Document:

exv10w2

 

Exhibit 10.2

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

          This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is dated as of May 1, 2007,
between Enstar Group Limited (formerly known as Castlewood Holdings Limited), a Bermuda corporation
(“Company”), and Dominic F. Silvester (“Executive”).

BACKGROUND

          Company desires to employ Executive, and Executive desires to be an employee of Company, on
the terms and conditions contained in this Agreement.

          NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein
and intending to be legally bound hereby, the parties hereto agree as follows:

TERMS

1. CAPACITY AND DUTIES

     1.1 Employment; Acceptance of Employment. Company hereby employs Executive and
Executive hereby agrees to continue employment by Company for the period and upon the terms and
conditions hereinafter set forth. Effective on the date hereof, this Agreement amends and restates
the Employment Agreement between Company and Executive, dated as of May 1, 2007 in its entirety,
and the rights and obligations of each party shall be governed by this Agreement.

     1.2 Capacity and Duties.

          (a) Executive shall serve as Chief Executive Officer of Company. Executive shall perform such
duties and shall have such authority consistent with his position as may from time to time be
specified by the Board of Directors of Company. Executive shall report directly to the Board of
Directors of Company and his principal place of business shall be Company’s office in Bermuda and
his secondary places of business may be in continental Europe. It is recognised that extensive
travel may be necessary or appropriate in connection with the performance of Executive’s duties
hereunder.

          (b) Executive shall devote his full working time and energy, skill and best efforts to the
performance of his duties hereunder, in a manner that will comply with Company’s rules and policies
and will faithfully and diligently further the business and interests of Company. Executive shall
not be employed by or participate or engage in or in any manner be a part of the management or
operation of any business enterprise other than Company without the prior written consent of
Company, which consent may be

 

 

granted or withheld in the reasonable discretion of the Board of Directors of Company.
Notwithstanding anything herein to the contrary, nothing shall preclude Executive from (i) serving
on the boards of directors of a reasonable number of other corporations or the boards of a
reasonable number of trade associations and/or charitable organizations, (ii) engaging in
charitable, community and other business affairs, and (iii) managing his personal investments and
affairs, provided that such activities do not materially interfere with the proper performance of
his responsibilities and duties hereunder.

2. TERM OF EMPLOYMENT

     2.1 Term. The term of Executive’s employment hereunder shall be five years commencing
on the date hereof, as further extended or unless sooner terminated in accordance with the other
provisions hereof (the “Term”). Except as hereinafter provided, on the fifth anniversary of the
commencement date and on each subsequent anniversary thereof, the Term shall be automatically
extended for one year unless either party shall have given to the other party written notice of
termination of this Agreement at least 120 days prior to such anniversary. If written notice of
termination is given as provided above, Executive’s employment under this Agreement shall terminate
on the last day of the Term.

3. COMPENSATION

     3.1 Basic Compensation. As compensation for Executive’s services during the first
twelve months of the Term, Company shall pay to Executive a salary at the annual rate of $600,000
payable in periodic installments in accordance with Company’s regular payroll practices in effect
from time to time. For each subsequent twelve-month period of Executive’s employment hereunder,
Executive’s salary shall be in the amount of his initial annual salary with such increases, as may
be established by the Board of Directors of Company in consultation with Executive provided that
the increase in base salary with respect to each subsequent twelve-month period shall not be less
than the product of Executive’s base salary multiplied by the annual percentage increase in the
retail price index (expressed as a decimal) for the United States, as reported in the most recent
report of the U.S. Department of Labor for the preceding twelve-month period. Once increased,
Executive’s annual salary cannot be decreased without the written consent of Executive.
Executive’s annual salary, as determined in accordance with this Section 3.1, is hereinafter
referred to as his “Base Salary.”

     3.2 Performance Bonus. Executive shall, following the completion of each fiscal year
of Company during the Term, be eligible for a performance bonus in accordance with Company’s
performance bonus plan. Executive shall also be eligible for additional equity and other incentive
awards, at a level commensurate with his position and in accordance with the policies and practices
of the Company.

     3.3 Employee Benefits. During the Term, Executive shall be entitled to participate in
such of Company’s employee benefit plans and benefit programs, as may

 

 

from time to time be provided by Company. In addition, during the Term, Executive shall be
entitled to the following:

          (a) a housing allowance equal to $8,500 per month;

          (b) a life insurance policy in the amount of five times the Executive’s Base Salary, provided
that Executive assists Company in the procurement of such policy (including, without limitation,
submitting to any required physical examinations and completing accurately any applicable
applications and or questionnaires);

          (c) fully comprehensive medical and dental coverage on a worldwide basis for the Executive,
his spouse and dependents and an annual medical examination for same;

          (d) long term disability coverage, including coverage for serious illness, and full
compensation paid by Company during the period up to and until Executive begins receiving benefits
under such long term disability plan. In the event that the generally applicable group long-term
disability plan contains a limitation on benefits that would result in Executive’s being entitled
to benefit payments under such plan which are less than 50% of his salary, Company shall provide
Executive with an individual disability policy paying a benefit amount that, when coupled with the
group policy benefit payable, would provide Executive with aggregate benefits in connection with
his long-term disability equal to 50% of such salary (provided that, if an individual policy can
not be obtained for such amount on commercially reasonable rates and on commercially reasonable
terms, Company shall provide Executive with a policy providing for the greatest amount of
individual coverage that is available on such standard terms and rates). Provision of any
individual disability policy will also be contingent upon Executive being able to be insured at
commercially reasonable rates and on commercially reasonable terms and upon Executive assisting
Company in the procurement of such policy (including, without limitation, submitting to any
required physical examinations and completing accurately any applicable applications and or
questionnaires);

          (e) payment from the company of an amount equal to 10% of Executive’s Base Salary each year to
Executive as contribution to his pension plans; and

          (f) During the Term, Executive will be reimbursed for one return trip for his family to/from
Bermuda each calendar year. Executive’s wife may travel business class and his children may travel
premium economy class.

     3.4 Vacation. During the Term, Executive shall be entitled to a paid vacation of 30
days per year (including 30 days during 2007).

     3.5 Expense Reimbursement. Company shall reimburse Executive for all reasonable
out-of-pocket expenses incurred by him in connection with the performance

 

 

of his duties hereunder in accordance with its regular reimbursement policies as in effect
from time to time.

4. TERMINATION OF EMPLOYMENT

     4.1 Death of Executive. If Executive dies during the Term, and for the year in which
Executive dies, Company achieves the performance goals established in accordance with any incentive
plan in which Executive participates, Company shall pay Executive’s estate an amount equal to the
bonus that Executive would have received had he been employed by Company for the full year,
multiplied by a fraction, the numerator of which is the number of calendar days Executive was
employed in such year and the denominator of which is 365. In addition, Executive’s spouse and
dependents (if any) shall be entitled for a period of 36 months, to continue to receive medical
benefits coverage (as described in Section 3.3) at Company’s expense if and to the extent Company
was paying for such benefits for Executive’s spouse and dependents at the time of Executive’s
death.

     4.2 Disability. If Executive is or has been materially unable for any reason to
perform his duties hereunder for 120 days during any period of 150 consecutive days, Company shall
have the right to terminate Executive’s employment upon 30 days’ prior written notice to Executive
at any time during the continuation of such inability, in which event Company shall thereafter be
obligated to continue to pay Executive’s Base Salary for a period of 36 months, periodically in
accordance with Company’s regular payroll practices and, within 30 days of such notice, shall pay
any other amounts (including salary, bonuses, expense reimbursement, etc.) that have been fully
earned by, but not yet paid to, Executive under this Agreement as of the date of such termination.
The amount of payments to Executive under disability insurance policies paid for by Company shall
be credited against and shall reduce the Base Salary otherwise payable by Company following
termination of employment. If, for the year in which Executive’s employment is terminated pursuant
to this Section, Company achieves the performance goals established in accordance with any
incentive plan in which Executive participates, Company shall pay Executive an amount equal to the
bonus that Executive would have received had he been employed by Company for the full year,
multiplied by a fraction, the numerator of which is the number of calendar days Executive was
employed in such year and the denominator of which is 365. Executive shall be entitled for a
period of 36 months, to continue to receive at Company’s expense medical benefits coverage (as
described in Section 3.3) for Executive and Executive’s spouse and dependents (if any) if and to
the extent Company was paying for such benefits to Executive and Executive’s spouse and dependents
at the time of such termination.

     4.3 Termination for Cause. Executive’s employment hereunder shall terminate
immediately upon notice that the Board of Directors of Company is terminating Executive for Cause
(as defined herein), in which event Company shall not thereafter be obligated to make any further
payments hereunder other than amounts (including salary, expense reimbursement, etc.) that have
been fully earned by, but not yet paid to, Executive under this Agreement as of the date of such
termination. “Cause” shall mean (a) fraud or dishonesty in connection with Executive’s employment
that results in a

 

 

material injury to Company, (b) conviction of any felony or crime involving fraud or
misrepresentation or (c) after Executive has received written notice of the specific material and
continuing failure of Executive to perform his duties hereunder (other than death or disability)
and has failed to cure such failure within 30 days of receipt of the notice, or (d) material and
continuing failure to follow reasonable instructions of the Board of Directors after Executive has
received at least prior written notice of the specific material and continuing failure to follow
instructions and has failed to cure such failure within 30 days of receipt of the notice.

     4.4 Termination without Cause or for Good Reason.

          (a) If (1) Executive’s employment is terminated by Company for any reason other than Cause or
the death or disability of Executive, or (2) Executive’s employment is terminated by Executive for
Good Reason (as defined herein):

               (i) Company shall pay Executive any amounts (including salary, bonuses, expense reimbursement,
etc.) that have been fully earned by, but not yet paid to, Executive under this Agreement as of the
date of such termination;

               (ii) Company shall pay Executive a lump sum amount equal to three times the Base Salary
payable to him;

               (iii) Executive shall be entitled to continue to receive medical benefits coverage (as
described in Section 3.3) for Executive and Executive’s spouse and dependents (if any) at Company’s
expense for a period of 36 months;

               (iv) Anything to the contrary in any other agreement or document notwithstanding, each
outstanding equity incentive award granted to Executive before, on or within three years after the
date hereof shall become immediately vested and exercisable on the date of such termination; and

               (v) In addition, if, for the year in which Executive is terminated, Company achieves the
performance goals established in accordance with any incentive plan in which Executive
participates, Company shall pay an amount equal to the bonus that Executive would have received had
he been employed by Company for the full year.

          (b) Upon making the payments described in this Section 4.4, Company shall have no further
obligation to Executive under this Agreement.

          (c) “Good Reason” shall mean the following:

               (i) material breach of Company’s obligations hereunder, provided that Executive shall have
given written notice thereof to Company, and Company shall have failed to remedy the circumstances
within 30 days;

 

 

               (ii) the relocation of Executive’s principal business office outside of Bermuda without the
Executive’s prior agreement; or

               (iii) any material reduction in Executive’s duties or authority.

     4.5 Change in Control.

          (a) If, during the Term, there should be a Change of Control (as defined herein), and within 1
year thereafter either (i) Executive’s employment should be terminated for any reason other than
for Cause or (ii) Executive terminates his employment for Good Reason (as defined in Section 4.4):

               (i) Company shall pay Executive any amounts (including salary, bonuses, expense reimbursement,
etc.) that have been fully earned by, but not yet paid to, Executive under this Agreement as of the
date of such termination;

               (ii) Company shall pay Executive a lump sum amount equal to three times Executive’s then
current Base Salary;

               (iii) Executive shall be entitled to continue to receive medical benefits coverage (as
described in Section 3.3) for Executive and Executive’s spouse and dependents (if any) at Company’s
expense for a period of 36 months;

               (iv) Anything to the contrary in any other agreement or document notwithstanding, each
outstanding equity incentive award granted to Executive before, on or after the date hereof shall
become immediately vested and exercisable on the date of such termination; and

               (v) In addition, if, for the year in which Executive is terminated, Company achieves the
performance goals established in accordance with any incentive plan in which Executive
participates, Company shall pay an amount equal to the bonus that Executive would have received had
he been employed by Company for the full year.

          (b) Upon making the payments described in this Section 4.5, Company shall have no further
obligation to Executive under this Agreement.

          (c) A “Change in Control” of Company shall mean:

               (i) the acquisition by any person, entity or “group” required to file a Schedule 13D or
Schedule 14D-1 under the Securities Exchange Act of 1934 (the “1934 Act”) (excluding, for this
purpose, Company, its subsidiaries, any employee benefit plan of Company or its subsidiaries which
acquires ownership of voting securities of Company, and any group that includes Executive) of
beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act) of 50% or more of either
the then

 

 

outstanding ordinary shares or the combined voting power of Company’s then outstanding voting
securities entitled to vote generally in the election of directors;

               (ii) the election or appointment to the Board of Directors of Company, or resignation of or
removal from the Board, of directors with the result that the individuals who as of the date hereof
constituted the Board (the “Incumbent Board”) no longer constitute at least a majority of the
Board, provided that any person who becomes a director subsequent to the date hereof whose
appointment, election, or nomination for election by Company’s shareholders, was approved by a vote
of at least a majority of the Incumbent Board (other than an appointment, election or nomination of
an individual whose initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of Company) shall be, for purposes of
this Agreement, considered as though such person were a member of the Incumbent Board; or

               (iii) approval by the shareholders of Company of: (i) a reorganization, merger or
consolidation by reason of which persons who were the shareholders of Company immediately prior to
such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of
the combined voting power of the reorganized, merged or consolidated company’s then outstanding
voting securities entitled to vote generally in the election of directors, or (ii) a liquidation or
dissolution of Company or the sale, transfer, lease or other disposition of all or substantially
all of the assets of Company (whether such assets are held directly or indirectly).

5. RESTRICTIVE COVENANTS

     5.1 Restrictive Covenants.

     (a) Executive acknowledges that he is one of a small number of key executives and that in such
capacity, he will have access to confidential information of the Company and will engage in key
client relationships on behalf of the Company and that it is fair and reasonable for protection of
the legitimate interests of the Company and the other key executives of the Company that he should
accept the restrictions described in Exhibit A hereto.

     (b) Promptly following Executive’s termination of employment, Executive shall return to the
Company all property of the Company, and all documents, accounts, letters and papers of every
description relating to the affairs and business of the Company or any of its subsidiaries, and
copies thereof in Executive’s possession or under his control.

     (c) Executive acknowledges and agrees that the covenants and obligations of Executive in
Exhibit A and this Section 5.1 relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations will cause the Company irreparable
injury for which adequate remedies are not available at

 

 

law. Therefore, Executive agrees that the Company shall be entitled to an injunction, restraining
order or such other equitable relief (without the requirement to post bond) restraining Executive
from committing any violation of the covenants and obligations contained in Exhibit A and this
Section 5.1. These injunctive remedies are cumulative and are in addition to any other rights and
remedies the Company may have at law or in equity.

     (d) Executive agrees that if he applies for, or is offered employment by (or is to provide
consultancy services to) any other person, firm, company, business entity or other organization
whatsoever (other than an affiliate of the Company) during the restriction periods set forth in
Exhibit A, he shall promptly, and before entering into any contract with any such third party,
provide to such third party a full copy of Exhibit A and this Section 5.1 in order to ensure that
such other party is fully aware of Executive’s obligations hereunder.

     5.2 Intellectual Property Rights. Executive recognizes and agrees that Executive’s
duties for the Company may include the preparation of materials, including written or graphic
materials for the Company or its affiliate, and that any such materials conceived or written by
Executive shall be done within the scope of his employment as a “work made for hire.” Executive
agrees that because any such work is a “work made for hire,” the Company (or the relevant affiliate
of the Company) will solely retain and own all rights in said materials, including rights of
copyright. Executive agrees to disclose and assign to the Company his entire right, title and
interest in and to all inventions and improvements related to the Company’s business or to the
business of the Company’s affiliates (including, but not limited to, all financial and sales
information), whether patentable or not, whether made or conceived by him individually or jointly
with others at any time during his employment by the Company hereunder. Such inventions and
improvements are to become and remain the property of the Company and Executive shall take such
actions as are reasonably necessary to effectuate the foregoing.

6. MISCELLANEOUS

     6.1 Key Employee Insurance. Company shall have the right at its expense to purchase
insurance on the life of Executive, in such amounts as it shall from time to time determine, of
which Company shall be the beneficiary. Executive shall submit to such physical examinations as
may reasonably be required and shall otherwise cooperate with Company in obtaining such insurance.

     6.2 Indemnification/Litigation. Company shall indemnify and defend Executive against
all claims arising out of Executive’s activities as an officer or employee of Company or its
affiliates to the fullest extent permitted by law and under Company’s organizational documents. At
the request of Company, Executive shall during and after the Term render reasonable assistance to
Company in connection with any litigation or other proceeding involving Company or any of its
affiliates. Company shall provide reasonable compensation to Executive for such assistance
rendered after the Term.

 

 

     6.3 No Mitigation. In no event shall Executive be required to seek other employment
or take any other action by way of mitigation of the amounts payable to Executive under this
Agreement, and such amounts shall not be reduced whether or not Executive obtains other employment
after termination of his employment hereunder.

     6.4 Severability. 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.

     6.5 Assignment; Benefit. This Agreement shall not be assignable by Executive, and
shall be assignable by Company only with the Executive’s consent and only to any person or entity
which may become a successor in interest (by purchase of assets or stock, or by merger, or
otherwise) to Company in the business or substantially all of the business presently operated by
it. Any Change in Control is deemed an assignment. Subject to the foregoing, this Agreement and
the rights and obligations set forth herein shall inure to the benefit of, and be binding upon, the
parties hereto and each of their respective permitted successors, assigns, heirs, executors and
administrators.

     6.6 Notices. All notices hereunder shall be in writing and shall be sufficiently
given if hand-delivered, sent by documented overnight delivery service or registered or certified
mail, postage prepaid, return receipt requested or by facsimile, receipt acknowledged, addressed as
set forth below or to such other person and/or at such other address as may be furnished in writing
by any party hereto to the other. Any such notice shall be deemed to have been given as of the
date received, in the case of personal delivery, or on the date shown on the receipt or
confirmation therefor, in all other cases. Any and all service of process and any other notice in
any action, suit or proceeding shall be effective against any party if given as provided in this
Agreement; provided that nothing herein shall be deemed to affect the right of any party to serve
process in any other manner permitted by law.

	 	(a)	 	If to Company:
	 
	 	 	 	Enstar Group Limited

P.O. Box HM 2267

Windsor Place, 3rd Floor

18 Queen Street

Hamilton HM JX

Bermuda
	 
	 	 	 	Attention: Paul O’Shea

Facsimile No.: 1 441 292 6603

 

 

	 	(b)	 	If to Executive:
	 
	 	 	 	Dominic F. Silvester

Seaspray 5a

Number 2 Palmetto Court

Smiths FL 07

Bermuda

     6.7 Entire Agreement; Modification; Advice of Counsel.

          (a) This Agreement constitutes the entire agreement between the parties hereto with respect to
the matters contemplated herein and supersedes all prior agreements and understandings with respect
thereto. No addendum, amendment, modification, or waiver of this Agreement shall be effective
unless in writing. Neither the failure nor any delay on the part of any party to exercise any
right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right or remedy preclude any other or further exercise of the same or of any other
right or remedy with respect to such occurrence or with respect to any other occurrence.

          (b) Executive acknowledges that he has been afforded an opportunity to consult with his
counsel with respect to this Agreement.

     6.8 Governing Law. This Agreement is made pursuant to, and shall be construed and
enforced in accordance with, the laws of Bermuda, to the extent applicable, without giving effect
to otherwise applicable principles of conflicts of law.

     6.9 Headings; Counterparts. The headings of paragraphs in this Agreement are for
convenience only and shall not affect its interpretation. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original and all of which, when taken
together, shall be deemed to constitute the same Agreement.

     6.10 Further Assurances. Each of the parties hereto shall execute such further
instruments and take such additional actions as the other party shall reasonably request in order
to effectuate the purposes of this Agreement.

[signature page follows]

 

 

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

	 	 	 	 	 
	 	ENSTAR GROUP LIMITED

 	 
	 	By:  	/s/ Richard J. Harris
 	 
	 	 	Name:  	Richard J. Harris 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	 	 
	 	                                                  /s/ Dominic Silvester
 	 
	 	Dominic Silvester 	 
	 	 	 

 

 

Exhibit A

Restrictive Covenants

	A.	 	Noncompetition. During the Term and, if Executive fails to remain employed through
the fifth anniversary of the date hereof, for a period of eighteen (18) months after
Executive’s employment terminates (the “Restriction Period”), Executive shall not, without the
prior written permission of the Board, directly or indirectly engage in any Competitive
Activity. The term “Competitive Activity” shall include (i) entering the employ of, or
rendering services to, any person, firm or corporation engaged in the insurance and
reinsurance run-off or any other business in which the Company or any of its affiliates has
been engaged at any time during the last twelve months of the Term and to which Executive has
rendered services or about which Executive has acquired Confidential Information or by which
Executive has been engaged at any time during the last twelve months of his period of
employment hereunder and in each case in any jurisdiction in which the Company or any of its
affiliates has conducted substantial business (hereinafter defined as the “Business”); (ii)
engaging in the Business for Executive’s own account or (becoming interested in any such
Business, directly or indirectly, as an individual, partner, shareholder, member, director,
officer, principal, agent, employee, trustee, consultant, or in any other similar capacity;
provided, however, nothing in this Paragraph A shall prohibit Executive from owning, solely as
a passive investment, 5% or less of the total outstanding securities of a publicly-held
company, or any interest held by Executive in a privately-held company as of the date of this
Agreement; provided further that the provisions of this Paragraph A shall not apply in the
event Executive’s employment with the Company is terminated without Cause or with Good Reason.

	B.	 	Confidentiality. Without the prior written consent of the Company, except to the
extent required by an order of a court having competent jurisdiction or under subpoena from an
appropriate regulatory authority, Executive shall not disclose and shall use his best
endeavours to prevent the disclosure of any trade secrets, customer lists, market data,
marketing plans, sales plans, management organization information (including data and other
information relating to members of the Board and management), operating policies or manuals,
business plans or financial records, or other financial, commercial, business or technical
information relating to the Company or any of its subsidiaries or affiliates or information
designated as confidential or proprietary that the Company or any of its subsidiaries or
affiliates may receive belonging to clients or others who do business with the Company or any
of its subsidiaries or affiliates (collectively, “Confidential Information”) to any
third person unless such Confidential Information has been previously disclosed to the public
by the Company or any of its subsidiaries or affiliates or is in the public domain (other than
by reason of Executive’s breach of this Paragraph B). In the event that Executive is required
to

 

 

	 	 	disclose Confidential Information in a legal proceeding, Executive shall provide the
Company with notice of such request as soon as reasonably practicable, so that the Company
may timely seek an appropriate protective order or waive compliance with this Paragraph B,
except if such notice would be unlawful or would place Executive in breach of an
undertaking he is required to give by law or regulation.

	C.	 	Non-Solicitation of Employees. During the Restriction Period, Executive shall not,
without the prior written permission of the Board, directly or indirectly induce any Senior
Employee of the Company or any of its affiliates to terminate employment with such entity, and
shall not directly or indirectly, either individually or as owner, agent, employee, consultant
or otherwise, offer employment to or employ any Senior Employee unless such person shall have
ceased to be employed by the Company or any affiliate for a period of at least six (6) months.
For the purpose of this Paragraph C, “Senior Employee” shall mean a person who, at
any time during the last twelve months of Executive’s period of employment hereunder:

(i) is engaged or employed (other than in a clerical, secretarial or administrative
capacity) as an employee, director or consultant of the Company or its affiliates;
and

(ii) is or was engaged in a capacity in which he obtained Confidential Information;
and

(iii) had personal dealings with Executive.

	D.	 	Non-Disparagement. Executive shall not do or say anything adverse or harmful to, or
otherwise disparaging of, the Company or its subsidiaries and their respective goodwill. The
Company shall not, and shall use reasonable efforts to ensure that its officers, directors,
employees and subsidiaries do not do or say anything adverse or harmful to, or otherwise
disparaging of, Executive and his goodwill; provided that no action by either
party in connection with the enforcement of its rights hereunder shall be construed as a
violation of this Paragraph D.

	E.	 	Definition. In this Exhibit A, “directly or indirectly” (without prejudice to the
generality of the expression) means whether as principal or agent (either alone or jointly or
in partnership with any other person, firm or company) or as a shareholder, member or holder
of loan capital in any other company or being concerned or interested in any other person,
firm or company and whether as a director, partner, consultant, employee or otherwise.

	F.	 	Severability. Each of the provisions contained in this Exhibit A is and shall be
construed as separate and severable and if one or more of such provisions is held to be
against the public interest or unlawful or in any way an unreasonable

 

 

	 	 	restraint of trade or unenforceable in whole or in part for any reason, the remaining
provisions of this Exhibit A or part thereof, as appropriate, shall continue to be in full
force and effect.exv10w1

 

Exhibit 10.1

CONSENT

to

TERMINATE LTIP TARGET UNITS

and

AMEND EMPLOYMENT AGREEMENT

of

GLENN BLUMENTHAL

     CONSENT, dated as of April 30, 2007 (the “Consent”), between First States Group, L.P., a
Delaware limited partnership (the “Company”), American Financial Realty Trust, a Maryland real
estate investment trust (the “REIT”), and Glenn Blumenthal (the “Executive”).

RECITALS

     WHEREAS, the Executive previously entered into an Employment Agreement with the Company, dated
August 30, 2005 (“Employment Agreement”);

     WHEREAS, the REIT is a limited partner and the sole owner of the general partner of the
Company, and has guaranteed the obligations of the Company under the Employment Agreement;

     WHEREAS, on March 1, 2006, Target Units (the “Target Units”) were awarded under the REIT’s
2006 Long-Term Incentive Plan (the “LTIP”) to executives of the Company and, as of the date of this
Consent, the participants in the LTIP, each of whom holds Target Units, are as follows: Brian S.
Block, Glenn Blumenthal, Jeffrey P. Foster, Sonya A. Huffman, Edward J. Matey Jr. and David J.
Nettina (collectively, the “LTIP Participants”);

     WHEREAS, the Compensation and Human Resources Committee of the Board of Trustees of the REIT
(the “Compensation Committee”), in its capacity as the administrator of the LTIP, has approved the
termination of the LTIP, and authorized the Company and the REIT, to enter into agreements with
each of the LTIP Participants to terminate their Target Units;

     WHEREAS, the Executive desires to terminate all of the Executive’s 480,000 Target
Units (the “Executive Target Units”);

     WHEREAS, the Company, the REIT and the Executive mutually desire to amend the Employment
Agreement as provided in this Consent;

     WHEREAS, the Compensation Committee has approved a new grant of restricted common shares upon
the execution and delivery of this Consent; and

 

 

NOW, THEREFORE, the REIT, the Company and the Executive, intending to be legally bound hereby,
agree as follows:

     1. Termination of Executive Target Units. The Executive Target Units are hereby
terminated, and the Executive consents to the termination of the Executive Target Units. The
Executive also consents to the termination of the LTIP and acknowledges that the LTIP no longer has
any force or effect with respect to the Executive.

     2. Grant of Restricted Common Shares. Upon the execution and delivery of this
Consent, the Company is granting to the Executive 240,000 restricted common shares on the
terms set forth in the form of 2007 Restricted Common Shares Award Agreement attached to this
Consent (the “New Restricted Share Grant”).

     3. Amendments to Employment Agreement. The parties hereto consent and agree to the
amendments to the Employment Agreement set forth under paragraphs (a) and (b) below:

     (a) The New Restricted Share Grant shall not be subject to any provision of the
Employment Agreement, including without limitation any provision with respect to vesting or
accelerated vesting.

     (b) The definition of “Change of Control Severance Payment” in the Employment
Agreement is amended to remove any reference to restricted common share grants, and
therefore is restated to mean the following:

“2.5 multiplied by the sum of (i) the Executive’s average annual Base Salary for the
three calendar year period immediately prior to the Executive’s date of termination,
which for this purpose is determined by taking the Executive’s Base Salary in effect
on the Executive’s date of termination, as well as the Executive’s Base Salary in
effect for the immediately preceding two calendar years, plus (ii) the average
annual cash incentive bonus actually received by the Executive for the three full
fiscal year periods that immediately preceded Executive’s date of termination.”

     (c) The parties hereto intend to enter into a comprehensive amendment and restatement
of the Employment Agreement on such terms and conditions as the parties shall mutually
agree, which shall contain the foregoing amendments.

 

 

     IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused
this Consent to be duly executed as of the date first above written.

	 	 	 	 	 	 	 	 	 	 	 
	FIRST STATES GROUP, L.P.	 	 	 	GLENN BLUMENTHAL	 	 
	By:

	 	 	 	First States Group, LLC	 	 	 	 	 	 
	 

	 	 	 	Its general partner	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 	 	 
	 

	 	 	 	 

Harold W. Pote
	 	 	 	 

	 	 
	 

	 	 	 	President and Chief Executive Officer	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	AMERICAN FINANCIAL REALTY TRUST	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 

Harold W. Pote
	 	 	 	 	 	 
	 

	 	 	 	President and Chief Executive Officer

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