ASPEN INSURANCE HOLDINGS LIMITED (NYSE:AHL) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
On March 28, 2019, Aspen Insurance Holdings Limited (the “Company”) entered into a Management Consulting Agreement, dated March 28, 2019 (the “Agreement”), by and between Aspen and Apollo Management Holdings, L.P., a Delaware limited partnership (“Apollo Management”). to the Agreement, Apollo Management will provide the Company and its subsidiaries (collectively, the “Aspen Group”) with management consulting and advisory services related to the business and affairs of the Aspen Group and Aspen will pay to Apollo Management in consideration for its services under the Agreement an annual management consulting fee equal to the greater of (i) 1% of the consolidated net income of the Aspen Group for the applicable fiscal year, and (ii) $5 million.
The Agreement is effective February 15, 2019 (the “Commencement Date”) and will have an initial term period of eight years from the Commencement Date. The Agreement will be automatically extended for an additional 12-month term on each of the eight-year and nine-year anniversary of the Commencement Date absent contrary notice by either party given not less than 30 days prior to such anniversary date. The Agreement will be automatically terminated on the occurrence of the consummation of any transaction or series of transactions, whether or not related, as a result of which New Holders (as defined in the Agreement) become the beneficial owner, directly or indirectly, of more than ninety percent of the ordinary shares or other common equity and voting securities of the Aspen Group.
The foregoing description of the Agreement does not purport to be complete and is subject to, and qualified in its entirety, by reference to the full text of the Agreement which is attached and incorporated herein by reference as Exhibit 10.1 to this Current Report on Form 8-K.
Section 5 — Corporate Governance and Management
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
As previously disclosed, Mr. Christopher O’Kane stepped down from his position as Chief Executive Officer of the Company effective February 15, 2019 (the “Termination Date”) in connection with the consummation of the merger (the “Merger”) with Highlands Merger Sub, Ltd. (“Merger Sub”), a wholly owned subsidiary of Highlands Holdings, Ltd. (“Parent”). Merger Sub merged with and into the Company in accordance with Section 105 of the Bermuda Companies Act 1981, as amended, with the Company continuing as the surviving company and as a wholly owned subsidiary of Parent. Parent is an affiliate of certain investment funds managed by affiliates of Apollo Global Management, LLC, a leading global alternative investment manager. Mr. O’Kane was succeeded by Mr. Mark Cloutier who was appointed as the Chief Executive Officer of the Company and the Chair of the Board of Directors of the Company effective February 15, 2019.
On March 28, 2019, the terms and conditions of Mr. O’Kane’s departure were agreed as set forth in the Settlement Agreement, which is a settlement agreement within the meaning of Section 203 of the United Kingdom’s Employment Rights Act of 1996, dated March 28, 2019 (the “Settlement Agreement”), by and among Aspen Insurance UK Services Limited (“Aspen UK Services”), the Company and Mr. O’Kane. The Settlement Agreement was agreed in accordance with the terms of (i) the Service Agreement, dated September 24, 2004, as amended on October 28, 2014, by and among Mr. O’Kane, Aspen UK Services and the Company, (ii) the Change of Control Employment Agreement, dated February 23, 2015, as amended on March 15, 2018, by and among Mr. O’Kane, Aspen UK Services and the Company, and (iii) the international assignment letter, dated May 16, 2018, between Mr. O’Kane and the Company.
to the Settlement Agreement, Mr. O’Kane will receive (i) $10,000,000 as a bonus in recognition of Mr. O’Kane’s contributions towards the Merger, (ii) $3,519,156 as a severance payment, which includes a payment in lieu of Mr. O’Kane’s notice period, (iii) $164,245 as the equivalent of the pension contributions Mr. O’Kane would have received for the 12 month period following the Termination Date, (iv) $62,690 as the equivalent cost of the private medical insurance premiums Mr. O’Kane would have received for the 12 month period following the termination date, (v) $47,706 for relocation costs, (vi) $40,000 for the provision of outplacement counseling, (vii) $38,590 as a pro-rata bonus for the 2019 performance year, (viii) $34,275 for assistance on certain of Mr. O’Kane’s U.S. and U.K. tax returns, (ix) up to a maximum of $20,000 for reasonable legal fees incurred by Mr. O’Kane for legal advice in connection with the termination of his employment with the Company, (x) the cost of flights for Mr. O’Kane and his family to return from Bermuda to either London or a city in the United States, (xi) $1,315 as consideration for entering into certain confidentiality obligations to apply indefinitely following the Termination Date, and (xii) $3,290 as
consideration for entering into certain non-compete and non-solicit restrictions as set forth in Schedule 4 of the Settlement Agreement.
All of the equity-based awards previously granted to Mr. O’Kane by the Company vested on completion of the Merger in accordance with the Agreement and Plan of Merger, dated as of August 27, 2018 (the “Merger Agreement”), by and among the Company, Merger Sub and Parent, with satisfaction of performance conditions determined based on either (i) the actual level of performance achieved with respect to any performance period that had been completed or (ii) the target performance level with respect to any performance period that had not yet been completed. In accordance with the Merger Agreement, Mr. O’Kane has received a lump-sum payment in cash, without interest, equal to $42.75 for each share subject to such equity-based awards (plus any applicable amounts in respect of accrued dividend equivalents) at the same time as other similarly situated employees of the Company.
In consideration for the promises and payments made by Aspen UK Services under the Settlement Agreement, Mr. O’Kane has agreed to a general release of claims in favor of the Company, Aspen UK Services, and their affiliates. Mr. O’Kane is also subject to a non-compete restriction for 12 months following the Termination Date and certain non-solicit restrictions for 24 months following the Termination Date as set forth in Schedule 4 of the Settlement Agreement, which he must adhere to unless he has the prior written consent of the Board of Directors of the Company.
In addition, Mr. O’Kane has agreed not to make any adverse or derogatory comment about Aspen UK Services, its directors or employees, and not to do anything which will, or may, bring Aspen UK Services, its directors or employees into disrepute. Aspen UK Services has agreed to use reasonable endeavors to ensure that its employees, directors and officers will not (i) make any adverse or derogatory comment about Mr. O’Kane, or (ii) do anything that will, or may, bring Mr. O’Kane into disrepute.
The foregoing description of the Settlement Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Settlement Agreement which is attached and incorporated herein by reference as Exhibit 10.2 to this Current Report on Form 8-K.
Section 9 — Financial Statements and Exhibits
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are filed as part of this Current Report on Form 8-K:
ASPEN INSURANCE HOLDINGS LTD Exhibit
EX-10.1 2 highlands-managementconsul.htm EXHIBIT 10.1 Exhibit Exhibit 10.1MANAGEMENT CONSULTING AGREEMENTMANAGEMENT CONSULTING AGREEMENT,…
To view the full exhibit click here
About ASPEN INSURANCE HOLDINGS LIMITED (NYSE:AHL)
Aspen Insurance Holdings Limited (Aspen Holdings) is a holding company. The Company conducts insurance and reinsurance business through its subsidiaries: Aspen U.K. and AUL, Aspen Bermuda (Bermuda) and Aspen Specialty and AAIC (the United States). It operates in two segments: Aspen Insurance and Aspen Reinsurance (Aspen Re). Its insurance segment consists of property and casualty insurance; marine, aviation and energy insurance, and financial and professional lines insurance. Aspen Re consists of property catastrophe reinsurance, other property reinsurance, casualty reinsurance and specialty reinsurance. Its Aspen Re consists of property catastrophe reinsurance, other property reinsurance (risk excess, pro rata and facultative), casualty reinsurance (the United States treaty, international treaty and global facultative) and specialty reinsurance (credit and surety, agriculture, marine, aviation, terrorism, engineering).
