CAPITAL RE CORPORATION
RETENTION AGREEMENT
This Retention Agreement is effective on the 21st day of December 1998,
between Capital Re Corporation (the "Company"), and Xxxxx Xxxxxx (the
"Executive").
WHEREAS, the Executive, as Executive Vice President and Chief Underwriting
Officer of the Company, is an important part of Company management; and
WHEREAS, the Company desires to assure itself of continuity of management
and the continued availability of the services of Executive and in furtherance
thereof is willing to provide an incentive to the employee to remain with the
Company; and
WHEREAS, the Executive is willing to remain with the Company under the
terms and conditions provided herein;
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the Company and Executive agree as follows:
1. Term. This Agreement shall terminate on January 31, 2000 (the
"Termination Date").
2. Retention Payment and Stock Appreciation Payment. The Executive will
receive a payment of $150,000 on January 3, 2000 (the "Retention Payment") if,
in the good faith judgment of the Compensation Committee of the Board of
Directors of the Company (a) the Company has maintained key Capital Re group
ratings in categories that do not result in a material impairment of the
business and (b) the 1999 Capital Plan approved by the Board of Directors has
been successfully executed; provided, however, that, except as otherwise
provided in Section 3.1, the Executive remains employed by the Company through
December 31, 1999. In addition, on or prior to January 31, 2000, the Executive
shall receive from the Company in cash an amount equal to the difference between
the fair market value of a share of Company common stock on January 15, 2000 and
$19.25 multiplied by 23,333 (the "Stock Appreciation Payment"), provided,
however, that, except as otherwise provided in Section 3.1, the Executive
remains employed by the Company through December 31, 1999.
3. Termination of Employment and Severance
3.1 Termination by the Company; Termination by the Executive for Good
Reason. If for any reasons other than for Cause (as
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Retention Agreement
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hereafter defined), or death or disability, the Company terminates the
Executive's employment during the Term or the Executive terminates employment
for Good Reason, the Company shall pay Executive, as liquidated damages or
severance pay or both, a lump sum amount equal to the Retention Payment and the
Stock Appreciation Payment. For purposes of this Agreement, "Good Reason" shall
mean (a) the Company's material breach of this Agreement or any other material
agreement between the Executive and the Company, or (b) the assignment to the
Executive of any duties substantially inconsistent with the Executive's status
as Executive Vice President and Chief Underwriting Officer of the Company or a
substantial adverse alteration in the nature or status of the Executive's
responsibilities.
3.2 Termination Due to Death, Disability or Cause. If the Executive's
employment is terminated prior to December 31, 1999 for Cause, there shall be no
Retention Payment or Stock Appreciation Payment. If the Executive's employment
is terminated prior to December 31, 1999 due to death or disability, the Company
shall pay Executive, as liquidated damages or severance pay or both, a lump sum
amount equal to the Stock Appreciation Payment but not the Retention Payment.
For the purposes of this Agreement, Cause shall mean (i) gross negligence or
willful misconduct in connection with the performance of duties; (ii) conviction
of a criminal offense (other than minor traffic offenses); or (iii) material
breach of any term of any employment, consulting or other services,
confidentiality, intellectual property or non-competition agreements, if any,
between Executive and the Company or any of its affiliates.
3.3 Voluntary Termination by the Executive. If the Executive voluntarily
terminates her employment for any reason, other than Good Reason, prior to
December 31, 1999, there shall be no Retention Payment or Stock Appreciation
Payment.
4. Withholding of Taxes. The Company shall have the right to deduct from
payments of any kind otherwise due to the Executive any federal, state, or local
taxes of any kind required by law to be withheld with respect to any payments
under this Agreement.
5. Successors; Binding Agreement. The Company will require any successor
(whether direct or indirect, 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. Failure of the Company to obtain such assumption and
agreement prior to the effectiveness of any such succession shall be a breach of
this Agreement and shall entitle the Executive to compensation from the Company
in
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Retention Agreement
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the same amount and on the same terms as she would be entitled to hereunder if
she terminated her employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
"Company" shall mean the Company as herein before defined and any successor to
its business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 5 or which otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law.
This Agreement and all rights of the Executive hereunder shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would still
be payable to her hereunder if she had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee, or other designee or, if
there be no such designee, to the Executive's estate.
6. Notice. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) sent by United States certified or registered mail or overnight
delivery service, addressed as follows:
If to the Executive:
Xxxxx Xxxxxx
c/o Capital Re Corporation
1325 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
If to the Company:
Capital Re Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
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7. Miscellaneous. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of New
York without regard to its conflicts of law principles.
8. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall deemed to be in an original but all of which
together will constitute one and the same instrument.
10. Resolution of Disputes. Any claim arising out of or relating to this
Agreement or the Executive's employment with the Company or the termination
thereof shall be resolved by binding confidential arbitration, to be held in New
York, New York, in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
11. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein shall, with respect to
the Executive, be of no further force and effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
CAPITAL RE CORPORATION
Attest:
By: By:
----------------------------- --------------------------------
Name:
Title:
EXECUTIVE:
Attest:
By: By:
----------------------------- --------------------------------
Title:
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