Exhibit 10.13
PAYMENT AGREEMENT
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This PAYMENT AGREEMENT (the "Agreement"), dated as of June 28, 2005 (the
"Effective Date"), is entered into by and between RAM Reinsurance Company Ltd.
(the "Company"), RAM Holdings Ltd. and RAM Holdings II Ltd. (collectively
referred to as "Holding") and Xxxx Xxxxx Xxxxxxxxx (the "Participant" and,
together with the Company and Holding, the "Parties").
W I T N E S S E T H:
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WHEREAS, the Participant was granted a stock option pursuant to a stock
option agreement entered into by the Parties, effective March 13, 2001 (the
"Option"), which is attached hereto as Annex A; and
WHEREAS, the Parties previously entered into the Contingent Share Agreement
and the First Amendment to the Contingent Share Agreement (collectively referred
to as the "Contingent Share Agreement"), each of which are attached hereto as
Annex B; and
WHEREAS, the Parties wish to terminate the Option and the Contingent Share
Agreement and to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, and intending to be legally bound,
the Parties hereby agree as follows:
1. Definitions.
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(a) "Assumed Share Price" means the product of (i) the GAAP book
value of one Share (excluding the xxxx to market effect of FAS 133 and SFAS 115)
as of the last day of the most recent fiscal quarter that ended prior to the
Payment Date or, if the Payment Date is the last day of a fiscal quarter, as of
the last day of the fiscal quarter that ends on the Payment Date (in either
case, as reported in the financial statements for such quarter), and (ii) 1.15.
(b) "Business Days" means any day except a Saturday, Sunday or other
day on which banks in Xxxxxxxx, Bermuda or the City of New York, United States,
are authorized or obligated by law or executive order to close.
(c) "Cash Payment" means a lump sum cash payment equal to the
product of (i) 9,911 and (ii) the excess, if any, of (A) the Assumed Share Price
over (B) $128.62.
(d) "Change in Control" means the first to occur of any of the
following events; provided that such event also constitutes a "change in the
ownership or effective control of the corporation, or in the ownership of a
substantial portion of the
assets of the corporation" as those terms are used in Section 409A of the
Internal Revenue Code of 1986, as amended:
(i) the acquisition by any person, entity or "group" (as defined
in Section 13(d) of the Securities Exchange Act of 1934, as amended)
of 50% or more of the combined voting power of the Company's or
Holding's then outstanding voting securities;
(ii) the merger, reorganization, or consolidation of, or share
exchange involving, the Company or Holding, as a result of which the
shareholders of the Company or Holding immediately before such
transaction do not, immediately thereafter, own, directly or
indirectly, more than 50% of the combined voting power entitled to
vote generally in the election of directors of the merged or
consolidated company;
(iii) a sale of all or substantially all of the Company's
assets; and
(iv) approval by the Company or Holding of the liquidation or
dissolution of the Company or Holding other than a liquidation of the
Company into Holding.
(e) "Hypothetical Payment" means an amount equal to what the Cash
Payment would be if, in calculating the Cash Payment in accordance with Section
1(c), the Assumed Share Price is an amount equal to the product of (i) the GAAP
book value of one Share (excluding the xxxx to market effect of FAS 133 and SFAS
115) as reported in the financial statements issued for the most recent fiscal
quarter that ended prior to the Payment Date and (ii) 1.15.
(f) "Payment Date" means the earlier to occur of (i) June 30, 2006
or (ii) the date of a Change in Control.
(g) "Preliminary Payment" means a lump sum cash payment equal to
seventy-five percent (75%) of the Hypothetical Payment.
(h) "Share" means a share of Class A Common Stock, par value $1.00
per share, of RAM Holdings II Ltd.
(i) "True-Up Payment" means a lump sum cash payment equal to the
difference between the Cash Payment and the Preliminary Payment, which is paid
(i) by the Company to the Participant if the Cash Payment is greater than the
Preliminary Payment and (ii) by the Participant to the Company if the
Preliminary Payment is greater than the Cash Payment.
2. Termination of Option and Contingent Share Agreement. In
consideration of the execution and delivery of this Agreement, effective as of
the
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Effective Date, the Option and the Contingent Share Agreement (and the
Participant's rights with respect to each) shall terminate and be of no further
force or effect.
3. Payment of Cash Payment. Subject to the terms hereof and provided the
Participant's employment is not terminated on or before the Payment Date either
by the Company or Holding for "Cause" (as that term is defined in the
Participant's Employment Agreement) or by the Participant without "Good Reason"
(as that term is defined in the Participant's Employment Agreement), the
Participant (and, if applicable, the Company) shall receive the following:
(a) if the financial statements for the fiscal quarter used to
determine the Assumed Share Price have been issued as of the
Payment Date, the Cash Payment, which shall be paid to the
Participant in full, in cash, on (or within three (3) Business
Days after) the Payment Date; or
(b) if the financial statements for the fiscal quarter used to
determine the Assumed Share Price have not been issued as of the
Payment Date, (i) the Preliminary Payment, which shall be paid
to the Participant on (or within three (3) Business Days after)
the Payment Date and (ii) the True-Up Payment, which shall be
paid to the Participant or to the Company, as the case may be,
on (or within five (5) Business Days after) the date the
financial statements for the fiscal quarter used to determine
the Assumed Share Price are issued; provided, however, that,
notwithstanding anything herein to the contrary, the Participant
shall not be required to make a True-Up Payment to the Company
if the financial statements for the fiscal quarter used to
determine the Assumed Share Price are not issued at least ten
(10) Business Days before the end of the fiscal year in which
the Preliminary Payment is made.
4. Termination for Cause and Termination Without Good Reason. If the
Participant's employment is terminated on or before the Payment Date either by
the Company or Holding for "Cause" (as that term is defined in the Participant's
Employment Agreement) or by the Participant without "Good Reason" (as that term
is defined in the Participant's Employment Agreement), this Agreement shall
terminate immediately and the Participant shall forfeit all rights to receive
any payments pursuant to this Agreement. For avoidance of doubt, (a) a
termination of the Participant's employment resulting from the expiration of the
term of her Employment Agreement shall not constitute a termination of
employment by the Company or Holding for "Cause" or a termination by the
Participant without "Good Reason" for purposes of this Agreement and (b)
notwithstanding any forfeiture of rights by the Participant to receive any
payments pursuant to this Agreement, the Participant's Option and Contingent
Share Agreement shall remain terminated.
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5. Withholding. The Participant hereby acknowledges that payments made
pursuant to this Agreement may be subject to income, employment and/or other tax
withholding and that the Company and/or an affiliate of the Company shall have
the power to withhold, or to require the Participant to remit to the Company or
one of its affiliates, an amount sufficient to satisfy all federal, state, local
and foreign withholding tax requirements in respect of any payment made pursuant
to this Agreement.
6. Financial Statements. Until such time as the True-Up Payment shall be
due and payable, the Company shall furnish to Participant its quarterly
financial statements not later than five (5) Business Days following the date
upon which they are issued.
7. Governing Law. This Agreement shall be governed by the laws of the
State of New York, without reference to principles of conflicts or choice of law
under which the law of any other jurisdiction might otherwise apply.
8. Rights Unsecured and Nontransferable. Any obligation of the Company to
make a payment hereunder shall constitute a general unsecured obligation of the
Company to the Participant. The Company shall not be required to establish or
maintain any special or separate fund, or otherwise to segregate assets to
assure that such payment shall be made, and the Participant shall have no
interest in any particular asset of the Company by reason of the Company's
obligation hereunder. To the extent the Participant acquires a right to receive
a payment from the Company hereunder, such right shall be no greater than the
right of an unsecured creditor of the Company. The rights of the Participant
under this Agreement shall be nontransferable other than by will or the laws of
descent and distribution.
9. Successors. The Company shall 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.
10. Miscellaneous.
(a) This Agreement may be executed in counterparts, which may be
delivered by facsimile transmission. Each counterpart when so executed and
delivered shall be deemed an original, and all such counterparts taken together
shall constitute one and the same instrument.
(b) Nothing in this Agreement shall interfere with or limit in any
way the right of the Company or Holding to terminate the Participant's
employment at any time, or confer upon any Participant the right to continue in
the employ of the Company or Holding.
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IN WITNESS WHEREOF, the Company and Holding have caused this Agreement to
be executed by their duly authorized officers and Participant has hereunto set
his hand as of June 28, 2005.
RAM REINSURANCE COMPANY LTD.
By:
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Xxxxxx X. Xxxx
President and Chief Executive Officer
RAM HOLDINGS LTD.
By:
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Xxxxxx X. Xxxx
President and Chief Executive Officer
RAM HOLDINGS II LTD.
By:
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Xxxxxx X. Xxxx
President and Chief Executive Officer
PARTICIPANT
By:
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Xxxx Xxxxx Xxxxxxxxx
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ANNEX A
ANNEX B
