EXHIBIT 10.13
EXECUTION COPY
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made and entered into as of the 30th day of June,
2003 by and among PXRE GROUP LTD., a Bermuda company (together with its
successors and assigns permitted under this Employment Agreement, the
"Company"), and XXXXXXX X. XXXXX (the "Executive").
W I T N E S S E T H:
WHEREAS, the Executive currently is the President and Chief Operating
Officer of the Company; and
WHEREAS, the Company desires to continue the employment of the
Executive as its President and Chief Executive Officer and to enter into an
employment agreement to set forth the terms of such continued employment (this
"Agreement"); and
WHEREAS, the Executive desires to enter into this Agreement and to
accept such continued employment, subject to the terms and provisions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt of
which is mutually acknowledged, the Company and the Executive (individually a
"Party" and together the "Parties") agree as follows:
1. EMPLOYMENT AND DUTIES
1.1. General. The Company hereby employs the Executive, and the
Executive hereby agrees to serve the Company, as President and Chief Executive
Officer of the Company, commencing as of June 30, 2003 (the "Effective Date")
upon the terms and subject to the conditions herein contained. The Executive
shall perform such other duties and services for the Company and its affiliates,
commensurate with the Executive's position, as may be designated from time to
time by the Board of Directors of the Company (the "Board"). The Executive
agrees to serve the Company faithfully and to the best of his ability under the
direction of the Board. The Executive shall report directly to the Board at such
times and in such detail as it shall reasonably require consistent with the
Executive's position as Chief Executive Officer. The Company shall not hire or
engage another officer, employee or agent in a position equal or senior to the
Executive's position and the Executive shall have senior executive authority
over all matters of the Company's business and operations.
1.2. Extent of Services. The Executive shall have all of the powers,
duties and responsibilities customary to his office and as are reasonably
necessary to the operations of the Company as may be assigned to him from time
to time by the Board consistent with his position of Chief Executive Officer.
Without limiting the foregoing, the Executive shall be responsible for the
general overall strategy, management, administration and day-to-day operations
of the Company. Except as may otherwise be approved in advance by the Board, and
except during vacation periods and reasonable periods of absence due to
sickness, personal injury or other disability, the Executive shall devote his
full working time throughout his period of employment with the Company to the
services required of him under this Agreement. Notwithstanding the foregoing,
the Executive shall be permitted to engage in charitable and civic activities,
manage his personal investments (provided that in doing so the Executive does
not place himself in a position of conflict with the interests of the Company)
and serve, with the prior approval of the Board in each instance, on advisory
boards or boards of directors of other entities, provided in all instances that
such activities do not interfere with the performance of his duties hereunder.
During the Employment Term, the Executive's services hereunder shall be
performed at the offices of the Company in Bermuda, subject to necessary and
reasonable travel requirements of his position and duties hereunder.
1.3. Term of Employment. The Executive's employment under this
Agreement shall commence as of the Effective Date and shall continue until the
earlier of the second anniversary of the Effective Date and the date of
termination of the Executive's employment pursuant to Section 4 or 5; provided
that, unless earlier terminated as provided in Sections 4 and 5 hereof, the
Executive's employment shall be automatically extended from and after the second
anniversary of the Effective Date for additional one year periods; provided
further, if the term of this Agreement is extended as herein described and the
Company shall thereafter determine to terminate this Agreement, the Company
shall give written notice to the Executive not less than 120 days prior to the
anniversary of the Effective Date which would xxxx the commencement of an
additional twelve month period, and under such circumstances the Executive's
employment hereunder shall not be deemed to have been terminated without cause
or for good reason. The date on which the Executive's employment hereunder
terminates is the "Termination Date", and the period commencing on the Effective
Date and ending on the Termination Date is hereinafter referred to as the
"Employment Term".
2. COMPENSATION
2.1. Base Salary. From the Effective Date through the end of the
Executive's employment hereunder, the Executive shall be entitled to receive a
base salary ("Base Salary") at a rate of US$450,000 per annum, payable in
arrears in equal installments in accordance with the Company's payroll
practices, with such increases as may be granted to the Executive in accordance
with Section 2.2. Once increased, such higher amount shall constitute the
Executive's annual Base Salary.
2.2. Annual Review. The Executive's Base Salary shall be reviewed by
the Board, based upon the Executive's performance, not less often than annually,
and may be increased but not decreased during the Employment Term.
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2.3. Annual Incentive Bonus Plan. Subject to the provisions of Section
4, the Executive shall be entitled to participate annually during the Employment
Term in the Company's Restated Employee Annual Incentive Bonus Plan (the "Bonus
Plan"), or such substitute plan as shall be established from time to time by the
Company (which substitute plan shall not be materially less favorable to the
Executive than the Bonus Plan) providing for the payment of annual bonuses to
key employees of the Company, subject to the terms and conditions of the Bonus
Plan or such substitute plan, as the case may be. The Executive's target bonus
in respect of the year 2003 shall be not less than 65% of his Base Salary and
shall be payable within 45 days after the end of the fiscal year, whether or not
the Executive is employed by the Company on the date of payment. The
determination of annual bonus amounts payable to the Executive in years 2004 and
subsequent shall be made in accordance with the terms of the Bonus Plan as that
Plan may be amended from time to time.
2.4. Equity Grants. Subject to the provisions of Section 4 and the next
succeeding sentences of this Section 2.4, the Executive shall be entitled to
participate annually during the Employment Term in the Company's 2002 Officer
Incentive Plan (the "Incentive Plan"), or such substitute plan as shall be
established from time to time by the Company providing for the grant of stock
options and restricted shares of Company stock to key employees of the Company,
subject to the terms and conditions of the Incentive Plan or such substitute
plan, as the case may be. The Company and the Executive agree that (i) for
purposes of determining Option grants to the Executive under the Incentive Plan,
the relevant multiple shall be 2.3, and (ii) Options shall be granted to the
Executive on July 1, 2003, the number of such Options subject to grant to be
computed by dividing (x) 1,593,900(1) by (y) the Fair Market Value (as defined
under the Incentive Plan) of the Company's Common Shares on the Effective Date.
The Options granted on July 1, 2003 as herein provided shall be in lieu of any
Option grants which otherwise might be required or contemplated under the terms
of the Incentive Plan in 2004 and 2005; provided, however, such Options shall
vest (subject to the applicability of Section 4.1.1) as set forth on Schedule A
attached hereto, and the Executive will again be eligible to receive grants of
Restricted Shares (as defined under the Incentive Plan) under the Incentive Plan
in 2004 and 2005 in accordance with normal Company practice.
2.5. Severance Plan. During the Employment Term, the Executive will not
be eligible to participate in the Company's Amended and Restated Severance Plan
for Certain Executives.
2.6. Housing; Automobile. During the Employment Term, the Executive
shall be entitled to receive such allowance for housing and the provision of an
automobile (to be leased or purchased by the Executive at the Company's expense)
as has been previously provided to the Executive, and the Company shall
otherwise provide to the Executive such additional benefits consistent with the
Executive's residence in Bermuda as has heretofore been provided to the
Executive by the Company.
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(1) This number is the numerator that would be used under the Option Plan,
representing a doubling (2x) of the amount which constitutes 77% of the
product of (x) Executive's Base Salary ($450,000) and (y) 230%.
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3. EMPLOYEE BENEFITS, VACATION AND EXPENSE REIMBURSEMENTS
3.1. In General. During the Employment Term (and thereafter to the
extent provided herein), the Executive and his dependents shall be included to
the extent eligible thereunder in all pension, 401(k), health, medical, life,
disability or other similar plans or benefits which shall be established by the
Company from time to time for, or made available to, its executives.
3.2. During the Employment Term, the Executive shall be entitled to the
number of paid vacation days (but not less than four weeks per annum) and
floating holidays that is consistent with those provided to similarly situated
executives of the Company, and in no event less than the number of such days
provided to the Executive immediately before the Effective Date, subject to and
in accordance with the vacation and holiday policies of the Company as in effect
from time to time.
3.3. During the Employment Term, the Executive is authorized to incur
reasonable business expenses in carrying out his duties and responsibilities
under this Agreement, and the Company shall reimburse him for all such
reasonable business expenses reasonably incurred in connection with carrying out
the business of the Company, subject to and in accordance with the terms and
conditions of the policies applicable to similarly situated senior executives of
the Company regarding such expenses as in effect from time to time. The Company
shall reimburse the Executive for his reasonable legal and other professional
fees and expenses incurred in the negotiation, preparation and execution of this
Agreement.
4. TERMINATION OF EMPLOYMENT
4.1. Termination Without Cause; Resignation for Good Reason.
4.1.1. General. Subject to the provisions of Sections 4.1.2 and 4.1.3,
if the Executive's employment is terminated by the Company without Cause (as
defined in Section 4.3), or if the Executive terminates his employment hereunder
for Good Reason (as defined in Section 4.4), the Company shall pay the Executive
severance pay in an amount equal to two times his Base Salary (at a rate in
effect on the date of such termination or, if a reduction in Base Salary is the
basis for termination for Good Reason, then the Base Salary in effect
immediately prior to such reduction). Such severance pay shall be payable at
such intervals as the same would have been paid had the Executive remained in
the active service of the Company during the 24-month period following
termination of employment (the "Severance Period"). In addition, the Executive
and his dependents shall continue to participate in the benefit plans described
in Section 3.1 for a period of one year from the date of termination or
resignation pursuant to this Section 4.1.1; provided, however, that the Company
may, at its option, pay to the Executive the present value of the aggregate
dollar value of such benefits, without the necessity to provide the respective
benefits to the Executive set forth in Section 3.1 hereof. The Executive shall
have no further right to receive any other compensation or benefits after such
termination or resignation of employment except as determined in accordance with
the terms of the employee benefit plans or programs of the Company, except that
he shall receive payment for earned but unused vacation. In the event of any
termination of the Executive's employment under this Section 4.1.1, all options
and other equity grants held by the Executive shall immediately vest in full and
remain exercisable in accordance with the terms of the Incentive Plan.
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4.1.2. Conditions Applicable to the Severance Period. If, during the
Severance Period, the Executive breaches his obligations under Section 6 or
Section 7 of this Agreement, the Company may terminate the Severance Period and
cease to make any further payments or provide any benefits described in Section
4.1.1.
4.1.3. Death During Severance Period. In the event of the Executive's
death during the Severance Period, all remaining severance pay due to the
Executive under Section 4.1.1 shall be payable immediately to the Executive's
designated beneficiary.
4.1.4. Date of Termination. The date of termination of employment
without Cause shall be the date specified in a written notice of termination to
the Executive. The date of resignation for Good Reason shall be the date
specified in the written notice of resignation from the Executive to the
Company; provided, however, that no such written notice shall be effective
unless the cure period specified in Section 4.4 has expired without the Company
having corrected the event or events subject to cure. If no date of resignation
is specified in the written notice from the Executive to the Company, the date
of termination shall be the first day following the expiration of such cure
period.
4.2. Termination for Cause; Resignation Without Good Reason.
4.2.1. General. If, prior to the expiration of the Employment Term, the
Executive's employment is terminated by the Company for Cause, or the Executive
resigns from his employment hereunder other than for Good Reason, the Executive
shall be entitled only to payment of his Base Salary as then in effect through
and including the date of termination or resignation together with payment for
earned but unused vacation. The Executive shall have no further right to receive
any other severance, compensation or benefits after such termination or
resignation of employment, except as determined in accordance with the terms of
the employee benefit plans or programs of the Company.
4.2.2. Date of Termination. Subject to the proviso to Section 4.3, the
date of termination for Cause shall be the date specified in a written notice of
termination to the Executive. The date of resignation without Good Reason shall
be the date specified in the written notice of resignation from the Executive to
the Company, or if no date is specified therein, 10 business days after receipt
by the Company of written notice of resignation from the Executive.
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4.3. Cause. Termination for "Cause" shall mean termination of the
Executive's employment because of: (a) any willful act or omission that
constitutes a material breach by the Executive of any of his obligations under
this Agreement; (b) the willful and continued failure or refusal of the
Executive to substantially perform the material duties required of him as an
employee of the Company; (c) any willful material violation by the Executive of
any law or regulation applicable to the business of the Company or any of its
subsidiaries or affiliates, or the Executive's conviction of or plea of guilty
or nolo contendere to a felony or a crime involving moral turpitude, or any
willful perpetration by the Executive of a common law fraud; or (d) any other
willful misconduct by the Executive that is injurious to the financial condition
or business reputation of, or is otherwise materially injurious to, the Company
or any of its subsidiaries or affiliates; provided, however, that if any such
Cause relates to the Executive's obligations under this Agreement and is
susceptible to cure, the Company shall not terminate the Executive's employment
hereunder unless the Company first gives the Executive notice of its intention
to terminate and of the grounds for such termination, and the Executive has not,
within 10 business days following receipt of the notice, cured such Cause. For
purposes of this Section 4.3, an "affiliate" of a person or other entity shall
mean a person or other entity that directly or indirectly controls, is
controlled by, or is under common control with, the person or entity specified.
4.4. Good Reason. For purposes of this Agreement, "Good Reason" shall
mean any of the following (occurring without the Executive's prior consent): (a)
a decrease in the Executive's Base Salary, or a failure by the Company to pay
material compensation due and payable to the Executive in connection with his
employment; (b) the failure by the Company to obtain an agreement from a
successor to assume and agree to perform this Agreement in accordance with the
second sentence of Section 11, (c) a Change of Control of the Company where, for
purposes of this Agreement, the term "Change of Control" has the meaning
provided to such term in Section 4.2(c) of the Company's 2002 Officer Incentive
Plan, which definition is incorporated herein by reference; (d) the assignment
to the Executive of any duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section 1 above or any
other action by the Company which results in a diminution in such position,
authority, duties or responsibilities, other than an isolated, insubstantial and
inadvertent action that is not taken in bad faith and is remedied by the Company
within 10 days after receipt of notice thereof given by the Executive; (e) the
Company's requiring the Executive to be based at any office or location other
than an office located in Bermuda, Edison, New Jersey (or its surrounding area)
or New York City or its surrounding area; (f) any action by the Company that
materially reduces the fringe benefits or perquisites provided to the Executive
or the Executive's eligibility to participate in any employee benefit plan of
the Company unless the Executive is provided with equal or more favorable fringe
benefits, perquisites or employee benefits, as the case may be; and (g) any
material breach of any other provision not covered by any other clause of this
Section 4.4; or provided, however, that if any such Good Reason is susceptible
of cure, the Executive may not resign for Good Reason unless the Executive first
gives the Company notice of his intention to resign and of the grounds for such
resignation, and the Company has not, within 10 business days following receipt
of the notice, cured such Good Reason, or in the event that such Good Reason is
not susceptible to cure within such 10 business day period, the Company has not
taken all reasonable steps within such 10 business day period to cure such Good
Reason as promptly as practicable thereafter.
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4.5. General Release by Executive. Notwithstanding any provision of
this Agreement to the contrary, the Executive acknowledges and agrees that the
obligation of the Company to pay any compensation and benefits under this
Section 4 is expressly conditioned upon the Executive's timely execution of and
agreement to be bound by a general release of any and all claims (other than
claims for compensation and benefits payable under this Section 4) arising out
of or relating to the Executive's employment and termination of employment. Such
general release shall be made in a form reasonably satisfactory to the Company
and shall run to the Company, its affiliates, and their respective officers,
directors, employees, agents, successors and assigns.
5. DEATH OR DISABILITY
In the event of termination of the Executive's employment by reason of
death or Permanent Disability (as hereinafter defined), the Executive (or his
estate, as applicable) shall be entitled to Base Salary, payment of any earned
but unpaid bonus and a pro rata (within the meaning of Section 5.6 of the
Incentive Plan) target bonus (if and to the extent provided for under the
Incentive Plan then in effect) for the year in which such termination by reason
of death or Permanent Disability occurs and benefits determined under Sections 2
and 3 through the date of termination, and all options and other equity grants
shall vest and remain exercisable in accordance with the terms of the Incentive
Plan. Other benefits shall be determined in accordance with the benefit plans
maintained by the Company, and the Company shall have no further obligation
hereunder. For purposes of this Agreement, "Permanent Disability" means a
physical or mental disability or infirmity of the Executive that prevents the
normal performance of substantially all his duties as an employee of the
Company, which disability or infirmity shall exist, or in the option of an
independent physician is reasonably likely to exist, for any continuous period
of 180 days.
6. CONFIDENTIALITY
6.1. Confidentiality. The Executive agrees that during the Employment
Term and thereafter he will not, except in the performance of his obligations to
the Company hereunder or as may otherwise be approved in advance by the Board,
directly or indirectly, disclose or use (except for the direct benefit of the
Company) any confidential information that he may learn or has leaned by reason
of his association with the Company, any client or any of their respective
subsidiaries and affiliates. The term "confidential information" includes all
data, analyses, reports, interpretations, forecasts, documents and information
concerning or otherwise reflecting information and concerning the Company and
its affairs, including, without limitation, with respect to clients, products,
policies, procedures, methodologies, trade secrets and other intellectual
property, systems, personnel, confidential reports, technical information,
financial information, business transactions, business plans, prospects or
opportunities, but shall exclude any portion of such information that (a) was
acquired by the Executive prior to his employment by, or other association with,
(1) the Company and (2) Select Reinsurance Company (as a retrocessionnaire of
the Company), (b) is or becomes generally available to the public or is
generally known in the industry or industries in which the Company operates, in
each case other than as a result of disclosure by the Executive in violation of
this Section 6.1 or (c) the Executive is required to disclose under any
applicable laws, regulations or directives of any government agency, tribunal or
authority having jurisdiction in the matter or under subpoena or other process
of law.
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6.2. Exclusive Property. The Executive confirms that all confidential
information with respect to the Company is and shall remain the exclusive
property of the Company. All business records, papers and documents kept or made
by the Executive relating to the business of the Company shall be and remain the
property of the Company, except for such papers customarily deemed to be the
personal copies of the Executive.
6.3. Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any of the
covenants contained in this Section 6 may result in material and irreparable
injury to the Company and its affiliates and subsidiaries for which there is no
adequate remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat thereof,
the Company shall be entitled to seek a temporary restraining order or a
preliminary or permanent injunction restraining the Executive from engaging in
activities prohibited by this Section 6 or such other relief as may be required
specifically to enforce any of the covenants in this Section 6. If for any
reason it is held that the restrictions under this Section 6 are not reasonable
or that consideration therefor is inadequate, such restrictions shall be
interpreted or modified to include as much of the duration and scope identified
in this Section 6 as will render such restrictions valid and enforceable.
7. PROHIBITED ACTIVITY
7.1. Non-Competition Covenant. The Executive covenants and agrees that
during the Employment Term and, upon action of the Board directing the same,
during the period ending on the first anniversary of the Termination Date, he
shall not at any time, without the prior written consent of the Company,
directly or indirectly, whether for his own account or as a shareholder (other
than as permitted by Section 7.3 below), partner, joint venturer, employee,
consultant, lender, advisor, and/or agent, of any person, firm, corporation, or
other entity:
7.1.1. engage in activities or businesses that are substantially in
competition with the Company or any of its affiliates (in each case for the
purposes of this Section 7, the term "Company" shall be deemed to include any
successor entity to the Company) ("Competitive Activities"), including (A) the
provision of reinsurance products and services, including without limitation
property catastrophe reinsurance and retrocessional coverage, except that if any
activities or businesses were not engaged in by the Company during the period of
time that the Executive was employed by the Company and are not engaged in by
the Company at the time the Executive's employment by the Company is terminated
(collectively "Permitted Activities"), the Executive may engage in any Permitted
Activities notwithstanding anything contained in this Agreement, (B) soliciting
any customer or prospective customer of the Company or any of its affiliates to
purchase any products or services of the type provided by the Company or any of
such affiliates, as applicable, from anyone other than the Company or any of
such affiliates, as applicable, and (C) assisting any person or entity in any
way to do, or attempt to do, anything prohibited by clause (A) or (B) above;
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7.1.2. perform any action, activity or course of conduct that is
substantially detrimental to the business of the Company or any of its
affiliates (other than engaging in Permitted Activities) or business reputation
of the Company or any of its affiliates; or
7.1.3. establish any new business that engages in Competitive
Activities;
provided, however, it is understood and agreed that, in the event the Board
shall elect to require enforcement of the foregoing covenant during the one year
period following termination of the Executive's employment for cause or without
good reason, then the Board and the Executive shall execute a mutual release, on
terms satisfactory to the Company, and the Company shall pay consideration (in
an amount not to exceed one year's Base Salary) to the Executive.
7.2. Non-Solicitation Covenant. The Executive also covenants and agrees
that during the Employment Term and during the period ending on the first
anniversary of the Termination Date, he shall not at any time, without the prior
written consent of the Company, directly or indirectly, whether for his own
account or as a shareholder (other than as permitted by Section 7.3 below),
partner, joint venturer, employee, consultant, lender, advisor, and/or agent, of
any person, firm, corporation, or other entity, solicit, recruit or hire any
persons who are then (or who were during the immediately preceding nine months)
employees of the Company or any of its affiliates, or solicit or encourage any
employee of the Company or any of its affiliates to leave the employment of the
Company or any of such affiliates, as applicable.
7.3. Exception. Notwithstanding anything to the contrary contained in
this Section 7, the Company hereby agrees that the foregoing covenant shall not
be deemed breached by the Executive as a result of the ownership by such
Executive of less than an aggregate of 3% of any class of securities of an
entity engaged, directly or indirectly, in Competitive Activities; provided that
such securities are listed on a national securities exchange or are quoted on
the NASDAQ National Market System.
7.4. Reasonableness of Limitations. The Executive declares that the
foregoing limitations are reasonable and properly required for the adequate
protection of the business and the goodwill of the Company. In the event any
such time limitation is deemed to be unreasonable by any court of competent
jurisdiction, the Executive agrees to the reduction of such time limitation to
such period which such court shall deem reasonable.
7.5. Injunctive Relief. Without intending to limit the remedies
available to the Company, the Executive acknowledges that a breach of any of the
covenants contained in this Section 7 may result in material and irreparable
injury to the Company and its affiliates and subsidiaries for which there is no
adequate remedy at law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or threat thereof,
the Company shall be entitled to seek a temporary restraining order or a
preliminary or permanent injunction restraining the Executive from engaging in
activities prohibited by this Section 7 or such other relief as may be required
specifically to enforce any of the covenants in this Section 7. If for any
reason it is held that the restrictions under this Section 7 are not reasonable
or that consideration therefor is inadequate, such restrictions shall be
interpreted or modified to include as much of the duration and scope identified
in this Section 7 as will render such restrictions valid and enforceable.
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8. MITIGATION
Executive shall not be required to mitigate the amount of any payment
provided for pursuant to this Agreement by seeking other employment, and shall
not be required to mitigate the amount of any such payment if he does obtain
other employment.
9. REPRESENTATION
The Company represents and warrants that it is fully authorized and
empowered to enter into this Agreement and that the performance of its
obligations under this Agreement will not violate any agreement between it and
any other person, firm or organization. The Executive represents and warrants
that no agreement exists between him and any other person, firm or organization
that would be violated by the performance of his obligations under this
Agreement.
10. GROSS-UP PAYMENT
(a) In the event it is determined that any payment or distribution of
any type to or for the benefit of the Executive, pursuant to this Agreement or
otherwise, by the Company, any person or entity who or which acquires ownership
or effective control of the Company, or ownership of a substantial portion of
the assets of the Company within the meaning of section 260G of the Code and the
regulations thereunder, or any affiliate of such person or entity (the "Total
Payments") would be subject to the excise tax imposed by section 4999 of the
Code or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are collectively referred to
as the "Excise Tax"), then the Executive shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such that, after payment
by the Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Total Payments.
(b) All mathematical determinations and determinations as to whether
any of the Total Payments are "parachute payments" (within the meaning of
Section 280G of the Code), in each case which determinations are required to be
made under this paragraph, including whether a Gross-Up Payment is required, the
amount of such Gross-Up Payment, and amounts relevant to the last sentence of
this paragraph, shall be made by an independent accounting firm retained by the
Company as selected by the Executive from among the largest five accounting
firms in the United States (the "Accounting Firm"). The Accounting Firm shall
provide to the Company and to the Executive its determination (the
"Determination"), together with detailed supporting calculations regarding the
amount of any Gross-Up Payment and any other relevant matter, within ten days
after termination of the Executive's employment, if applicable, or at such
earlier time following termination of employment as is requested by the
Executive (if the Executive reasonably believes that any of the Total Payments
may be subject to the Excise Tax). If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with a
written statement that such Accounting Firm has concluded that no Excise Tax is
payable (including the basis for such conclusion) and that the Executive has
substantial authority not to report any Excise Tax on the Executive's federal
income tax return. If a Gross-Up Payment is determined to be payable, it shall
be paid to the Executive within ten days after the Determination is delivered to
the Company or the Executive. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive, absent manifest error. All fees and
expenses of the Accounting Firm shall be paid by the Company.
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(c) As a result of uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments not made by the Company and the
Executive should have been made ("Underpayment"), or that Gross-Up Payments will
have been made by the Company and the Executive that should not have been made
("Overpayments"). In either such event, the Accounting Firm shall determine the
amount of the Underpayment or Overpayment that has occurred. In the case of an
Underpayment, the Company promptly shall pay, or cause to be paid, the amount of
such Underpayment to or for the benefit of the Executive. In the case of an
Overpayment, the Executive shall, at the direction and expense of the Company,
take such steps as are reasonably necessary (including the filing of returns and
claims for refund), follow reasonable instructions from and procedures
established by, the Company, and otherwise reasonably cooperate with the Company
to correct such Overpayment; provided, however, that (1) Executive shall not in
any event be obligated to return to the Company an amount greater than the net
after-tax portion of the Overpayment that he has retained or recovered as a
refund from the applicable taxing authorities and (2) this provision shall be
interpreted in a manner consistent with the intent of Section 10(a) above, which
is to make the Executive whole, on an after-tax basis, from the application of
the Excise Tax, it being understood that the correction of an Overpayment may
result in the Executive repaying to the Company an amount that is less than the
Overpayment. Any payment to be made to correct an Underpayment or Overpayment,
as the case may be, (the "Correcting Payment") shall be accompanied by an
interest payment on the Correcting Payment at an annual rate of 8% for the
period from the date of the Gross-Up Payment through the date of payment of the
Correcting Payment.
11. SEVERABILITY
Each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable law, such
provision will be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
11
12. ASSIGNABILITY
The Company's rights and obligations under this Agreement shall not be
assignable by the Company except as incident to a reorganization, merger or
consolidation, or transfer of all or substantially all the Company's business
and properties (or portion thereof in which the Executive is employed). The
Company shall require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all the business 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. Neither this Agreement nor any rights
hereunder shall be assignable or otherwise subject to hypothecation by the
Executive.
13. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement between
the Parties concerning the subject matter hereof and, subject to the occurrence
of the Effective Date, supersedes all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between the
Parties with respect thereto.
14. WITHHOLDING
The payment of any amount pursuant to this Agreement shall be
subject to applicable withholding and payroll taxes, and such other deductions
as may be required under the Company's employee benefit plans, if any.
15. GOVERNING LAW/JURISDICTION
This Agreement shall be governed by, and construed in accordance with,
the laws of Bermuda without regard to any conflict of law rules that might apply
the laws of any other jurisdiction.
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16. AMENDMENT OR WAIVER
No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by the Executive and an officer of the Company
specifically authorized to execute such amendment by the Board. No waiver by any
Party of any breach by another Party of any condition or provision contained in
this Agreement to be performed by such other Party shall be deemed a waiver of a
similar or dissimilar condition or provision at the same or any prior or
subsequent time. Any waiver must be in writing and signed by the Executive and
an officer of the Company specifically authorized to execute such waiver by the
Board.
17. SURVIVORSHIP
The respective rights and obligations of the Parties hereunder shall
survive any termination of the Executive's employment to the extent necessary to
the intended preservation of such rights and obligations.
18. BENEFICIARIES/REFERENCES
The Executive shall be entitled, to the extent permitted under any
applicable law and under the terms of any applicable plan or program, to select
and change a beneficiary or beneficiaries to receive any compensation or benefit
payable hereunder following the Executive's death by giving the Company written
notice thereof. In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement to the Executive
shall be deemed, where appropriate, to refer to his beneficiary, estate or other
legal representative.
19. NOTICES
All notices or communications hereunder shall be in writing, addressed
as follows:
If to the Company:
PXRE Group Ltd.
00 Xxxxxxxx
Xxxxxxxx XX 00
Xxxxxxx
Fax: 000-000-0000
Attn: Chairman
If to the Executive:
Xxxxxxx X. Xxxxx
c/o PXRE Group Ltd.
26 Xxxxxxxx
Xxxxxxxx HM 12
Bermuda
Fax: 000-000-0000
With a copy to:
Xxxxxxxx Xxxxx & Deutsch LLP
000 Xxxxx Xxxxxx, 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXX
Attention: Xxxxx X. Xxxxx
Fax: (000) 000-0000
13
All such notices shall be conclusively deemed to be received and shall
be effective, (a) if sent by hand delivery or courier service, upon receipt, (b)
if sent by telecopy or facsimile transmission, upon confirmation of receipt by
the sender of such transmission or (c) if sent by registered or certified mail,
on the fifth day after the day on which such notice is mailed.
20. HEADINGS
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
21. COUNTERPARTS
This Agreement may be executed in two or more counterparts.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
PXRE GROUP LTD.
By:
-----------------------------------
Name:
Title:
THE EXECUTIVE
----------------------------------------
Xxxxxxx X. Xxxxx
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SCHEDULE A
Except as provided in Section 4.1, the Options granted on July 1, 2003 will vest
as follows:
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02/01/2004 0%
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02/01/2005 10%
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02/01/2006 20%
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02/01/2007 20%
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02/01/2008 20%
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02/01/2009 20%
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02/01/2010 10%
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