[LETTERHEAD OF PXRE REINSURANCE COMPANY]
EMPLOYMENT AGREEMENT (this "Agreement") dated as of June 8, 1998
between PXRE Reinsurance Company, a Connecticut insurance company (the
"Company"), and Michael J. Toman, an individual residing at 909 Foxboro Drive,
Norwalk, CT 06851 (the "Executive").
WHEREAS, the Company desires to employ the Executive and to enter
into this Agreement to set forth the terms of such employment; and
WHEREAS, the Executive desires to accept such employment and enter
into this Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto 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 Executive Vice President of the
Company, 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 Chief Executive Officer (the "CEO") or
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
CEO and the Board.
1.2. Extent of Services. 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. The Executive
shall use his best efforts, judgment and energy to improve and advance the
business, reputation and interests of the Company in a manner consistent with
the duties of his position.
1.3. Term of Employment. The Executive's employment under this
Agreement shall commence as of June 23, 1998, or earlier should the Executive be
released by his current employer, (the "Effective Date") and shall terminate on
the earliest to occur of the third anniversary of the Effective Date and the
date of termination of the Executive's employment pursuant to Section 4 or 5.
The period commencing on the Effective Date and ending on the third anniversary
of the Effective Date is hereinafter referred to as the "Employment Term".
[LOGO PXRE]
1.4. Reimbursement of Business Expenses. The Company shall reimburse
the Executive for reasonable travel and other business expenses incurred by him
in the fulfillment of his duties hereunder upon presentation by the Executive of
an itemized account of such expenditures, in accordance with Company practices
in effect from time to time.
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 $260,000 per annum, payable in arrears
in equal installments in accordance with the Company's payroll practices, with
such increases as may be provided in accordance with the terms hereof. 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 CEO, based upon the Executive's performance, not less often than annually,
and may be increased but not decreased.
2.3. Annual Incentive Bonus Plan. Subject to the provisions of
Section 4.2, the Executive shall be entitled to participate annually during the
Employment Term in the Company's Annual Incentive Bonus Plan (the "Bonus Plan"),
or such substitute plan as shall be established from time to time by Company,
which provides 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 amount of the Executive's annual bonus
under the Bonus Plan shall range from zero to 82.5% of the Executive's annual
earned Base Salary, based upon the Company's return on equity percentages in any
of its relevant fiscal years, as determined by the Company in its discretion.
The Executive's bonus award under the Bonus Plan (if any) shall be comprised of
a combination of 70% cash and 30% restricted stock, the restricted stock portion
of which shall be subject to vesting following the expiration of three years.
2.4. Equity Grants. Subject to the provisions of Section 4.2, the
Executive shall be entitled to participate annually during the Employment Term
in the Company's 1992 Officer Incentive Plan (the "Incentive Plan"), or such
substitute plan as shall be established from time to time by Company, which
provides 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. In addition, the
Executive shall receive, as of the Effective Date. an initial award of 13,500
restricted shares of the Company pursuant to the Incentive Plan, subject to such
terms and conditions as are set forth in the Incentive Plan, a copy of which is
attached hereto as Exhibit A. Vesting of this grant will be 100% after three
years, with no partial vesting prior to the end of the three-year period.
-2-
[LOGO PXRE]
3. EMPLOYEE BENEFITS
3.1. In General. The Executive and his dependents shall, during his
employment under this Agreement, 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. Automobile Allowance. If the Executive is a Senior Vice
President or higher, in addition to all other compensation and benefits provided
hereunder, the Executive shall be entitled to receive a monthly automobile
allowance in the amount of $600 per month, payable at normal payroll intervals
of the Company.
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, prior to the expiration of the Employment Term, 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 the 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)
for the remainder of the Employment Term (such period being referred to
hereinafter as the "Severance Period"), at such intervals as the same would have
been paid had the Executive remained in the active service of the Company. In
addition, the Executive and his dependents shall continue to participate in
the benefit plans described in Section 3.1 for a period equal to the lesser of
(a) the Severance Period and (b) 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. Furthermore, the
initial award of 13,500 shares will vest after a three year period as set forth
in Section 2.4. 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. Salary continuation payments made and benefits provided to the
Executive pursuant to this Section 4.1.1 shall be reduced by compensation earned
and benefits received by the Executive from a subsequent employer during the
Severance Period.
-3-
[LOGO PXRE]
4.1.2. Conditions Applicable to the Severance Period. If,
during the Severance Period, the Executive breaches his obligations under
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, payments of Base Salary under
this Section 4 shall cease as of the month immediately following such death.
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.
4.3. Cause. Termination for "Cause" shall mean termination of the
Executive's employment because of:
(a) any wilful act or omission that constitutes a material breach by
the Executive of any of his obligations under this Agreement;
-4-
[LOGO PXRE]
(b) the wilful 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 wilful 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
nolo contendere to a felony or a crime involving moral turpitude, or any
wilful perpetration by the Executive of a common law fraud; or
(d) any other wilful 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 either of the following (occurring without the Executive's prior
consent):
(a) a decrease in the Executive's base rate of compensation, or a
failure by the Company to pay material compensation due and payable to the
Executive in connection with his employment; or
(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 8.3;
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.
-5-
[LOGO PXRE]
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 and benefits determined
under Sections 2 and 3 through the date of termination. 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. NO MITIGATION OF DAMAGES
The Executive shall not be required to mitigate the amount of any
payment provided for in Section 4.1 by seeking other employment.
7. NONSOLICITATION; CONFIDENTIALITY; NONCOMPETITION
7.1. Nonsolicitation. For so long as the Executive is employed by
the Company and continuing for two years thereafter, the Executive shall not,
without the prior written consent of the Company, directly or indirectly, as a
sole proprietor, member of a partnership, stockholder or investor, officer or
director of a corporation, or as an employee, associate, consultant, independent
contractor or agent of any person, partnership, corporation or other business
organization or entity other than the Company: (a) solicit or endeavor to entice
away from the Company or any of its subsidiaries any person or entity who is,
or, during the then most recent 12-month period, was, employed by, or had served
as an agent or key consultant of, the Company or any of its subsidiaries, or (b)
solicit or endeavor to entice away from the Company or any of its subsidiaries
any person or entity who is, or was within the then most recent 12-month period,
a customer or client (or reasonably anticipated (to the general knowledge of the
Executive or the public) to become a customer or client) of the Company or any
of its subsidiaries.
7.2. 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
-6-
[LOGO PXRE]
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, 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 7.2 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.
7.3. Noncompete. Except as may otherwise be approved in advance by
the Board, (i) for so long as the Executive is (x) employed by the Company, or
(y) receiving salary continuation payments pursuant to Section 4.1.1, and (ii)
in the case of a termination by the Company of the Executive's employment
hereunder for Cause or a resignation by the Executive other than for Good
Reason, continuing for one year after such termination or resignation, the
Executive shall not, directly or indirectly, as a sole proprietor, member of a
partnership, stockholder or investor (other than a stockholder or investor
owning not more than a .05% interest), officer or director of a corporation, or
as an employee, associate, consultant, independent contractor or agent of any
person, partnership, corporation or other business organization or entity other
than the Company or any of its subsidiaries, render any service to or in any way
be affiliated with a competitor (or any person or entity that is reasonably
anticipated (to the general knowledge of the Executive or the public) to become
a competitor) of the Company or any of its subsidiaries or affiliates or
otherwise involved in the businesses in which the Company or any of its
subsidiaries or affiliates is engaged. Notwithstanding anything contained in
this Section 7.3 to the contrary, (a) the period of applicability of this
Section 7.3 shall be extended by an additional day for each day on which the
Executive is in breach hereof and (b) the Board may in its discretion waive the
application of this Section 7.3, including, without limitation, in the event of
the Executive's resignation without Good Reason resulting from a serious family
illness or other serious misfortune.
7.4. 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.
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
-7-
[LOGO PXRE]
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.
8. MISCELLANEOUS
8.1. Notices. All notices or communications hereunder shall be in
writing, addressed as follows:
To the Company:
PXRE Reinsurance Company
399 Thornall Street
Edison, New Jersey 08837
Attention: Chief Executive Officer
With a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: F. Sedgwick Browne, Esq.
To the Executive:
Michael J. Toman
909 Foxboro Drive
Norwalk, CT 06851
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.
8.2. 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.
-8-
[LOGO PXRE]
8.3. Assignment. 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.
8.4. Entire Agreement. Except as expressly set forth herein, this
Agreement represents the entire agreement of the parties and shall supersede any
and all previous contracts, arrangements or understandings between the Company
and the Executive. This Agreement may be amended at any time by mutual written
agreement of the parties hereto.
8.5. 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.
8.6. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed and to be performed entirely within that State.
8.7. Waiver. No waiver by either party of any breach by the other
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 or an authorized officer of the
Company, as the case may be.
8.8. Headings. The headings of the sections contained in this
Agreement are for convenience of reference only and shall not be deemed to
control or affect the meaning or construction of any provision of this
Agreement.
-9-
[LOGO PXRE]
8.4. Entire Agreement. Except as expressly set forth herein, this
Agreement represents the entire agreement of the parties and shall supersede any
and all previous contracts, arrangements or understandings between the Company
and the Executive. This Agreement may be amended at any time by mutual written
agreement of the parties hereto.
8.5. 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.
8.6. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to
contracts executed and to be performed entirely within that State.
8.7. Waiver. No waiver by either party of any breach by the other
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 or an authorized officer of the
Company, as the case may be.
8.8. Headings. The headings of the sections contained in this
Agreement are for convenience of reference only and shall not be deemed to
control or affect the meaning or construction of any provision of this
Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Executive has hereunto set his hand, as of the day and year
first above written.
PXRE REINSURANCE COMPANY
By Gerald L. Radke
----------------------------
Gerald L. Radke
Chairman, President and
Chief Executive Officer
Date: 6/8/98
----------------------------
EXECUTIVE
By Michael J. Toman
----------------------------
Michael J. Toman
Date: 6/8/98
----------------------------
-10-