PXRE GROUP LTD.
DIRECTOR EQUITY AND DEFERRED COMPENSATION PLAN
SECTION 1. PURPOSE
The purpose of the Plan is to attract and retain highly qualified
persons to serve as non-employee Directors of PXRE Group Ltd. by providing the
Directors with greater flexibility in the form and timing of receipt of
compensation for services on the Board of Directors, and an opportunity to
obtain a greater proprietary interest in the Company's success and progress
through receipt of fees in the form of Shares and Options on Shares, thereby
aligning the Director's interests with the interests of the stockholders of the
Company.(1)
SECTION 2. DEFINITIONS
Whenever used in this plan, the following terms shall have the
definitions set forth in this section:
2.1 -- "ACCOUNT" shall have the meaning provided in Section 8.3.
2.2 -- "ANNUAL RETAINER" shall mean the annual retainer fee payable to a
Director for serving as a Director of PXRE Group Ltd.
2.3 -- "BOARD OF DIRECTORS" or "BOARD" shall mean the Board of Directors of
PXRE Group Ltd.
2.4 -- "CODE" shall mean the Internal Revenue Code of 1986, as amended.
2.5 -- "COMPANY" shall mean PXRE Group Ltd.
2.6 -- "DIRECTOR" shall mean a member of the Board of Directors who is not a
full-time
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(1) The Plan was originally a plan of PXRE Corporation, a Delaware
corporation ("PXRE Corp."), which provided, among other things, for
the grant of PXRE Corp. common stock. Pursuant to an Agreement and
Plan of Merger dated as of July 7, 1999 among the Company, PXRE Corp.
and PXRE Merger Corp., PXRE Corp. reorganized so that, among other
things, the Company, a Bermuda corporation, became the parent holding
company for PXRE Corp. As a result of the reorganization, each
outstanding share of PXRE Corp. under the Plan was automatically
converted into one common share of the Company. Additionally, pursuant
to the reorganization, the Company assumed all of the obligations of
PXRE Corp. under the Plan.
employee of the Company or a subsidiary.
2.7 -- "DIRECTOR FEES" shall mean all cash compensation payable to a
Director, including the Annual Retainer, committee membership fees,
fees associated with a chair and fees for attendance at meetings of
the Board and its committees, but not including reimbursements for
expenses.
2.8 -- "DISABILITY" shall mean the inability, in the judgment of the Board,
of a Director to perform his or her duties due to mental or physical
impairment.
2.9 -- "EFFECTIVE DATE" shall mean the date provided in Section 13 of the
Plan.
2.10 -- "FAIR MARKET VALUE" shall mean the average of the high and low per
share prices quoted for Shares on the New York Stock Exchange over the
twenty (20) trading days prior to the December 31 immediately
preceding the calendar year for which the Annual Retainer is payable.
If the Shares are not publicly traded, Fair Market Value shall be
determined by the Board in a manner consistent with the requirements
of Section 422 of the Code.
2.11 -- "GRANT DATE" shall have the meaning provided in Section 7.2.
2.12 -- "OPTION" shall mean an option to purchase Shares granted under Section
7 of the Plan.
2.13 -- "OPTION VALUE" shall mean the value of an Option determined as of the
December 31 immediately preceding the calendar year for which the
Annual Retainer is payable in accordance with the Black-Scholes option
valuation model and assumptions consistent with those used by the
Company in preparing footnotes to the Company's financial statements
under Statement of Financial Accounting Standards No. 123, with a 20%
discount to compensate for the additional risk.
2.14 -- "RULE 16b-3" shall mean Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended.
2.15 -- "SHARES OF STOCK" or "SHARES" shall mean Common Shares, par value
$1.00 per share, of the Company.
SECTION 3. AMOUNT OF SHARES
The number of Shares which may be issued and sold under the Plan shall
not exceed 250,000 Shares, subject to adjustment as provided in Section 7.3
below. The Shares to be issued may be either authorized and unissued Shares,
treasury Shares, issued Shares acquired by the Company or its subsidiaries or
any combination thereof. In the event that Options granted under the Plan shall
terminate or expire without being exercised in whole or in part, new Options may
be granted covering the Shares not purchased under such lapsed Options.
SECTION 4. ELIGIBILITY AND PARTICIPATION
Each Director in office on the Effective Date of the Plan shall be
eligible to participate in the Plan, and each Director elected or reelected
after the Effective Date shall be eligible to participate in the Plan upon
election or reelection to the Board of Directors.
SECTION 5. ELECTIONS OF FORM AND TIME OF PAYMENT
5.1 ELECTION ALTERNATIVES. In lieu of receiving all of his or her Annual
Retainer and other Director Fees in cash at such time as such Fees are payable
under the policies and practices of the Company, a Director may elect to:
(a) convert all or a portion (in increments of 25%) of his or her Annual
Retainer into Shares as provided in Section 6;
(b) convert all or a portion (in increments of 25%) of his or her Annual
Retainer into Options as provided in Section 7; and
(c) defer the payment of all or a portion of his or her Director Fees as
provided in Section 8.
5.2 ELECTION AGREEMENT. A Director who desires to have any portion of
his or her Annual Retainer converted into Shares or Options or to have any
portion of his or her Director Fees deferred must complete and deliver an
Election Agreement (on a form approved by the Board) to the Treasurer of the
Company or other person designated by the Board no later than the December 31
immediately preceding the calendar year for which the Annual Retainer and other
Director Fees would be payable; provided, however, that
(a) any Director in office on the Effective Date of the Plan may make an
election with respect to his or her Director Fees not yet earned as of
the Effective Date by filing an Election Agreement within thirty (30)
days after such Effective Date; and
(b) any Director elected to the Board after the Effective Date who was
not a Director on the preceding December 31 may make an election with
respect to his or her Director Fees not yet earned for the calendar year
in which he or she is first elected to the Board by delivering an
Election Agreement within thirty (30) days after such election.
An Election Agreement, once timely delivered, shall be effective for the
succeeding calendar year(s) unless revoked or modified for a future year by the
Director by delivering a new Election Agreement before the December 31
immediately preceding the calendar year for which the new election is to apply.
A Participant's election for a given year is irrevocable.
If a Director does not provide an Election Agreement, his or her
Director Fees shall be paid pursuant to the Company's policies and practices for
the payment of such Fees.
SECTION 6. SHARES
6.1 NUMBER OF SHARES. A Director who elects to have all or a portion of
his or her Annual Retainer paid in the form of Shares shall receive the whole
number of Shares that is equal to the amount of his or her Annual Retainer
designated in his or her Election Agreement divided by the per Share Fair Market
Value of the Shares of the Company, as determined pursuant to Section 2.10. No
fractional Shares will be issued, and any remainder of the designated Annual
Retainer amount shall be paid to the Director promptly in cash.
6.2 ISSUANCE OF SHARES. The Company shall issue certificates for such
Shares promptly following the date on which the Annual Retainer is payable. Such
Shares shall be subject to Section 9.4 of the Plan.
SECTION 7. OPTIONS
7.1 NUMBER OF OPTIONED SHARES. A Director who elects to have all or a
portion of his or her Annual Retainer paid in the form of an Option shall
receive an Option to purchase the number of whole Shares determined by dividing
the amount of the Annual Retainer designated in his or her Election Agreement by
the per Share Option Value, as determined pursuant to Section 2.13. No Option
will be issued on fractional Shares, and any remaining amount of the designated
Annual Retainer shall be paid to the Director promptly in cash.
7.2 OPTION AGREEMENTS. The Company shall issue to the Director an Option
Agreement as of the date on which the Annual Retainer is payable (the "Grant
Date") to evidence the Option granted to the Director. Each Option Agreement
shall comply with the following terms and conditions and be in a form approved
by the Board:
(a) Exercise Price. The Option per Share exercise price shall be the per
Share Fair Market Value, as determined pursuant to Section 2.10.
(b) Vesting. The Option shall be 100% exercisable when issued.
(c) Expiration. No portion of an Option shall be exercisable after the
expiration of ten years following the Grant Date, provided that, upon a
Director's ceasing to serve as a Director within such ten year period,
the Option will expire unless it is exercised within three years
following such cessation. If a Director should die within three years
following the date he or she ceased to be a Director, the decedent's
estate or any person who acquires the right to exercise the Option by
reason of the decedent's death may exercise the Option at any time (but
in no event after 10 years after the Grant Date) within the period
ending on the later of (i) the last day of the period within which the
decedent
could have exercised the Option but for his or her death and (ii) the
first anniversary of such person's death.
(d) Exercise. A Director may exercise all or part of an Option by
delivering a written notice substantially in the form approved by the
Board to the Treasurer of the Company identifying the number of whole
Shares to be purchased and providing payment in full of the exercise
price in United States dollars by certified check or bank draft.
Options and Shares acquired upon the exercise of an Option shall be
subject to Section 9.4.
7.3 ANTI-DILUTION MEASURES. In the event the outstanding Shares are
increased or changed into or exchanged for a different number or kind of shares
of capital stock or other securities of the Company by reason of any stock
dividend or split, recapitalization, reclassification, merger, consolidation,
combination of Shares or other corporate change, the Board of Directors shall
make such substitution or adjustment, if any, as it deems to be equitable, in
the number or kind of shares or other securities as to which Options may be
granted and in the number of Shares or the exercise price under unexercised
Options granted prior to such change.
In the case of any such substitution or adjustment, the aggregate Option
price in each Option Agreement of all the Shares covered thereby prior to such
substitution or adjustment shall be the Option price for all the shares or other
securities substituted for such Shares or to which such Shares are adjusted, and
the Option price per share after such substitution or adjustment shall be
determined accordingly; provided, however, that no such determination shall
obligate the Company to issue or sell fractional shares or other securities.
SECTION 8. DEFERRALS
8.1 DEFERRAL CHOICES. A Director who elects to have all or a portion of
his or her Director Fees deferred shall make the following irrevocable elections
on an Election Agreement:
(a) The amount or percentage of Director Fees to be deferred;
(b) The length of the deferral period pursuant to Section 8.2;
(c) The investment return choice(s) pursuant to Section 8.3; and
(d) The form of payment of deferred amounts following the end of the
deferral period pursuant to Section 8.4.
In addition, the Director shall designate one or more primary and
contingent beneficiaries pursuant to Section 8.5.
8.2 DEFERRAL PERIOD. The deferral period elected by each Director with
respect to deferrals of Director Fees for any given year shall be at least equal
to one (1) year, and no more than fifteen (15) years, following the end of the
calendar year in which the Director Fees are earned. However, notwithstanding
the deferral period elected by a Director, payment of a Director's Account shall
be made to the Director, or the Director's beneficiary designated under Section
8.5, as the case may be, in a single lump sum within sixty (60) days in the
event the Director's service as a Director of the Company ceases by reason of
death or Disability at any time prior to full payment of the balance of the
Director's Account.
8.3 ACCOUNTS AND INVESTMENT RETURN. The Director Fees which a Director
elects to defer shall be credited to an unfunded deferred compensation account
maintained by the Company or its agent for bookkeeping purposes (the "Account")
on the date the Director Fees otherwise would have been paid to the Director.
A Director's Account balance will be credited with the investment return
(and debited with any losses) experienced on the investment choice or choices
specified by the Director from time to time from among the fund or funds of the
Company's 401(k) Plan. As of the Effective Date, the funds of the Company's
401(k) Plan are the Baron Asset Fund, GAM International Fund, Oakmark Growth
Fund and Vanguard Fixed Income Securities Fund.
Unless the Board otherwise determines, a Director may change the
investment return choice(s) for his or her Account as often as the Director
wishes by notifying the Treasurer of the Company or agent of the Company
appointed to manage the Accounts under the Plan.
The obligation of the Company under the Plan to pay the Account balance
to a Director or his or her beneficiary constitutes an unsecured promise of the
Company to make payments from its general assets, and a Director shall have the
status of a general unsecured creditor of the Company with respect to his or her
Account.
8.4 PAYMENT OF ACCOUNT. The balance of a Director's Account shall be
paid following the end of the deferral period as elected under Section 8.2 in
either (a) a single lump sum cash payment as soon as practicable thereafter, or
(b) annual installments over a period not to exceed fifteen (15) years, in
either case as elected by the Director on his or her Election Agreement. The
annual installment payments, if elected, will be based upon a Director's then
existing Account balance divided by the number of installment payments remaining
to be made.
8.5 DEATH OF DIRECTOR. A Director shall designate on a form approved by
the Board a primary and contingent beneficiary or beneficiaries who, upon the
Director's death, will receive payment of the Director's Account. All
designations shall be signed by the Director, and shall be effective as of the
date received by the Treasurer of the Company or other designated agent.
Directors may change their designations of beneficiary by submitting a
new designation
form. The payment of amounts deferred under the Plan shall be in accordance with
the last unrevoked designation of beneficiary that has been signed by the
Director and delivered by the Director to the Treasurer of the Company or other
designated agent prior to the Director's death.
In the event that all the beneficiaries designated by a Director
predecease the Director, the Director's Account balance shall be paid to the
Director's estate.
In the event a Director does not designate a beneficiary, or for any
reason such designation is ineffective, in whole or in part, the amounts that
otherwise would have been paid to the Director or the Director's beneficiaries
shall be paid to the Director's estate.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 PERSONAL REPRESENTATIVES. In the event any Account or Share is
payable to or an Option is exercised by the executors, administrators, heirs,
legatees or distributees of the estate of a deceased Director or by the guardian
or legal representative of a disabled former Director, the Company shall be
under no obligation to issue, make payment or deliver Shares unless and until
the Company is satisfied that the person or persons requesting payment or
exercising the Option are the duly appointed legal representatives of the
deceased Director's estate or the proper legatees or distributees thereof or the
duly appointed guardian or legal representative of the disabled former Director.
9.2 NO RIGHT TO DIRECTORSHIP. Neither the Plan nor any action taken
hereunder shall be construed as giving any Director any right to be retained in
the service of the Company.
9.3 NONTRANSFERABLE INTERESTS AND RIGHTS. A Director's interest in an
Account or an Option and his or her rights under the Plan may not be assigned or
transferred in whole or in part either directly or by operation of law or
otherwise (except under a domestic relations order (as defined in Section 414(p)
of the Code)) or, in the event of Director's death, by will or the laws of
descent and distribution), including, but not by way of limitation, execution,
levy, garnishment, attachment, pledge, bankruptcy or in any other manner, and no
such right or interest of any Director in the Plan shall be subject to any
obligation or liability of such Director.
9.4 COMPLIANCE WITH LAW. The Company shall not be required to deliver
any Shares under Section 6 or 7 unless the Committee has determined that it may
do so without violation of applicable federal or state laws pertaining to the
issuance of securities, and the Company may require any Shares to bear a legend,
may give the transfer agent instructions, and may take such other steps, as in
its judgment are reasonably required to prevent any such violation. No Shares
shall be issued under the Plan unless the Director first enters into an
agreement with the Company providing for compliance with all such applicable
laws. The Company is under no obligation to register the Shares covered by this
Agreement under federal securities laws, nor is the Company under any obligation
to register any of the Shares or otherwise qualify them for sale under any state
law. Any Shares acquired hereunder must be held indefinitely unless they
are registered under the Securities Act of 1933, as amended (the "Act") or the
disposition thereof is exempt from the registration requirements of the Act.
9.5 EXPENSES. The expenses of the Plan shall be borne by the Company.
9.6 UNFUNDED. The Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of Accounts or the issuance of
Shares upon exercise of any Option under the Plan, and the payment of Accounts
and the issuance of Shares shall be unsecured general obligations of the
Company.
9.7 ACCEPTANCE. By accepting a Share, Option or Account, each Director
and each person claiming under or through such person shall be conclusively
deemed to have indicated his or her acceptance and ratification of and consent
to, any action taken under the Plan by the Company or the Board of Directors.
9.8 CONSTRUCTION. It is the intent of the Company that the Plan comply
in all respects with Rule 16b-3 or any successor rule, that any ambiguities or
inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be in
compliance with Rule 16b-3, such provision shall be deemed null and void to the
extent required to permit the Plan to comply with Rule 16b-3. The Board may
adopt rules and regulations under, and amend, the Plan in furtherance of the
intent of the foregoing.
In all other respects the Plan and Shares, Options and Accounts provided
thereunder shall be governed by, and construed in accordance with the laws of
the State of Delaware without regard to the conflict of laws principles thereof.
SECTION 10. AMENDMENT OR DISCONTINUANCE
The Plan may be amended at any time and from time to time by the Board
as the Board shall deem advisable, including, but not limited to, amendments
necessary to qualify for any exemption or to comply with applicable law or
regulations. Subject to the provision of Section 9.8 relating to Rule 16b-3, no
amendment of the Plan shall materially and adversely affect any right of any
Director with respect to any Option theretofore granted without such Director's
written consent.
SECTION 11. ADMINISTRATION
The Plan shall be administered by the Board. The Board shall have all
the powers vested in it by the terms of the Plan, such powers to include
authority (within the limitations described herein) to prescribe the form of the
Election Agreement, Option Agreement and Beneficiary Designation, have the power
to construe the Plan, to determine all questions arising thereunder
and to adopt and amend such rules and regulations for the administration of the
Plan as it may deem desirable. Any decision of the Board in the administration
of the Plan, as described herein, shall be final and conclusive. The Board may
act only by a majority of its members in office, except that the members thereof
may authorize any one or more of their number or the Secretary or any other
officer of the Company to execute and deliver documents on behalf of the Board.
No member of the Board shall be liable for anything done or omitted to be done
by such member or by any other member of the Board in connection with the Plan,
except in circumstances involving actual bad faith.
SECTION 12. TERMINATION
This Plan shall terminate upon the earlier of the following dates or
events to occur:
(a) upon the adoption of a resolution of the Board terminating
the Plan; or
(b) immediately following the annual meeting of stockholders in
2007.
SECTION 13. EFFECTIVE DATE OF PLAN
The Plan was originally adopted by the Board of Directors of PXRE
Corporation, a Delaware corporation, and became effective as of June 5, 1997.(2)
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(2) The Plan was approved by the affirmative vote of the holders of a majority
of the outstanding shares of PXRE Corporation common stock present in
person or represented by proxy at the 1997 Annual Meeting of Stockholders
of PXRE Corporation. See Footnote 1.