EXHIBIT 10.5
PLATINUM UNDERWRITERS HOLDINGS, LTD.
The Belvedere Building
69 Pitts Bay Road
Pembroke HM 08 Bermuda
June 20, 2003
Gregory E. A. Morrison
42 Buttermere Road
London, Ontario Canada N6G4L1
Dear Gregory:
I am writing this letter (the "Letter Agreement") to confirm the terms
and conditions of your employment with Platinum Underwriters Holdings, Ltd., a
Bermuda corporation ("Platinum") and Platinum Underwriters Bermuda, Ltd., a
Bermuda corporation ("Platinum Bermuda").
1. Term of Employment.
Your employment will commence on June 1, 2003 (the "Effective Date")
and, subject to termination as provided in Section 11, shall end on the third
anniversary of the Effective Date; provided that on the third anniversary of the
Effective Date and each anniversary thereafter, the term of your employment
shall automatically be extended by an additional year unless Platinum or you
give the other party written notice, at least 30 days prior to the applicable
anniversary of the Effective Date, that you or it does not want the term to be
so extended. Such employment period, as extended, shall hereinafter be referred
to as the "Term."
2. Title and Duties.
During the Term, you will serve as President and Chief Executive
Officer of Platinum and Chief Executive Officer of Platinum Bermuda and will
have such duties and responsibilities and power and authority as those normally
associated with such positions, plus any additional duties, responsibilities
and/or power and authority assigned to you by the Board of Directors of Platinum
(the "Board"). In addition, you will be the Chairman of the Board of all
Platinum subsidiaries. Platinum will use its best efforts to nominate you for
election to the Board at its 2003 annual meeting of shareholders.
3. Base Salary.
During the Term, Platinum will pay you a base salary (the "Base
Salary") at an annual rate of US$650,000 (the "Base Salary"), payable in
accordance with Platinum's payroll practices as in effect from time to time.
Your Base Salary may be reviewed from time to time by the Board for possible
merit increase.
4. Bonus.
(a) Sign-On Bonus. You will receive a one-time sign-on bonus of
US$150,000, payable within five (5) days following the signing
of this Letter Agreement.
(b) Annual Incentive. For the remainder of the 2003 fiscal year,
you will be paid a minimum annual bonus of US$650,000,
provided that you remain employed until December 31, 2003 (the
"Minimum Bonus"). During each fiscal year of the Term
thereafter, you will be eligible for an annual performance
bonus pursuant to the terms of Platinum's annual incentive
plan (the "Annual Bonus"). Your Annual Bonus will have an
incentive target equal to 100% of Base Salary (the "Target
Bonus") with the range of bonus payout to be from 0% to 200%
of Base Salary, depending upon the achievement of performance
criteria established under Platinum's annual incentive plan.
The Minimum Bonus and the Annual Bonus will generally be paid
following the end of the applicable fiscal year, part in cash
and part in restricted stock units or other equity incentives,
as determined by the Compensation Committee of the Board.
(c) Long-Term Incentive. Platinum currently intends to establish a
long-term incentive plan for its key employees, including its
Chief Executive Officer. The terms of such plan and the timing
of its implementation have not yet been established. If a
long-term plan is established by the Board, you will be a
participant in the plan.
5. Share Option Grant.
Effective as of May 13, 2003, you have been granted an option to
purchase 400,000 of Platinum's common shares under the terms of Platinum's 2002
Share Incentive Plan (the "Option Grant"). The Option Grant (i) has a term of
ten years from the date of grant, (ii) has an exercise price of US$26.00 per
share, the closing sales price of the Platinum common shares on the New York
Stock Exchange on the trading day immediately preceding the date of grant and
(iii) vests in equal annual installments on each of the first four anniversaries
of the date of grant, based on your continued employment with Platinum. The
specific terms of your Option Grant will be provided for in an option agreement
between you and Platinum that has been approved by the Compensation Committee
under the 2002 Share Incentive Plan, the form of which agreement is attached
hereto.
6. Share Ownership.
You agree to purchase from Platinum 20,000 of Platinum's common shares
at a purchase price of US$26.00 per share (the "Purchased Shares") within 60
days following the signing of this Letter Agreement. You agree to enter into a
purchase agreement in connection with such purchase containing representations,
warranties and covenants typical for such an agreement. You represent, warrant,
acknowledge and agree that (i) you have had the opportunity to ask questions of,
and receive information from, representatives of Platinum concerning Platinum
and your investment in Platinum, (ii) by reason of your business or financial
experience you are capable of evaluating information and data relating to
Platinum and the merits or risks of an investment in Platinum and of protecting
your own interest in connection with an investment in Platinum and that you are
able to bear the economic risk of such investment in Platinum, (iii) you are an
"accredited investor" as
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defined in Regulation D promulgated under the Securities Act of 1933, as amended
(the "Act"), (iv) you are purchasing the Purchased Shares for your own account,
for investment only, and not with a view to, or for resale in connection with,
any distribution thereof, (v) the Purchased Shares may not be sold, transferred,
pledged or otherwise disposed of without registration under the Act and
applicable state securities laws or in accordance with applicable exemptions
therefrom, (vi) any transfer of the Purchased Shares is subject to Platinum
receiving an opinion of counsel satisfactory to it, and (vii) the certificates
representing the Purchased Shares will bear legends referring to restrictions on
transferability and sale and a notation will be made on the appropriate records
of Platinum and Platinum's transfer agent so that transfers of the Purchased
Shares will not be effected on those records without compliance with those
restrictions. You acknowledge that the Board is considering adopting share
ownership requirements for senior executives of Platinum.
7. Employee Benefits.
During the Term, you and your eligible dependents will receive benefits
substantially similar to the employee benefit plans that are generally available
to senior executives of Platinum, subject to the terms and conditions of such
plans. The Board reserves the right to amend or terminate any employee benefit
plan at any time, and to adopt any new plan.
8. Moving/Housing.
Platinum will pay you $50,000 associated with your relocation to
Bermuda. Upon your establishment of a residence in Bermuda, you will be entitled
to reimbursement of your actual and reasonable housing and living expenses up to
US$25,000 per month (the "Monthly Reimbursement") during the Term.
9. Perquisites.
Platinum will reimburse you for reasonable dues and fees for a golf and
a health club membership during the Term, as well as such other perquisites and
fringe benefits as may be approved by the Compensation Committee of the Board
from time to time. Platinum will reimburse you for reasonable expenses
associated with the review of this Letter Agreement by your advisors. Platinum
will reimburse you for the reasonable school fees associated with the attendance
of your children at high schools in Bermuda.
10. Business Expenses.
During the Term, Platinum shall reimburse you for all reasonable
expenses and disbursements in carrying out your duties and responsibilities
under this Letter Agreement in accordance with Company policy for senior
executives as in effect from time to time.
11. Termination of Employment.
(a) Termination for Good Reason or Without Cause. If you terminate
your employment during the Term for "Good Reason" (as defined
below) or if your employment is terminated during the Term by
Platinum without "Cause," (as defined below) you will receive,
beginning one month following the effective date of any such
termination, monthly salary continuation payments for the
"Severance Period" (as
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defined below) equal to one-twelfth (1/12) of the sum of (i)
100% of your then-current Base Salary and (ii) the greater of
(a) your then-current Target Bonus and (b) the amount of
Annual Bonus payable to you (without regard to equity-based
deferrals) for the fiscal year immediately preceding the year
during which the effective date of your termination of your
employment occurs (or, in the event such termination occurs
during 2003, the amount of your Minimum Bonus). For purposes
hereof, the Severance Period shall be the lesser of (1)
twenty-four (24) months, or (2) the number of full months
remaining in the Term on the effective date of termination of
employment; provided, however that the Severance Period shall
not be less than twelve (12) months. You will also be paid any
earned but unpaid Base Salary or other amounts (including
reimbursements expenses and any vested amounts or benefits
under Platinum's employee benefit plans or programs) accrued
or owing through the date of termination. The foregoing
payment will be conditioned upon you executing and honoring a
standard waiver and release of claims in favor of Platinum in
a form determined by Platinum. Any vested and unexercised
options to purchase Platinum's common shares held by you as of
the effective date of such termination will remain exercisable
for the greater of 45 days from such date or May 31, 2006
whichever is later. Any unvested options to purchase
Platinum's common shares and any unvested equity incentive
awards held by you as of the effective date of such
termination will be immediately forfeited.
(b) Termination Other than for Good Reason. If you terminate your
employment during the Term other than for Good Reason, you
will receive no further payments, compensation or benefits
under this Letter Agreement, except you will be eligible to
receive, upon the effectiveness of such termination, amounts
(including reimbursable expenses and any vested amounts or
benefits under Platinum's employee benefit plans or programs)
accrued or owing prior to the effectiveness of such
termination. Any vested and unexercised options to purchase
Platinum's common shares held by you as of the effective date
of such termination will remain exercisable for 45 days from
such date. Any unvested options to purchase Platinum's common
shares and any unvested equity incentive awards held by you as
of the effective date of such termination will be immediately
forfeited.
(c) Termination for Cause. If your employment is terminated by
Platinum during the Term for Cause, you will receive no
further payments, compensation or benefits under this Letter
Agreement, except you will be eligible to receive, upon the
effectiveness of such termination, amounts (including
reimbursable expenses and any vested amounts or benefits under
Platinum's employee benefit plans or programs) accrued or
owing prior to the effectiveness of your termination. All
vested and unvested options to purchase Platinum's common
shares and other equity incentive awards held by you as of the
effective date of such termination will be immediately
forfeited.
(d) Death or Disability. Upon the termination of your employment
during the Term on account of your death or Disability, you or
your beneficiaries will receive (i) any unpaid Base Salary
through the date of termination plus a pro-rata portion
through the date of termination of your Target Bonus (or
Minimum Bonus, if applicable) for
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the year of termination, (ii) all other unpaid amounts
(including reimbursable expenses and any vested amounts or
benefits under Platinum's employee benefit plans or programs)
accrued or owing prior to the effectiveness of such
termination. In addition, the unvested portion of any
outstanding options to purchase Platinum's common shares or
other equity incentive awards held by you shall fully vest as
of the date of such termination and, along with any previously
vested grants, will be exercisable for one year from the
effectiveness of such termination.
(e) Definitions.
(i) Cause. For purposes of this Letter
Agreement, "Cause" means (i) your willful
and continued failure to substantially
perform your duties hereunder; (ii) your
conviction of, or plea of guilty or nolo
contendere to, a felony or other crime
involving moral turpitude; or (iii) your
engagement in any malfeasance or fraud or
dishonesty of a substantial nature in
connection with your position with Platinum
or its subsidiaries, or other willful act
that materially damages the reputation of
Platinum or its subsidiaries; provided,
however, no such act, omission or event
shall be treated as "Cause" under this
Letter Agreement unless you have been
provided a detailed, written statement of
the basis for Platinum's belief that such
act, omission or event constitutes "Cause"
and have had at least a thirty (30) day
period to take corrective action. For
purposes of this Section, no act or failure
to act will be considered "willful" unless
it is done, or omitted to be done, in bad
faith and without reasonable belief that the
action was in the best interests of
Platinum.
(ii) Good Reason. For purposes of this Letter
Agreement, "Good Reason" means (i) Platinum
reduces your Base Salary or your Target
Bonus (or Minimum Bonus, if applicable)
without your express written consent; (ii)
Platinum reduces the scope of your duties,
responsibilities or authority without your
express written consent; (iii) Platinum
requires you to report to anyone other than
the Board; (iv) Platinum requires you to be
principally based other than in Platinum's
offices in Bermuda; (v) Platinum breaches
any other material provision of this Letter
Agreement; and (vi) Platinum elects not to
extend the term of this Letter Agreement;
provided, however, that if you voluntarily
consent to any reduction or change described
above in lieu of exercising your right to
resign for Good Reason and deliver such
consent to Platinum in writing, then such
reduction, transfer or change shall not
constitute "Good Reason" hereunder, but you
shall have the right to resign for Good
Reason under this Letter Agreement as a
result of any subsequent reduction described
above.
(iii) Disability. For purposes of this Letter
Agreement, "Disability" means a termination
of your employment by Platinum if you have
been rendered incapable of performing your
duties to Platinum by reason of any
medically determined physical or mental
impairment that can be expected
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to result in death or that can be expected
to last for a period of either (i) six or
more consecutive months from the first date
of your absence due to the disability or
(ii) nine or more months during any
twelve-month period.
12. Covenants.
In exchange for the remuneration outlined above, in addition to
providing service to Platinum as set forth in this Letter Agreement, you agree
to the following covenants:
(a) Confidentiality. During the period of your employment and
following any termination of your employment for any reason,
you will keep confidential any trade secrets and confidential
or proprietary information of Platinum (and its subsidiaries
and affiliates) which are now known to you or which hereafter
may become known to you as a result of your employment or
association with Platinum and will not at any time, directly
or indirectly disclose any such information to any person,
firm or corporation, or use the same in any way other than in
connection with the business of Platinum (or its subsidiaries
or affiliates) during, and at all times after, the termination
of your employment. For purposes of this Letter Agreement,
"trade secrets and confidential or proprietary information"
means information unique to Platinum (or its subsidiaries or
affiliates) which has a significant business purpose and is
not known or generally available from sources outside Platinum
(or its subsidiaries or affiliates) or typical of industry
practice, but shall not include any of the foregoing (i)
information that becomes a matter of public record or is
published in a newspaper, magazine or other periodical
available to the general public, other than as a result of any
act or omission of you or (ii) information that is required to
be disclosed by any law, regulation or order of any court or
regulatory commission, department or agency, provided that you
give prompt notice of such requirement to Platinum (or its
subsidiaries or affiliates), as appropriate, to enable
Platinum (or its subsidiaries or affiliates), as appropriate,
to seek an appropriate protective order or confidential
treatment.
(b) Non-Competition. You further covenant that during the period
of your employment with Platinum and for the fifteen month
period following termination of your employment for any
reason, you will not, without the express written approval of
Platinum, anywhere where Platinum (or its subsidiaries of
affiliates) has engaged in business during the term of your
employment with Platinum, for yourself or on behalf of any
other person, partnership, company or corporation, directly or
indirectly, acquire any financial or beneficial interest, be
employed by, or own, manage, operate or control any entity
which is primarily engaged in the reinsurance business;
provided, however, you may have an interest in up to 2% of the
capital stock of a corporation whose capital stock is traded
publicly.
(c) Non-Solicitation. You further covenant that during the term of
your employment with Platinum and during the fifteen month
period following termination of your employment for any
reason, you will not, directly or indirectly, hire, or cause
to be hired by an employer with whom you may ultimately become
associated, any senior executive of Platinum (or its
subsidiaries or affiliates) at the time of termination of
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your employment with Platinum (defined for such purposes to
include executives that report directly to you or that report
directly to such executives that report directly to you).
(d) Enforcement. You acknowledge that if you breach any provision
of this Section 12, Platinum (or its subsidiaries or
affiliates) will suffer irreparable injury. It is therefore
agreed that Platinum (or its subsidiaries or affiliates) shall
have the right to enjoin any such breach, without posting any
bond, if permitted by a court of the applicable jurisdiction.
You hereby waive the adequacy of a remedy at law as a defense
to such relief. The existence of this right to injunctive, or
other equitable relief, shall not limit any other rights or
remedies which Platinum (or its subsidiaries or affiliates)
may have at law or in equity including, without limitation,
the right to monetary, compensatory and punitive damages. You
acknowledge and agree that the provisions of this Section 12
are reasonable and necessary for the successful operation of
Platinum. In the event an arbitrator or a court of competent
jurisdiction determines that you have breached your
obligations in any material respect under this Section 12,
Platinum, in addition to pursuing all available remedies under
this Letter Agreement, at law or otherwise, and without
limiting its right to pursue the same shall cease all payments
to you under this Letter Agreement. If any provision of this
Section 12 is determined by a court of competent jurisdiction
to be not enforceable in the manner set forth in this Letter
Agreement, you and Platinum agree that it is the intention of
the parties that such provision should be enforceable to the
maximum extent possible under applicable law. If any
provisions of this Section 13 are held to be invalid or
unenforceable, such invalidation or unenforceability shall not
affect the validity or enforceability of any other provision
of this Letter Agreement (or any portion thereof).
13. Representations. By signing this Letter Agreement where indicated
below, you represent that you are not subject to any employment
agreement or noncompetition agreement that would prevent you from
performing your obligations under this Letter Agreement nor that could
subject Platinum to any present or future liability or obligation to
any third party as a result of the execution of this Letter Agreement
and your appointment to the positions with Platinum described above.
14. Miscellaneous Provisions.
(a) This Letter Agreement may not be amended or terminated without
the prior written consent of you and Platinum.
(b) This Letter Agreement may be executed in any number of
counterparts which together will constitute but one agreement.
(c) This Letter Agreement will be binding on and inure to the
benefit of our respective successors and, in your case, your
heirs and other legal representatives. Other than as provided
herein, the rights and obligations described in this Letter
Agreement may not be assigned by either party without the
prior written consent of the other party.
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(d) Subject to Section 12(d) of this Letter Agreement, all
disputes arising under or related to this Letter Agreement
will be settled by arbitration under the Commercial
Arbitration Rules of the American Arbitration Association then
in effect as the sole and exclusive remedy of either party.
Such arbitration shall be held in New York City. Any judgment
on the award rendered by such arbitration may be entered in
any court having jurisdiction over such matters. Each party's
costs and expenses of such arbitration, including reasonable
attorney fees and expenses, shall be borne by such party,
unless you are, in whole, and not in part, the prevailing
party in the award entered in such arbitration, in which case,
all such costs and expenses shall be borne by Platinum.
(e) All notices under this Letter Agreement will be in writing and
will be deemed effective when delivered in person, or five (5)
days after deposit thereof in the mails, postage prepaid, for
delivery as registered or certified mail, addressed to the
respective party at the address set forth below or to such
other address as may hereafter be designated by like notice.
Unless otherwise notified as set forth above, notice will be
sent to each party as follows:
Gregory Morrison, to:
The address maintained in Platinum's records
Platinum, to:
Platinum Underwriters Holdings, Ltd.
The Belvedere Building
69 Pitts Bay Road
Pembroke HM 08, Bermuda
P.O. Box HM 3012
Hamilton HM MX, Bermuda
Attention: General Counsel
In lieu of personal notice or notice by deposit in the mail, a party
may give notice by confirmed telegram, telex or fax, which will be effective
upon receipt.
(f) This Letter Agreement will be governed by and construed and
enforced in accordance with the laws of the State of New York
without reference to rules relating to conflict of laws.
(g) This Letter Agreement supercedes any inconsistent provisions
of any plan or arrangement that would otherwise be applicable
to you to the extent such provisions would limit any rights
granted to you hereunder or expand any restrictions imposed on
you hereby.
This Letter Agreement is intended to be a binding obligation upon
Platinum and yourself. If this Letter Agreement correctly reflects your
understanding, please sign and return one copy to me for Platinum's records.
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Platinum Underwriters Holdings, Ltd.
By: /s/ Michael E. Lombardozzi
------------------------------------
Michael E. Lombardozzi
Executive Vice President, General Counsel
and Corporate Secretary
The above Letter Agreement correctly reflects our understanding, and I hereby
confirm my agreement to the same.
/s/ Gregory E. A. Morrison
- --------------------------------
Gregory E. A. Morrison
Dated as of June 20, 2003
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