Exhibit 10.40
ST. XXXX RE, INC.
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
July 3, 2002
Xxxxxxx Xxxxxx
00 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Dear Xxxx:
I am writing this letter (the "Letter Agreement") on behalf of St. Xxxx
Re, Inc. ("SPR" or the "Company"), currently a division of The St. Xxxx
Companies, Inc. ("SPC"), to confirm the terms and conditions of your
employment with SPR or Platinum Underwriters Holding, Ltd., a Bermuda
corporation and Platinum Underwriters Reinsurance, Inc., a Maryland
corporation ("Platinum"), which is expected to acquire certain assets of SPR
in connection with an initial public offering of Platinum Underwriters
Holdings, Ltd. ("Holdings").
1. TERM OF EMPLOYMENT.
Your employment will commence no later than August 5, 2002 (the
"Effective Date") and, subject to termination as provided in Section 7, 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 the Company 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."
Upon consummation of the IPO, the Company shall promptly assign all of
its rights and obligations hereunder to Platinum and shall, upon such
assignment, cease to be a party to this Letter Agreement (except as otherwise
provided herein) and Platinum will be the sole obligor hereunder. Following
assignment of this Letter Agreement to Platinum, all references herein to the
"Company" shall be deemed to mean Platinum and all references to the "Board"
shall be deemed to mean the Board of Directors of Platinum.
2. TITLE AND DUTIES.
During the Term, you will serve as Executive Vice President and Chief
Financial Officer of the Company and will have such duties and
responsibilities and power and authority as those normally associated with
such position in public companies of a similar
stature, plus any additional duties, responsibilities and/or power and
authority assigned to you by the Chief Executive Officer of the Company.
3. BASE SALARY.
During the Term, the Company will pay you a minimum base salary (the
"Base Salary") at an annual rate of $350,000 (the "Base Salary") payable in
accordance with the Company's payroll practices as in effect from time to
time.
4. BONUS.
(a) ANNUAL. During the Term, you will be entitled to receive an
annual bonus (the "Annual Bonus") pursuant to the Company's
annual incentive plan, with a target bonus opportunity of fifty
percent (50%) of Base Salary (the "Target Bonus") and a maximum
bonus opportunity of one hundred percent (100%); provided
however that you will be entitled to receive a minimum Annual
Bonus for the calendar year 2002 in an amount equal to a
pro rata portion of your Target Bonus adjusted for the
period beginning with the Effective Date and ending at
December 31, 2002.
(b) SIGN-ON BONUS. On the Effective Date, the Company shall pay you
a one-time cash sign-on bonus of $200,000.
5. HOUSING ALLOWANCE.
To the extent that you establish a residence in Bermuda following the
consummation of the IPO, you will be entitled to reimbursement of reasonable
housing and living expenses (not exceeding $15,000 per month) following
consummation of the IPO. To the extent that you establish a temporary housing
in the New York City area, you will be entitled to reimbursement of
reasonable housing expenses (not exceeding $2,000 per month).
6. STOCK OPTION GRANT.
Upon consummation of the IPO, you will be entitled to receive a stock
option grant to purchase 150,000 shares of Holdings common stock (the "IPO
Grant") at a price not greater than the initial offering price under the IPO
and having a term of ten years. Subject to the specific terms of this Letter
Agreement, the terms and conditions of your IPO Grant will provide for
vesting in equal annual installments on each of the first four anniversaries
of the date of the IPO Grant, provided you are then employed by SPR.
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7. TERMINATION OF EMPLOYMENT.
(a) Resignation for Good Reason or Termination Without Cause. If
you terminate your employment for Good Reason or you are
terminated by the Company without Cause, you will receive,
immediately upon the effectiveness of any such termination,
a lump sum cash payment equal to the sum of (i) $525,000, and
(ii) any earned but unpaid Base Salary or other amounts
(including reimbursable expenses and any vested amounts or
benefits under the Company's otherwise applicable employee
benefit plans or programs) accrued owing through the date of
termination, provided that you execute a release substantially
in the form attached hereto as Exhibit A concurrently with
such payment.
(b) TERMINATION OTHER THAN FOR GOOD REASON OR FOR CAUSE. If you
terminate your employment other than for Good Reason or if
your employment is terminated by the Company 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 the Company's otherwise applicable employee
benefit plans or programs) accrued or owing prior to the
effectiveness of your termination.
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 the Company or other willful act that materially
damages the reputation of the Company.
For purposes of this Letter Agreement, "Good Reason" means (i) the
Company reduces your Base Salary or your Target Bonus without your
express written consent; (ii) the Company reduces the scope of your
duties, responsibilities or authority without your express written
consent; (iii) the Company requires you to report to anyone other
the Chief Executive Officer; (iv) the Company requires you to be
principally based more than 35 miles from the Company's offices in
New York or Bermuda; (v) the Company breaches any other material
provision of this Letter Agreement; (vi) the resignation by you for
any reason during the 30-day period commencing twenty four months
from the Effective Date if an IPO has not occurred; (vii) SPR fails
to assign this Letter Agreement to Platinum prior to or promptly
upon the IPO; provided, however, that if you voluntarily consent to
any reduction or change described above in lieu
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of exercising your right to resign for Good Reason and deliver such
consent to the Company 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 Agreement as a
result of any subsequent reduction described above.
8. COVENANTS.
In exchange for the remuneration outlined above, in addition to
providing service to the Company as set forth in this Letter Agreement, you
agree to the following covenants:
(a) CONFIDENTIALITY. During the period of your employment and for a
period of three years following any termination of your
employment, you will keep confidential any trade secrets and
confidential or proprietary information of SPC, SPR and Platinum
which are now known to you or which hereafter may become known
to you as a result of your employment or association with SPC,
SPR and 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 SPC, SPR and Platinum 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 SPC, SPR
and Platinum which has a significant business purpose and is not
known or generally available from sources outside SPC, SPR and
Platinum or typical of industry practice, but shall not include
any of the foregoing (i) 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) 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 SPC, SPR and Platinum, as
appropriate, to enable SPC, SPR and Platinum, as appropriate,
to seek an appropriate protective order or confidential
treatment.
(b) NON-SOLICITATION. You further covenant that during the term of
your employment 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 SPC, SPR or Platinum at the time of
termination of your employment with the Company (defined for
such purposes to
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include executives that report directly to you or that report
directly to such executives that report directly to you).
9. REPRESENTATIONS. By signing this Letter Agreement where indicated
below, you represent that you are not subject to any employment
agreement or non-competition agreement that could subject St. Xxxx
Re, Inc. to any 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 St. Xxxx Re, Inc described above.
10. MISCELLANEOUS PROVISIONS.
(a) This Letter Agreement may not be amended or terminated without
the prior written consent of you and the Company.
(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.
(d) 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 the
prevailing party in the award entered in such arbitration, in
which case, all such costs and expenses shall be borne by the
Company.
(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:
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You, to:
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The address maintained in the Company's records
SPC or SPR, to:
--------------
The address of SPC's principal place of business
Attention: General Counsel
Platinum, to:
------------
The address of Platinum's principal place of business
Attention: Chief Executive Officer
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.
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This Letter Agreement is intended to be a binding obligation upon the
Company and yourself. If this Letter Agreement correctly reflects your
understanding, please sign and return one copy to me for the Company's
records.
ST. XXXX RE, INC.
By: /s/ XXXXXX X. XXXXXX
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Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
The above Letter Agreement correctly reflects our understanding, and I hereby
confirm my agreement to the same.
/s/ XXXXXXX XXXXXX
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Xxxxxxx Xxxxxx
Dated as of July 12, 2002
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