EXHIBIT 10.2
EMPLOYMENT AGREEMENT
 
This Employment Agreement (the “Agreement”) is effective as of the 1st day of
July, 2012, between Everest Global Services, Inc., a Delaware corporation (the
“Company”), Everest Reinsurance Holdings, Inc., a Delaware corporation
(“Holdings”) and Joseph V. Taranto (“Taranto”).
 
 
WITNESSETH
 
WHEREAS, the Company and Holdings wish to continue to secure the services of
Taranto pursuant to the terms and conditions hereof; and
 
WHEREAS, Taranto is willing to accept such employment with the Company and
Holdings and to enter into the Agreement;
 
NOW, THEREFORE, in consideration of the promises and mutual covenants contained
herein and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
 
1.    POSITION; DUTIES; RESPONSIBILITIES
 
1.1     The Company hereby employs Taranto and Taranto hereby agrees to serve
during the term of this Agreement as Chairman and Chief Executive Officer of
each of Everest Re Group, Ltd. (“Group”), Everest Reinsurance Holdings, Inc. and
Everest Reinsurance Company and, subject to his election, as a director and
officer of any corporation which is a subsidiary or affiliate of Everest
Reinsurance Company, if elected by the stockholders or the board of directors of
such corporation; provided, however, that in no event shall Taranto be required
to serve as a director of the Company unless he consents to do so.
 
1.2    During the course of his employment, Taranto agrees to devote his full
working time and attention and give his best efforts and skill to furthering the
business and interests of the Company and its affiliates. Consistent with the
foregoing, Taranto may volunteer a reasonable portion of his non-working time to
charitable, civic and professional organizations.
 
1.3    Notwithstanding the provisions of Section 1.2 above, during the course of
his employment Taranto may serve as a director or officer of one or more
companies affiliated with the Company. Taranto may also, with written consent of
the Company, serve as a director of any public or private corporation, as a
member of the governing board or as an officer of any charitable, civic,
educational or professional organization; provided, however, that Taranto shall
comply with the procedures established by the Company and Holdings to prevent
conflicts of interest by its officers and employees with respect to the business
of the Company and Holdings, their subsidiaries and affiliates.
 
 
 

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2.    TERM
 
The term of employment under this Agreement shall commence as of July 1, 2012
(the “Appointment Date”), and shall continue through December 31, 2013, unless
sooner terminated in accordance with this Agreement.
 
3.    SALARY
 
The Company shall pay Taranto a minimum base salary during the term of
employment at the annual rate of One Million Dollars ($1,000,000) (“Base
Salary”), payable in accordance with the standard payroll practices for senior
executives of the Company.
 
4.    BONUS
 
4.1    During the course of his employment, Taranto shall be eligible to
participate in a bonus program or plan established by Group, subject to the
approval of Group’s shareholders. If Group’s shareholders do not approve the
bonus plan or program described in this Section 4.1, Taranto shall have the
right to re-open this Agreement to negotiate an alternative bonus arrangement;
provided, however, that Taranto must exercise his right to re-open by providing
the Company with written notice of his intent to re-open within thirty days of
Taranto’s becoming aware that the shareholders of Group did not approve the
bonus plan or program described in this Section 4.1.
 
4.2    All bonuses pursuant to this Section 4 shall be paid to Taranto in
conformance with the Company’s normal bonus pay policies following the end of
the respective fiscal year.
 
5.     STOCK AWARDS
 
5.1    During the course of his employment, Taranto shall be eligible to
participate in the Everest Re Group, Ltd. 2010 Stock Incentive Plan (the “Stock
Plan”). All awards granted to Taranto under the Stock Plan shall be in
accordance with and subject to the terms and conditions of the Stock Plan. The
Company agrees to request the Compensation Committee (the “Compensation
Committee”) of the Board of Directors of Group (the “Group Board”) to consider
granting stock awards to be deemed fully earned and vested to Taranto in
December, 2012 and December 2013 and to determine whether to grant such awards
and the amount of such awards, on a basis consistent with the method used for by
the Committee to determine the restricted stock awards granted to Taranto on
February 24, 2011 and February 22, 2012, taking into account, among other
factors, Taranto’s demonstrated past and expected future performance, his
exceptional creation of shareholder value, his continued commitment to Group and
its subsidiaries, and the total compensation for other chief executive officers
at comparable companies.
 
5.2     Notwithstanding the foregoing, Section 8.5, or any provision of any
agreement with or other arrangement maintained by the Company or any affiliate
to the contrary, but subject to the repayment provisions of Section 9.8
following a termination of employment if Taranto engages in Competition within
six months after the date of his termination, Taranto and/or his beneficiaries
or estate shall become fully vested in all outstanding awards of restricted
stock upon execution of this Agreement.  In accordance with the applicable
Restricted Stock
 
 
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Award Agreements or related Plan documents, Taranto shall surrender a number of
vested shares to satisfy his income tax withholding obligations as determined by
the Committee administering the Stock Plan (the “Tax Shares”) and shall own the
remaining shares (the “Net Accelerated Shares”) free of all restrictions
otherwise imposed by the applicable Restricted Stock Award Agreements or related
Stock Plan documents to the extent such restricted stock has not previously
vested in accordance with the applicable terms of the respective Restricted
Stock Award Agreements.
 
6.    EMPLOYEE BENEFIT PLAN.
 
6.1    During the term of Taranto’s employment hereunder, Taranto shall be
eligible to participate in the employee benefit plans maintained by the Company
and/or Everest Reinsurance Company on the same basis as the Company’s other
senior executives.
 
6.2     In addition to the benefits described in Section 6.1, Taranto shall also
receive or participate, at a level consistent with Taranto’s position, to the
extent permitted by law, the various perquisites and plans which the Company’s
Board of Directors (the “Board”) determines to make available to officers of the
Company from time to time in accordance with the provisions thereof. Taranto
shall be entitled to not less than four weeks vacation per year.
 
6.3    Nothing contained in this Agreement shall prevent the Board or the Group
Board from adopting additional compensation arrangements for Taranto or
providing additional benefits under any of the existing compensation
arrangements.
 
7.     EXPENSE REIMBURSEMENTS
 
During Taranto’s employment with the Company, Taranto will be entitled to
receive reimbursement by the Company for all reasonable, out-of-pocket expenses
incurred by him (in accordance with policies and procedures established by the
Company), in connection with his performing services hereunder.
 
8.     CONSEQUENCES OF TERMINATION OF EMPLOYMENT
 
8.1     Death.  In the event of the death of Taranto during the term of
employment under this Agreement or during the period when payments are being
made pursuant to Section 8.2, this Agreement shall terminate and all obligations
to Taranto shall cease as of the date of death except that the Company will (1)
pay the Base Salary until the end of the month in which Taranto dies and any
annual incentive bonus earned but not yet paid for any completed full fiscal
year immediately preceding the employment termination date, (2) Taranto’s
beneficiaries or estate, as appropriate, shall be entitled to all rights and
benefits accrued up to the date of termination under the stock option plans,
stock incentive plans, retirement plan, supplemental plan and other benefit
plans and programs of the Company and/or Everest Reinsurance Company in which
Taranto is a participant, as determined in accordance with the terms and
provisions of such plans and programs; provided, however, that Taranto shall
cease to be an active participant in such plans and programs as the date of
termination.  Notwithstanding the foregoing, it is expressly agreed and
understood that in the case of such termination, all of Taranto’s then unvested
outstanding stock options and then unvested restricted stock shares will
automatically vest in full.  Any bonus (or amounts in lieu thereof) pursuant to
Section 4, payable with respect
 
 
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to the year in which Taranto’s death occurs, shall be annualized and paid to
Taranto’s estate pro rata to the date of death. Except as otherwise expressly
stated herein, benefits payable pursuant to this Section 8.1 shall be paid
within sixty (60) days following Taranto’s death.
 
8.2    Disability.  If Taranto shall become incapacitated by reason of sickness,
accident or other physical or mental disability, as such incapacitation is
certified in writing by a physician chosen by the Company and reasonably
acceptable to Taranto (or his spouse or representative if in the Company’s
reasonable determination Taranto is not then able to exercise sound judgment),
and shall therefore be unable to perform his duties hereunder for a period of
either (i) one hundred twenty consecutive days, or (ii) more than six months in
any twelve month period, with reasonable accommodation as required by law, then
to the extent consistent with applicable law, Taranto shall be considered
“disabled” and the employment of Taranto hereunder and this Agreement may be
terminated by Taranto or the Company upon thirty (30) days’ written notice to
the other party following such certification. Should Taranto not acquiesce in
the Company’s selection of the certifying doctor, Taranto (or his spouse or
representative if in the Company’s reasonable determination Taranto is not then
able to exercise sound judgment) may choose a doctor to determine whether he is
disabled. If the two doctors are unable to concur on whether Taranto is
disabled, the two doctors shall designate a third doctor whose decision shall be
determinative. Except as otherwise expressly stated herein, within sixty (60)
days following termination of employment pursuant to this Section 8.2, the
Company shall thereafter pay to Taranto, (1) Base Salary through the date of
termination and any annual incentive bonus earned but not yet paid for any
completed full fiscal year immediately preceding the employment termination
date, and (2) Taranto shall be entitled to all rights and benefits accrued up to
the date of termination under the stock option plans, stock incentive plans,
retirement plan, supplemental plan and other benefit plans and programs of the
Company and/or Everest Reinsurance Company in which Taranto is a participant, as
determined in accordance with the terms and provisions of such plans and
programs; provided, however, that Taranto shall cease to be an active
participant in such plans and programs as of the date of
termination.  Notwithstanding the foregoing, it is expressly agreed and
understood that in the case of such termination, all of Taranto’s then unvested
outstanding stock options and then unvested restricted stock shares will
automatically vest in full.  Any bonus (or amounts in lieu thereof) pursuant to
Section 4, payable with respect to the year in which Taranto’s termination
pursuant to Section 8.2 occurs, shall be annualized and promptly paid to Taranto
pro rata to the date of termination.
 
8.3    Due Cause.  The Company may terminate Taranto and this Agreement at any
time for Due Cause. In the event of such termination for Due Cause, Taranto
shall only continue to receive Base Salary through the date of such termination
for Due Cause and any annual incentive bonus earned but not yet paid for any
completed full fiscal year immediately preceding the employment termination
date, and Taranto shall be entitled to no further benefits or compensation under
this Agreement, except that Taranto shall be entitled to all rights and benefits
accrued up to the date of termination under the stock option plans, stock
incentive plans, retirement plan, supplemental plan and other benefit plans and
programs of the Company and/or Everest Reinsurance Company in which Taranto is a
participant, as determined in accordance with the terms and provisions of such
plans and programs; provided, however, that Taranto shall cease to be an active
participant in such plans and programs as of the date of termination.  The term
“Due Cause” shall mean (a) repeated and gross negligence in fulfillment of, or
repeated failure of Taranto to fulfill, his material obligations under this
Agreement, in either event after
 
 
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written notice thereof, (b) material willful misconduct by Taranto in respect of
his obligations hereunder, (c) conviction of any felony, or any crime of moral
turpitude or, (d) a material breach in trust committed in willful or reckless
disregard of the interests of the Company or its affiliates or undertaken for
personal gain. Except as otherwise expressly stated herein, benefits payable
pursuant to this Section 8.3 shall be paid within sixty (60) days following
Taranto’s termination.
 
For purposes of this Section 8.3 of the Agreement, an act or failure to act
shall be considered “willful” only if done or omitted to be done without a good
faith reasonable belief that such act or failure to act was in the best interest
of the Company.
 
8.4    Termination by the Company Without Due Cause.  The other provisions of
this Agreement notwithstanding, the Company may terminate Taranto’s employment
and this Agreement at any time for whatever reason it deems appropriate, without
Due Cause and with or without prior notice. In the event of such a termination
of Taranto’s employment and this Agreement, Taranto shall have no further
obligations of any kind under or arising out of the Agreement and the Company
shall be obligated only to pay Taranto as severance, the following: (a) a lump
sum payment equal to the aggregate amount of Base Salary at the rate then in
effect for the period from the date of termination through December 31, 2013, or
an amount equal to the sum of one (1) year’s Base Salary, whichever is greater,
and any annual incentive bonus earned but not yet paid for any completed full
fiscal year immediately preceding the employment termination date, (b) the
aggregate bonus amounts due under the appropriate bonus plans or programs for
the period from the date of termination through December 31, 2013, payable in
accordance with, and at the time provided for under, the appropriate bonus plan
or program or an amount equal to three (3) times the sum of annual Base Salary,
whichever is greater, and (c) a cash  amount equal to either (i) two times the
cash value of the restricted stock award granted to Taranto on February 22,
2012, if Taranto’s termination of employment occurs prior to the Committee’s
grant of stock awards under the Stock Plan in December, 2012, or (ii) the cash
value of the stock award granted to Taranto in December, 2012, if Taranto’s
termination of employment occurs after the Committee’s grant of stock awards
under the Stock Plan in December, 2012 but prior to the Committee’s grant of
stock awards under the Stock Plan in December, 2013.  As a condition precedent
to Taranto’s receipt of the payments described in this Section 8.4, Taranto
shall execute a general release and waiver on behalf of the Company and its
affiliates in a form acceptable to the Company and Taranto.  Taranto shall be
entitled to all rights and benefits accrued up to the date of termination under
the stock option plans, stock incentive plans, retirement plan, supplemental
plan and other benefit plans and programs of the Company and/or Everest
Reinsurance Company in which Taranto is a participant, as determined in
accordance with the terms and provisions of such plans and programs; provided,
however, that Taranto shall cease to be an active participant in such plans and
programs as of the date of termination.  Notwithstanding the foregoing, it is
expressly agreed and understood that in the case of such termination, all of
Taranto’s then unvested outstanding stock options and then unvested restricted
stock shares will automatically vest in full.  The Company further agrees to pay
Taranto a single cash sum payment equal to the increase of the amount of his
Everest Reinsurance Retirement Plan and Supplemental Retirement plan (“SRP”)
that he would have otherwise been entitled to if he had remained employed
through December 31, 2013.  Additionally, the Company shall arrange for Taranto
to continue to participate , on substantially the same terms and conditions as
in effect for him (including any required contribution) immediately prior to
such termination, in the disability and life insurance programs provided to
 
 
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him until the earlier of (i) the end of the 24 month period beginning on the
effective date of the termination of Taranto’s employment hereunder, or (ii)
such time as he is eligible to be covered by comparable benefit(s) of a
subsequent employer (determined on a benefit-by-benefit and coverage-by-coverage
basis).  The foregoing is referred to as “Benefits Continuation”.  In addition,
the Company agrees to pay Taranto a single cash sum in order to enable Taranto
to pay for medical and dental coverage (through COBRA or otherwise) that is
comparable to the medical and dental coverage in effect for Taranto (and his
dependents, if any) immediately prior to his termination of employment, with
such cash amount equal to the cost of the premiums for such coverage that would
apply if Taranto were to elect COBRA continuation coverage under the Company’s
medical and dental plans following his termination of employment and continue
such coverage for the 24-month period beginning on the date of Taranto’s
termination of employment. Taranto agrees to notify the Company promptly if and
when he begins employment with another employer and if and when he becomes
eligible to participate in any benefit or other welfare plans, programs or
arrangements of another employer.  Except as otherwise expressly stated herein,
benefits payable pursuant to this Section 8.4 shall be paid within sixty (60)
days following Taranto’s termination.
 
8.5    Employee Voluntary Termination.  In the event Taranto terminates his
employment of his own volition, and not pursuant to Section 8.6 of this
Agreement, prior to the end of the term specified in Section 2 of this
Agreement, he shall provide 30 days prior written notice to the Company and such
termination shall constitute a voluntary termination and in such event the
Company’s only obligation to Taranto shall be to make Base Salary payments
provided for in this Agreement through the period ending with the date of such
voluntary termination and any annual incentive bonus earned but not yet paid for
any completed full fiscal year immediately preceding the employment termination
date.  Additionally, if Taranto’s termination of employment occurs prior to the
Committee’s grant of stock awards under the Stock Plan in December, 2012,
Taranto shall be paid a cash amount equal to the cash value of the restricted
stock award granted to Taranto on February 22, 2012, whereas if Taranto’s
termination of employment occurs after the Committee’s grant of stock awards
under the Stock Plan in December, 2012 but prior to the Committee’s grant of
stock awards under the Stock Plan in December, 2013, then Taranto shall be paid
a cash amount equal to the cash value of the stock award granted to Taranto in
December, 2012.  Taranto shall be entitled to all rights and benefits accrued up
to the date of termination under the stock option plans, stock incentive plans,
retirement plan, supplemental plan and other benefit plans and programs of the
Company and/or Everest Reinsurance Company in which Taranto is a participant, as
determined in accordance with the terms and provisions of such plans and
programs; provided, however, that Taranto shall cease to be an active
participant in such plans and programs as of the date of
termination.  Notwithstanding the foregoing, it is expressly agreed and
understood that in the case of such termination, all of Taranto’s then unvested
outstanding stock options and then unvested restricted stock shares will
automatically vest in full.  Taranto understands and agrees that in the event of
the termination of employment pursuant to this Section 8.5 the Company shall
have no obligation to make any payments under this Agreement other than as set
forth in this Section 8.5. Taranto specifically understands and agrees that in
the event of the termination of employment pursuant to this Section 8.5 the
Company shall have no further obligation to pay any bonus to Taranto pursuant to
Section 4 of this Agreement. Except as otherwise expressly stated herein,
benefits payable pursuant to this Section 8.5 shall be paid within sixty (60)
days following Taranto’s termination.
 
 
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8.6     Employee Voluntary Termination for Good Reason.  If at the time Taranto
terminates his employment any of the following circumstances shall have occurred
without Taranto’s express consent and shall have remained uncorrected for more
than thirty (30) days following Taranto’s giving written notice of such
occurrence to the Company, then Taranto’s termination of his employment shall be
deemed a “Termination for Good Reason”: (a) materially adverse change in the
nature or status of his position or responsibilities; (b) a reduction by the
Company in the Base Salary set forth in Section 3 of this Agreement; or (c) a
material breach of this Agreement by the Company, provided, for purposes of
clarification, that the failure of Taranto and the Company to reach agreement on
an alternative bonus arrangement pursuant to Section 4.1 of this Agreement shall
not constitute a material breach.  (In such instance, the parties hereto agree
that an amount equal to two (2) times the sum of Taranto’s annual Base Salary
will be the cash bonus paid to Taranto).  If Taranto’s termination of employment
is deemed a Termination for Good Reason, the Company shall pay to Taranto and
afford to him the compensation and benefits, in the same form and at the same
time, Taranto would be entitled to receive in the event of a Termination by the
Company without Due Cause pursuant to Section 8.4 of this Agreement.
 
8.7     Change of Control.  If within one year of a Material Change (as defined
in the Change of Control Agreement between the parties hereto effective as of
January 1, 2011), Taranto terminates his employment with the Company for any
reason or the Company terminates Taranto’s employment for any reason, Taranto
shall continue to receive Base Salary through the date of such termination and
the Company shall pay to Taranto and afford to him the compensation and benefits
provided for in the Change of Control Agreement.  Notwithstanding the foregoing,
if the rights, compensation and benefits described therein (Change of Control
Agreement) pertaining to termination are less than those provided in this
Agreement, as determined by Taranto, Taranto will be entitled to the
compensation, benefits and rights provided in this Agreement.
 
8.8     General Guaranty.  The Company’s obligations to pay Taranto the
compensation and other benefits specified herein shall be absolute and
unconditional and shall not be affected by any circumstances, including, without
limitation, any set off, counterclaim, recoupment, defense or other right which
the Company or its affiliates may have against him or anyone else. In no event
shall Taranto be obligated to seek other employment or take any other action by
way of mitigation of the amounts payable to him under this Agreement. To the
extent that the Company fails, for any reason, to meet its financial obligations
under this Agreement, Holdings and Everest Reinsurance Company shall have full
responsibility and liability for all such obligations.
 
9.     COVENANTS OF EMPLOYEE
 
9.1    Taranto acknowledges that as a result of the services to be rendered to
the Company hereunder, Taranto will be brought into close contact with many
confidential affairs of the Company, its subsidiaries and affiliates, not
readily available to the public. Taranto further acknowledges that the services
to be performed under this Agreement are of a special, unique, unusual,
extraordinary and intellectual character; that the business of the Company is
international in scope; that its goods and services are marketed throughout the
United States and
 
 
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other countries; and that the Company competes with other organizations that are
or could be located in any part of the United States or the world.
 
9.2    In recognition of the foregoing, Taranto covenants and agrees that,
except as is necessary in providing services under this Agreement, or as
required by law or pursuant to legal process or in connection with an
administrative proceeding before a governmental agency, Taranto will not
knowingly use for his own benefit nor knowingly divulge any Confidential
Information and Trade Secrets of the Company, its subsidiaries and affiliated
entities, which are not otherwise in the public domain and, so long as they
remain Confidential Information and Trade Secrets not in the public domain, will
not disclose them to anyone outside of the Company either during or after his
employment. For the purposes of this Agreement, “Confidential Information” and
“Trade Secrets” of the Company mean information which is proprietary and secret
to the Company, its subsidiaries and affiliated entities. It may include, but is
not limited to, information relating to present future concepts and business of
the Company, its subsidiaries and affiliates, in the form of memoranda, reports,
computer software and data banks, customer lists, employee lists, books,
records, financial statements, manuals, papers, contracts and strategic plans.
As a guide, Taranto is to consider information originated, owned, controlled or
possessed by the Company, its subsidiaries or affiliated entities which is not
disclosed in printed publications stated to be available for distribution
outside the Company, its subsidiaries and affiliated entities as being secret
and confidential. In instances where doubt does or should reasonably be
understood to exist in Taranto’s mind as to whether information is secret and
confidential to the Company, its subsidiaries and affiliated entities, Taranto
agrees to request an opinion, in writing, from the Company as to whether such
information is secret and confidential.
 
9.3    Taranto will deliver promptly to the Company on termination of his
employment with the Company, or at any other time the Company may so request,
all memoranda, notes, records, reports and other documents relating to the
Company, its subsidiaries and affiliated entities, and all property owned by the
Company, its subsidiaries and affiliated entities, which Taranto obtained while
employed by the Company, and which Taranto may then possess or have under his
control.
 
9.4    Taranto will promptly disclose to the Company all inventions, processes,
original works of authorship, trademarks, patents, improvements and discoveries
related to the business of the Company, its subsidiaries and affiliated entities
(collectively “Developments”), conceived or developed during Taranto’s
employment with the Company and based upon information to which he had access
during the term of employment, whether or not conceived during regular working
hours, though the use of Company time, material or facilities or otherwise. All
such Developments shall be the sole and exclusive property of the Company, and
upon request Taranto shall deliver to the Company all outlines, descriptions and
other data and records relating to such Developments, and shall execute any
documents deemed necessary by the Company to protect the Company’s rights
hereunder. Taranto agrees upon request to assist the Company to obtain United
States or foreign letters patent and copyright registrations covering inventions
and original works of authorship belonging to the Company. If the Company is
unable because of Taranto’s mental or physical incapacity to secure Taranto’s
signature to apply for or to pursue any application for any United States or
foreign letters patent or copyright registrations covering inventions and
original works of authorship belonging to the Company, then Taranto hereby
irrevocably designates and appoints the Company and its duly authorized officers
and
 
 
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agents as his agent and attorney in fact, to act for and in his behalf and stead
to execute and file any such applications and to do all other lawfully permitted
acts to further the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if executed by
him. Taranto hereby waives and quitclaims to the Company any and all claims, of
any nature whatsoever, that he may hereafter have for infringement of any
patents or copyright resulting from registrations belonging to the Company.
 
9.5    Taranto agrees that the remedy at law for any breach or threatened breach
of any covenant contained in this Section 9 will be inadequate and that the
Company, in addition to such other remedies as may be available to it, in law or
in equity, shall be entitled to injunctive relief without bond or other
security. This Section 9.5 shall not apply to Section 9.8.
 
9.6     Although the restrictions contained in Sections 9.1 through 9.4 above
are considered by the parties hereto to be fair and reasonable in the
circumstances, it is recognized that restrictions of such nature may fail for
technical reasons, and accordingly it is hereby agreed that if any of such
restrictions shall be determined by a court in a final determination, not
subject to appeal, to be void or unenforceable for whatever reason, but would be
valid if part of the wording thereof was deleted, or the period thereof reduced
or the area dealt with thereby reduced in scope, the restrictions contained in
Sections 9.1 through 9.4 shall be enforced to the maximum extent permitted by
law, and the parties consent and agree that such scope or wording may be
accordingly judicially modified in any proceeding brought to enforce such
restrictions.
 
9.7    Notwithstanding that Taranto’s employment hereunder may expire or be
terminated as provided in Section 2 or Section 8 above, this Agreement shall
continue in full force and effect insofar as is necessary to enforce the
covenants and agreements of Taranto contained in this Section 9.
 
9.8    If Taranto engages in Competition within six months after the date of his
termination, he will transfer back to the Company all of the Net Accelerated
Shares referenced in Section 5.2 plus an amount equal to the lesser of (a) the
value of the Tax Shares referenced in Section 5.2 as of the date of execution of
this Agreement or (b) the excess, if any, of Taranto’s combined federal and
state income tax liability determined without regard to any effect of the
repayment of the Net Accelerated Shares for the year in which such repayment
occurs over Taranto’s actual combined federal and state income tax liability for
such year.  For purposes of the preceding sentence, “Competition” means Taranto
directly or indirectly engaging in the property and casualty insurance or
reinsurance business, whether such engagement is as an officer, director,
proprietor, employee, partner, investor (other than as holder of less than 5% of
the outstanding capital stock of a publicly traded corporation), consultant,
advisor, agent, sales representative or other participant, in any geographic
area in which the Company or any of its parents, subsidiaries or affiliates
conducts any line of business.
 
10.     ARBITRATION.
 
The parties shall use their best efforts and good will to settle all disputes by
amicable negotiations. The Company and Taranto agree that, with the express
exception of any dispute or controversy arising under Section 9 of this
Agreement, any controversy or claim arising out of or in any way relating to
Taranto’s employment with the Company, including, without limitation,
 
 
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any and all disputes concerning this Agreement and the termination of this
Agreement that are not amicably resolved by negotiation, shall be settled by
arbitration in New Jersey, or such other place agreed to by the parties, as
follows:
 
(a)    Any such arbitration shall be heard by a single arbitrator. Except as the
parties may otherwise agree, the arbitration, including the procedures for the
selection of an arbitrator, shall be conducted in accordance with the National
Rules for the Resolution of Employment Disputes of the American Arbitration
Association (“AAA”).
 
(b)    All attorneys’ fees and costs of the arbitration shall in the first
instance be borne by the respective party incurring such costs and fees, but the
arbitrator shall have the discretion to award costs and/or attorneys’ fees as he
or she deems appropriate under the circumstances. The parties hereby expressly
waive punitive damages, and under no circumstances shall an award contain any
amounts that are in any way punitive in nature.
 
(c)    Judgment on the award rendered by the arbitrator may be entered in any
court having jurisdiction thereof.
 
(d)    It is intended that controversies or claims submitted to arbitration
under this Section 10 shall remain confidential, and to that end it is agreed by
the parties that neither the facts disclosed in the arbitration, the issues
arbitrated, nor the view or opinions of any persons concerning them, shall be
disclosed to third persons at any time, except to the extent necessary to
enforce an award or judgment or as required by law or in response to legal
process or in connection with such arbitration.
 
(e)     Notwithstanding the foregoing, each of the parties agrees that, prior to
submitting a dispute under this Agreement to arbitration, the parties agree to
submit for a period of sixty (60) days, to voluntary mediation before a jointly
selected neutral third party mediator under the auspices of JAMS, New York, New
York Resolutions Center (or any successor location), pursuant to the procedures
of JAMS International Mediation Rules conducted in New Jersey (however, such
mediation or obligation to mediate shall not suspend or otherwise delay any
termination or other action of the Company or affect the Company’s other
rights).
 
11.    SUCCESSORS AND ASSIGNS.
 
11.1     Assignment by the Company and Holdings.  This Agreement shall inure to
the benefit of and shall be binding upon the successors and assigns (including
successors by merger, consolidation, sale or similar transaction) of the Company
and Holdings, respectively.  It is assignable by the Company and Holdings to the
purchaser or assignee of all or substantially all of the Company’s or Holdings’
assets.
 
11.2     Assignment by Taranto.  Taranto may not assign this Agreement or any
part thereof; provided, however, that nothing herein shall preclude one or more
beneficiaries of Taranto from receiving any amount that may be payable following
occurrence of his legal incompetency or his death and shall not preclude the
legal representative of his estate from receiving such amount or from assigning
any right hereunder to the person or persons entitled thereto under his will or,
in the case of intestacy, to the person or persons entitled thereto under the
laws of the intestacy applicable to his estate.  This Agreement and all of the
provisions hereof
 
 
 
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shall be binding upon and inure to the benefit of, Taranto and his successors
(including executors, administrators, personal representatives, heirs and
distributees).
 
12.    GOVERNING LAW.
 
This Agreement shall be deemed a contract made under, and for all purposes shall
be construed in accordance with, the laws of the State of New Jersey without
reference to the principles of conflict of laws.
 
13.    ENTIRE AGREEMENT
 
This Agreement contains all the understandings and representations between the
parties hereto pertaining to the subject matter hereof and supersedes all
undertakings and agreements, whether oral or in writing, if any there be,
previously entered into by them with respect thereto, including but not limited
to the employment agreement executed by the parties on June 15, 2011.
 
14.    AMENDMENT OR MODIFICATION: WAIVER
 
No provision of this Agreement may be amended or modified unless such amendment
or modification is agreed to in writing, signed by Taranto and by a duly
authorized officer of the Company. Except as otherwise specifically provided in
this Agreement, no waiver by either party hereto of any breach by the other
party of any condition or provision of the Agreement to be performed by such
other party shall be deemed a waiver of a similar or dissimilar provision or
condition at the same or any prior or subsequent time.
 
15.     NOTICES
 
Any notice to be given hereunder shall be in writing and delivered personally or
sent by overnight mail, addressed to the party concerned at the address
indicated below or to such other address as such party may subsequently give
notice of hereunder in writing:
 
If to the Company or Holdings:
 
 
Everest Global Services, Inc.

 
Westgate Corporate Center

 
477 Martinsville Road

 
P.O. Box 830 Liberty Corner,

 
New Jersey 07938-0830

 
Attention: General Counsel

 
 
If to Taranto:

 
160 Henry Street

 
Brooklyn, New York 11201

 
 
 
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16.     SEVERABILITY.
 
In the event that any provision or portion of this Agreement shall be determined
to be invalid or unenforceable for any reason, the remaining provisions or
portions of this Agreement shall be unaffected thereby and shall remain in full
force and effect to the fullest extent permitted by law.
 
17.    WITHHOLDING AND TAXES.
 
Anything to the contrary notwithstanding, all payments required to be made by
the Company hereunder to Taranto or his beneficiaries, including his estate,
shall be subject to withholding and deductions as the Company may reasonably
determine it should withhold or deduct pursuant to any applicable law or
regulation. In lieu of withholding or deducting such amounts in whole or in part
the Company may, in its sole discretion, accept other provision for payment as
permitted by law, provided it is satisfied in its sole discretion that all
requirements of law affecting its responsibilities to withhold such taxes have
been satisfied.
 
In the event it shall be determined that any payments, distributions, or
benefits of any type by the Company to or for the benefit of Taranto, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (the “Total Payments”), would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code (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 Taranto shall be entitled to receive an additional payment
(a “Gross-Up Payment”) in an amount such that after payment by Taranto of all
taxes (including additional excise taxes under said Section 4999, and any
interest and penalties imposed with respect to any taxes) imposed upon the
Gross-Up Payment, Taranto retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Total Payments.
 
Notwithstanding anything in this Agreement to the contrary, it is the intention
of the parties that this Agreement comply with Section 409A of the Code and any
regulations and other guidance issued thereunder, and this Agreement and. the
payment of any benefits hereunder shall be operated and administered
accordingly. Specifically, but not by limitation, Taranto agrees that if, at the
time of termination of employment, the Company is considered to be publicly
traded and he is considered to be a specified employee, as defined in Section
409A, then some or all of such payments to be made hereunder as a result of his
termination of employment shall be deferred for no more than six (6) months
following such termination of employment, if and to the extent the delay in such
payment is necessary in order to comply with the requirements of Section 409A of
the Code. Upon expiration of such six (6) month period (or, if earlier, his
death), any payments so withheld hereunder from Taranto hereunder shall be
distributed to Taranto, with a payment of interest thereon credited at a rate of
prime plus 1 % (with such prime rate to be determined as of the actual payment
date).
 
With respect to any amount of expenses eligible for reimbursement that is
required to be included in Taranto’s gross income for federal income tax
purposes, such expenses shall be reimbursed to Taranto no later than December 31
of the year following the year in which Taranto incurs the related expenses.  In
no event shall the amount of expenses (or in-kind benefits) eligible for
reimbursement in one taxable year affect the amount of expenses (or in-kind
benefits)
 
 
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eligible for reimbursement in any other taxable year (except for those medical
reimbursements referred to in Section 105(b) of the Internal Revenue Code of
1986), nor shall Taranto’s right to reimbursement or in-kind benefits be subject
to liquidation or exchange for another benefit.
 
If the benefits payable hereunder constitute deferred compensation within the
meaning of Section 409A of the Code, then Taranto shall execute and deliver to
the Company such release within 60 days following the receipt of the general
release, or if later, immediately following the expiration of any revocation
period required by law.  Benefits that would have otherwise been payable during
such 60-day period shall be accumulated and paid on the 60th day following
Taranto’s termination, provided such release shall have been executed and such
revocation periods shall have expired.  If a bona fide dispute exists, then
Taranto shall deliver a written notice of the nature of the dispute to the
Company within 30 days following receipt of such general release.  Benefits
shall be deemed forfeited if the release (or a written notice of a bona fide
dispute) is not executed and delivered to the Company within the time specified
herein.
 
Notwithstanding anything in this Agreement to the contrary, if any payment or
benefit provided by the Company to or for the benefit of Taranto, whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise (a “409A Payment”) is subject to the tax imposed by
Section 409A, including any interest or penalties incurred by Taranto with
respect to such tax (such tax, interest and penalties are hereinafter
collectively referred to as the “409A Tax”), then Taranto shall be entitled to
receive an additional payment (a “409A Gross-Up Payment”) in an amount such
that, after payment by Taranto of all taxes (and any interest or penalties
imposed with respect to such taxes), including, without limitation, any income
taxes (and any interest and penalties imposed with respect thereto) and 409A Tax
imposed upon the 409A Gross-Up Payment, Taranto retains an amount of the 409A
Gross-Up Payment equal to the 409A Tax imposed upon the 409A Payments.  The 409A
Gross-Up Payment shall be paid no later than the end of Taranto’s taxable year
next following the taxable year in which the 409A Tax (and any income or other
related taxes or interest or penalties thereon) on a 409A Payment are remitted
to the Internal Revenue Service or any other applicable taxing
authority.  Notwithstanding any other provision of this Section 17, the Company
may, in its sole discretion, withhold and pay over to the Internal Revenue
Service or any other applicable taxing authority, for the benefit of Taranto,
all or any portion of any 409A Gross-Up Payment, and Taranto hereby consents to
such withholding.
 
Termination of employment, or words of similar import, used in this Agreement
means, for purposes of any payments under this Agreement that are payments of
deferred compensation subject to Section 409A of the Code, “separation from
service” as defined in Section 409A of the Code and the regulations promulgated
thereunder.
 
18.    SURVIVORSHIP
 
The respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
 
 
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19.    NO MITIGATION
 
In no event shall Taranto be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to him under any of the
provisions of this Agreement, nor shall the amount of any payment hereunder be
reduced by any compensation earned by him as a result of subsequent employment.
 
20.     INDEMNIFICATION
 
(a)    The Company shall indemnify, defend and hold Taranto harmless, to the
maximum extent permitted by law, against all judgments, fines, amounts paid in
settlement and all reasonable expenses, including attorneys’ fees incurred by
him, in connection with the defense of, or as a result of, any action or
proceeding (or any appeal from any action or proceeding) in which Taranto is
made or is threatened to be made a party by reason of the fact that he is or was
an officer or director of the Company, regardless of whether such action or
proceeding is one brought by or in the right of the Company.  Each of the
parties hereto shall give prompt notice to the other of any action or proceeding
from which the Company is obligated to indemnify, defend and hold harmless
Taranto of which it or he (as the case may be) gains knowledge.
 
(b)    The Company agrees that Taranto shall be covered and insured up to the
full limits provided by all directors’ and officers’ insurance which the Company
then maintains to indemnify its directors and officers (and to indemnify the
Company for any obligations which it incurs as a result of its undertaking to
indemnify its officers and directors), subject to applicable deductibles and to
the terms and conditions of such policies.
 
21.     HEADINGS
 
Headings of the sections of this Agreement are intended solely for convenience
and no provision of this Agreement is to be construed by reference to the title
of any section.
 
22.     CLAWBACK
 
Notwithstanding anything in this Agreement to the contrary, if Taranto engages
in theft, embezzlement or other criminal misappropriation of Company funds, as
determined by a court of law, during the term of this Agreement, then Taranto
shall be required to repay to the Company any incentive compensation (including
equity awards) paid to Taranto in 2013; provided further that the Company may
only exercise this clawback right by asserting such a claim within a 90 day
period following such determination by a court of law, and in no event may such
a claim be asserted beyond the three year period following the expiration of the
term of this Agreement.
 
23.    409 A COMPLIANCE
 
It is the intention of the parties that the payments and benefits to which
Taranto could become entitled under this Agreement not be subject to accelerated
recognition of income or imposition of additional tax under Code section 409A,
and this agreement shall be construed in a manner that is consistent with this
intent.
 
 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of July 18,
2012.
 

 
EVEREST GLOBAL SERVICES, INC. 
    EVEREST REINSURANCE         HOLDINGS, INC.                    
/S/ SANJOY MUKHERJEE
   
/S/ SANJOY MUKHERJEE
Sanjoy Mukherjee
   
Sanjoy Mukherjee
Executive Vice President
   
Executive Vice President
                              /S/ JOSEPH V. TARANTO       Joseph V. Taranto

 
 
 
 
 
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