EXHIBIT 10.1
March 14, 2007
Jeffrey L. Radke
c/o PXRE Group Ltd.
PXRE House
110 Pitts Bay Road
Hamilton, HM 08 Bermuda

     Re:   Separation Letter Agreement (this “Letter Agreement”)

Dear Jeff:
Your last day of employment with and service as a Director of PXRE Group Ltd.
(the “Company”), and each of the Company’s direct and indirect subsidiaries,
including, without limitation, PXRE Corporation, PXRE Reinsurance Company and
PXRE Reinsurance Ltd. (collectively with the Company, “PXRE”) will be the
earliest of (i) December 28, 2007, (ii) the date of the closing under the
Agreement and Plan of Merger by and among the Company, PXMS, Inc. and Argonaut
Group, Inc. dated as of March 14, 2007, or, in the event that a closing does not
occur as aforesaid for any reason, the date of the closing of an alternative
transaction in which the Company is acquired (whether by merger or in a sale of
assets or capital stock) by an unaffiliated person or entity, (iii) the date you
terminate your employment by written notice to the Company for “Good Reason” (as
defined in paragraph 17 below) under this Letter Agreement or (iv) the date your
employment with the Company is terminated by written notice to you other than
for “Cause” (as defined in paragraph 17 below) under this Letter

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Agreement (the “Separation Date”). We and you hereby agree that your termination
on the Separation Date constitutes termination without Cause for purposes of all
of the Company’s compensation, equity and benefit plans and programs, except for
the Company’s 2004 Incentive Bonus Compensation Plan, your entitlements under
which are governed by Section 1(e) hereof.
     Subject to your acceptance of this Letter Agreement in the manner described
in Section 21 below, and provided that you do not terminate your employment
prior to the Separation Date other than on account of Good Reason and provided
that prior to the Separation Date the Company does not terminate your employment
for Cause, you shall be entitled to, and the Company shall pay and provide you
with, the payments, compensation, benefits and entitlements in connection with
your termination of employment as follows:

1.   Compensation and Benefits. In addition to your final paycheck and your
vested benefits under the Company’s Retirement Plan, 401(k) Plan and
Supplemental Executive Retirement Plan, (collectively, the “Retirement Plans”),
(which vested benefits as of the Separation Date are set forth in Exhibit A
hereto and which will be paid in accordance with the terms of such plans), you
will be entitled to the following additional payments, compensation, benefits
and entitlements (subject, in each case, to applicable statutory deductions and
withholdings):

  (a)   Severance Payment. You will receive a lump sum severance payment (the
“Severance Payment”) of (i) U.S. $1,626,000, plus (ii) a tax gross-up in respect
of the U.S. $126,000 housing allowance payment included in the U.S. $1,626,000,
which the parties agree is an additional U.S. $61,634.46. Subject to paragraph
1(h) below, the Severance Payment shall be paid by the Company in the form of
cash on the first business day following the six month anniversary of the
Separation Date. Payments under this subsection (a) will

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      constitute payment in full of the Base Salary and Severance Benefits
payable under Sections 4.1(i), 4.6.1 and 4.6.2 of the Employment Agreement dated
June 23, 2005, between the Company and Jeffrey L. Radke (the “Employment
Agreement”).     (b)   Incentive Plan. On the Separation Date, all stock options
and restricted shares held by you will fully vest, will become non-forfeitable
and all restrictions thereon will lapse. On the Separation Date, all stock
options held by you will be exercisable for the period of time provided under
the applicable plan of the Company in the circumstances of a termination of
employment without cause; provided that if on or before the Separation Date the
Internal Revenue Service issues guidance, rules or regulations that counsel to
the Company and you agree permits an extension of the exercise periods of such
stock options to their original ten year periods without causing such to be a
taxable event under Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”), then the Company agrees to promptly take all necessary
corporate action so to extend such exercise periods.     (c)   Vacation Pay. You
will receive a lump sum payment of accrued and unused vacation, payable by the
Company on the Separation Date in the form of cash. The parties hereto agree
that you will be entitled to U.S. $3,076.92 per day for each day of accrued and
unused vacation existing on the Separation Date.     (d)   Health Benefits. On
the first business day following the six month anniversary of the Separation
Date, the Company will pay you for the cost of twelve (12) months of medical,
dental, disability and life insurance coverage to be obtained for you and your
eligible dependents through Colonial Medical Insurance Company Ltd. (or other
similar

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      provider) at the same coverage levels and on the same terms and conditions
applicable to you and your eligible dependents as exist immediately prior to the
Separation Date, provided that the Company shall have received appropriate
documentation evidencing such cost, and provided, further, that such
reimbursement shall not exceed U.S. $30,000. Such payment shall be in lieu of
any obligation to allow continued participation by you and your eligible
dependents in any health, medical, life, disability and similar plans of the
Company.     (e)   Annual Bonus. You acknowledge that no annual bonus is payable
for 2006 or 2007 under Section 2.3 of the Employment Agreement.     (f)   Other
Employee Benefits. On the first business day following the six month anniversary
of the Separation Date, the Company will pay you U.S. $40,000 in cash in lieu of
any obligation to permit you to continue to participate in any compensation,
deferred compensation, 401(k), retirement and other benefit plans in which and
to the extent that you participate in such plans on the Separation Date.     (g)
  Legal Fees. On the date hereof, the Company shall reimburse you for the
reasonable legal fees incurred by you in connection with the negotiation of this
Letter Agreement up to a maximum of U.S. $25,000, provided that the Company
shall have received appropriate documentation evidencing such legal fees.    
(h)   Timing Rule. Notwithstanding anything in subparagraphs (a), (d) and
(f) above to the contrary, in the event that on the Separation Date, you would
have had the right to any payments pursuant to the provisions of Sections 4.6
and 4.7 of the Employment Agreement that would have been payable in 2007 (the
“2007 Payments”) if such Sections

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      of the Employment Agreement had then been in effect, such 2007 Payments
will be made under this Letter Agreement in 2007 in accordance with Section 4.7
of the Employment Agreement (as if such Section of the Employment Agreement had
then been in effect), and you will receive a lump-sum cash payment of the total
amounts set forth in subparagraphs (a), (d) and (f) above, minus the 2007
Payments (if any), on the later of (i) January 2, 2008 or (ii) the first
business day following the six month anniversary of the Separation Date.

2.   For a period of twelve (12) months after the Separation Date, you, on
behalf of yourself and Indica Consulting Ltd. (“Indica”), agree to continue to
comply with the covenants under Sections 5.1, 5.2 and 5.3 of the Employment
Agreement. If you breach your obligations under Sections, 5.1, 5.2 or 5.3 of the
Employment Agreement during such twelve-month period, the Company will continue
to have the rights to enforce such obligations under Section 5.4 of the
Employment Agreement and to seek the damages for such breach set forth in
Section 5.5 of the Employment Agreement. Notwithstanding the foregoing, it is
understood by the Company that during such twelve-month period (and thereafter)
you will be the owner of a controlling equity interest in Indica, will serve as
a director and executive officer of Indica and will be active in strategic
planning and implementation, and the management and operation, of Indica’s risk
modeling, portfolio management and consulting businesses, including in such
capacity conducting business with PXRE and with persons and entities
unaffiliated with PXRE (the foregoing, collectively, the “Indica Activities”).
The Company agrees that you may engage in the Indica Activities provided that
such engagement does not result in a breach of any of your obligations under
Sections 5.1, 5.2 or 5.3 of the Employment Agreement, except to the extent that
the Company consents to such breach.

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    Any breach of such obligations by Indica shall be deemed to be a breach by
you for purposes of this Section 2.   3.   Cessation of all other Compensation
and Benefits. From and after the Separation Date, and except as otherwise
expressly set forth in this Letter Agreement and in Sections 10 or 12 of the
Employment Agreement, you will not receive compensation, payments or benefits of
any kind from PXRE and you expressly acknowledge and agree that, from and after
the Separation Date, except with respect to the compensation, payments, benefits
and rights expressly set forth in this Letter Agreement and in Sections 10 and
12 of the Employment Agreement, you are not entitled to any compensation,
payment, benefit or right whatsoever, including, without limitation, any right
to payment under the sections of the Employment Agreement which do not survive
beyond the Separation Date as provided in paragraph 10 below, or under the
Company’s Amended and Restated Severance Plan for Certain Executives of PXRE
Group Ltd., Severance Pay Plan or 2004 Incentive Bonus Compensation Plan.   4.  
Confidential Information. Except (i) as may be required by the lawful order of a
court or agency of competent jurisdiction, (ii) as is necessary or appropriate
in connection with your cooperation and assistance pursuant to paragraph 7
below, (iii) with respect to any litigation, arbitration, mediation or
investigation involving PXRE or this Letter Agreement, including, without
limitation, the enforcement of this Letter Agreement, (iv) as to information
which becomes known to the public or within the relevant trade or industry other
than due to your violation of this paragraph 4, and (v) to the extent that you
have express authorization from the Company, you, on behalf of yourself and
Indica, hereby agree to keep secret and confidential indefinitely all non-public
information (including, without limitation,

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    information regarding any pending or threatened litigation, arbitrations or
disputes) concerning PXRE which was acquired by or disclosed to you during the
course of your employment with PXRE, and not to disclose same, either directly
or indirectly, to any other person, firm or business entity, or use it in any
way. To the extent that you obtained information on behalf of PXRE that, to your
knowledge, is subject to attorney-client privilege as to PXRE’s attorneys, you
agree to take reasonable steps to maintain the confidentiality of such
information and, to the extent within your control, to preserve such privilege.
  5.   Non-disparagement. You will not at any time after the Separation Date,
whether in writing or orally, knowingly publicly disparage, or demean in any way
PXRE or its products, services, officers, directors or employees. The Company
will not, and will cause each of the Company’s direct and indirect controlled
subsidiaries and each of the Company’s and such controlled subsidiaries’
respective officers and directors not to, at any time, whether in writing or
orally, knowingly publicly disparage or demean you in any way. Notwithstanding
the foregoing, nothing in this paragraph 5 will prevent any person from
(x) responding publicly to incorrect, disparaging, derogatory or demeaning
public statements to the extent reasonably necessary to correct or refute such
public statement or (y) making any truthful statement to the extent (i)
necessary with respect to any litigation, arbitration, mediation or
investigation involving (A) PXRE or this Letter Agreement, including, but not
limited to, the enforcement of this Letter Agreement, or (B) any claims made by
third parties that relate to your service as a director or officer of the
Company, including, without limitation, any litigation related to the pending
securities complaints that have been filed in the Southern District of New York
by Stephen Goldberger, Steve Klein, Ralph Lowry and Eldon Voss (the

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    “Class Action Securities Actions”) or (ii) required by law or by any court,
arbitrator, mediator or administrative or legislative body (including any
committee thereof) with apparent jurisdiction to order such person to disclose
or make accessible such information.   6.   Release. Each party to this Letter
Agreement agrees to execute and deliver to the other party the Mutual Release of
Claims attached hereto as Exhibit A (the “Mutual Release”) on or immediately
following the Separation Date. A party which executes and delivers the Mutual
Release to the other party will be released from the provisions of this
Section 6 (and the Mutual Release executed and delivered by such party shall be
of no force or effect) if, after such party’s execution and delivery of the
Mutual Release to the other party, the other party does not deliver a fully
executed counterpart of the Mutual Release within ten (10) days after such other
party’s receipt of the Mutual Release signed by the first party.   7.   Future
Cooperation.

  (a)   You agree that, upon the Company’s reasonable request, you will use
reasonable efforts to assist and cooperate with the Company and the other
Releasees in connection with the defense or prosecution of any claim that may be
made against or by the Company or any of the other Releasees in their official
capacities, or in connection with any ongoing or future investigation or dispute
or claim of any kind involving the Company or any of the other Releasees in
their official capacities, including any proceeding before any arbitral,
administrative, regulatory, self-regulatory, judicial, legislative, or other
body or agency; provided, however, that, any such assistance and cooperation
requested by the Company will take into account your business and personal
commitments, and that you will not be required to devote more than ten
(10) business days per year to such assistance and

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      cooperation, and, provided, if at the time of such assistance and
cooperation you are not employed or providing consulting services on a full-time
basis (other than the Indica Activities), you will be compensated at the rate of
U.S. $350.00 per hour spent in such activities.     (b)   To the extent
possible, the Company will try to limit your participation under subparagraph
7(a) above to regular business hours. In any event, (i) in any matter subject to
this paragraph 7, you will not be required to act against your best interests or
the best interests of any employer or business venture in which you are a
partner or active participant (including, without limitation, Indica) where the
interest of your employer or business venture are adverse to the interests of
PXRE and (ii) any request for assistance and cooperation will take into account
the significance of the matters at issue in the litigation, arbitration,
proceeding or investigation. The Company agrees to provide you with reasonable
notice, to the extent practicable, in the event your assistance and cooperation
is required under this paragraph 7. The Company will reimburse you for the
reasonable expenses and costs actually incurred by you as a result of providing
assistance and cooperation under this paragraph 7, such reimbursement to be made
as soon as practicable after the receipt by the Company of the appropriate
documentation evidencing such expenses and costs. Such expenses and costs will
include, without limitation, demonstrably lost wages or other fees, travel costs
and legal fees to the extent you reasonably believe that separate representation
is warranted, provided the Company is notified in advance of the amount of such
lost wages, costs and fees. Your entitlement to reimbursement of such wages,
costs and fees pursuant to this paragraph 7 will in no way affect your rights to
be indemnified and/or advanced expenses in accordance with the

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      Company’s corporate documents, any applicable insurance policy, and/or in
accordance with this Letter Agreement (including pursuant to Sections 12.1, 12.2
and 12.3 of the Employment Agreement).

8.   Successors and Assigns. This Letter Agreement will inure to the benefit of
and will be binding upon the parties hereto and (i) with respect to the Company,
its successors and assigns, including, but not limited to, any entity with which
the Company may merge or consolidate or to which the Company may sell all or
substantially all of its assets, (it being agreed by the Company that it will
cause any buyer of all or substantially all of its assets or any such successor
or assign to assume and agree to perform this Letter Agreement (and the sections
of the Employment Agreement which expressly survive the execution and delivery
hereof) in the same manner and to the same extent as the Company and that such
sale , succession or assignment will not relieve the Company of its obligations
hereunder or thereunder) and (ii) with respect to you, your executors,
administrators, heirs and legal representatives. In the event of your death, all
amounts due hereunder will be accelerated and immediately paid to your estate.  
9.   Severability; Headings. In the event that any provision of this Letter
Agreement is held by a court of proper jurisdiction to be invalid, void or
voidable or otherwise unenforceable, the balance of this Letter Agreement will
continue in full force and effect unless such construction would clearly be
contrary to the intentions of the parties or would result in an unconscionable
injustice. The headings of the sections and paragraphs of this Letter Agreement
are for convenience of reference only and will not constitute a part hereof.  
10.   Miscellaneous; Choice of Law. This Letter Agreement may be executed in
several

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    counterparts, each or which will be deemed to be an original but all of
which together will constitute one and the same instrument. This Letter
Agreement constitutes the entire agreement, and supersedes all prior agreements,
of the parties hereto relating to the subject matter hereof, including, without
limitation, the Employment Agreement, which, subject to the following proviso
and subject to the provisions of paragraph 1(h) hereof, is hereby terminated and
of no further force or effect; provided that (i) Sections 1.1, 1.2, 2.1, 2.4,
2.5, 2.6 and 3 of the Employment Agreement shall remain in full force and effect
until the Separation Date and (ii) the first sentence of Section 4.6.4,
Sections 5.1, 5.2, 5.3, 5.4, 5.5 and 6 (subject to the terms and conditions of
Section 2 hereof), Sections 10(a) through (d) (and, for greater certainty, it is
agreed by the parties that the payments, compensation, benefits and entitlements
pursuant to paragraph 1 hereof shall be “Covered Payments” within the meaning of
Section 10(d)), and Sections 12.1, 12.2 and 12.3 of the Employment Agreement,
shall each survive the execution and delivery hereof and shall survive after the
Separation Date and the termination of the other provisions of the Employment
Agreement. There are no written or oral terms or representations made by either
party with respect to the subject matter hereof other than those contained
herein and therein. This Letter Agreement (and the sections of the Employment
Agreement which expressly survive after the Separation Date) cannot be modified,
altered or amended except by a writing signed by all of the parties hereto. No
waiver by any party of any provision or condition of this Letter Agreement at
any time will be deemed a waiver of such provision or condition at any prior or
subsequent time or of any provision or condition at the same or any prior or
subsequent time. This Letter Agreement will be governed by and construed in
accordance with the laws of Bermuda, without giving effect to any choice of law
or conflict of law provision or rule (whether of

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    Bermuda or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than Bermuda.   11.   Remedies. In the event of a
breach or threatened breach of paragraph 5 of this Letter Agreement, you and the
Company agree that the Company and you, as applicable, will be entitled to
injunctive or other equitable relief in a court of appropriate jurisdiction to
remedy any such breach or threatened breach, and you and the Company acknowledge
that damages would be inadequate and insufficient. The existence of this right
to injunctive and other equitable relief will not limit any other rights or
remedies that you or the Company may have at law or in equity including, without
limitation, the right to monetary, compensatory and punitive damages.   12.  
Indemnification. The Company agrees that, for purposes of and without limiting
Sections 12.1, 12.2 and 12.3 of the Employment Agreement, the conduct of
activities pursuant to paragraph 7 hereof will be covered by the provisions of
such Sections and that you will be indemnified, held harmless and reimbursed for
and in respect of such activities to the extent and subject to the terms and
conditions set forth in such Section.   13.   Notices. For the purpose of this
Letter Agreement, notices, demands and all other communications provided for in
this Letter Agreement will be in writing and will be sent by messenger or
overnight courier (provided in each case, confirmation of receipt is obtained),
certified or registered mail, postage prepaid and return receipt requested to
the parties at their respective addresses set forth below or to such other
address as to which notice is given.

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If to you:
At the last address on the records of the Company
If to the Company:
PXRE Group Ltd.
PXRE House
110 Pitts Bay Road
Pembroke HM 08, Bermuda
With a copy to
PXRE Reinsurance Company
379 Thornall Street
Second floor
Edison, NJ 08837
Attn: General Counsel
Notices, demands and other communications will be deemed given on delivery
thereof.

14.   No Mitigation; No Offset. In no event will you be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
under this Letter Agreement. There will be no offset by the Company against your
entitlements under this Letter Agreement on account of any claim PXRE may have
against you or for any compensation or other amounts that you earn from
subsequent employment or engagement of your services, including without
limitation, from or in connection with the Indica Activities.   15.   Company
Representations. The Company represents and warrants that (i) the execution,
delivery and performance of this Letter Agreement by the Company has been fully
and validly authorized by all necessary corporate action, (ii) the officer
signing this Letter

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    Agreement on behalf of the Company is duly authorized to do so, (iii) the
execution, delivery and performance of this Letter Agreement by the Company does
not violate any applicable law, regulation, order, judgment or decree or any
agreement, plan or document to which the Company is a party or by which it is
bound and (iv) upon execution and delivery of this Letter Agreement by the
parties, it will be the valid and binding obligation of the Company enforceable
against it in accordance with its terms, except to the extent that
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors’ rights generally.   16.  
Arbitration. Subject to the provisions of Section 11 above, any disputes arising
under or in connection with this Letter Agreement (and the sections of the
Employment Agreement which expressly survive the execution and delivery hereof)
will be resolved by binding arbitration, to be held in Hamilton, Bermuda, in
accordance with the employment dispute rules and procedures of the American
Arbitration Association. Judgment upon the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof. Each party hereto will
bear his or its own costs of the arbitration or litigation, including, without
limitation, his or its attorneys’ fees.   17.   Definitions. For purposes of
this Letter Agreement, “Good Reason” shall mean the occurrence of any of the
following events (without the your prior written consent): (a) a decrease in the
your current base salary, or a failure by the Company to pay material
compensation when due and payable to you in connection with your employment with
the Company; (b) the failure by the Company to promptly obtain an agreement from
a successor to assume and agree to perform this Letter Agreement in accordance
with paragraph 8 above; (c) the Company’s requiring you to be based at any
office or location other than an office

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      located in Bermuda or within fifty (50) miles of Manhattan; (d) any action
by the Company that materially reduces the fringe benefits or perquisites
provided to you or your eligibility to participate in any employee benefit plan
of the Company unless you are provided with equal or more favorable fringe
benefits, perquisites or employee benefits, as the case may be; (d) the
assignment to you of any duties inconsistent in any respect with your position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 1 of the Employment
Agreement, other than an isolated, unsubstantial and inadvertent action that is
not taken in bad faith and is remedied by the Company within 10 days after
receipt of notice thereof given by you and other than any senior executive
duties that may be assigned to you in connection with the start-up and conduct
of business by Peleus Reinsurance Ltd. in accordance with the business plan
therefor; and (e) any material breach of any provision of this Letter Agreement
(or of the sections of the Employment Agreement which survive in accordance with
paragraph 10 hereof) not covered by any other clause above. If any such Good
Reason is susceptible of cure, you may not resign for Good Reason unless you
first give the Company notice of your intention to resign and of the grounds for
such resignation, and the Company has not, within ten (10) business days
following receipt of the notice, cured such Good Reason, or in the event that
such Good Reason is not susceptible to cure within such 10 business day period,
the Company has not taken all reasonable steps within such 10 business day
period to cure such Good Reason as promptly as practicable thereafter, but in no
event less than 20 business days after such written notice from you. For
purposes of this Agreement, “Cause” shall mean: (a) any willful act or willful
omission that constitutes a material breach by you of your obligations under
this Letter Agreement; (b) the willful and continued refusal of you to

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    substantially perform the material duties required of you under this Letter
Agreement; (c) any willful material violation by you of any law or regulation
applicable to the business of the Company or any of its subsidiaries or
affiliates; (d) your conviction of or plea of guilty or nolo contendere to a
felony or a crime involving moral turpitude, or any willful perpetration by you
of a common law fraud; or (e) any other willful misconduct by you that
materially injures the financial condition or business reputation of, or is
otherwise materially injurious to, the Company or any of its subsidiaries or
affiliates. For purposes hereof, an action or inaction will not be deemed to be
willful if such is taken or omitted to be taken in the good faith belief that
such is in, or not opposed to, the best interests of PXRE. If the events giving
rise to Cause are susceptible to cure, the Company shall not terminate your
employment hereunder unless the Company first gives you written notice of its
intention to terminate and of the grounds for such termination, and you have
not, within ten (10) business days following receipt of the notice, cured the
events giving rise to Cause. Except in the case of a conviction or plea
described in clause (d) above, no termination shall be treated as a termination
for Cause unless and until the Company Board shall have determined by a majority
vote of its members that Cause exists, after you have had an opportunity to be
heard (with counsel of your choice) before the Company Board.   18.  
Withholding. The payment of any amount pursuant to this Letter Agreement shall
be subject to applicable withholding and payroll taxes, and such other
deductions as may be required, if any.   19.   Counterparts. This Letter
Agreement may be executed in two or more counterparts. Signatures delivered by
facsimile or pdf shall be effective for all purposes.

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20.   409A. You and the Company agree that the terms and conditions hereof are
intended by the parties to comply with Section 409A of the Code and that,
accordingly, you shall not report on your personal income tax returns that any
payment under Section 1 hereof will be subject to an excise tax or an additional
income tax by application of Section 409A of the Code. You shall notify the
Company in writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the gross-up payment
under Section 10(d) of the Employment Agreement. Such notification shall be
given as soon as practicable but no later than thirty (30) business days after
you receive written notification of such claim and shall apprise the Company of
the nature of such claim in reasonable detail and the date on which such claim
is requested to be paid. You shall not pay such claim prior to the expiration of
the thirty (30) day period following the date on which you give such notice to
the Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies you in writing prior
to the expiration of such period that it desires to contest such claim, you
shall: (i) give the Company all available information reasonably requested by
the Company relating to such claim; (ii) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney selected by the Company and reasonably
acceptable to you and/or ceasing all efforts to contest such claim;
(iii) cooperate in all reasonably respects with the Company in good faith in
order to effectively contest such claim; and (iv) permit the Company to
participate in any proceeding relating to such claim; provided, however, that
the Company shall bear and pay directly all reasonable costs and expenses
(including attorney fees and additional interest and penalties) incurred by you
and it

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    in connection with such contest and, without limiting Section 10(d) of the
Employment Agreement, shall indemnify and hold you harmless, on an after-tax
basis, from any excise tax or income tax (including interest and penalties with
respect thereto) and other costs, expenses or liabilities imposed on you as a
result of such contest, representation and payment of taxes, interest,
penalties, costs and expenses. Without limiting the foregoing provisions of this
Letter Agreement, the Company shall control all proceedings taken in connection
with such contest, provided that such is pursued in a diligent and professional
manner, and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct you to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and you agree to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine and direct; provided, however,
that if the Company directs you to pay such claim and sue for a refund, the
Company shall pay such claimed amount to you prior to you making such payment,
and, without limiting Section 10(d) of the Employment Agreement, shall indemnify
and hold you harmless, on an after-tax basis, from any excise tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such payment or with respect to any imputed income with respect to such payment;
and provided, further, that any extension of the statute of limitations relating
to payment of taxes for your taxable year with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues
with respect to which a gross-up payment would be payable hereunder and you
shall be entitled, in your sole discretion, to settle or

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    contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority. It is understood and agreed that nothing
in this paragraph 20 shall require you not to pay any tax (or interest and
penalties thereon) imposed under Section 409A when due or shall limit the
Company’s obligations under Section 10(d) of the Employment Agreement, including
the Company’s obligation to pay you the 409A Gross-Up Payment (as defined in
Section 10(d) of the Employment Agreement) prior to the date on which any excise
tax or income tax (and interest and penalties thereon) imposed by Section 409A
is due to be paid.   21.   Acknowledgement and Acceptance of this Letter
Agreement. For the avoidance of doubt, you acknowledge and agree that this
Letter Agreement shall not constitute a “notice of termination” under the
Employment Agreement, and you further acknowledge and agree that you have
received no such “notice of termination” prior to the date hereof. If this
Letter Agreement conforms to your understanding and is acceptable to you, please
indicate the acceptance hereof by signing and dating the enclosed copy of this
Letter Agreement where indicated and returning it by mail or personal delivery
to:

Robert P. Myron
Chief Financial Officer
PXRE Group Ltd.
PXRE House
110 Pitts Bay Road
Pembroke HM 08, Bermuda
Sincerely,

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PXRE GROUP LTD.

By:   /s/  Robert P. Myron

 
Robert P. Myron
Executive Vice President & Chief Financial Officer

THIS LETTER AGREEMENT IS A LEGAL DOCUMENT. YOU SHOULD CONSULT WITH AN ATTORNEY
PRIOR TO SIGNING THIS LETTER AGREEMENT.
BY SIGNING THIS LETTER AGREEMENT YOU ACKNOWLEDGE THAT YOU ARE COMPETENT, THAT
YOU HAVE BEEN PROVIDED WITH THE OPPORTUNITY TO REVIEW AND CONSIDER THIS LETTER
AGREEMENT WITH AN ATTORNEY OF YOUR CHOICE AND YOU HAVE USED SUCH REVIEW PERIOD
TO THE EXTENT YOU DESIRED, THAT YOU HAVE READ AND UNDERSTAND AND VOLUNTARILY
ACCEPT THIS LETTER AGREEMENT AS FULLY AND FINALLY RESOLVING, WAIVING AND
RELEASING ANY AND ALL CLAIMS WHICH YOU MAY HAVE AGAINST THE COMPANY AND
RELEASEES (AS DEFINED HEREIN) ON THE DATE HEREOF, THAT NO PROMISES OR
INDUCEMENTS HAVE BEEN MADE TO YOU EXCEPT AS SET FORTH IN THIS LETTER AGREEMENT,
AND THAT YOU HAVE SIGNED THIS LETTER AGREEMENT FREELY AND VOLUNTARILY, INTENDING
TO BE LEGALLY BOUND BY ITS TERMS. THE FOREGOING IS A SUMMARY DESCRIPTION OF THE
GENERAL IMPORT OF THIS INSTRUMENT AND DOES NOT ALTER OR AMEND THE DETAILED
PROVISIONS CONTAINED IN THE BODY HEREOF.

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ACCEPTED AND AGREED:
   
 
   
/s/ Jeffrey L. Radke
  Date: March 14, 2007
 
Jeffrey L. Radke
   

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