EX-10.1



 





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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