UNITED AMERICA INDEMNITY Walker House l 87 Mary Street l P.O. Box 908GT l George Town l Grand Cayman l Cayman Islands April 26, 2005
UNITED AMERICA INDEMNITY
Walker House l 87 Mary Street l P.O. Box 908GT l
George Town l Grand Cayman l Cayman Islands
April 26, 2005
Jon S. Saltzman
435 Dreshertown Road
Ft. Washington, PA 19034
Dear Jon:
This agreement sets forth the terms and conditions of our agreement regarding your separation of employment from Penn-America Group, Inc. (the “Company”), United America Indemnity, Ltd. (“UAIL”) and all of their affiliates. Reference is made to the executive employment agreement dated as of October 14, 2004 between you and the Company (the “Employment Agreement”).
Separation: Compensation/ | Your separation will be effective as of September 1, 2005 (the “Separation Date”). Between the date hereof and the Separation Date (the “Transition Period”), you shall continue to bear the titles of “President of UAIL” and “Chairman” and “Director” of the Company, but shall only bear responsibility for assisting with transition duties as it pertains to the Company’s wholesale general agents. You shall not be responsible for, or otherwise required to, execute and/or certify to any communications to the public. | |
Benefits: | You will continue to earn base salary until the Separation Date. You will be permitted to retain the signing bonus you received pursuant to Section 1.04.05 of the Employment Agreement. You agree that you are not entitled to any benefits under (i) Penn America’s 2005 KEIC Bonus Plan, or on PNG’s 2004 KEIC Bonus as it may have been amended for 2005, as referred to in Section 1.04.2 of the Employment Agreement; and (ii) the Restricted Share Plan referred to in Section 1.04.3 of the Employment Agreement; and (iii) the car allowance referred to in Section 1.04.4 of the Employment Agreement, after the Separation Date; and (iv) the Annual Integration Bonus as referred to in Section 1.04.6 of the Employment Agreement; and the Benefits referred to in Section 1.05.1 of the Employment Agreement. You will be eligible to receive coverage under the Company’s group health plans as if you were employed by the Company, to the extent permitted under such plans, up until the second anniversary of the Separation Date. If your continued participation is not so permitted, you may elect COBRA coverage and the Company will reimburse you for up to two years of COBRA (or its equivalent following the expiration of COBRA) coverage, which coverage(s) shall be no less than such coverage(s) as is in effect as of the date this agreement is executed. When you no longer remain eligible for coverage as an active employee, you will be provided under separate cover forms by which you may elect COBRA continuation coverage with respect to group health coverage offered by the Company and conversion coverage with respect to any life insurance benefits offered by the Company. You understand that the payments and benefits you receive pursuant to this agreement are subject to (i) your compliance with your obligations hereunder, (ii) delivery of Annex A and Annex B at the time you deliver this agreement, and (iii) your delivery of Annex C to UAIL at its Bala Cynwyd address, Attn: General Counsel (the “Address”) on or before the Separation Date; provided that your revocation of the either of the releases pursuant to Annex B or Annex C within the applicable 7-day periods shall relieve the Company of all of its obligations to provide you with payments and benefits hereunder. | |
Equity: | Any options to purchase common shares in or restricted shares of the Company or UAIL which you own and in which you are not vested as of the Separation Date shall be forfeited and cancelled as of the Separation Date. | |
Covenants: | During the Transition Period and for eighteen (18) months thereafter, you will continue to be subject to the non-compete, non-solicit, no-hire and confidentiality restrictions contained in the Employment Agreement. | |
Non-Disparagement: | You agree that you will not at any time disparage or encourage or induce others to disparage the Company or call into question the business operations, status or reputation of the Company. For the purposes of this paragraph, the term “disparage” includes, without limitation, comments or statements to the press and/or media or any individual or entity with whom the Company has a business relationship that may adversely affect in any manner (i) the conduct of the business of the Company (including, without limitation, any business plans or prospects) or (ii) the business reputation of the Company or the quality, standing or character of any of the Company’s products or services. | |
| For purposes of this section and the “Release,” “Other Agreements,” and “Miscellaneous” sections below, the definition of “Company” shall include Fox Paine & Company, LLC and its affiliated entities, including without limitation Fox Paine Capital Fund, L.P., FPC Investors, L.P., Fox Paine Capital, LLC, Fox Paine Capital Fund II GP, LLC, Fox Paine Capital Fund II, L.P., Fox Paine Capital Fund II International, L.P., Fox Paine Capital Fund II Co-Investors International, L.P., FPC Investment GP, and all corporate entities that are partners in any such related entities and each of their past and present directors, members, managers, officers, employees, servants, divisions, owners, shareholders and successors (including, without limitation, Saul Fox, Troy Thacker and Michael McDonough), and all affiliates of the foregoing. | ||
Release: | As further provided for in Annex B and Annex C, (i) you agree to fully release the Company and its affiliates and each of their past and present employees, officers, members, shareholders and directors thereof from any claims that you have had or may ever have against the Company (including, without limitation, any claims arising under the Age Discrimination in Employment Act (“ADEA”), or any state or local law respecting employment discrimination on the basis of age or other protected status) and (ii) should you later choose to pursue a claim against the Company or violate the terms of this agreement in any way, you agree that such action would irreparably damage the Company that the Company would be entitled to an injunction to cease such a proceeding and to indemnification by you of any costs (including reasonable attorneys’ fees) incurred relating to such a proceeding. Notwithstanding the foregoing, you understand and confirm that you are entering into this agreement (with its covenant not to sue and waiver and release) voluntarily and knowingly, and the covenant not to sue shall not affect your right to claim otherwise with respect to your rights under ADEA. In addition, the first two sentences of this paragraph shall not apply to any action challenging the validity of a waiver or release in this agreement of a claim under ADEA | |
Other Agreements: Miscellaneous: Effectiveness: | You agree that this agreement (except as specifically provided herein) constitutes the entire agreement between you and the Company with respect to the matters addressed herein and may not be altered or modified other than in a writing signed by you, the Company and UAIL. Furthermore, except as otherwise provided herein, the Company and you agree that the Employment Agreement has been terminated in all respects as of the Separation Date and without any further force and effect; provided that Section 5.011 of the Employment Agreement, as well as any other confidentiality, non-compete or non-solicit agreements to which you have agreed shall continue in effect and govern any dispute between the parties arising under this agreement. The Company agrees that, to the extent provided for under its policies and/or guidelines for coverage for its senior officers who have terminated employment, you will continue to be eligible for D&O coverage and for defense and indemnification under the Company’s by-laws and charter, with respect to claims brought by parties unaffiliated with the Company and arising as a result of your employment by the Company under the Employment Agreement and through the Separation Date. You agree to cooperate in executing any necessary documents (including Annex A, Annex B and Annex C) to effectuate your separation and to assist the Company with any outstanding matters with which you were involved during your employment with the Company and to return any Company property in your possession to the Company as soon as possible. You agree that any work you did for the Company while employed is “work for hire” and therefore the property of the Company and you agree to keep this agreement and any confidential information regarding the Company, UAIL and its affiliates (whether such information is personal or business-related in nature) confidential. This agreement shall be governed by the laws of Pennsylvania without regard to conflict of law principles of such state. You have reviewed the terms of this agreement and you confirm that you have had the opportunity to confer with an attorney of your own choosing with respect to the terms of this agreement (including each of Annex B and Annex C). You acknowledge that you were advised that you could take up to twenty-one (21) days from the date this agreement was given to you to review this agreement and decide whether you would enter into this agreement (including each of Annex B and Annex C). To the extent that you have elected to enter into this agreement (including each of Annex B and Annex C) prior to such time, you have done so voluntarily, and have knowingly waived such twenty-one (21) day review period. You may revoke your assent to the terms of this agreement (including each of Annex B and Annex C) for a period of seven (7) calendar days after its execution (the “Revocation Period”), by delivery of a notarized written notice of revocation prior to 5:00 p.m. on the last day comprising the Revocation Period to the Company at the Address. This agreement (including each of Annex B and Annex C) shall become irrevocable automatically upon the expiration of the Revocation Period if you do not revoke it in the aforesaid manner; provided that the foregoing shall not apply to your separation of employment from the Company, which shall be effective as of the Separation Date. | |
Please acknowledge your acceptance to the matters described above and return this agreement to the Address.
| Very truly yours, |
PENN-AMERICA GROUP, INC.
| By: /s/ Joseph F. Morris |
| Joseph F. Morris President & Chief Executive Officer |
UNITED AMERICA INDEMNITY, LTD.
| By: | /s/ Edward J. Noonan | |||
| Edward J. Noonan Acting Chief Executive Officer | ||||
Agreed to and accepted: | ||||
/s/ Jon S. Saltzman | ||||
Jon S. Saltzman
Date: April 26, 2005
EXECUTION COPY
ANNEX A
April 26, 2005
Saul Fox, Chairman
United America Indemnity, Ltd.
Walker House
87 Mary Street
P.O. Box 908GT
George Town, Grand Cayman
Dear Saul:
Effective as of September 1, 2005, I hereby resign as President of United America Indemnity, Ltd. and as Chairman of Penn-America Group, Inc. (collectively, the “Companies”) and from all other positions I hold with the Companies and any of their affiliates and/or subsidiaries, from which I have not previously resigned.
Sincerely,
/s/ Jon S. Saltzman
Jon S. SaltzmanEXECUTION COPY
ANNEX B
INITIAL RELEASE
R-1. Effective as of April 29, 2005, pursuant to the employment agreement between Jon Saltzman (“Executive”) and Penn-America Group, Inc. (“Penn-America”) dated as of October 14, 2004 (the “New Employment Agreement”) and the separation agreement between Executive, Penn-America and United America Indemnity, Ltd. (“UAIL”) (the “Separation Agreement”), Executive hereby irrevocably consents to the termination of any agreements regarding employment and compensation between himself and Penn-America or himself and UAIL (or any of their affiliates) (“Existing Agreements”). Executive on behalf of himself and his affiliates, heirs, executors and successors hereby remises, releases and forever discharges, and by these present does release and forever discharge the Company and its subsidiaries, parents and affiliates, and their respective successors and assigns of and from any and all actions, causes of action, suits, debts, accounts, bonds, bills, covenants, contracts, controversies, agreements, liabilities, damages, costs, expenses, demands, judgments, executions, variances, claims and other obligations of whatever kind or nature, in law or in equity, known or unknown, including without limitation, arising from or connected with or related to the Existing Agreements or any employment by or other matter relating to the Company or any claim to compensation or benefits arising from or related to his employment (collectively, the “Claims”), including without limitation, any Claims related to or in connection with Fox Paine & Company, LLC, Fox Paine Capital Fund, L.P., FPC Investors, L.P., Fox Paine Capital, LLC, Fox Paine Capital Fund II GP, LLC, Fox Paine Capital Fund II, L.P., Fox Paine Capital Fund II International, L.P., Fox Paine Capital Fund II Co-Investors International, L.P., FPC Investment GP, and all corporate entities that are partners in any such related entities and each of their past and present directors, members, managers, officers, employees, servants, divisions, owners, shareholders and successors (including without limitation, Saul Fox, Troy Thacker and Michael McDonough) (all such persons and entities collectively referred to for purposes of this Release as the “Company”), including any Claims under local, state, or federal law based on:
| (i) | claims of discrimination on the basis of race, age, religion, sex, sexual harassment, sexual orientation, national origin, marital status, or disability including without limitation, any claims arising under the Age Discrimination in Employment Act of 1967 (“ADEA”), as amended, the Older Workers Benefit Protection Act, the Civil Rights Act of 1866, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1990, the Pennsylvania Human Relations Act, the Pennsylvania Human Relations Commission rules, including, without limitation, the Employment Policies Relating to Pregnancy, Childbirth and Childbearing rules, and the Handicap Discrimination rules, the Pennsylvania Wage Payment and Collection Law, the Pennsylvania Equal Pay Law, the Pennsylvania Minimum Wage Act, the Pennsylvania Whistleblower Law, the Pennsylvania Labor Relations Act, the Pennsylvania Worker and Community Right to Know Act, the Pennsylvania Military Leave Law, the Pennsylvania Equal Pay Act, the Pennsylvania Religious Freedom Protection Act, and the Family and Medical Leave Act of 1993, each as amended; |
(ii) infliction of any tort;
(iii) breach of contract, whether actual or implied, written or oral; and
| (iv) | any violation of any pension or welfare plans or any other benefit plan or arrangement (including without limitation, the Employee Retirement Income Security Act of 1974, as amended). |
The foregoing Release shall not act as a release of (i) the obligations of Penn-America under the Separation Agreement to provide Executive with the payments and benefits specified therein, (ii) any vested benefits under any employee retirement or welfare plan or program, (iii) any rights as a shareholder or owner of any equity interest in the Company (subject to any changes or modifications that may be made therein pursuant to the provisions of (x) the documentation relating to the merger transaction between United National Group, Ltd. and its affiliates and Penn-America and its affiliates, and (y) the provisions of the New Employment Agreement), (iv) any rights Executive may have to receive unemployment compensation, and (v) Executive’s right to be defended and indemnified by the Company, pursuant to charter, certificate, by-laws or other constituent documents of the Company, or under any insurance maintained by or for the benefit of the Company, for any liability, cost or expense for which Executive would have been indemnified for actions taken by Executive on behalf of the Company prior to the date of this Release.
R-2. Executive further represents that he has not, at any time up to and including the date hereof, commenced, and will not in the future commence, to the full extent permitted by law, any action or proceeding, or file any charge or complaint, of any nature against the Company relating to the matters released above and Executive waives to the full extent permitted by law, any right to any monetary or equitable relief in any proceeding that may relate to the matters released above.
R-3. Executive agrees that in the event of a breach by him or his heirs of this Release, and in addition to any other rights or remedies the Company may have hereunder or otherwise (i) the Company will be irreparably damaged and will have no adequate remedy at law, and will be entitled to an injunction as a matter of right from any court of competent jurisdiction restraining any further breach of this Release, (ii) the Company will be indemnified and held harmless from and against any and all damages or losses incurred by the Company (including reasonable attorneys’ fees and expenses) as a result of such breach; and (iii) the Company may offset against any amounts otherwise owed Executive damages or losses incurred as a result of a breach of this Release. Executive further agrees that this Release may and shall be pleaded as a full and complete defense to any action, suit or other proceeding covered by the terms of this Release which is or may be instituted, prosecuted or maintained by Executive and his heirs.
THE FOREGOING RELEASE IS HEREBY AGREED TO AS OF APRIL 29, 2005:
EXECUTIVE
/s/ Jon S. Saltzman
Jon S. Saltzman
EXECUTION COPY
ANNEX C
SUPPLEMENTAL RELEASE
R-1. Effective as of September 1, 2005, pursuant to the employment agreement between Jon Saltzman (“Executive”) and Penn-America Group, Inc. (“Penn-America”) dated as of October 14, 2004 (the “New Employment Agreement”) and the separation agreement between Executive, Penn-America and United America Indemnity, Ltd. (“UAIL”) (the “Separation Agreement”), Executive hereby irrevocably consents to the termination of any agreements regarding employment and compensation between himself and Penn-America or himself and UAIL (or any of their affiliates) (“Existing Agreements”). Executive on behalf of himself and his affiliates, heirs, executors and successors hereby remises, releases and forever discharges, and by these present does release and forever discharge the Company and its subsidiaries, parents and affiliates, and their respective successors and assigns of and from any and all actions, causes of action, suits, debts, accounts, bonds, bills, covenants, contracts, controversies, agreements, liabilities, damages, costs, expenses, demands, judgments, executions, variances, claims and other obligations of whatever kind or nature, in law or in equity, known or unknown, including without limitation, arising from or connected with or related to the Existing Agreements or any employment by or other matter relating to the Company or any claim to compensation or benefits arising from or related to his employment (collectively, the “Claims”), including without limitation, any Claims related to or in connection with Fox Paine & Company, LLC, Fox Paine Capital Fund, L.P., FPC Investors, L.P., Fox Paine Capital, LLC, Fox Paine Capital Fund II GP, LLC, Fox Paine Capital Fund II, L.P., Fox Paine Capital Fund II International, L.P., Fox Paine Capital Fund II Co-Investors International, L.P., FPC Investment GP, and all corporate entities that are partners in any such related entities and each of their past and present directors, members, managers, officers, employees, servants, divisions, owners, shareholders and successors (including without limitation, Saul Fox, Troy Thacker and Michael McDonough) (all such persons and entities collectively referred to for purposes of this Release as the “Company”), including any Claims under local, state, or federal law based on:
| (i) | claims of discrimination on the basis of race, age, religion, sex, sexual harassment, sexual orientation, national origin, marital status, or disability including without limitation, any claims arising under the Age Discrimination in Employment Act of 1967 (“ADEA”), as amended, the Older Workers Benefit Protection Act, the Civil Rights Act of 1866, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1990, the Pennsylvania Human Relations Act, the Pennsylvania Human Relations Commission rules, including, without limitation, the Employment Policies Relating to Pregnancy, Childbirth and Childbearing rules, and the Handicap Discrimination rules, the Pennsylvania Wage Payment and Collection Law, the Pennsylvania Equal Pay Law, the Pennsylvania Minimum Wage Act, the Pennsylvania Whistleblower Law, the Pennsylvania Labor Relations Act, the Pennsylvania Worker and Community Right to Know Act, the Pennsylvania Military Leave Law, the Pennsylvania Equal Pay Act, the Pennsylvania Religious Freedom Protection Act, and the Family and Medical Leave Act of 1993, each as amended; |
(ii) infliction of any tort;
(iii) breach of contract, whether actual or implied, written or oral; and
| (iv) | any violation of any pension or welfare plans or any other benefit plan or arrangement (including without limitation, the Employee Retirement Income Security Act of 1974, as amended). |
The foregoing Release shall not act as a release of (i) the obligations of Penn-America under the Separation Agreement to provide Executive with the payments and benefits specified therein, (ii) any vested benefits under any employee retirement or welfare plan or program, (iii) any rights as a shareholder or owner of any equity interest in the Company (subject to any changes or modifications that may be made therein pursuant to the provisions of (x) the documentation relating to the merger transaction between United National Group, Ltd. and its affiliates and Penn-America and its affiliates, and (y) the provisions of the New Employment Agreement), (iv) any rights Executive may have to receive unemployment compensation, and (v) Executive’s right to be indemnified by the Company, pursuant to charter, certificate, by-laws or other constituent documents of the Company, or under any insurance maintained by or for the benefit of the Company, for any liability, cost or expense for which Executive would have been indemnified for actions taken by Executive on behalf of the Company prior to the date of this Release.
R-2. Executive further represents that he has not, at any time up to and including the date hereof, commenced, and will not in the future commence, to the full extent permitted by law, any action or proceeding, or file any charge or complaint, of any nature against the Company relating to the matters released above and Executive waives to the full extent permitted by law, any right to any monetary or equitable relief in any proceeding that may relate to the matters released above.
R-3. Executive agrees that in the event of a breach by him or his heirs of this Release, and in addition to any other rights or remedies the Company may have hereunder or otherwise (i) the Company will be irreparably damaged and will have no adequate remedy at law, and will be entitled to an injunction as a matter of right from any court of competent jurisdiction restraining any further breach of this Release, (ii) the Company will be indemnified and held harmless from and against any and all damages or losses incurred by the Company (including reasonable attorneys’ fees and expenses) as a result of such breach, and (iii) the Company may offset against any amounts otherwise owed Executive damages or losses incurred as a result of a breach of this Release. Executive further agrees that this Release may and shall be pleaded as a full and complete defense to any action, suit or other proceeding covered by the terms of this Release which is or may be instituted, prosecuted or maintained by Executive and his heirs.
THE FOREGOING RELEASE IS HEREBY AGREED TO AS OF APRIL 29, 2005:
EXECUTIVE
/s/ Jon S. Saltzman
Jon S. Saltzman
