EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This employment agreement (the "Agreement") is made and entered into as of
October 1, 2001 (the "Effective Date") between ODYSSEY RE HOLDING CORP., a
Delaware corporation (the "Company"), and Xx. Xxxxxxx Xxxxxxx, an individual
residing at 000 Xxx Xxxx, Xxxxxxxxxx Xxxxx, Xxx Xxxx 00000 (the "Executive").
WHEREAS, The Board of Directors of the Company (the "Board ") believes that
it is in the best interests of the Company to (i) ensure that the reasonable
employment, compensation and benefits expectations of the Executive are
satisfied and (ii) induce, encourage the Executive to join the Company as a
senior executive and reward the Executive's commitment to provide continued
service, full attention and dedication to the Company and not to seek or obtain
other employment by providing the Executive with the compensation and benefits
arrangements described below during the term provided for in this Agreement;
WHEREAS, to accomplish these objectives, the Board has authorized and
directed the Company to enter into this Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. TERM OF AGREEMENT
The term of this Agreement shall commence on the Effective Date and
shall continue in effect until the third anniversary of the Effective Date;
provided, however, that the Employment Term (as hereinafter defined) shall
automatically be extended without further action of either party for
additional twelve (12)-month periods unless either party gives written
notice to the other party at least sixty (60) days prior to the expiration
of the then-effective term. The period commencing on the Effective Date and
ending on the third anniversary of the Effective Date, or such later date
to which the term shall have been extended by the Company and the
Executive, is hereinafter referred to as the "Employment Term." In the
event that the Company provides the Executive with written notice of its
intention not to extend the Employment Term, such nonrenewal shall be
deemed to be a termination of the Executive's employment by the Company
without Cause for purposes of Section 5.1.1.
2. EMPLOYMENT AND DUTIES
2.1 Position. The Company hereby employs the Executive, and the
Executive agrees to serve, as Executive Vice President and Chief Financial
Officer of the Company, upon the terms and conditions herein contained as
of the Effective Date.
2.2 Duties. The Executive shall perform such other duties and
services for the Company, commensurate with the Executive's position, as
may be designated from time to time by the Board or the Chief Executive
Officer of the Company. It is understood by the parties that, the Executive
shall be a senior executive and shall have the duties and responsibilities
commensurate with those of a Chief Financial Officer of a public company.
The Executive agrees to serve the Company faithfully and to the best of his
ability.
2.3 Exclusive Services. Except as may otherwise be approved in
advance by the Board, and except during vacation periods and reasonable
periods of absence due to sickness, personal injury or other disability,
the Executive shall devote his full working time throughout the Employment
Term to the services required of him hereunder. The Executive shall render
his services exclusively to the Company during the Employment Term, and
shall use his best efforts, judgment and energy to improve and advance the
business and interests of the Company in a manner consistent with the
duties of his position.
2.4 Reimbursement of Expenses. The Company shall reimburse the
Executive for reasonable travel and other business expenses incurred by him
in the fulfillment of his duties hereunder upon
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presentation by the Executive of an itemized account of such expenditures,
in accordance with Company policies.
3. COMPENSATION
3.1 Annual Base Salary. During the Employment Term, the Executive
shall be entitled to receive an annual base salary ("Annual Base Salary")
of no less than $412,500 Annual Base Salary shall be payable in
installments no less frequently than monthly, and shall be in accordance
with the Company's normal payroll practices.
3.2 Annual Review. The Executive's Annual Base Salary shall be
reviewed by the Board, based upon the Executive's performance, not less
often than annually for increases (but may not be decreased). Any increases
in Annual Base Salary effected as a result of such review shall be made by
the Board in its sole discretion.
3.3 Bonus Plan. The Executive shall participate in the Company's a
bonus plan (the "Bonus Plan") and the Board shall establish performance
criteria upon which the Executive's bonus shall be determined. During the
Executive's employment under this Agreement, he shall be entitled to
participate in the Bonus Plan, under which he shall be eligible to receive
a target cash bonus of 100% of his Annual Base Salary. Actual bonus awards
may exceed, match or be less than the target bonus as the Executive's
performance or the Company's results warrant. The form of payment and other
terms and conditions of such bonus shall be as determined under the Bonus
Plan.
For the year ended December 31, 2001, the Executive shall receive a
minimum bonus of $50,000. For the year ended December 31, 2002, the
Executive shall receive a minimum bonus of $200,000. For the year ended
December 31, 2003, the Executive shall receive a minimum bonus of $150,000.
Bonuses will be paid on or about March 1 each year.
3.4 Restricted Stock Grant. As a bonus for signing this Agreement,
the Executive shall be granted shares of restricted common stock
("Restricted Shares") in accordance with the terms and provisions of the
Company's 2001 Restricted Share Plan (the "Restricted Share Plan"), with a
fair market value on the Effective Date equal to $500,000. The Restricted
Shares shall be subject to the terms and conditions of the Restricted Share
Plan except that the Restricted Shares granted to the Executive shall have
the additional condition that in the event that the Employment Term
terminates on or after the third anniversary of the Effective Date but
before the fifth anniversary of the Effective Date, then 30% of the
Restricted Shares shall vest to the benefit of the Executive. At the fifth
anniversary and the tenth anniversary of the effective date, the Restricted
Shares will be vested 50% and 100% respectively. If the Executive resigns
from his employment with Good Reason (as hereafter defined), the Executive
shall be 100% vested with respect to restricted stock grants. If there is a
Change in Control of the Company at any time, the Restricted Shares shall
vest 100% to the benefit of the Executive. For the purposes of this
section, Change in Control means a person or persons acting jointly, or in
concert, other than Fairfax Financial Holdings Limited, hold sufficient
shares of the Company to elect a majority of the board of directors.
In the event the Company establishes a new equity-based incentive plan, the
Executive shall have the opportunity to convert his interest in the Restricted
Shares to an interest in the new equity-based incentive plan on terms to be
established through good faith negotiations with the Company.
4. EMPLOYEE BENEFITS
4.1 Generally. The Executive shall, during his employment under this
Agreement, be included to the extent eligible thereunder in all employee
benefit plans, programs or arrangements (including, without limitation, any
plans, programs or arrangements providing for retirement benefits, profit
sharing, disability benefits, health and life insurance, or vacation and
paid holidays) that shall be established by the Company for, or made
available to, its senior executives.
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4.2 Indemnification. In addition to any rights to indemnification to
which the Executive is entitled under the Company's Articles of
Incorporation and Bylaws, the Company shall indemnify the Executive at all
times during and after the term of this Agreement to the maximum extent
permitted under the Delaware General Corporation Law and any successor
provision thereof and any other applicable corporate law, and shall pay the
Executive's expenses in defending any civil action, suit or proceeding in
advance of the final disposition of such action, suit or proceeding, to the
maximum extent permitted under such applicable corporate laws.
5. TERMINATION OF EMPLOYMENT
5.1 Termination Without Cause; Resignation With Good Reason; Nonrenewal of
the Employment Term.
5.1.1 General. (a) Subject to the provisions of Sections 5.1.2 and
5.1.3, if, prior to the expiration of the Employment Term, the Executive's
employment is terminated by the Company without Cause (as hereinafter
defined) or the Company does not extend the Employment Term pursuant to
Section 1 (provided that the Company does not have grounds to terminate the
Executive for Cause at the time of such nonrenewal), or if the Executive
resigns from his employment hereunder with Good Reason (as hereinafter
defined), the Executive shall, subject to the Executive's execution of a
general release of claims against the Company in a form satisfactory to the
Company, be entitled to the following "Severance Payments":
(i) the Company shall continue to pay the Executive the Annual Base
Salary (at the rate in effect on the date of such termination) for the
greater of (A) twelve (12) months following his termination of
employment or (B) the remainder of the Employment Term (such period
being referred to hereinafter as the "Severance Period "), at such
intervals as the same would have been paid had the Executive remained in
the active service of the Company; and
(ii) the Company shall pay in cash to the Executive, when the same
would ordinarily be paid, (A) all amounts accrued in the Bonus Plan by
the Executive with respect to years preceding the year in which the
termination of the Executive occurs and (B) a pro-rated bonus under the
Bonus Plan in an amount equal to the bonus to which the Executive would
have been entitled for the year of termination had the Executive
remained employed multiplied by a fraction, the numerator of which is
the actual number of days that the Executive was employed by the Company
during such year and the denominator equal to 365 (the "Pro-Rata
Bonus").
(b) In addition to the Severance Payments, the Executive shall
be entitled to continue to participate during the Severance Period in
the medical, dental, life insurance and disability plans that the
Company provides (and continues to provide) generally to its senior
executives (the "Welfare Plans"), provided that the Executive is
entitled to continue to participate in such plans under the terms
thereof. For any plans the Executive is not entitled to participate,
the Company will pay the Executive the amount which the Company would
have paid for such participation had the Executive been entitled to
participate.
(c) Other than as described herein, the Executive shall have no
further right to receive any other payments or benefits after such
termination or resignation of employment under any severance plans,
programs, contracts or arrangements of the Company or any of its
subsidiaries or affiliates.
5.1.2 Conditions Applicable to the Severance Period. If, during the
Severance Period, the Executive materially breaches his obligations under
Section 6, the Company may, upon written notice to the Executive, terminate
the Severance Period and cease to make any Severance Payments or provide
any benefits described in Section 5.1.1(b).
5.1.3 Death During Severance Period. In the event of the Executive's
death during the Severance Period, payments of Annual Base Salary under
Section 5.1.1 shall continue to be made during the remainder of the
Severance Period, and any bonus that the Executive is entitled to receive
from the Bonus Plan shall be paid when the same would ordinarily be paid to
the beneficiary designated in writing
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for this purpose by the Executive or, if no such beneficiary is
specifically designated, to the Executive's estate.
5.1.4 Date of Termination. The date of termination of employment
without Cause shall be the date specified in a written notice of
termination to the Executive. The date of resignation with Good Reason
shall be the date specified in the written notice of resignation from the
Executive to the Company; provided, however, that no such written notice
shall be effective unless the cure period specified in Section 5.1.6 has
expired without the Company having corrected, in all material respects, the
event or events subject to cure. If no date of resignation is specified in
the written notice from the Executive to the Company, the date of
termination shall be the first day following the expiration of such cure
period.
5.1.5 Cause. For purposes of this Agreement, termination for "Cause"
shall mean termination of the Executive's employment because of:
(a) any act or omission that constitutes a material breach by the
Executive of any of his obligations under this Agreement that is
materially injurious to the financial condition or business reputation
of the Company;
(b) the willful and continued failure or refusal of the Executive
to substantially perform the duties required of him as an Executive of
the Company;
(c) any willful and material violation by the Executive of any
written law or regulation applicable to the business of the Company or
any of its subsidiaries or affiliates, or the Executive's conviction of,
or a plea of nolo contendre to, a felony, or any willful perpetration by
the Executive of a common law fraud; or
(d) any other willful misconduct by the Executive that is
materially injurious to the financial condition or business reputation
of, or is otherwise materially injurious to, the Company or any of its
subsidiaries or affiliates;
provided, however, that if any such Cause relates to the Executive's
obligations under this Agreement, the Company may not terminate the
Executive's employment hereunder unless the Company first gives the
Executive notice of its intention to terminate and of the grounds for
such termination within thirty (30) days of becoming aware of the
occurrence of such event or condition, and the Executive has not, within
thirty (30) business days following receipt of such notice, cured such
Cause, or, in the event such Cause is not susceptible to cure within
such thirty (30)-day period, the Executive has not taken all reasonable
steps within such thirty (30)-day period to cure such Cause as promptly
as practicable thereafter.
5.1.6 Good Reason. For purposes of this Agreement, "Good Reason"
shall mean any of the following (without the Executive's prior written
consent):
(a) a failure by the Company to pay material compensation due and
payable to the Executive in connection with his employment;
(b) a material diminution of the Executive's position, title,
authority, duties or responsibilities as contemplated by Sections 2.1
and 2.2 of this Agreement; or
(c) a request by the Company that the Executive either (i) violate
any written law or (ii) commit an act that would reasonably be expected
to violate any written law.
provided, however, that no event or condition described in clauses (a),
(b) and (c) of this Section 5.1.6 shall constitute Good Reason unless
(i) the Executive gives the Company written notice of his objection to
such event or condition within ninety (90) days of such event or
condition, (ii) such event or condition is not corrected, in all
material respects, by the Company within thirty (30) business days of
its receipt of such notice (or, in the event that such event or
condition is not susceptible to correction within such thirty (30)-day
period, the Company has not taken all reasonable steps within such
thirty (30)-day period to correct such event or condition as promptly as
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practicable thereafter) and (iii) the Executive resigns from his
employment with the Company not more than thirty (30) business days
following the expiration of the thirty (30)-day period described in the
foregoing clause (ii).
5.2 Termination for Cause. If, prior to the expiration of the
Employment Term, the Executive's employment is terminated by the Company
for Cause, unless otherwise required by applicable law, except with respect
to Section 5.1.5(a) the Executive shall be entitled only to payment of his
Annual Base Salary as then in effect through and including the date of
termination and payment of all accrued unpaid vacation days. The Executive
shall have no further right to receive any other compensation or benefits,
except as determined in accordance with the terms of the employee benefit
plans or programs of the Company. With respect to Section 5.1.5(a), the
Executive shall be entitled to payment of his Annual Base Salary and all
amounts accrued in the Bonus Plan by the Executive with respect to years
preceding the year in which termination for Cause occurs.
5.2.1 Date of Termination. Subject to the proviso to Section 5.1.5,
the date of termination for Cause shall be the date specified in a written
notice of termination to the Executive.
5.3 Resignation Without Good Reason. The Executive may resign his
employment without Good Reason under this Agreement voluntarily by giving
thirty (30) days written notice to the Company of his intention to resign
his employment with the Company without Good Reason. If the Executive
resigns his employment without Good Reason, unless otherwise required by
applicable law, the Executive shall be entitled to: (i) payment of his
Annual Base Salary as then in effect through and including the date of his
actual termination of employment; (ii) all amounts accrued in the Bonus
Plan by the Executive with respect to years preceding the year in which the
resignation without Good Reason occurs; and (iii) payment for all accrued
unpaid vacation days. The Executive shall have no further right to receive
any other compensation or benefits, after such termination, except as
determined in accordance with the terms of the employee benefit plans or
programs of the Company.
5.4 Death or Disability. In the event the Executive's employment is
terminated by reason of death or Disability (as hereinafter defined), the
Executive (or his estate, as applicable) shall be entitled to (i) his
Annual Base Salary through the date of termination at such intervals as the
same would have been paid had the Executive remained in active service of
the Company; (ii) all amounts accrued in the Bonus Plan by the Executive
with respect to years preceding the year in which the death or Disability
occurs; (iii) the Pro-Rata Bonus payable with respect to the year in which
the death or Disability occurs; and (iv) payment for all accrued unpaid
vacation days. Other benefits shall be determined in accordance with the
terms of the benefit plans maintained by the Company and the Company shall
have no further obligation hereunder. For purposes of this Agreement,
"Disability" shall have the same meaning as under the Company's long-term
disability plan applicable to the Executive.
6. CONFIDENTIALITY
6.1 Confidentiality.
6.1.1 The Executive agrees that all confidential and proprietary
information relating to the business of the Company shall be kept and
treated as confidential both during and after the Employment Term, except
as may be permitted in writing by the Company's Board or as such
information is within the public domain or comes within the public domain
without any breach of this Agreement.
6.1.2 The phrase "confidential and proprietary information" shall not
include information that (i) is or becomes generally available to the
public other than as a result of a disclosure by, or at the direction of,
the Executive or (ii) becomes available to the Executive on a
non-confidential basis from a source other than the Company or any of its
representatives, provided that such source is not known to the Executive to
be bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to the Company with respect to such
information.
6.2 Exclusive Property. The Executive confirms that all confidential
information is and shall remain the exclusive property of the Company. All
business records, papers and documents kept or made
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by the Executive relating to the business of the Company shall be and
remain the property of the Company.
7. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement that cannot be mutually resolved by the parties hereto shall be
settled exclusively by arbitration in New York, New York under the employment
arbitration rules of the American Arbitration Association before a single
arbitrator of exemplary qualifications and stature, who shall be selected
jointly by the Company and the Executive, or, if the Company and the Executive
cannot agree on the selection of the arbitrator, shall be selected by the
American Arbitration Association. Judgment may be entered on the arbitrator's
award in any court having jurisdiction. The parties hereby agree that the
arbitrator shall be empowered to enter an equitable decree mandating specific
enforcement of the terms of this Agreement.
8. MISCELLANEOUS
8.1 Communications. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered or on the fifth business day
after mailed if delivered personally or mailed by registered or certified
mail (postage prepaid, return receipt requested) to the party at the
following addresses (or at such other address for a party as shall be
specified by like notice, except that notices of changes of address shall
be effective upon receipt):
If to the Company:
Odyssey Re Holdings Corp.
000 Xxxxxxxx, 00xx xxxxx
Xxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: General Counsel
If to the Executive:
Xx. Xxxxxxx Xxxxxxx
000 Xxx Xxxx
Xxxxxxxxxx Xxxxx
Xxx Xxxx 00000
8.2 Waiver of Breach; Severability. The waiver by the Executive or
the Company of a breach of any provision of this Agreement by the other
party hereto shall not operate or be construed as a waiver or any
subsequent breach by either party. The parties hereto recognize that the
laws and public policies of various jurisdictions may differ as to the
validity and enforceability of covenants similar to those set forth herein.
It is the intention of the parties that the provisions hereof be enforced
to the fullest extent permissible under the laws and policies of each
jurisdiction in which enforcement may be sought, and that the
unenforceability (or the modification to conform to such laws or policies)
of any provisions hereof shall not render unenforceable, or impair, the
remainder of the provisions hereof. Accordingly, if at the time of
enforcement of any provision hereof a court of competent jurisdiction holds
that the restrictions stated herein are unreasonable under circumstances
then existing, the parties hereto agree that the maximum period, scope, or
geographic area reasonable under such circumstances will be substituted for
the stated period, scope or geographical area and that such court shall be
allowed to revise the restrictions contained herein to cover the maximum
period, scope and geographical area permitted by law.
8.3 Assignment; Successors. No right, benefit or interest hereunder
shall be assigned, encumbered, charged, pledged, hypothecated or be subject
to any setoff or recoupment by the Executive. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of the
Company.
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8.4 Entire Agreement. This Agreement represents the entire agreement
of the parties regarding the matters contemplated herein, and shall
supersede any and all previous contracts, arrangements or understandings
between the Company and the Executive, if any. This Agreement may be
amended at any time by mutual written agreement of the parties hereto.
8.5 Other Severance Benefits. The Executive hereby agrees that in
consideration for the payments to be received under this Agreement, the
Executive waives any and all rights to any payments or benefits under any
severance plans, programs, contracts or arrangements of the Company or any
of its subsidiaries or affiliates.
8.6 Withholding. The payment of any amount pursuant to this Agreement
shall be subject to applicable withholding and payroll taxes, and such
other deductions as may be required under the Company's employee benefit
plans, if any.
8.7 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York.
8.8 Headings. The headings in this Agreement are for convenience only
and shall not be used to interpret or construe any of its provisions.
8.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Executive has executed this Agreement as of
the day and year first above written.
Xx. Xxxxxxx Xxxxxxx
By: /s/ XXXXXXX X. XXXXXXX
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ODYSSEY RE HOLDINGS CORP.
By: /s/ XXXXXX X. XXXXX
------------------------------------
Xxxxxx X. Xxxxx
Senior Vice President
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