This Employment
Agreement (the “Agreement”) is made and entered into as
of April 1, 2008 (the Effective Date”) between ODYSSEY
RE HOLDINGS CORP. (“Employer”), a holding company,
incorporated in the State of Delaware, that owns all of the shares
of the entities comprising the group of reinsurance and insurance
companies constituted by Odyssey America Reinsurance Corporation
and its subsidiaries, and Michael G. Wacek
(“Executive”), an individual residing at
[address].
WHEREAS,
the Board of Directors of Employer (such Board of Directors, and/or
any duly authorized Committee thereof acting on its behalf, being
referred to herein as the “Board”) believes it is in
the best interests of Employer (i) to ensure that the
reasonable employment, compensation and benefits expectations of
Executive are satisfied; (ii) to induce and encourage
Executive to continue his employment with Employer as a senior
executive; and (iii) to reward Executive’s commitment to
provide continued service, full attention and dedication to
Employer, by providing Executive with the compensation and benefits
arrangements described below during the term provided for in this
Agreement; and
WHEREAS,
to accomplish these objectives, the Board has authorized and
directed Employer to enter into this Agreement with
Executive.
NOW THEREFORE,
IT IS AGREED AS FOLLOWS:
EMPLOYMENT AND DUTIES;
COMPENSATION
During the term of
this Agreement, Executive shall be employed by and shall serve
Employer in the capacity of Executive Vice President, and shall be
employed by and/or shall serve Employer and such subsidiaries of
Employer in such capacities as Employer shall from time to time
designate and as are consistent with Executive’s position as
Executive Vice President of Employer, including, without
limitation, his present duties as President of the Company’s
principal operating subsidiary, Odyssey America Reinsurance
Corporation; as Chief Executive Officer, Americas Division; and as
Employer’s Chief Risk Officer (until such time as a
replacement is identified). Executive shall devote substantially
all of his business time to the business and affairs of Employer
and shall use his best efforts, skills, and energy to promote
Employer’s interests, provided that it shall not be a
violation of the foregoing for Executive to act or serve as a
director, trustee or committee member of any civic or charitable
organization, as long as such activities are disclosed to Employer,
and Employer, in the exercise of its reasonable judgment, agrees
that such activities do not present any conflict of interest with
Employer.
Section 2: Term of
Employment.
The term of
employment of Executive by Employer shall commence as of
April 1, 2008 (the “Commencement Date”) and shall
continue until April 1, 2011 (the
“Term”),
provided , however , that the Term 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. At any time
prior to the expiration of the Term, Employer and Executive may, by
mutual written agreement, extend Executive’s employment under
the terms of this Agreement for such additional periods as they may
agree.
Section 3: Salary, Benefits and
Additional Compensation.
As compensation
and consideration for the performance by Executive of his duties
and responsibilities pursuant to this Agreement, Employer agrees to
pay, and/or to cause one or more of its subsidiaries to pay
Executive, and Executive agrees to accept the following amounts and
benefits (all Dollar amounts referred to herein are in United
States Dollars):
During the Term,
Executive shall receive an annual base salary (“Base
Salary”) of Six Hundred Thousand Dollars ($600,000), as it
may be increased from time to time at the discretion of the Board,
pro rated for any calendar year within the Term for which
employment does not extend for the entire calendar year. The Base
Salary shall be paid to Executive in equal bi-weekly
installments.
Executive shall
participate in the bonus pool (the “Bonus Pool”)
created by the Board with respect to each calendar year, and the
Board shall establish performance criteria upon which
Executive’s bonus shall be determined. During
Executive’s employment under this Agreement, Executive shall
be eligible to receive a
target bonus of
100% of Base Salary, although it is agreed that actual bonus awards
may exceed, match or be less than the target bonus, as
Executive’s performance or Employer’s performance
warrant. The form of payment and other terms and conditions of such
bonus shall be determined by Employer. Notwithstanding the
foregoing, to the extent Executive is a “covered
employee” within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the “Code”),
the annual bonus may be implemented and administered in a manner
intended to insure the treatment of such bonus as
“performance-based compensation” within the meaning of
Section 162(m) of the Code (including, without limitation, by
having the relevant performance goals established by the Board and
having the Board certify the achievement of such goals before the
annual bonus is paid).
Bonuses will be
paid on or about March 15 of the year following the related
calendar year (and in no event later than April 15 of the year
following the related calendar year).
(c)
Restricted Stock Grants :
(i) Executive
shall receive, as of the date hereof, an award consisting of that
number of restricted shares of OdysseyRe’s common stock, par
value $.01 per share (“Restricted Shares”), which, when
multiplied by the simple average of the closing prices of
OdysseyRe’s common stock on the New York Stock Exchange on
the twenty (20) business days next preceding the date of
execution hereof, yields the aggregate sum of One Million Dollars
($1,000,000), subject to subparagraph (ii) below, the foregoing
grant (the “Incentive Stock Bonus”) shall be subject to
the terms of the Odyssey Re Holdings Corp. Restricted Share Plan
(the “Restricted Share Plan”). Executive shall
become
vested in the
shares granted pursuant to the foregoing sentence, and all
restrictions shall lapse, on April 1, 2009 with respect to
twenty percent (20%) of the Restricted Shares and on each
anniversary thereafter with respect to an additional twenty percent
(20%) of the Restricted Shares such that on April 1, 2013 all
restrictions on the Restricted Shares constituting the Incentive
Stock Bonus shall lapse.
(ii) A
copy of the award document relating to the Incentive Stock Bonus
(an “Award Document”) is attached hereto as
Exhibit A. The Award Document provide that (a) upon
Executive’s Termination of Employment as a result of death,
disability, reaching retirement age; Change in Control (as defined
in Article II, Section 6 below); termination by Executive
as a result of a Constructive Termination (as defined in
Article II, Section 4 below); or termination by Employer
for reasons other than For Cause (as defined in Article II,
Section 3 below) the restricted period applicable to any
Restricted Shares granted to Executive thereunder (an
“Award”) shall terminate and Executive shall become
fully vested in such Award; and (b) if the stock of Employer
at any time during the restricted period ceases to be publicly
traded, then Executive shall have the option to receive a cash
payment, payable by Employer within ten (10) days following
written notice from Executive no later than thirty (30) days
following the delisting of Employer stock from the exchange, equal
to the number of shares of Restricted Stock of Employer granted
under the Award Document and held by Executive as of the delisting
of the stock times the greater of (i) the share price of
Employer stock as of the close of business forty-five
(45) trading days prior to its delisting and (ii) the
average share price of Employer stock (based on end of business day
values) over the forty-five (45) trading day period prior to
delisting. To the extent the cash payment exceeds the fair market
value of the
stock at the
time of payment and Executive is a “specified employee”
as defined in Section 409A of the Code, the excess amount
shall be paid the earlier of (A) 6 months following
termination of employment, or (B) death. The foregoing
subparagraph (b) shall not apply if the stock of Employer
ceases to be publicly traded as a result of Employer having made a
general assignment for the benefit of creditors, been adjudicated
as bankrupt or insolvent, or having filed a voluntary petition in
bankruptcy, a petition or answer seeking an arrangement with
creditors or to take advantage of any insolvency law or having
filed an answer admitting the material allegations of a petition
filed against Employer in bankruptcy.
(iii) Employer
will take whatever action necessary, including, without limitation,
amendment of the Restricted Share Plan, to ensure that the issuance
of Restricted Shares to Executive pursuant to the Award Document
does not exceed the maximum number of shares available for such
purpose.
(d)
Additional Benefits : During the term of
this Agreement, Executive shall be entitled to the following fringe
benefits:
(i) Executive
Benefits: Executive shall be eligible to participate in such
benefits and perquisites as are now generally available or later
made generally available to executive officers of
Employer.
(ii) Vacation:
Executive shall be entitled to vacation time consistent with his
position as Executive Vice President and his duties
hereunder.
(iii) Life
Insurance: Executive shall be eligible to participate in any life
insurance program available to executive officers of Employer on
terms at least as favorable as those generally made available to
such executive officers.
(iv) Disability
Insurance: Executive shall be eligible to participate in any
disability insurance program available to executive officers of
Employer on terms at least as favorable as those generally made
available to such executive officers.
(v) Reimbursement
for Expenses: Employer shall reimburse Executive for reasonable and
properly documented out-of-pocket business and/or entertainment
expenses incurred by Executive in connection with the performance
of his duties under this Agreement.
(vi) Retirement
Plans and Related Arrangements: Executive shall continue to
participate in all retirement plans and related arrangements made
available by Employer to its executives.
(vii) Reimbursement
of Attorney’s Fees: Employer shall pay all reasonable
attorney’s fees and disbursements incurred by Executive in
negotiating this Agreement; payment shall be made either to
Executive upon submission of paid invoices for such legal work or
directly to the attorney chosen by Executive.
Section 4: Reimbursement of Certain
Taxes, Penalties and Interest.
To the best of
Employer’s knowledge, Employer hereby represents to Executive
that, as of the date hereof, Executive’s execution of this
Agreement shall not result in the attribution of any current
taxable income to him. Notwithstanding anything in this Agreement
to the contrary, in the event that the execution of this Agreement
or the payment of any bonus hereunder is subject to tax under
Section 409A of the Internal Revenue Code of 1986, as amended
(the “409A Tax”), Employer will reimburse Executive for
such 409A Tax (together with any interest and penalties and the
amount of any federal income tax attributable to your receipt of
such reimbursement from the
Employer). Such
reimbursement payment will be made at the time the 409A Tax is due
and payable. In addition, Employer agrees to advance to Executive
an amount equal to any base taxes that he would be obligated to pay
in any year during which he does not receive a bonus payment or
bonus payments if 409A liability is alleged and payment is actually
made. Any and all such advances shall be treated by the Company as
a credit against bonus payments to be made to Executive under this
Agreement. If Executive is terminated without Cause or terminates
his employment in the event of Constructive Termination and such
advance is not offset against a bonus payment, Employer shall
forgive all amounts owed to it by Executive in respect of such
advance. In the event Executive is terminated with Cause or
terminates his employment for any reason other than Constructive
Termination and such advance is not offset against a bonus payment,
Executive hereby agrees to pay Company an amount equal to amounts
outstanding in respect of such advance together with interest at an
annual rate of six percent (6%) payable in two (2) equal
annual payments over the two (2) year period immediately
following Executive’s termination with Cause or termination
for any reason other than Constructive Termination.
TERMINATION OF
EMPLOYMENT
Subject to
Section 7 of this Article II, Employer shall provide
Executive with the following payments and benefits upon termination
of employment:
Section 1: Termination Due to
Death.
The employment of
Executive under this Agreement shall terminate upon
Executive’s death. In the event of Executive’s death
during Executive’s employment hereunder, the estate or other
legal representative of Executive shall be entitled to receive the
following:
(a)
Base Salary : Employer shall pay to
Executive’s estate or other legal representative of
Executive, Executive’s Base Salary for the period ending one
year following the month in which Executive dies. Such an amount
and all other amounts payable under this Section 1 of
Article II shall be paid by Employer in a lump sum within
thirty (30) days of the date of death, provided ,
however , that the amounts due with respect to the Bonus
Pool shall be paid when such amounts would ordinarily be
paid.
(b)
Payment from Bonus Pool : Employer shall
pay to the estate or other legal representative of Executive,
(i) all amounts accrued in the Bonus Pool by Executive with
respect to years preceding the year in which the death of Executive
occurs and (ii) the pro-rated bonus payable with respect to
the year in which the death of Executive occurs.
(c)
Restricted Stock : Upon the death of
Executive, the restricted period with respect to all Restricted
Stock previously awarded to Executive including, without
limitation, Restricted Stock awarded pursuant to this Agreement,
shall terminate and Executive’s estate or other legal
representative shall become fully vested in all Restricted Stock
previously awarded to Executive. In addition, upon the death of
Executive, all other equity awards shall vest (and, with respect to
stock options and stock appreciation rights, if any, shall become
fully exercisable).
Section 2: Termination by Reason of
Disability.
If, during the
term of this Agreement, Executive, in the reasonable judgment of
the Board, has failed to perform his duties under this Agreement on
account of illness or physical or mental incapacity, and such
illness or incapacity continues for a period of more than
(i) six (6) consecutive months or (ii) one hundred
eighty three (183) days in any consecutive three hundred
sixty-five (365) day period, Employer shall have the right to
commence process to terminate Executive’s employment under
this Agreement on account of disability. Employer shall send
written notice to Executive of (x) its intention to commence
such process, (y) a medical doctor chosen by Employer to make the
determination referred to in the next sentence, and
(z) Executive’s right within ten (10) days of
receipt of the notice to choose a second medical doctor to make
such determination. Termination for disability shall be based on a
reasonable determination that Executive is either unable to engage
in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or last for a continuous period of not less than
12 months; or by reason
of any medically determinable physical or mental impairment that
can be reasonably expected to result in death or last for a
continuous period of not less than 12 months, is receiving
income replacement benefits for a period of not less than three
months under an accident and health plan covering employees of the
service provider’s employer. Executive shall fully cooperate
in this process, including by making himself available for and
consenting to all examinations and tests reasonably required by any
doctor making the aforesaid determination. The aforesaid
determination shall be made by the medical doctor chosen by
Executive, if he exercises his foregoing right to choose a doctor,
and the medical
doctor chosen
by Employer. If the determination is being made by two medical
doctors and they cannot agree within fifteen (15) days of
their both being chosen, they shall as soon as reasonably possible
select a third medical doctor to make the determination, who shall
make the determination within fifteen (15) days of being
chosen. The determination made by the foregoing process shall be
conclusive. In the event Executive’s employment is terminated
on account of disability, Executive’s rights to compensation
and benefits shall be as follows:
(a)
Base Salary : Executive shall be paid his
pro rated Base Salary, as determined in accordance with the terms
of Section 3(a) of Article I for a period of no less than one
year, less any benefits paid to him under disability insurance
policies maintained by Employer, following his termination on
account of disability.
(b)
Payment from Bonus Pool : Employer shall
pay to Executive, when the same would ordinarily be paid,
(i) all amounts accrued in the Bonus Pool by Executive with
respect to years preceding the year in which termination due to
disability of Executive occurs and (ii) the pro-rated bonus
payable with respect to the year in which termination due to the
disability of Executive occurs.
(c)
Restricted Stock : The restricted period
with respect to all Restricted Stock previously awarded to
Executive shall terminate and Executive shall become fully vested
in all Restricted Stock previously awarded to Executive, including,
without limitation, Restricted Stock awarded pursuant to this
Agreement. In addition, all other equity awards shall vest (and,
with respect to stock options and stock appreciation rights, if
any, shall become fully exercisable).
Section 3: Termination for
Cause.
“Termination
for Cause” shall mean termination by Employer of
Executive’s employment by Employer by reason of:
(i) a
willful failure by Executive in bad faith to substantially perform
his duties with Employer resulting in material harm to Employer;
or
(ii) Executive’s
conviction of a felony involving moral turpitude. Executive must be
given written notice that Employer intends to terminate his
employment for Cause. Such written notice shall specify the
particular act or failure to act constituting the basis of the
intention to so terminate employment.
In the case of a
Termination for Cause under clause (i) above, Executive shall
be given the opportunity, within twenty (20) days of the
receipt of such notice, to meet with the Board to refute or explain
such act or failure to act. If such act or failure to act is
reasonably determined by the Board to be in violation of clause
(i) of this Section, Executive shall be given ten
(10) days after such meeting to correct such act or failure to
act, and upon failure of Executive within such ten (10) day
period to correct such act or failure to act to the reasonable
satisfaction of the Board, Executive’s employment by Employer
shall be terminated. In the case of Termination for Cause under
Clause (ii) above, Executive’s employment shall be
terminated as of the date such notice is given.
In the event the
Board shall terminate Executive’s employment for Cause,
Executive shall be entitled only to the following:
(a)
Base Salary : Within thirty (30) days
of the date of Executive’s Termination for Cause, Executive
shall be paid his pro rated Base Salary, as determined in
accordance with the terms of Section 3(a) of
Article I.
(b)
Payment from Bonus Pool : Executive shall
forfeit all rights to payments from the Bonus Pool.
Section 4: Termination without Cause;
Constructive Termination.
Notwithstanding
anything in this Agreement to the contrary, Executive’s
employment hereunder may be terminated by Employer without Cause,
and Executive may terminate his employment hereunder in the case of
Constructive Termination, as defined in this Section 4,
provided , however , that in the event that
Executive’s employment is terminated in accordance with the
terms of this Section 4, Executive shall be entitled to
receive:
(a)
Base Salary : Within thirty (30) days
of Executive’s termination of employment, Employer shall pay
to Executive a lump sum payment equal to Executive’s Base
Salary, as determined in accordance with the terms of Section 3(a)
of Article I, for the month in which termination occurs, and
for the period incepting the first day of the month immediately
following the month in which termination occurs to the end of the
Term, or any extension thereto, inclusive (but in no event for less
than one (1) year).
(b)
Payment from Bonus Pool : Employer shall
pay to Executive, within thirty (30) days following
termination of employment, (i) if performance has been met
under the Bonus Pool, all amounts accrued in the Bonus Pool by
Executive with respect to years preceding the year in which
termination of employment of Executive occurs and (ii) if
performance has been met under the Bonus Pool, the pro-rated bonus
determined under the Bonus Pool with respect to the year in which
termination of employment of Executive occurs.
(i) The
restricted period applicable to all Restricted Stock previously
awarded to Executive shall terminate and Executive shall become
fully vested in all Restricted Stock previously awarded to
Executive, including, without limitation, Restricted Stock awarded
pursuant to this Agreement. Executive shall, upon such termination,
have the option to take cash in lieu of Restricted Stock with
respect to all, or any portion, of the shares of Restricted Stock
that vest as a result of this subparagraph, based on a share price
for such Restricted Stock that is the greater of (a) the share
price of Employer’s stock as of the close of business on the
business day next preceding the date of termination of employment
and (b) the share price of Employer’s stock ten
(10) business days prior to the date determined under
paragraph (a) above (or the closing price of the next
preceding business day, if such date does not fall on a business
day). To the extent the cash payment exceeds the fair market value
of the stock at the time of payment and Executive is a
“specified employee” as defined in Section 409A of
the Code; the excess amount shall be paid the earlier of
(A) 6 months following termination of employment or
(B) death. In addition, all other equity awards shall vest
(and, with respect to stock options and stock appreciation rights,
if any, shall become fully exercisable).
(ii) Executive
shall give Employer written notice within ten (10) business
days following termination of employment under this Section 4,
specifying the number of shares of Restricted Stock with respect to
which Executive has elected to take cash in lieu of shares of
Restricted Stock. Employer shall, within thirty (30) days of
receipt of such notice, deliver to Executive a check in payment of
the value of the shares of Restricted Stock as determined in
accordance with the immediately preceding subsection, and
share
certificates
evidencing the remaining shares of Restricted Stock that have
vested as a result of termination of employment under this
Section 4 and with respect to which Executive has not
exercised his election to take cash in lieu of shares.
(d)
Health Coverage : Executive’s medical
and dental coverage shall cease upon the termination of
Executive’s employment. In the event of such termination in
accordance with the terms of this Section 4, Employer shall
provide Executive with notice and enrollment materials confirming
Executive’s right to continue medical and dental insurance
coverage to the extent permitted under COBRA; provided ,
however , that Executive shall only be required to pay the
premiums charged to similarly-situated active employees during the
entire COBRA continuation period, and Employer shall pay the
remaining cost of coverage.
For purposes of
this Agreement, “Constructive Termination” shall mean
the termination of employment by Executive following written notice
to Employer for any of the following reasons:
(i) without
Executive’s express written consent, the loss of
Executive’s position described in Article I,
Section 1 or a material alteration in Executive’s
position or responsibility as so described;
(ii) without
Executive’s express written consent, a breach by Employer of
any of its material obligations set forth in this
Agreement;
(iii) any
failure by a successor to Employer to assume Employer’s
obligations under this Agreement, either expressly or by operation
of law, or, if Employer sells all or substantially all of its
assets, or as a result of a sale by Employer’s majority
stockholder, Fairfax Financial Holdings Limited
(“Fairfax”) of all of Employer or a
controlling
interest in
Employer and in either case, as a result thereof, any failure by
the purchaser to assume Employer’s obligations under this
Agreement; or
(iv) without
Executive’s express written consent, relocation of
Executive’s work situs to a location that is not within a
radius of thirty (30) miles by major thoroughfare from the
Executive’s work situs in Stamford, Connecticut at the
inception of this Agreement.
Executive must
give written notice to Employer within ninety (90) days
following the initial existence of one or more of the reasons
listed above if Executive intends to terminate Executive’s
employment because of the occurrence of one of the circumstances
co
|
