This Employment
Agreement (the “Agreement”) is made and entered into as
of May 1, 2009 (the “Effective Date”) by and
between ODYSSEY RE HOLDINGS CORP., a Delaware Corporation
(“Employer”) and Mr. Brian David Young
(“Executive”), and supersedes all prior agreements,
written or oral, between Employer and its subsidiaries and
Executive regarding the matters referenced herein.
WHEREAS,
the Board of Directors of Employer 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 join
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 Chief
Operating Officer, 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, and his duties as Chief Operating Officer. In such
capacity, all division heads of Employer’s business
operations shall directly report to Executive. 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 under this Agreement shall
commence as of May 1, 2009 (the “Commencement Date”)
and shall continue until May 1, 2014 (the “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.
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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):
(a) Base
Salary : During the Term, Executive shall receive an
annual base salary (“Base Salary”) of Seven Hundred
Fifty Thousand Dollars ($750,000), as it may be increased from time
to time at the discretion of Employer’s Board of Directors,
upon advice and consent of the Compensation Committee of
Employer’s Board of Directors (the “Compensation
Committee”), pro rated for any calendar year within the Term
for which employment hereunder does not extend for the entire
calendar year. The Base Salary shall be paid to Executive in equal
bi-weekly installments.
(b) Bonus
Pool : Executive shall participate in the bonus pool
(the “Bonus Pool”) created with respect to each
accident underwriting year, consisting of that portion of the
underwriting profit for such year designated by the Board, 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
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bonus shall be
determined by Employer, upon advice and consent of the Compensation
Committee. 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 Compensation Committee and having the Compensation Committee
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
accident underwriting year (and in no event later than
April 15 of the year following the related accident
underwriting year).
(c) Restricted
Stock Grant :
(i) Executive
shall receive, as of the execution date hereof, an award consisting
of that number of restricted shares of Employer’s common
stock, par value $.01 per share (“Restricted Shares”),
which, when multiplied by the simple average of the closing prices
of Employer’s common stock on the New York Stock Exchange on
the twenty (20) business days next preceding May 1, 2009,
yields the aggregate sum of One Million Five Hundred Thousand
Dollars ($1,500,000), and, subject to subparagraphs (ii) and
(iii) below, the foregoing grant shall be subject to the terms
of the Employer’s Restricted Share Plan (the
“Restricted Share Plan”). Executive shall become fully
vested in the shares granted pursuant to the foregoing sentence,
and all restrictions on the Restricted Shares shall lapse, on
May 1, 2014.
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(ii) An
award document evidencing the foregoing Restricted Share grant (the
“Award Document”) shall be provided to Executive by
Employer within 30 days of the date of execution hereof. The
Award Document shall 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’s stock from the
exchange, equal to the number of shares of Restricted Stock 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’s stock as of the close of business forty-five
(45) trading days prior to its delisting and (ii) the
average share price of Employer’s 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) six (6) months following termination
of
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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,
requesting 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 — Chief Operating Officer of
Employer.
(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.
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(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: Except as otherwise provided herein,
Employer shall reimburse Executive for reasonable and properly
documented out-of-pocket business, travel and/or entertainment
expenses incurred by Executive in connection with the performance
of his duties under this Agreement, consistent with
Employer’s Travel and Entertainment Policy.
(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.
(viii) Tax
Assistance: Any tax obligations relating to the
performance by Executive of his duties and responsibilities
pursuant to this Agreement, and the preparation and filing of any
related United States federal, state and local returns (as
required), shall be the sole responsibility of Executive,
provided , however , that during the term hereof, an
accounting firm selected by Employer will assist in the preparation
and filing of any United Kingdom and United States federal, state
and local returns (as required) that are reasonably related to, or
resulting from, Executive’s service to Employer during the
term of Executive’s prior expatriation to London on behalf
of
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Employer’s subsidiary, Odyssey America
Reinsurance Corporation (“London Service”), and will
provide Employer with a statement of the tax liability on
Executive’s total income subject to certain limitations. At
such time as Executive’s actual tax returns, if any, relating
to Executive’s London Service are filed, a reconciliation
will be prepared, comparing the hypothetical tax withheld
throughout the year to Executive’s final hypothetical tax.
This reconciliation will take into account Executive’s actual
personal income and deductions.
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
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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, if any, 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 judgment of the Chief
Executive Officer of Employer, 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
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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
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 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 required by any
doctor making the aforesaid determination. The aforesaid
determination shall be made by the medical doctor chosen by
Executive, if Executive 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.
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(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, if any, 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.
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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 of Directors of
Employer to refute or explain such act or failure to act. If such
act or failure to act is reasonably determined by the Board of
Directors to be in violation of clause (i) of this
Section 3, 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 of Directors, 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 of Directors shall terminate Executive’s employment for
Cause, Executive shall be entitled to receive 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 the following:
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(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
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