EMPLOYMENT AGREEMENT
EXHIBIT
10.11
THIS
EMPLOYMENT AGREEMENT
dated as
of June 1, 2005 (the “Effective Date”), by and between AmTrust North America,
Inc., 00 Xxxxxx Xxxx, 0xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx, a Delaware corporation (the “Company”) and Xxxxxxx X. Xxxxx,
an individual residing at 000 Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxx 00000
(“Executive”).
WITNESSETH
WHEREAS,
The
Company and Executive desire to enter into this Employment Agreement (the
“Agreement”) in order to set forth the terms and conditions of Executive’s
employment, intending to supersede any prior employment agreement, written
or
oral, whether with the Company or other affiliates.
NOW,
THEREFORE,
in
consideration of the mutual covenants and promises contained herein and other
good and valuable consideration, receipt of which is acknowledged, the parties
hereto agree as follows:
1. Duties
and Responsibilities.
The
duties and responsibilities of Executive shall be those of a senior executive
of
the Company as the same shall be assigned to him, from time to time, by the
Board of Directors of the Company. Executive recognizes that, during the period
of his employment hereunder, he owes an undivided duty of loyalty to the Company
and agrees to devote all of his business time and attention to the performance
of his duties and responsibilities and to use his best efforts to promote and
develop the business of the Company. Subject to the approval of the Board of
Directors, which shall not be unreasonably withheld, Executive shall be entitled
to serve on corporate, civic, and/or charitable boards or committees and to
otherwise reasonably participate as a member in community, civic, or similar
organizations and the pursuit of personal investments which do not present
any
material conflicts of interest with the Company.
It
is the
intention of the Company that Executive shall be appointed President to serve
in
such position at the pleasure of the Board of Directors, reporting on a
day-to-day basis directly to the president of Company’s parent corporation,
AmTrust Financial Services, Inc. (“AFS”). If elected, Executive shall serve as a
member of the Board of Directors of the Company or such of its affiliates to
which he may be elected, in each case, without additional
compensation.
2. Employment
Period.
For a
period commencing on the Effective Date hereof and ending on May 31, 2008 (the
“Employment Period”), the Company hereby employ Executive in the capacities
herein set forth. Executive agrees, pursuant to the terms hereof, to serve
in
such
capacities
for the Employment Period. This Agreement shall renew for successive one year
periods unless one of the parties provides written notice of not less than
ninety days prior to the end of the Employment Period or any successive
Employment Period that the party will not renew the Agreement.
3. Compensation
and Benefits.
(a) Salary.
The Company, collectively, shall pay Executive a salary at the rate of Two
Hundred Fifty Thousand Dollars ($250,000) per annum through December 31, 2005
and Three Hundred Twenty-Five Thousand Dollars ($325,000) per annum effective
January 1, 2006 (“Salary”), payable in accordance with the Company’ normal
payroll process. Executive shall be entitled to a salary review annually
commencing on the second anniversary of the Effective Date of this Agreement.
Such salary review shall be based entirely on merit and any salary adjustments
shall be determined by the Board of Directors of the Company solely at its
discretion.
(b) Profit
Bonus. Executive shall receive an annual bonus equal to one percent (1%) of
the
profit, as defined herein, of AFS during the Employment Period or any successive
Employment Period (the “Profit Bonus”). Effective as of the Calendar year ending
December 31, 2006, the Profit Bonus shall not exceed Executive’s then current
Salary. For
purposes of computing the Profit Bonus, profits shall mean AFS’ after tax net
income, excluding extraordinary income and all income of AmTrust Pacific
Limited, as determined by AFS’s independent public accountants whose
determination thereof shall be final, binding and conclusive. The Profit Bonus
for each year shall be paid within sixty (60) days after the completion and
issuance of AFS’s consolidated financial statements for the prior calendar year.
The Profit Bonus shall be payable only if Executive is employed by the Company
on the date that the bonus is payable.
(c) Special
Bonus. It is understood and agreed that AFS intends to adopt a 2005 Incentive
Stock Plan (the “Plan”). Upon such adoption and based upon a proposed
capitalization of thirty million issued and outstanding shares of common stock,
Executive shall be granted an incentive stock option to purchase under the
Plan
300,000 shares of AFS common stock, subject to the terms and conditions of
the
Plan. The number of shares covered by the option shall be adjusted upward or
downward, as the case may be, to an amount equal to one percent of the issued
and outstanding shares of common stock if the number of said shares is greater
or lesser than thirty million. In the event that AFS, during the term of the
option, does not have a liquidity event, such as an initial public offering,
a
sale of in excess of twenty percent (20%) of its outstanding shares to persons
currently not affiliated with AFS or a merger or sale of AFS to a non-affiliated
third party, exercise of the option, in whole or in part, shall be deferred
indefinitely unless and until such event occurs.
(d) Executive
may also receive other bonus payments determined at the sole discretion of
the
Board of Directors (“Discretionary Bonus”).
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(e) Executive
shall also be entitled to the following benefits:
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(i)
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three
weeks (3) weeks of paid vacation for each twelve (12) months of the
Employment, or such greater period as may be approved from time to
time by
Board of Directors. Unused vacation time shall not be carried over
to any
subsequent calendar year;
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(ii)
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paid
holidays and any and all other work-related leave (whether sick leave
or
otherwise) as provided to the Company’ other executive employees;
and
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(iii)
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participation
in such employee benefit plans to which executive employees of the
Company, their dependents and beneficiaries generally are entitled
during
the Employment Period and, including, without limitation, health
insurance, disability and life insurance, retirement plans and other
present or successor plans and practices of Company for which executive
employees, their dependents and beneficiaries are
eligible.
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4. Reimbursement
of Expenses.
The
Company recognizes that Executive, in performing Executive’s functions, duties
and responsibilities under this Agreement, may be required to spend sums of
money in connection with those functions, duties and responsibilities for the
benefit of the Company and, accordingly, shall reimburse Executive for travel
and other out-of-pocket expenses reasonably and necessarily incurred in the
performance of his functions, duties and responsibilities hereunder upon
submission of written statements and/or bills in accordance with the regular
procedures of the Company in effect from time to time.
5. Disability.
In the
event that Executive shall be unable to perform because of illness or
incapacity, physical or mental, all the functions, duties and responsibilities
to be performed by him hereunder for a consecutive period of two (2) months
or
for a total period of three (3) months during any consecutive twelve (12) month
period, the Company may terminate this Agreement effective on or after the
expiration of such period (the “Disability Period”) upon five (5) business days’
written notice to Executive specifying the termination date (the “Disability
Termination Date”). Executive shall be entitled to receive his Salary and any
unreimbursed expenses to the Disability Termination Date and for a period of
the
three months thereafter. Disability under this paragraph, shall be determined
by
a physician who shall be selected by the Company and approved by Executive.
Such
approval shall not be unreasonably withheld or delayed, and a physician shall
be
deemed to be approved unless he or she is disapproved in writing by Executive
within ten (10) days after his or her name is submitted. The Company may obtain
disability income insurance for the benefit of Executive in such amounts as
the
Company may determine.
6. Death.
In the
event of the death of Executive during the Employment Period, this Agreement
and the employment of Executive hereunder shall terminate on the date of death
of Executive. Executive’s heirs or legal representatives shall be entitled to
receive his Salary earned to the date of his death and for a period of three
months thereafter and any unreimbursed expenses.
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7.
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Termination. |
The
Company may discharge Executive for Cause at any time. Cause for discharge
shall
include (i) a material breach of this Agreement by Executive, but only if such
breach is not cured within thirty (30) days following written notice by the
Company to Executive of such breach, assuming such breach may be cured; (ii)
Executive is convicted of any act or course of conduct involving moral
turpitude; or (iii) Executive engages in any willful act or willful course
of
conduct constituting an abuse of office or authority which significantly
adversely affects the business or reputation of the Company. No act, failure
to
act or course of conduct on Executive’s part shall be considered “willful”
unless done, or omitted to be done, by him not in good faith and without
reasonable belief that his action, omission or course of conduct was in the
best
interest of the Company. Any written notice by the Company to Executive pursuant
to this paragraph 7 shall set forth, in reasonable detail, the facts and
circumstances claimed to constitute the Cause. If Executive is discharged for
Cause, the Company, without any limitations on any remedies it may have at
law
or equity, shall have no liability for salary or any other compensation and
benefits to Executive after the date of such discharge.
8. Non-Disclosure
of Confidential Information.“Confidential
Information” means all information known by Executive about the
Company’ business plans, present or prospective customers, vendors, products,
processes, services or activities, including the costing and pricing of such
services or activities, employees, agents and representatives. Confidential
Information does not include information generally known, other than through
breach of a confidentiality agreement with any of the Company’, in the industry
in which the Company engages or may engage. Executive will not, while this
Agreement is in effect or after its termination, directly or indirectly, use
or
disclose any Confidential Information, except in the performance of Executive’s
duties for the Company, or to other persons as directed by the Board of
Directors. Executive will use reasonable efforts to prevent unauthorized use
or
disclosure of Confidential Information. Upon termination of employment with
the
Company, Executive will deliver to the Company all writings relating to or
containing Confidential Information, including, without limitation, notes,
memoranda, letters, drawings, diagrams, and printouts, including any tapes,
discs or other forms of recorded information. If Executive violates any
provision of this Section while this Agreement is in effect or after
termination, the Company specifically reserve the right, in appropriate
circumstances, to seek full indemnification from Executive should the Company
suffer any monetary damages or incur any legal liability to any person as a
result of the disclosure or use of Confidential Information by Executive in
violation of this Section.
9. Restrictive
Covenant.
(a) Prohibited
Activities.
Executive agrees that he shall not (unless he has received the prior written
consent of the Company), during the period beginning on the date of termination
of employment and during the term of this Agreement and ending three (3) years
thereafter (the “Restriction Period”), directly or indirectly, for any reason,
for his own account or on behalf of or together
with any other person or firm:
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(i)
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engage
in any capacity or as an owner or co-owner of or investor in, whether
as
an independent contractor, consultant or advisor, or as a representative
of any kind, in any business selling any products or providing any
services in competition with the Company based on the lines of business
being written by the Company as of the termination of this Agreement
except in the states of North Dakota, South Dakota and Wyoming; provided,
however, that Executive may own not more than five percent (5%) of
the
outstanding securities of any class of any corporation engaged in
any such
business, if such securities are listed on a national securities
exchange
or regularly traded in the over-the-counter market by a member of
a
national securities association;
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(ii)
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hire
or solicit for employment or call, directly or indirectly, through
any
person or firm, on any person who is at that time (or at any time
during
the one year prior thereto) employed by or representing the Company
with
the purpose or intent of attracting that person from the employ of
the
Company;
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(iii)
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call
on, solicit or perform services for, directly or indirectly through
any
person or firm, any person or firm that at that time is, or at any
time
within one year prior to that time was, a customer of the Company
or any
prospective customer that had or, to the knowledge of Executive,
was about
to receive a business proposal from the Company, for the purpose
of
soliciting or selling any product or service in competition with
the
Company; or
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(iv)
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call,
directly or indirectly through any person or firm, on any entity
which has
been called on by the Company in connection with a possible acquisition
by
the Company with the knowledge of that entity’s status as such an
acquisition candidate, for the purpose of acquiring that entity or
arranging the acquisition of that entity by any person or firm other
than
the Company.
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(b) Damages.
Because
of (i) the difficulty of measuring economic losses to the Company as a result
of
any breach by Executive of the covenants in Sections 9(a), and (ii) the
immediate and irreparable damage which could be caused to the Company for which
they would have no other adequate remedy, Executive agrees that the Company
may
enforce the provisions of Paragraph 9(a) by injunction and restraining order
against Executive if he breaches any of said provisions, without necessity
of
providing a bond or other security.
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(c) Reasonable
Restraint.
The
parties hereto agree that Sections 9(a) and 9(b) impose a reasonable restraint
on Executive in light of the activities and business of the Company on the
date
hereof and the current business plans of the Company.
10. Ownership
of Inventions.
Executive shall promptly disclose in writing to the Board of Directors all
inventions, discoveries, and improvements conceived, devised, created, or
developed by Executive in connection with his employment (collectively,
“Invention”), and Executive shall transfer and assign to the Company all right,
title and interest in and to any such Invention, including any and all domestic
and foreign patent rights, domestic and foreign copyright rights therein, and
any renewal thereof. Such disclosure is to be made promptly after the conception
of each Invention, and each Invention is to become and remain the property
of
the Company, whether or not patent or copyright applications are filed thereon
by the Company. Upon request of the Company, Executive shall execute from time
to time during or after the termination of employment such further instruments
including, without limitation, applications for patents and copyrights and
assignments thereof as may be deemed necessary or desirable by the Company
to
effectuate the provisions of this Section.
11. Construction.
If the
provisions of paragraph 9 should be deemed unenforceable, invalid, or overbroad
in whole or in part for any reason, then any court of competent jurisdiction
designated in accordance with paragraph 13 is hereby authorized, requested,
and
instructed to reform such paragraph to provide for the maximum competitive
restraint upon Executive’s activities (in time, product, geographic area and
customer or employee solicitation) which shall then be legal and
valid.
12. Damages
and Jurisdiction.
Executive agrees that violation of or threatened violation of any of paragraphs
8, 9 or 10 would cause irreparable injury to the Company for which any remedy
at
law would be inadequate, and the Company shall be entitled in any court of
law
or equity of competent jurisdiction to preliminary, permanent and other
injunctive relief against any breach or threatened breach of the provisions
contained in any of said paragraphs 8, 9 or 10 hereof, and such compensatory
damages as shall be awarded. Further, in the event of a violation of the
provisions of paragraph 9, the Restriction Period referred to therein shall
be
extended for a period of time equal to the period that any violation
occurred.
13. Jurisdiction
and Venue.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York. The Company and Executive hereby each consents to the
exclusive jurisdiction of the Supreme Court of the State of New York or the
United States District Court for the Southern District of New York with respect
to any dispute arising under the terms of this Agreement and further consents
that any process or notice of motion therewith may be served by certified or
registered mail or personal service, within or without the State of New York,
provided a reasonable time for appearance is allowed. Each party acknowledges
and agrees that any controversy which may arise under this Agreement
is
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likely
to
involve complicated and difficult issues, and therefore each party hereby
irrevocably and unconditionally waives any right such party may have to a trial
by jury in respect or any litigation directly or indirectly arising out of
or
relating to this agreement, or the breach, termination or validity of this
Agreement, or the transactions contemplated by this Agreement.
14. Indemnification.
To the
fullest extent permitted by, and subject to, the Company’ Certificates of
Incorporation and By-laws, the Company shall indemnify and hold harmless
Executive against any losses, damages or expenses (including reasonable
attorney’s fees) incurred by him or on his behalf in connection with any
threatened or pending action, suit or proceeding in which he is or becomes
a
party by virtue of his employment by the Company or any affiliates or by reason
of his having served as an officer or director of the Company or any other
corporation at the express request of the Company, or by reason of any action
alleged to have been taken or omitted in such capacity.
15. Severability.
If any
provision of this Agreement is held to be invalid, illegal, or unenforceable,
that determination will not affect the enforceability of any other provision
of
this Agreement, and the remaining provisions of this Agreement will be valid
and
enforceable according to their terms.
16. Successors
to Company.
Except
as otherwise provided herein, this Agreement shall be binding upon and inure
to
the benefit of Executive and the Company and any successor or assign of the
Company, including, without limitation, any corporation acquiring, directly
or
indirectly, all or substantially all of the assets of the Company, whether
by
merger, consolidation, sale or otherwise (and such successor shall thereafter
be
deemed embraced within the term “Company” for the purposes of this Agreement),
but shall not otherwise be assignable by the Company. The services to be
provided by Executive hereunder may not be delegated nor may Executive assign
any of his rights hereunder.
17. No
Restrictions.
Executive represents and warrants that as of the date of this Agreement
Executive is not subject to any contractual obligations or other restrictions,
including, but not limited to, any covenant not to compete, that could interfere
in any way with his employment hereunder.
18. Miscellaneous.
(a) This
Agreement constitutes the entire understanding of the parties with respect
to
the subject hereof, may be modified only in writing, is governed by laws of
New
York, without giving effect to the principles of conflict of laws thereof,
and
will be binding and inure to the benefit of Executive and Executive’s personal
representatives, and the Company, their successors and assigns.
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(b) If
Executive should die while any amount would still be payable to him under this
Agreement
if he had continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to Executive’s
estate or legal representative.
(c) The
failure of any of the parties hereto to enforce any provision hereof on any
occasion shall not be deemed to be a waiver of any provision or succeeding
breach of such provision or any other provision.
(d) All
notices under this Agreement shall be given by registered or certified mail,
return receipt requested, directed to parties at the following addresses or
to
such other addresses as the parties may designate in writing:
If
to the
Company:
AmTrust
North America, Inc.
00
Xxxxxx
Xxxx, 0xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxx X. Xxxxxxx
If
to
Executive
Xxxxxxx
X. Xxxxx
000
Xxxxxxxxxx Xxxxx
Xxxxxx,
Xxxx 00000
(e) In
furtherance and not in limitation of the foregoing, this Agreement supersedes
any employment agreement between the Company and Executive, written or oral,
and
any such agreement hereby is terminated and is no longer binding on either
party.
19. Key
Man Insurance Authorization.
At any
time during the term of this Agreement, the Company will have the right (but
not
the obligation) to insure the life of Executive for the sole benefit of the
Company and to determine the amount of insurance and type of policy. The Company
will be required to pay all premiums due on such policies. Executive will
cooperate with the Company in taking out the insurance by submitting to physical
examination, by supplying all information required by the insurance company,
and
by executing all necessary documents. Executive, however, will incur no
financial obligation by executing any required document, and will have no
interest in any such policy.
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21. Counterparts.
This
Agreement may be executed in one or more counterparts, all of which shall be
deemed to be duplicate originals.
| AMTRUST NORTH AMERICA, INC. | ||
| By:__________________________________ | ||
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Xxxxx
X. Xxxxxxx
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Xxxxxxx
X. Xxxxx
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