exv10w31



 





Exhibit 10.31




RETIREMENT AND CONSULTING AGREEMENT




     THIS RETIREMENT AND CONSULTING AGREEMENT (the “Agreement”) is entered into
as of June 15, 2004, by and among Bruce A. Esselborn (“Executive”), Fairfax
Financial Holdings Limited, a Canadian corporation (“FFH”), Fairfax Inc., a
Wyoming corporation (“Fairfax”), and Crum & Forster Holdings Corp., a Delaware
corporation (the “Company”) (collectively, the “Companies”).



     WHEREAS, Executive was employed as Chief Executive Officer and Chairman of
the Board of Directors (the “Board”) of Crum & Forster Holding Inc. (“C&F
Holding”) and the insurance operating companies of the Company (the “Operating
Companies”);



     WHEREAS, Executive resigned as (i) Chief Executive Officer of C&F Holding
and the Operating Companies effective April 2, 2004, and (ii) Chairman of the
Board of C&F Holding and the Operating Companies effective June 15, 2004;



     WHEREAS, Executive retired from active employment with C&F Holding and the
Operating Companies effective June 15, 2004; and



     WHEREAS, Executive has agreed to provide consulting services to Fairfax as
requested from July 1, 2004 through December 31, 2004.



     NOW, THEREFORE, in consideration of the mutual covenants and agreements
described below, and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties hereto agreed as follows:




	I.	 	Employment and Retirement





	 	1.	 	Effective Date. This Agreement shall be effective as
of the Retirement Date, as defined below.
	 
	 	2.	 	Resignation and Retirement. Executive hereby confirms
his previously announced resignation as Chairman of the Board and
Chief Executive Officer of C&F Holding and the Operating
Companies and retires from active employment therewith effective
as of June 15, 2004 (the “Retirement Date”). C&F Holding and the
Operating Companies have accepted Executive’s retirement from
active employment effective as of the Retirement Date.
	 
	 	3.	 	2004 Cash Bonus. Executive will receive from the
Company a pro-rata 2004 cash bonus for services rendered during
the 2004 calendar year as determined by Fairfax in its sole
discretion (the “2004 Bonus”). Executive is entitled to receive
the 2004 Bonus only if all members of the Company’s executive
management team are granted a 2004 cash bonus.



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	 	4.	 	Restricted Stock. The FFH restricted common stock
granted to Executive pursuant to his Employment Agreement dated
October 1, 1999, will continue to vest in accordance with the
vesting schedule provided therein, pursuant to which all such shares of FFH restricted common stock will be fully vested on
October 1, 2004. All such shares of FFH restricted common stock
will be delivered to Executive by FFH net of withholding taxes.
	 
	 	5.	 	Benefits.





	 	(a)	 	Life Insurance and Medical Benefits. Following
the Retirement Date, the Company will provide Executive with
(i) life insurance equal to the maximum amount available to
the Executive under the Operating Companies’ basic life
insurance coverage prior to the Retirement Date and (ii)
medical benefits substantially similar to those medical
benefits provided to Executive prior to the Retirement Date
with continued contributions toward such medical benefits by
Executive in a manner and percentage similar to that prior to
the Retirement Date. To the extent Executive becomes eligible
for life insurance or medical benefits through a new employer,
Executive shall promptly advise the Company in writing and the
obligations to provide life insurance or medical benefits in
accordance with this Section shall immediately cease.
	 
	 	(b)	 	Income Tax Preparation. The Companies will
reimburse Executive for the cost of the preparation of
Executive’s 2004 income tax returns.





	II.	 	Consulting Relationship





	 	1.	 	Consulting Services. In recognition of the significant
value to Fairfax of the availability of a person of Executive’s
experience, Fairfax hereby agrees to engage Executive as a
consultant to it for the period beginning July 1, 2004 through
December 31, 2004 (the “Consulting Period”), and Executive hereby
commits to serve Fairfax as a consultant during the Consulting
Period. During the Consulting Period, Executive will consult
with management of Fairfax as requested from time to time.
During the Consulting Period, Executive will be free to pursue
and accept any employment or consulting arrangement with any
other entity, so long as that entity is not a Competitor, as
defined in Section III.2 of this Agreement.
	 
	 	2.	 	Compensation. Executive will be paid by Fairfax a
retainer fee equal to $250,000 U.S. for consulting services
rendered during the Consulting Period (the “Retainer Fee”),
subject to further payment for extraordinary engagements as
mutually agreed upon by Fairfax and Executive. The Retainer Fee
will be paid by check either in lump sum or other periodic
payments as determined by Fairfax.
	 
	 	3.	 	Reimbursement of Expenses. Fairfax will pay or
reimburse Executive for all reasonable business expenses actually
incurred or paid by the Executive during the Consulting Period
under this Agreement in performance of Executive’s



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	 	 	 	consulting services hereunder, in accordance with the customary
reimbursement policies of Fairfax for its senior executive
employees.





	III.	 	General Provisions





	 	1.	 	Indemnity. The Companies and/or one or more of their
subsidiaries will indemnify and provide a defense to Executive to
the fullest extent permitted by law and their respective by-laws
with respect to any claims arising out of the performance of
Executive’s duties as an employee, director or officer of, or
consultant to, any of such indemniters, consistent with the
indemnity and defense provided to other officers, directors or
consultants of the Companies.
	 
	 	2.	 	Non-Competition. During the Consulting Period,
Executive shall not, without the prior written consent of
Fairfax, engage in any business or activity in competition with
the Companies, whether as an employee, consultant, partner,
principal, agent, representative or in any other individual,
corporate or representative capacity, or render any services or
provide any advice to any business, activity or person engaged in
the business of insurance (including reinsurance) or the
provision of insurance related services (a “Competitor”).
	 
	 	3.	 	Miscellaneous Provisions.





	 	(a)	 	Assignability; Binding Nature. This Agreement
shall be binding upon and inure to the benefit of the parties
and their respective successors, heirs and assigns. No rights
or obligations under this Agreement may be assigned or
transferred except upon prior written approval of all parties
hereto.
	 
	 	(b)	 	Notices. Notices and all other communications
contemplated by this Agreement shall be in writing and shall
be deemed to have been duly given when personally delivered
or, if sent by prepaid overnight courier or by U.S. registered
or certified mail, return receipt requested and postage
prepaid, on the later of delivery or two (2) business days
after being so sent. In the case of Executive, mailed notices
shall be addressed to Executive at the home address that
Executive most recently communicated to the Companies in
writing. In the case of the Companies, mailed notices shall
be addressed to their respective corporate headquarters, and
all notices shall be directed to the attention of their Chief
Executive Officers.
	 
	 	(c)	 	Governing Law. This Agreement shall be deemed to
be made in, and in all respects be interpreted, construed and
governed by and in accordance with the laws of, the State of
New Jersey.
	 
	 	(d)	 	Modifications; Waivers. The waiver by any party
hereto of a breach of any provision of this Agreement by any
other party hereto shall not operate or be construed as a
waiver of any prior or subsequent breach of



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	 	 	 	the same provision by the other party. No waiver or
modification of any provision of this Agreement shall be
valid unless in writing and duly executed by each of the
parties hereto.
	 
	 	(e)	 	Entire Agreement. This Agreement is intended by
the parties hereto to be the final expression of their
agreement with respect to the subject matter hereof and is the
complete and exclusive statement of the terms thereof,
notwithstanding any representations, statements or agreements
to the contrary heretofore made.
	 
	 	(f)	 	Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original
but all of which together shall constitute one and the same
instrument.




     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.



	 	 	 
	Crum & Forster Holdings Corp.	 	
Fairfax Financial Holdings Limited
	By: /s/ Mary Jane Robertson


Name:  Mary Jane Robertson

Title: Senior Executive Vice President,

          Chief Financial Officer & Treasurer	 	
By: /s/ Eric P. Salsberg



Name:  Eric P. Salsberg

Title: Vice President
	 	 	
Fairfax Inc.
	/s/ Bruce A. Esselborn


Bruce A. Esselborn	 	
By: /s/ Eric P. Salsberg



Name:  Eric P. Salsberg

Title: Vice President








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