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EXHIBIT 10.1
SEPARATION AGREEMENT
This Separation Agreement ("Agreement") is entered into by and
between Max Re Capital Ltd. (the "Company") and Robert Cooney
("Executive").
WHEREAS, the Company has employed Executive as its President and
Chief Executive Officer and Chairman of its Board of Directors
pursuant to an Amended and Restated Employment Agreement, dated as
of August 1, 2004 (the "Amended Employment Agreement");
and
WHEREAS, Executive has decided to resign his position as Chief
Executive Officer, President, and Chairman of the Board of the
Company for Good Reason in accordance with the terms of the Amended
Employment Agreement; and
WHEREAS, the Company desires to retain the services of Executive
as a Consultant and Executive desires to provide such services to
the Company; and
WHEREAS, the parties now desire to enter into this Agreement to
set forth the terms and conditions of the termination of
Executive’s position as Chief Executive Officer, President,
and Chairman of the Board of Directors of the Company and of the
terms and conditions under which Executives will provide consulting
services to the Company;
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth below, it is hereby agreed as follows:
1. Executive has resigned as a director, officer, and
representative of the Company and its affiliates, including but not
limited to his position as President, Chief Executive Officer, and
Chairman of the Board of Directors, effective October 29,
2006. Upon the execution of this Agreement, Executive shall sign
the letter attached as Schedule A documenting his resignation
from any and all positions he previously held. Executive also
represents and warrants that all pre-termination transactions
involving the Company’s common shares and other securities
during the current fiscal year that are reportable under
Section 16 of the Securities Exchange Act have been reported
on a Form 4 or Form 5, as applicable, or have been
reported by Executive to the Company, prior to Executive’s
termination.
2. Executive shall continue as a non-employee Consultant to
the Company from October 30, 2006 through December 31,
2006 (the Consulting Period). As a Consultant, Executive shall
perform such services as are reasonably requested of him by the
Company and shall use his best efforts to assist in the orderly
transition of his former duties and responsibilities. While serving
as a Consultant during the Consulting Period, Executive shall
receive a consulting fee at a rate of $58,333 per month and the
following additional items of benefit: (a) as long as
Executive remains a resident of Bermuda through the Consulting
Period, he shall receive continued benefits under the health,
vision, and dental plans in which he participated up to the date of
his resignation or an individual replacement plan(s) purchased at
the Company’s expense for Executive, his wife, and his two
children; (b) a car allowance of $1,000 per month; (c) a
housing allowance of $10,000 per month; and (d) reimbursement
of country club dues up to a maximum of $833.33 per month through
the Consulting Period. Within ten (10) days of the effective
date of this Agreement, Executive shall be paid any accrued but
unpaid amounts due to him under this Paragraph 2 for full
months worked as a Consultant since October 30, 2006. Within
ten (10) days of the effective date of this Agreement,
Executive also shall receive an amount representing his accrued but
unused vacation time for 2006 (if any) as determined by the
Company.
3. In lieu of the payments and benefits described in the
Amended Employment Agreement upon a termination of employment,
including, without limitation, Section 5.10(c) thereof, the
parties have agreed that in consideration of the benefits provided
in this Agreement, Executive shall receive the following payments
and benefits. Accordingly, the severance pay provisions of the
Amended Employment Agreement, including, without limitation,
Section 5.10(c), shall be null and void.
(a) Severance payments of $58,333 per month, minus
applicable taxes and withholdings, payable in accordance with the
Company’s regular payroll schedule for the period
January 1, 2007 through June 30, 2008 (the "Severance Pay
Period"); provided however that the Company shall deduct a
total of $200,000 from the payments under this Paragraph 3(a) in
coequal installments over the eighteen (18) month period in
satisfaction of the fine imposed on Executive by the
Company’s Audit Committee on or about September 17,
2006.
(b) Executive also shall receive the following benefits
throughout the Severance Pay Period: (i) so long as Executive
remains a resident of Bermuda through the Severance Pay Period, he
shall receive continued benefits under the health, vision, and
dental plans in which he participated up to the date of his
resignation or through an individual replacement plan(s) purchased
at the Company’s expense for Executive, his wife, and his two
children; (ii) a car allowance of $1,000 per month;
(iii) a housing allowance of $10,000 per month; and
(iv) reimbursement of country club dues capped at a maximum of
$833.33 per month through the Severance Pay Period.
(c) In exchange for the additional covenants regarding
non-competition and non-solicitation granted by Executive to the
Company as set forth in Paragraph 4, below, Executive shall
receive an additional monthly payment of $40,000, minus applicable
taxes and withholdings, through the Severance Pay Period. Executive
agrees that he resigned from the Company of his own free will, and
that the terms of his various restrictive covenants, as set forth
in Paragraph 4 below, are valid and enforceable. Executive
acknowledges that the Company is relying on his representations in
this Paragraph 3(c) in entering into this Agreement, and it shall
have the right to recoup all amounts and benefits (including,
without limitation, the vesting of 100,000 of the Restricted Stock
Awards) provided to Executive under this Agreement, as well as
obtaining injunctive relief as set forth in Section 4.2 of the
Amended Employment Agreement, should Executive breach any of the
restrictive covenants referenced in Paragraph 4 (or directly
or indirectly challenge the lawfullness of any of these
covenants).
4. Executive acknowledges that as the Company’s
President and Chief Executive Officer, he had access to substantial
Confidential Information, including but not limited to information
regarding the Company’s clients, customers, goals,
strategies, pricing, and trade secrets. Executive further
acknowledges that should he become employed by or in any way
affiliated with a competitor of the Company, he inevitably would
disclose the Company’s Confidential Information in the course
of providing services to such competitor. Therefore, and in light
of the substantial compensation and severance payments Executive is
eligible to receive under this Agreement, Executive hereby
covenants as follows: All terms and covenants in Article IV of
the Amended Employment Agreement (including Sections 4.1(a),
(b), (c), (d), and (e) and Section 4.2 thereof) shall
continue in full force and effect; provided however that
Executive’s obligations to the Company under
Section 4.1(c) shall continue only until June 30, 2008.
In addition, from the date of his resignation through June 30,
2008, Executive shall not directly or indirectly (a) solicit,
hire, attempt to hire, retain, contract with, compensate, or work
at the same business or venture with any individual who (i) as
of December 31, 2006, is an employee, officer, director, or
consultant of any of the Designated Entities (as defined in the
Amended Employment Agreement) or (ii) has been an employee,
officer, director, or consultant of any of the Designated Entities
at any time since January 1, 2006; (b) solicit, interfere
with, contract with, or endeavor to entice away from any of the
Designated Entities (i) any of the Designated Entities’
current clients or customers, (ii) any persons or entities
that were customers or clients of any of the Designated Entities at
any time since January 1, 2006, or (iii) any potential
client or customer that any of the Designated Entities were
actively pursuing or contemplating actively pursuing during
Executive’s employment; or (c) compete with, or
participate in any business or venture that competes with, any of
the Designated Entities, including but not limited to participating
in any business or venture in the insurance or reinsurance
industry, any business or venture that underwrites insurance or
reinsurance, or any business or venture that focuses in whole or in
part on risk transfer for clients in the property & casualty or
life & annuity insurance markets.
5. Equity Awards.
(a) Warrants . Nothing in this Agreement shall have
any effect on the terms and conditions of the Warrants the Company
has issued to Executive to purchase the Company’s Common
Shares, and those Warrants shall continue to be governed under the
terms and conditions of the applicable Warrant Agreement.
(b) Stock Options . Nothing in this Agreement shall
have any effect on the terms and conditions of the Nonqualified
Stock Options the Company has granted Executive pursuant to the
terms and conditions of the Company’s 2000 Stock Incentive
Plan (the "Plan"). Such stock options shall continue to be governed
under the terms and conditions of the applicable stock option
agreement.
(c) Restricted Stock . Notwithstanding the terms
and conditions of the Amended Employment Agreement, the Restricted
Stock Award Agreement, dated February 16, 2006, between the
Company and Executive; the Restricted Stock Award Agreement, dated
February 7, 2005, between the Company and Executive; the
Restricted Stock Award Agreement, dated August 1, 2004,
between the Company and Executive; and the R
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