Exhibit 10.1
EXECUTION COPY
                       [exhibit1011.jpg]

 

GENERAL RELEASE AND SETTLEMENT AGREEMENT
 
This General Release and Settlement Agreement (hereinafter “Agreement”) is
entered into as of the 21st day of May 2010 between (i) Mark J. Byrne
(hereinafter “Byrne”) of Roughill, 6 Long Lane, Hamilton Parish, Bermuda and
(ii) Flagstone Holdings (Bermuda) Limited (together with its parent(s),
subsidiaries and affiliated companies and entities, and its and their respective
shareholders, investors, predecessors, successors, assigns, officers, directors,
employees and agents, hereinafter “Flagstone”).  Byrne and Flagstone are
collectively referred to herein as the “Parties”.
 
WHEREAS, Byrne was employed by Flagstone from 18th October 2006 until 21st May
2010 (hereinafter the “Termination Date”) when Byrne resigned from his
employment with Flagstone; and
 
WHEREAS, the Parties desire to fully and finally conclude all employment
relations between them; and
 
NOW THEREFORE, in consideration of the mutual promises contained herein, and
other good and valuable consideration as hereinafter recited, the receipt and
adequacy of which is hereby acknowledged, Byrne and Flagstone agree as follows:
 
 
1.
On the Termination Date, Byrne will resign as, and cease to be, (a) an employee
of Flagstone or any of its subsidiaries or affiliates, (b) the Executive
Chairman of Flagstone’s Board of Directors (hereinafter the “Board”), (c) a
member of any committee or subcommittee of the Board and (d) a member of the
board of directors of any of Flagstone’s subsidiaries or affiliates, provided
that Byrne will remain a member of the Board as a non-employee
director.  Following the Termination Date, Flagstone will provide Byrne with
compensation and benefits commensurate with those provided to other non-employee
members of the Board, but Byrne will cease to earn or accrue, or participate in
any plans or programs providing, any employee compensation or benefits
(including disability benefits), except as expressly provided herein.

 
2.
Promptly, but in no event later than the first business day after the
Termination Date, Flagstone will pay Byrne a lump-sum cash payment in an amount
equal to $1,100,000 as severance.

 
3.
On the 730th day after the Termination Date, Flagstone will pay Byrne an
additional lump-sum cash payment in an amount equal to $1,100,000 as additional
severance.

 
 

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4.
All equity, equity-based, bonus or incentive compensation awards (including
performance share units under Flagstone’s Amended and Restated Performance Share
Unit Plan) held by Byrne on the Termination Date shall be forfeited without
payment; provided that, for the avoidance of doubt, this paragraph 4 shall not
apply to the Amended and Restated Share Purchase Warrant dated May 17, 2010,
issued by Flagstone Reinsurance Holdings, S.A. to Haverford (Bermuda) Ltd.
(hereinafter the “Warrant”), which shall continue in full force and effect.

 
5.
Flagstone will provide Byrne with the benefits set forth on Schedule I hereto.

 
6.
Flagstone’s obligations to provide Byrne with the compensation and benefits
described in Sections 2 through 5 above will cease in the event Byrne breaches
any provision of this Agreement in any material respect.

 
7.
Byrne shall return to Flagstone, no later than 31st August 2010, all Flagstone
property, this shall include but not be limited to all data removed from
Flagstone systems or computers, except as expressly provided herein.

 
8.
Byrne, for himself, his heirs, executors, administrators, legal representatives,
successors and assigns, releases and forever discharges Flagstone and all
persons acting by, through, under or in concert with Flagstone, its subsidiaries
and affiliated companies and entities (hereinafter collectively referred to as
“Released Parties”), of and from any and all manner of actions, causes of
actions, claims, debts, dues, accounts, bonds, covenants, contracts, agreements
and compensation, and demands of every name and nature, whether at law, in
equity, administrative, in contract or in tort, under statute or at common law,
or pursuant to any plan or program providing any employee compensation or
benefits (including disability benefits), whether now known or unknown, which
Byrne ever had, now has or hereafter may have, or which Byrne’s heirs, executors
or administrators hereafter may have, by reason of any matter, cause or thing
whatsoever from the beginning of time to the date of this Agreement.  In no
event will this release and discharge prohibit Byrne from enforcing this
Agreement.

 
9.
Flagstone releases and forever discharges Byrne and Byrne’s heirs, executors,
administrators, legal representatives, successors and assigns (hereinafter
collectively referred to as “Byrne Released Parties”), of and from any and all
manner of actions, causes of actions, claims, debts, dues, accounts, bonds,
covenants, contracts, agreements and compensation, and demands of every name and
nature, whether at law, in equity, administrative, in contract or in tort, under
statute or at common law, whether now known or unknown, which Flagstone ever

 
 

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had, now has or hereafter may have, or which Flagstone hereafter may have, by
reason of any matter, cause or thing whatsoever from the beginning of time to
the date of this Agreement.  In no event will this release and discharge
prohibit Flagstone and its affiliates from enforcing this Agreement.

 
10.
Byrne will continue to be indemnified for Byrne’s actions taken while employed
by Flagstone to the same extent as other former employees of Flagstone under the
statuts of Flagstone Reinsurance Holdings, S.A., and Byrne will continue to be
covered by Flagstone’s directors’ and officers’ liability insurance policy as in
effect from time to time to the same extent as other former employees of
Flagstone, each subject to the requirements of the Law of 10 August 1915 on
Commercial Companies of the Grand Duchy of Luxembourg.

 
11.
Byrne warrants, represents and agrees that he has not assigned or transferred,
or purported to assign or transfer, to any person, firm, partnership or
corporation, or any other entity whatsoever, any action or actions, cause or
causes of action, at law or in equity, suits, debts, demands, claims, contracts,
covenants, liens, liabilities, losses, costs or expenses (including without
limitation, attorney’s fees and damages) that are the subject of this Agreement.

 
12.
Byrne represents and warrants that he has not filed, and shall not file any
grievance, charge, claim, complaint or legal action against any of the Released
Parties before any ministerial department, federal, state or local agency, any
judicial forum or any legislative body.  If Byrne breaches this Agreement by
suing any of the Released Parties in violation of this covenant not to sue,
Byrne understands that the Released Parties will be entitled to apply for and
receive an injunction to restrain any violation of this Section 12.

 
13.
Byrne agrees that he will not say or do anything to disparage or discredit
Flagstone (including Flagstone’s directors, officers, employees, advisors or
consultants) or to cause any disruption of business for Flagstone or its parent,
subsidiary or affiliate corporations and entities; provided that this provision
will not restrict (a) Byrne’s ability to make truthful statements in good faith
in any legal proceeding or (b) Byrne’s ability to make a public response to any
public statement by Flagstone’s directors or executive officers that violates
Section 14.    Byrne agrees that breach of this clause by him will constitute a
material breach of this Agreement.

 
14.
Flagstone agrees that it will use commercially reasonable efforts to cause its
directors and executive officers to not say or do anything to disparage or
discredit

 
 

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Byrne; provided that this provision will not restrict (A) the ability of
Flagstone or its directors and executive officers to make truthful statements in
good faith in any legal proceeding or (B) the ability of Flagstone or its
directors and executive officers to make a public response to any public
statement by Byrne that violates Section 13.  Flagstone agrees that breach of
this clause by it will constitute a material breach of this Agreement.

 
15.
Byrne agrees that after his departure from Flagstone, he will not disclose to
any person the affairs of Flagstone, including, but not limited to, its
investors, clients, transactions, trading models and trading strategies or the
financial results or performance figures of Flagstone or any client or strategy
that may have come to his attention during the course of his employment with
Flagstone.  Byrne further agrees that upon his departure from Flagstone, he will
not take with him any Confidential Information (as defined in Byrne’s Employment
Agreement) belonging to or concerning Flagstone, or its clients, whether in
printed form or on any electronic storage device.  In the event that Byrne does
have in his possession any Confidential Information following his departure from
Flagstone, he undertakes to deliver such information to Flagstone within three
(3) days of his departure.  If personal delivery of such information is either
not possible or inconvenient, he undertakes to contact the Chief Executive
Officer of Flagstone and arrange a suitable method of disposal of such
information within three (3) days of his departure.

 
16.
Byrne expressly covenants that all rights in inventions, patents, trade marks,
service marks, design rights (whether registerable or otherwise), trade and
business names, copyrights (including rights in computer software), database
rights and semiconductor topography rights (whether or not any of these is
registered and including applications for registrations) and all rights or terms
of protection of a similar nature or having equivalent or similar effect to any
of these which may subsist anywhere in the world (the “Intellectual Property
Rights”) relating in any way to the business activities (or incidental to the
use of Flagstone time and or property) of Flagstone or its affiliates which may
be discovered, invented, improved or developed by Byrne during Byrne’s
employment with Flagstone, whether during regular office hours or otherwise and
whosesoever discovered, invented, improved or developed will be the exclusive
and sole property of Flagstone and its affiliates.  Byrne undertakes to disclose
promptly to Flagstone and hereby assigns to Flagstone without further
compensation, all rights, title and interest in such discoveries, inventions,
improvements and developments whether conceived and developed solely by Byrne or
jointly with others and will on the request of Flagstone execute all documents
and do all such things as may be

 
 

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requested by Flagstone or its affiliates to confirm and perfect the rights,
title and interest in such property provided that Flagstone will bear all costs
and expenses associated therewith.

 
17.
Byrne will not use any of Flagstone’s property for personal use, except as
expressly provided herein.

 
18.
During the 730 days after the Termination Date, Byrne will not directly, or
indirectly through another individual or entity:  (a) solicit any employee of
Flagstone or any of its affiliates to leave the employ of Flagstone and its
affiliates, or in any way interfere with the relationship between Flagstone or
any of its affiliates, on the one hand, and any employee thereof, on the other
hand; provided, however, that the general solicitation of third parties through
the use of means generally available to the public, including the placement of
advertisements in a newspaper, will not be deemed to violate this clause (a); or
(b) hire any individual who was an employee of Flagstone or any of its
affiliates until 12 months after such individual’s employment relationship has
ended; provided that this clause (b) may be waived by the Chief Executive
Officer of Flagstone on an individual, case-by-case basis.  If Byrne is employed
by or a consultant to another individual or entity, Byrne will procure the
compliance of that individual or entity with the provisions of this Section 18.

 
19.
Byrne agrees that, upon reasonable notice and without the necessity of Flagstone
obtaining a subpoena or court order, Byrne will provide reasonable cooperation
in connection with any suit, action or proceeding (or any appeal from any suit,
action or proceeding), and any investigation or defense of any claims asserted
against any Released Parties, which relates to events occurring during Byrne’s
services or employment with Flagstone as to which Byrne may have relevant
information (including furnishing relevant information and materials to
Flagstone or its designee and/or providing testimony at depositions and at
trial).

 
20.
Byrne acknowledges that the limitations and obligations contained in this
Agreement are, individually and in the aggregate, reasonable and properly
required by Flagstone and that in the event that any such limitations are found
to be unreasonable and unenforceable, Byrne will submit to such limitations and
obligations in such form as the applicable court will determine.  Byrne agrees
that Byrne will not challenge or contest the reasonableness, validity or
enforceability of any such limitations and obligations.

 
 

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21.
On the Termination Date, Flagstone shall, and Byrne shall cause Limestone
Business Limited, a limited company organized under the laws of the British
Virgin Islands (hereinafter, the “Selling Shareholder”) to enter into the Share
Repurchase Agreement attached as Exhibit A hereto, which shall provide for
Flagstone to purchase from the Selling Shareholder, on the third day after the
Termination Date, 2,000,000 of Flagstone’s common shares, par value $0.01 per
share, at a price of $12.00 per share in cash.

 
22.
From the Termination Date until the first anniversary of the date on which Byrne
is no longer a member of the Board, Byrne shall, and shall cause Byrne’s
affiliates to, comply with the volume and manner-of-sale limitations of Rule 144
under the Securities Act of 1933 (regardless of whether such limitations are
applicable) with respect to securities of Flagstone.

 
23.
The existence of this Agreement, its provisions and actions taken pursuant to
this Agreement shall not constitute, be construed as, or be admissible in
evidence in any proceeding as, an admission of any wrongdoing, fault, violation
of law, or liability of any kind on the part of any of the Released Parties.

 
24.
This Agreement shall in all respects be interpreted, enforced and governed under
the laws of Bermuda without regard to conflicts of laws principles or choice of
law provisions that would cause the application of the law of any other
jurisdiction.  It is the intention of the parties to this Agreement that the
laws of the Bermuda shall govern the validity of this Agreement, the
construction of its terms, the interpretation of the rights and duties of the
Parties, and its enforcement.

 
25.
This Agreement constitutes a single, integrated written contract expressing the
entire agreement between the Parties and cannot be modified in any way except by
written modification executed by all Parties.  There are no other agreements,
written or oral, expressed or implied, between the Parties hereto except as set
forth in this Agreement and the Warrant.

 
26.
If any provision of this Agreement is declared invalid or otherwise
unenforceable, the other provisions herein shall remain in full force and effect
and shall be construed in a fashion to effectuate the purpose and intent of this
Agreement.

 
27.
The Parties agree that this Agreement shall be binding upon and inure to the
benefit of the Parties hereto, and their respective successors, heirs, personal
representatives and assigns.

 
 

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28.
The Parties agree that, in any action or proceeding to interpret or enforce this
Agreement or for material breach of this Agreement, the prevailing party shall
be entitled to recover from the other party the costs of such action or
proceeding, including its reasonable attorney’s fees.

 
29.
The Parties agree that this Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 
30.
The Parties agree that for the purposes of construing or interpreting this
Agreement, this Agreement shall be deemed to have been drafted equally by both
Parties hereto.

 
31.
All payments or benefits provided hereunder will be subject to applicable tax
deductions and withholdings.

 
32.
Byrne acknowledges and agrees that a breach of any provision of this agreement
in any material respect, or the pursuit of a claim against Flagstone relating to
his employment or its termination, notwithstanding the provisions of this
agreement, that all and any payments made under this agreement shall cease.

 
33.
No amendment of this Agreement will be binding unless in writing and signed by
you and the Company.

Byrne confirms that he has had the opportunity to receive independent legal
advice respecting the matters contained herein; that he fully understands the
terms of this settlement; and that he voluntarily accepts the settlement
referred to above for the purpose of making final compromise, adjustment and
settlement of all claims related to his employment with Flagstone.

 
 

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IN WITNESS WHEREOF, the Parties hereunto execute this Agreement on this 21st day
of May 2010.
 

FLAGSTONE HOLDINGS (BERMUDA)LIMITED

By:  ____________________________

Its:  _____________________________

ACCEPTED AND AGREED:

_______________________
Mark J. Byrne

 
 

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