EX-10.1






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 Restricted Stock Award Agreement, dated January 30, 2004, between
the Company and Executive (collectively, the “Restricted Stock Awards”), in final and complete
settlement of Executive’s rights under the Restricted Stock Awards, the parties agree that of the
295,000 shares of the Company’s common stock subject to restriction, 219,163 vested on October 29,
2006 and 75,837 were permanently forfeited on October 29, 2006, all as set forth in Schedule B.



(d) Schedule B. Schedule B hereto sets forth all of Executive’s outstanding equity
awards with the Company and his rights with respect thereto as of his termination of employment.



6. Any rights Executive may have to indemnification or advancement of expenses to which he is
otherwise entitled under applicable law, the Company’s Bye-Laws, or the Amended Employment
Agreement shall be unaffected by this Agreement. As of the date of this Agreement, the Company has
made no determination that Executive is not entitled to indemnification or advancement of expenses.



7. Following the Consulting Period set forth in Paragraph 2, above, and through the Severance
Pay Period, Executive agrees that he will make reasonable efforts to answer Company inquiries that
may arise regarding matters on which he may have knowledge or information. Company agrees that
Executive’s cooperation shall be subject to reasonable accommodations that will avoid or minimize
disruption of his personal or professional obligations.



8. In consideration of the mutual promises and covenants contained in this Agreement, and
after consultation with counsel:



(a) Executive for himself and each of his respective heirs, representatives, agents,
successors, and assigns, irrevocably and unconditionally releases and forever discharges the
Company and its respective current and former officers, directors, shareholders, employees,
representatives, heirs, attorneys, and agents, as well as its respective predecessors, parent
companies, subsidiaries, affiliates, divisions, successors, and assigns and its respective current
and former officers, directors, shareholders, employees, representatives, attorneys, and agents,
from any and all causes of action, claims, actions, rights, judgments, obligations, damages,
demands, accountings, or liabilities of whatever kind or character, which Executive may have
against them, or any of them, by reason of or arising out of, touching upon, or concerning
Executive’s employment and/or directorship with the Company or his separation from the Company, or
any statutory claims, or any and all other matters of whatever kind, nature, or description,
whether known or unknown. Executive acknowledges that this release of claims specifically
includes, but is not limited to, any and all claims for fraud; breach of contract; breach of the
implied covenant of good faith and fair dealing; inducement of breach; interference with
contractual rights; wrongful or unlawful discharge or demotion; violation of public policy;
invasion of privacy; intentional or negligent infliction of emotional distress; intentional or
negligent misrepresentation; conspiracy; failure to pay wages, benefits, vacation pay, expenses,
severance pay, attorneys’ fees, or other compensation of any sort; defamation; unlawful effort to
prevent employment; discrimination on the basis of race, color, sex, sexual orientation, national
origin, ancestry, religion, age, disability, handicap, medical condition, or marital status; any
claim under Title VII of the Civil Rights Act of 1964 (Title VII, as amended), 42 U.S.C. § 2000, et
seq., the Civil Rights Act of 1991, the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. §
621, et seq., the Older Workers Benefit Protection Act (“OWBPA”), 29 U.S.C. § 626(f), the Equal Pay
Act, the Family and Medical Leave Act (“FMLA”), the Fair Labor Standards Act (“FLSA”), the
Americans with Disabilities Act (“ADA”), the Consolidated Omnibus Budget Reconciliation Act of 1985
(“COBRA”), the Occupational Safety and Health Act (“OSHA”) or any other health and/or safety laws,
statutes, or regulations, the Employee Retirement Income Security Act of 1974 (“ERISA”), the
Internal Revenue Code of 1986, as amended; the Bermuda Employment Act 2000; the Bermuda Human
Rights Act 1981; and any and all other foreign, federal, state, or local laws, common law, or case
law, including but not limited to all statues, regulations, common law, and other laws in place in
Bermuda or the state of New York.



(b) Executive shall have up to twenty-one (21) days from the date of his receipt of this
Agreement to consider its terms and conditions. If Executive does not sign and return this
Agreement within twenty-one (21) days, the Company’s offer to enter into this Agreement shall be
withdrawn and the Agreement shall be null and void. This Agreement shall not become effective
until the eighth (8th) day following Executive’s signing of the Agreement. Executive
may revoke this Agreement by delivering written notice of revocation before the end of the seventh
(7th) day following his signing of this Agreement (the “Revocation Period”) to: Sarene
Bourdages, General Counsel, Max Re Capital Ltd. If the last day of the Revocation Period falls on
a Saturday, Sunday or holiday, the last day of the Revocation Period will be deemed to be the next
business day thereafter. In the event that Executive revokes this Agreement prior to the eighth
(8th) day after signing it, this Agreement and the promises contained herein (including,
but not limited to the obligation of the Company to provide the severance payments, benefits and
other things of value set forth in this Agreement or the Amended Employment Agreement) shall
automatically be null and void.



(c) Executive agrees never to file a lawsuit of any kind with any court or arbitrator against
the Company or any Company Released Parties, asserting any claims that are released in this
Agreement. Executive represents and agrees that, prior to signing this Agreement, he has not filed
or pursued any complaints, charges, or lawsuits of any kind with any court, governmental or
administrative agency, or arbitrator against the Company, or any other person or entity released
under Paragraph 8(a) above, asserting any claims whatsoever.



(d) Executive represents and warrants that he has not assigned or subrogated any of his
rights, claims, and/or causes of action, including any claims referenced in this Agreement, or
authorized any other person or entity to assert such claim or claims on his behalf, and he agrees
to indemnify and hold harmless the Company against any assignment of said rights, claims, and/or
causes of action.



(e) If Executive should breach any of his obligations under this Agreement or the terms of
Section 4.1 of the Amended Employment Agreement, the Company shall have no further obligation to
make the payments and benefits described in this Agreement or the Amended Employment Agreement, and
Executive shall return all amounts paid or provided to him thereunder (including, without
limitation, the fair market value of 100,000 shares of the Restricted Stock Awards that vested in
accordance herewith).



9. Any disputes arising under this Agreement shall be subject to the same terms set forth in
the Amended Employment Agreement.



10. No failure by either party hereto at any time to give notice of any breach by the other
party of, or to require compliance with, any condition or provision of this Agreement shall (i) be
deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time or (ii) preclude insistence upon strict compliance in the future.



11. If a court of competent jurisdiction determines that any provision of this Agreement is
invalid or unenforceable, then the invalidity or unenforceability of that provision shall not
affect the validity or enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect and such invalid or unenforceable provision shall
be reformulated by such court to preserve the intent of the parties hereto.



12. All of the terms and provisions contained in this Agreement shall inure to the benefit of
and shall be binding upon the parties hereto and their respective heirs, legal representatives,
successors, and assigns.



13. This Agreement may be executed in counterparts, each of which shall be deemed an original.



14. This Agreement shall not in any way be construed as an admission that the Company,
Executive, or any other individual or entity has any liability to or acted wrongfully in any way
with respect to Executive, the Company, or any other person.



15. The Company represents that it has the authority to enter into this Agreement and has
obtained all necessary corporate approvals necessary to do so. Executive represents and warrants
that he has been advised in writing to consult with an attorney before signing this Agreement; that
he has had an opportunity to be represented by independent legal counsel of his own choosing
throughout all of the negotiations preceding the execution of this Agreement; that he has executed
this Agreement after the opportunity for consultation with his independent legal counsel; that he
is of sound mind and body, competent to enter into this Agreement, and is fully capable of
understanding the terms and conditions of this Agreement; that he has carefully read this Agreement
in its entirety; that he has had the opportunity to have the provisions of the Agreement explained
to him by his own counsel, who has answered to his satisfaction any questions he has asked with
regard to the meaning of any of the provisions of the Agreement; that he fully understands the
terms and significance of all provisions of this Agreement; that he voluntarily assents to all the
terms and conditions contained in this Agreement; and that he is signing the Agreement of his own
force and will, without any coercion or duress.



16. This Agreement shall be deemed to satisfy all Notice requirements under the Employment
Agreement, including but not limited to those regarding the termination of Executive’s employment,
and no additional notices shall be required to or by either the Company or Executive.



17. Nothing in this Agreement shall have any effect on the terms and conditions of any loans
previously made by the Company to Executive which shall continue to be governed under the terms and
conditions of the applicable loan agreements, including, without limitation, accelerated payment
upon a termination of employment.



18. Except as otherwise specifically provided herein, this Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof, contains all the covenants,
promises, representations, warranties, and agreements between the parties with respect to
Executive’s resignation from the Company and all positions therewith, and supersedes all prior
employment or severance or other agreements between Executive and the Company, whether written or
oral, or any of its predecessors or affiliates, including, but not limited to, the Amended
Employment Agreement. Executive acknowledges and agrees that the consideration provided for herein
is adequate consideration for Executive waiving his rights under any other agreement, whether
written or oral, between Executive and the Company. Except as otherwise provided herein, Executive
acknowledges that no representation, inducement, promise, or agreement, oral or written, has been
made by either party, or by anyone acting on behalf of either party, which is not embodied herein,
and that no agreement, statement, or promise relating to Executive’s resignation from the Company
that is not contained in this Agreement shall be valid or binding. Except as specifically provided
herein, Executive acknowledges and agrees that he is not entitled to any other payments or benefits
from the Company upon his termination of employment (or in conjunction with his termination of
service as a director). Any modification of this Agreement will be effective only if it is in
writing and signed by both parties.



19. This Agreement is entered into under, and shall be governed for all purposes by, the laws
of the State of New York without giving effect to any choice of law principles.



WHEREFORE, the parties, by their signatures below, evidence their agreement to the provisions
stated above:



MAX RE CAPITAL LTD.



Dated:   By:      



Signature:      



Title:      



I HAVE READ AND UNDERSTOOD THIS AGREEMENT AND AM IN AGREEMENT WITH ITS TERMS.



Dated:        



Robert Cooney



1



SCHEDULE A




October 29, 2006



Max Re Ltd.


Max Re House


2 Front Street


Hamilton HM 11


Bermuda


Attn: Sarene A. Bourdages



Senior Vice President & General Counsel



To Whom It May Concern:



Effective as of October 29, 2006, I hereby tender my resignations from any and all positions I hold
as a director, officer, employee, agent, or representative of Max Re Capital Ltd. and/or its
subsidiaries, including but not limited to the following:



President of Max Re Capital Ltd.


Chief Executive Officer of Max Re Capital Ltd.


Chairman of Max Re Capital Ltd.


President of Max Re Ltd.


Chief Executive Officer of Max Re Ltd.


Chairman of Max Re Ltd.


Director of Max Re Capital Ltd. (including but not limited to my positions on the Executive
Committee and the Finance and Investment Committee of the Board of Directors of Max Re Capital
Ltd.)


Director of Max Re Ltd.


Director of Max Europe Holdings


Director of Max Insurance Europe


Director of Max Re Diversified


Director of Grand Central Re Limited (Grand Central Re)


Director of Re Managers


Director of Max Re Europe



Sincerely,



Robert J. Cooney, Esq.



2



SCHEDULE B




1. Warrants.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Post-Termination
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Exercise Period
	 	 	 	 	 	 	 	 	 	 	Shares Subject to	 	Number Still	 	 	 	 	 	(w/o cause or for
	Grant Date	 	Grant Number	 	Exercise Price ($)	 	Award	 	Outstanding	 	Vested Status	 	good reason)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	6-months from
	December 22, 1999
	 	 	 	 	 	 	15	 	 	 	397,227	 	 	 	397,227	 	 	Vested
	 	termination

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	6-months from
	March 31, 2000
	 	 	W 21A	 	 	 	15	 	 	 	228,109	 	 	 	228,109	 	 	Vested
	 	termination

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	6-months from
	June 29, 2000
	 	 	W 24	 	 	 	15	 	 	 	864	 	 	 	864	 	 	Vested
	 	termination

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	6-months from
	January 1, 2001
	 	 	W 31	 	 	 	16	 	 	 	8,081	 	 	 	8,081	 	 	Vested
	 	termination

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	6-months from
	May 22, 2001
	 	 	W 38	 	 	 	18	 	 	 	15,000	 	 	 	15,000	 	 	Vested
	 	termination

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	6-months from
	August 17, 2001
	 	 	W 45	 	 	 	16	 	 	 	233,000	 	 	 	233,000	 	 	Vested
	 	termination

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 






2. Stock Options.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Shares Subject to	 	Number Still	 	 	 	 	 	 	 	Post-Termination
	Grant Date	 	Option	 	Outstanding	 	Exercise Price ($)	 	Vested Status	 	Exercise Period
	January 1, 2001

	 	 	90,000	 	 	 	90,000	 	 	 	16	 	 	Vested
	 	90-days from termination
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	January 1, 2002

	 	 	160,000	 	 	 	160,000	 	 	 	15.66	 	 	Vested
	 	90-days from termination
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 






3. Restricted Stock.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Shares Subject to	 	Vesting Date set	 	Amount Vested on	 	Amount Forfeited on
	Grant Date	 	Awards	 	forth in Agreement	 	October 29, 2006	 	October 29, 2006
	 
	 	 	 	 	 	100% on January 30,	 	 	 	 	 	 	 	 
	January 30, 2004
	 	 	84,000	 	 	 	2007	 	 	 	77,020	 	 	 	6,980	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	August 1, 2004
	 	 	100,000	 	 	Performance Vesting
	 	 	100,000	 	 	 	N/A	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	100% on February 7,	 	 	 	 	 	 	 	 
	February 7, 2005
	 	 	48,000	 	 	 	2008	 	 	 	27,529	 	 	 	20,471	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	100% on February	 	 	 	 	 	 	 	 
	February 16, 2006
	 	 	63,000	 	 	 	16, 2009	 	 	 	14,614	 	 	 	48,386	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total
	 	 	295,000	 	 	 	 	 	 	 	219,163	 	 	 	75,837	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 







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