Exhibit
10.1


 


AXIS
SPECIALTY LIMITED

Overbay, 106 Pitts Bay Road

Pembroke, HM 08


 


February 17, 2006


 


PERSONAL AND
CONFIDENTIAL


 


Carol S. Rivers


AXIS Specialty Limited


106 Pitts Bay Road


Pembroke HM 08 Bermuda


 


Dear Carol:


 


This will confirm the agreement (the “Agreement”),
dated as of the date first set forth above (the “Execution Date”), that
has been reached with you in connection with the termination of your employment
with AXIS Specialty Limited (the “Company”).


 


1.             Termination of Employment. We have agreed
that your employment with the Company as General Counsel shall terminate
effective February 28, 2006 (the “Termination Date”). You hereby confirm
that effective February 28, 2006, you shall no longer hold any officer or
director positions with the Company or any of its parents, subsidiaries or
affiliates, or any other offices or positions that you hold in connection with
your employment with the Company, and you agree to execute such documents and
take such actions as may be necessary or desirable to effectuate the foregoing.
During the period from the Execution Date to the Termination Date, the
Employment Agreement between you and the Company dated August 1, 2003 (the “Employment
Agreement”) shall continue in full force and effect. Without limiting the
generality of the foregoing, the Employment Agreement shall govern any
termination of your employment which occurs prior to the Termination Date. Upon
the Termination Date, the Employment Agreement shall terminate other than with
respect to provisions identified in Section 4(a) below. A copy of the
Employment Agreement is annexed hereto as Exhibit A.


 


2.             Separation Payments and Benefits. In
consideration for your execution of and compliance with the terms and
conditions in this Agreement including, but not limited to, your consent to the
Release set forth in paragraph 3 below:


 


(a)           The
Company agrees to pay you the equivalent of twelve (12) months of your current
annual base salary of $341,250 to be payable in a lump sum on the Termination Date.


 


(b)           You
will receive a cash payment of $204,750.00 on the Termination Date in lieu of a
cash bonus for the 2005 plan year under the 2004 Annual Incentive Plan.


 


(c)           You
shall receive with respect to the Company’s fiscal year 2005, 24,000 shares of
Restricted Stock under AXIS Capital Holdings Limited 2003 Long Term Equity Plan
in accordance with the terms of the Plan and based upon the performance of the
Company


 

















 


(the “2005
LTEP Award”). The 2005 LTEP Award shall be awarded at the time the Company
makes such awards to similarly situated employees.


 


(d)           With
respect to your outstanding equity awards set forth on Exhibit B and the 2005
LTEP award, such awards shall vest on the Termination Date and you shall be
entitled to exercise any options within 90 days following the Termination Date
after which such time any unexercised options shall terminate.


 


(e)           The
Company agrees to pay you an amount equal to any and all reasonable and
necessary unreimbursed business expenses incurred by you on behalf of the
Company prior to the Termination Date.


 


(f)            The
Company agrees to provide you with twelve (12) months of group health insurance
coverage (i.e., medical and dental coverage) at the Company’s expense, under a
Bermuda health and welfare plan substantially similar to the plan offered to employees
of the Company based in Bermuda. Should you repatriate to the United States
within six (6) months of your Termination Date, however, the Company will
provide you with the benefits set forth in Section 3(g) of your Employment
Agreement.


 


(g)           In
lieu of repatriation benefits as stated in paragraph 2(k) of the Employment
Agreement, the Company will pay you $25,000 in a lump sum on the Termination
Date.


 


(h)           The
Company agrees to make contributions for the 2005 Plan Year to both the AXIS 401(k)
Savings Plan, and the AXIS Specialty US Services, Inc. Supplemental Retirement
Plan (the “Supplemental Retirement Plan”). The parties understand and agree
that payments made from the Supplemental Retirement Plan may be “deferred
compensation” for purposes of Section 409A of the United States Internal
Revenue Code (the “Code”) and distributions from the Supplemental Retirement
Plan made upon or in respect to your termination of employment hereunder shall
not be made prior to the first day of the seventh month after your Termination
Date to the extent necessary to comply with Section 409A(2)(B)(i) of the Code. The
Company shall promptly pay any such deferred compensation amounts, without
interest, at the conclusion of the applicable six month period.


 


(i)            The
payments, benefits and awards contemplated by paragraphs 2(a), 2(b), 2(c),
2(d), 2(f), 2(g) and 2(h) above shall be made provided that this Agreement
becomes effective (as provided for in paragraph 9 below). Notwithstanding the
foregoing, the Company shall have no obligation to provide you with the
payments, benefits or awards contemplated by paragraphs 2(a), 2(b), 2(c), 2(d),
2(f), 2(g) or 2(h) above in the event your employment is terminated by the
Company for Cause as determined by the Board of Directors of AXIS Capital
Holdings Limited (“Parent”) pursuant to paragraph 3(a)(iii) of the
Employment Agreement prior to the Termination Date.


 


(j)            You
acknowledge that the payments,
benefits and awards referred to in this Agreement are in lieu of and in full
satisfaction of any amounts that might otherwise be payable or due to you under
any contract, plan, policy or practice, past or present, of the Company or any
of the other Company Releasees (as defined below), including, without


 


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limitation,
the Employment Agreement, the AXIS Capital Holdings 2003 Long-Term Equity
Compensation Plan, and the AXIS Capital Holdings Limited 2004 Annual Incentive
Plan. Notwithstanding the foregoing,
nothing in this Agreement shall impair or preclude your entitlement to any
vested benefits you may have as of the Termination Date under the AXIS 401(k)
Savings Plan and the Supplemental Retirement Plan.


 


3.             Release.


 


(a)           In
consideration of the Company’s obligations set forth in this Agreement,
including but not limited to the payments and benefits described in paragraph 2
above, you voluntarily, knowingly and willingly on behalf of yourself, your
heirs, executors, administrators, successors and assigns, hereby irrevocably
and unconditionally release the Company, its parents, their subsidiaries,
divisions and affiliates, together with their respective owners, assigns,
agents, directors, partners, officers, employees, consultants, shareholders,
attorneys and representatives, and any of their predecessors and successors and
each of their estates, heirs and assigns (collectively, the “Company Releasees”)
from any and all charges, complaints, claims, liabilities, obligations,
promises, agreements, causes of action, rights, costs, losses, debts and
expenses of any nature whatsoever, known or unknown, which you or your
heirs, executors, administrators, successors or assigns ever had, now have or
hereafter can, will or may have (either directly, indirectly, derivatively or
in any other representative capacity) against the Company or any of the other
Company Releasees by reason of any matter, cause or thing whatsoever arising on
or before the date this Agreement is executed by you (the “Release”). This
Release includes, without limitation, any rights or claims relating in any way
to your employment relationship with the Company or any of the Company
Releasees, or the termination thereof, arising under Bermuda law, including,
the Bermuda Employment Act 2000, and under the Human Rights Act of 1981, the
Commission for Unity and Racial Equality Act 1994, as each Act may be amended,
the U.S. Civil Rights Act of 1964 (“Title VII”) as amended, the Age
Discrimination in Employment Act, as amended by the Older Workers’ Benefit
Protection Act, or under any law of Bermuda or the U.S., or any policy,
agreement, understanding or promise, written or oral, formal or informal,
between the Company or any of the Company Releasees and you, including, without
limitation, the Employment Agreement.


 


(b)           By
signing this Agreement, you represent that you have not commenced or joined in
any claim, charge, action or proceeding whatsoever against the Company or any
of the Company Releasees arising out of or relating to any of the matters set
forth in this paragraph 3. You further represent that you will not be entitled
to any personal recovery in any action or proceeding of any nature whatsoever
against the Company or any of the other Company Releasees that may be commenced
on your behalf arising out of any of the matters released hereby.


 


(c)           You
agree and acknowledge that the Company and the other Company Releasees have
fully satisfied any and all obligations owed to you arising out of your
employment with the Company (or the termination thereof), and no further sums
are owed to you by the Company or any of the other Company Releasees, except as
expressly provided in this Agreement.


 


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(d)           In
consideration of your obligations set forth in this Agreement, including but
not limited to the release described in paragraph 3(a) above, the Company
voluntarily, knowingly and willingly on its behalf and on behalf of its
parents, their subsidiaries, divisions and affiliates, together with their
respective owners, assigns, agents, directors, partners, officers, employees,
consultants, shareholders, attorneys and representatives, and any of their
predecessors and successors and each of their estates, heirs and assigns,
hereby irrevocably and unconditionally release you and your heirs, executors,
administrators, successors and assigns (collectively, the “Executive
Releasees”) from any and all charges, complaints, claims, liabilities,
obligations, promises, agreements, causes of action, rights, costs, losses,
debts and expenses of any nature whatsoever, known or unknown, which the
Company or any of the Company Releasees ever had, now have or hereafter can,
will or may have (either directly, indirectly, derivatively or in any other
representative capacity) against you or any of the other Executive Releasees by
reason of any matter, cause or thing whatsoever arising on or before the date
this Agreement is executed by the Company (the “Company Release”). This
Company Release includes, without limitation, any rights or claims relating in
any way to your employment relationship with the Company or any of the Company
Releasees, or the termination thereof, arising under any law of Bermuda or the
U.S., or any policy, agreement, understanding or promise, written or oral,
formal or informal, between the Company or any of the Company Releasees and
you, including, without limitation, the Employment Agreement.


 


4.             Covenants.


 


(a)          You reaffirm, and agree to comply
with, all of your obligations set forth in paragraph 4 (Assignment of
Intellectual Property Rights), paragraph 5 (Non-Disclosure) and paragraph 6
(Non-Solicitation) of the Employment Agreement (as defined above), and agree
that such obligations shall remain in full force and effect as stated in the
Employment Agreement.


 


(b)         Notwithstanding anything herein to the
contrary, in the event that you violate any of your continuing obligations
referenced in paragraph 4(a) above or any of the provisions set forth in 7
herein: (i) the Company shall have no obligation to make, or to continue to
make, the payments set forth in paragraphs 2(a), 2(b) and 2(g) above; and (ii)
all outstanding and unvested equity awards held by you as of the date of any
such violation shall be forfeited.


 


(c)          On the Effective Date, the Company
will notify the Bermuda Department of Immigration that the Company has no
objection to you seeking employment in Bermuda and the Company shall provide a
copy of such notice to you. The notice shall be in the form annexed hereto as
Exhibit C. Should you accept other employment, you agree not to begin such
employment prior to April 15, 2006.


 


(d)         You shall be indemnified and secured
harmless by Parent and the Company to the extent required by statute and the Bye-Laws
of the Company as amended from time to time.


 


5.             Waiver of Future Employment. You acknowledge
that you forever waive any interest in, or claim to, any future employment with
the Company, its parents or any


 


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of its
subsidiaries, divisions or affiliates, and further agree that you will not
knowingly apply for, or otherwise seek or accept employment with, any such
entity at any time in the future.


 


6.             No Admission. The Company’s offer to
you of this Agreement and the payments and benefits set forth herein are not
intended to, and shall not be construed as, any admission of liability or
wrongdoing on the part of the Company or any of the Company Releasees.


 


7.             Nondisparagement.


 


(a)           You
agree that at all times hereafter, you shall not make, or cause to be made, any
public statement, observation or opinion that (i) accuses or implies that the
Company or any of the Company Releasees engaged in any wrongful, unlawful or
improper conduct, whether relating to your employment with the Company (or the
termination thereof), the business or operations of the Company, or otherwise;
or (ii) disparages, impugns or in any way reflects adversely upon the business
or reputation of the Company or any of the other Company Releasees. Nothing in
this paragraph 7(a) shall preclude you from providing truthful testimony in
response to a legal subpoena or as required by law.


 


(b)           The
Company agrees that at all times hereafter, neither it, Parent or any of it’s
Parent’s Executive Officers shall make, or cause to be made, any public
statement, observation or opinion that (i) accuses or implies that you engaged
in any wrongful, unlawful or improper conduct, whether relating to your
employment with the Company (or the termination thereof), or otherwise; or (ii)
disparages, impugns or in any way reflects adversely upon your reputation. Nothing
in this paragraph 7(b) shall preclude the Company, Parent or any of their
Executive Officers from providing truthful testimony in response to a legal
subpoena or as required by law.


 


8.             Consultation with Attorney/Voluntary Agreement.
You acknowledge that (i) the Company has advised you of your right to consult
with an attorney of your choosing prior to signing this Agreement, (ii) you
have carefully read and fully understand all of the provisions of this
Agreement, and (iii) you are entering into this Agreement knowingly, freely and
voluntarily in exchange for good and valuable consideration.


 


9.             Consideration and Revocation Period. You
have twenty-one (21) days to consider this Agreement, although you may elect to
sign it sooner. Once you have signed this Agreement, you shall have seven (7)
days from the date you sign it to revoke your consent to the Release by
delivering (by hand or overnight courier) written notice of revocation to me at the Company, at the address listed
above. In the event you do not revoke your consent, the Release and this
Agreement shall become effective on the eighth (8th) day after the
date you have signed this Agreement (the “Effective Date”). In the event
that you revoke your consent, the Release and this Agreement shall become null
and void and shall not become effective.


 


10.           Assignment. This Agreement is personal
to you and may not be assigned by you. This Agreement is binding on, and will
inure to the benefit of, the Company and the other Company Releasees.


 


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11.           No Oral Modification; No Waivers. This
Agreement may not be changed orally, but may be changed only in a writing
signed by you and by a duly authorized representative of the Company. The
failure of you or the Company to enforce any of the terms, provisions or
covenants of this Agreement will not be construed as a waiver of the same or of
the right of such party to enforce the same. Waiver by you or the Company of
any breach or default by the other party of any term or provision of this
Agreement will not operate as a waiver of any other breach or default.


 


12.           Descriptive Headings. The paragraph
headings contained herein are for reference purposes only and will not in any
way affect the meaning or interpretation of this Agreement.


 


13.           Enforceability. It is the desire and
intent of the parties that the provisions of this Agreement shall be enforced
to the fullest extent permissible. In the event that any one or more of the
provisions of this Agreement is held to be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remainder hereof will not in
any way be affected or impaired thereby and any such provision or provisions
will be enforced to the fullest extent permitted by law. Moreover, if any one
or more of the provisions contained in this Agreement is held to be excessively
broad as to duration, scope, activity or subject, such provisions shall be
construed by limiting and reducing them so as to be enforceable to the maximum
extent compatible with applicable law.


 


14.           Each Party the Drafter. This Agreement,
and the provisions contained in it, shall not be construed or interpreted for,
or against, any party to this Agreement because that party drafted or caused
that party’s legal representatives to draft any of its provisions.


 


15.           Governing Law. This Agreement shall be
governed by, and construed and enforced in accordance with, the laws of
Bermuda, without reference to its choice of law rules. The parties hereby
irrevocably consent to the jurisdiction of Bermuda and courts located in
Bermuda for purposes of resolving any dispute under this Agreement and
expressly waive any objections as to venue in any such courts.


 


16.           Compliance with Code Section 409A. The
parties understand and agree that certain payments contemplated by this
Agreement may be “deferred compensation” for purposes of Section 409A of the Code.
No deferred compensation payable hereunder shall be subject to acceleration or
to any change in the specified time or method of payment, except as otherwise
provided under this Agreement and consistent with Section 409A of the Code. Any
reimbursement of expenses contemplated hereunder shall be completed no later
than December 31, 2008. In no event shall the Company have any liability
or obligation with respect to taxes for which you may become liable as a result
of the application of Section 409A of the Code.


 


17.           Entire Agreement. This Agreement sets
forth the entire agreement and understanding between you and the Company and
merges and supersedes any and all prior agreements, representations,
discussions, and understandings of every kind and nature, written and oral,
between you and the Company concerning the subject matter hereof, including,
but not limited to, the Summary of Terms between you and the Company; provided,
however, that the


 


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Employment
Agreement shall not be superseded until the Termination Date (except with
respect to those sections of the Employment Agreement which remain in full
force and effect). You represent that, in executing this Agreement, you have
not relied upon any representation or statement made by the Company or any
other Company Releasees, other than those set forth herein, with regard to the
subject matter, basis or effect of this Agreement or otherwise.


 


If the foregoing sets forth our agreement as
you understand it and consent to it, please sign the enclosed copy of this
Agreement and return it to me at the Company.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  AXIS SPECIALTY LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael A. Butt

  	
   

  
	
   

  	
   

  	
  Name: Michael A. Butt

  
	
   

  	
   

  	
  Title: Chairman of the Board

  
	
  Agreed to and Accepted:

  
	
   

  
	
   

  
	
  /s/ Carol S. Rivers

  	
   

  
	
  Carol S. Rivers

  
	
  Dated:
  02/17/06

  
					



 


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EXHIBIT B


 


OPTIONS


 


	
  AMOUNT

  	
   

  	
  GRANT DATE

  	
   

  	
  EXERCISE PRICE

  	
   

  	
  VESTED

  	
   

  	
  UNVESTED

  	
   

  
	
  20,000

  	
   

  	
  August 1, 2003

  	
   

  	
  $

  	
  25.50

  	
   

  	
  13,332

  	
   

  	
  6,668

  	
   

  
	
  25,000

  	
   

  	
  January 13, 2005

  	
   

  	
  $

  	
  28.02

  	
   

  	
  0

  	
   

  	
  25,000

  	
   

  



 


RESTRICTED STOCK


 


	
  AMOUNT

  	
   

  	
  GRANT DATE

  	
   

  	
  VESTING

  	
   

  	
  VESTED

  	
   

  
	
  5,000

  	
   

  	
  January 2, 2004

  	
   

  	
  January 2, 2007

  	
   

  	
  0

  	
   

  
	
  18,000

  	
   

  	
  January 13, 2005

  	
   

  	
  January 13, 2008

  	
   

  	
  0

  	
   

  



 

















 


EXHIBIT C


 


February        , 2006


 


 


Dr. Martin Brewer


Chief Immigration Officer


Ministry of Labour & Home Affairs


Government Administration Building


30 Parliament Street, Hamilton HM 12


 


Dear Dr. Brewer:


 


Ref:  Carol S. Rivers - File #
00128253


 


This letter serves to confirm that Axis Specialty Limited has no
objection to employee Carol S. Rivers
seeking other employment in Bermuda.


 


Employee Carol S. Rivers is employed in the capacity of General Counsel
and has been with Axis since August 1, 2003.


 


If you need further information, please feel free to contact the
undersigned.


 


Sincerely,


 


 


Jane Bermingham


HR Consultant at Axis Specialty