Document:

exv10w31

 

Exhibit 10.31

COMMUTATION AND RELEASE AGREEMENT

     This Commutation and Release Agreement is made effective as of September 29, 2006
(hereinafter the “Commutation Date”) by and between Clearwater Insurance Company (formerly
known as Odyssey Reinsurance Corporation and previously as Skandia America Reinsurance
Corporation) (hereinafter the “Reinsured”) and nSpire Re Limited (formerly known as ORC Re
Limited) (hereinafter the “Reinsurer”).

WITNESSETH

     WHEREAS, the Reinsured and the Reinsurer are parties to that certain Stop-Loss
Reinsurance Agreement originally effective as of December 31, 1995, whereby the Reinsurer
reinsured the Reinsured (the “Reinsurance Agreement”), a copy of which is attached hereto as
Exhibit A; and

     WHEREAS, the Reinsurer made a cash payment to the Reinsured in the amount of
Seventy-Eight Million Dollars ($78,000,000) under the Reinsurance Agreement in the first
quarter of 2006; and

     WHEREAS, the parties desire to terminate any and all remaining obligations under the
Reinsurance Agreement, and to fully and finally settle and commute all of their respective
rights, privileges, duties, obligations and liabilities whether past, present or future and
whether known or unknown under the Reinsurance Agreement and to fully and forever release
and discharge one another with respect to the Reinsurance Agreement.

     NOW, THEREFORE, in consideration of the covenants set forth herein and the payment to
be made hereunder, it is agreed between the Reinsured and the Reinsurer as follows:

1. Within seven (7) business days of the execution of this Commutation and Release Agreement
by both the Reinsured and the Reinsurer, or otherwise as agreed between the
parties, the Reinsurer shall pay to the Reinsured by check or wire an amount equal to

 

 

Sixty-Three Million Two Hundred Forty-One Thousand Four Hundred Eighty-Four Dollars
($63,241,484), as set forth in Exhibit B attached hereto, which amount, together with the
payment received by the Reinsurer in the first quarter of 2006 (together, the “Commutation
Amount”), constitutes the full consideration for this Commutation and Release Agreement.

2. The Reinsured shall accept the Commutation Amount as full and final settlement of any and
all amounts claimed heretobefore or hereafter to be due from the Reinsurer to the Reinsured
arising under or in respect of the Reinsurance Agreement.

3. Each of the parties hereto agrees that in consideration of payment of the Commutation
Amount, they hereby release and discharge each other, their predecessors, parents,
affiliates, subsidiaries, agents, officers, directors, employees, shareholders,
policyholders, successors and assigns from any and all liabilities, including, but not
limited to, all obligations, adjustments, executions, offsets, actions, causes of action,
suits, debts, sums of money, accounts, reckonings, bonds, bills, covenants, contracts,
controversies, agreements, promises, damages, judgments, claims, demands, duties, doings,
omissions, costs, expenses and/or losses whatsoever, whether known or unknown, reported or
unreported, and whether arising in the past, present or future, which each of them and their
successors and assigns ever had, now have, or hereafter may have, whether grounded in law or
equity, in contract or in tort, against the other by reason of any matter whatsoever arising
out of the Reinsurance Agreement, it being the intention of the parties that this
Commutation and Release Agreement shall operate as a full and final settlement and
commutation of each of the parties’ past, present and future liabilities to each other
under the Reinsurance Agreement.

4. Except as otherwise provided in this Commutation and Release Agreement, the Reinsured and
the Reinsurer absolutely and unconditionally covenant and agree with each other, their
respective successors and assigns, that after the Commutation Date and in consideration of
the payment of the Commutation Amount, no party will hereafter for any reason whatsoever,
demand, claim or file suit or initiate arbitration proceedings
against the other in respect of any matters relating to or arising out of the Reinsurance

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Agreement.

5. This Commutation and Release Agreement is the product of arm’s length negotiations and
the terms of this Commutation and Release Agreement have been completely read and fully
understood and voluntarily accepted by both the Reinsured and the Reinsurer.

6. The Reinsured and the Reinsurer each represents and warrants to the other that it is a
corporation in good standing in its state or country of domicile; that it is fully
authorized and empowered to execute and deliver this Commutation and Release Agreement; that
the person executing this Commutation and Release Agreement is fully authorized to do so;
that there are no pending conditions, agreements transactions, or negotiations to which
either is a party that would render this Commutation and Release Agreement or any part
hereof void, voidable or unenforceable; and that the Commutation and Release Agreement is
enforceable against each party in accordance with its terms.

7. This Commutation and Release Agreement shall constitute the entire agreement between the
parties as respects its subject matter. All previous discussions and negotiations between
the parties concerning the subject matter of the Commutation and Release Agreement are
merged into this Commutation and Release Agreement. This Commutation and Release Agreement
may not be modified or amended, except by written instrument executed by each of the parties
hereto.

8. It is hereby agreed that the parties, including but not limited to, their attorneys,
agents, representatives and affiliates, will not disclose the terms of this Commutation and
Release Agreement except (a) when necessary to perform the terms of this Commutation and
Release Agreement, or (b) in response to lawful process. Notwithstanding the foregoing,
nothing in this Section 8 shall restrict the ability of the parties to disclose the terms of
this Commutation and Release Agreement to their respective parents, retrocessionaires,
auditors, actuaries, regulatory entities or in connection with reports and statements that
they may be required from time to time to file or submit to government
agencies.

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9. This Commutation and Release Agreement is intended to fully and finally resolve the
rights and liabilities of the parties to this Commutation and Release Agreement under the
Reinsurance Agreement and, except as expressly set forth herein, no party to this
Commutation and Release Agreement shall seek to reopen or set aside this Commutation and
Release Agreement on the grounds that in the future that party becomes aware of any mistake
of law (including any such mistake arising as a result of a subsequent change of law) or a
mistake of fact relating to this Commutation and Release Agreement or the Reinsurance
Agreement upon which this Commutation and Release Agreement or the Reinsurance Agreement
were entered into.

10. This Commutation and Release Agreement shall be interpreted under and governed by the
laws of the State of Delaware, without regard to its choice of law rules.

11. This Commutation and Release Agreement may be signed in counterparts, each of which when
so executed and delivered shall be considered an original, but such counterparts shall
together constitute one and the same instrument and agreement.

     IN WITNESS WHEREOF, the parties have executed this Commutation and Release Agreement in
duplicate, as of the day and year first written above.

Clearwater Insurance Company

	 	 	 	 	 	 	 
	BY:

	 	/s/   R. Scott
Donovan	 	WITNESS:	 	/s/   Mark A. Welshons
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	TITLE:
	 	Executive Vice President	 	 	 	 
	 

	 	 
	 	 	 	 

nSpire Re Limited

	 	 	 	 	 	 	 
	BY:

	 	/s/   John Casey 	 	WITNESS:	 	/s/   Peter Howley 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	TITLE:
	 	President & COO 	 	 	 	 
	 

	 	 
	 	 	 	 

4Form of Award Notice for Stock Options Granted to Executive Officers

    EXHIBIT
      10.01

    
 

     AWARD
      NOTICE 

    

    NOTICE
      OF NONQUALIFIED STOCK OPTION

    GRANTED
      PURSUANT TO THE

    EASTMAN
      CHEMICAL COMPANY

    2002
      OMNIBUS LONG-TERM COMPENSATION PLAN

    

    

    Grantee:
      

    

    Number
      of
      Shares: 

    

    Option
      Price: $____

    

    Date
      of
      Grant: October 31, 2006

    

    1. Grant
      of Option.
      This
      Award Notice serves to notify you that the Compensation and Management
      Development Committee (the “Committee”) of the Board of Directors of Eastman
      Chemical Company ("Company") has granted to you, under the Company’s 2002
      Omnibus Long-Term Compensation Plan (the "Plan"), a nonqualified stock option
      ("Option") to purchase, on the terms and conditions set forth in this Award
      Notice and the Plan, up to the number of shares of its $.01 par value Common
      Stock ("Common Stock") set forth above, at a price equal to $______ per share.
      The Plan is incorporated herein by reference and made a part of this Award
      Notice. Capitalized terms not defined herein have the respective meanings set
      forth in the Plan. The principal terms of the Plan, and of the offer by the
      Company of the shares of Common Stock covered by the Option, are described
      in
      the Prospectus for the Plan, which Prospectus will be delivered to you by the
      Company.

    

    2. Period
      of Option and Limitations on Right to Exercise.
      Subject
      to earlier cancellation of all or a portion of the Option as described in
      Sections 6 and 7 of this Award Notice, the Option will expire at 4:00 p.m.,
      Eastern Standard Time, on October 30, 2016 ("Expiration Date").

    

    3. Exercise
      of Option.
      

    

    (a) Subject
      to the terms set forth in this Award Notice, the Option will become exercisable
      as to one-third of the shares covered hereby on October 31, 2007, and one-third
      of the shares covered hereby on October 31, 2008, and as to the remaining shares
      on October 31, 2009.

    

    (b) Upon
      your
      death, your personal representative may exercise the Option, subject to the
      terms set forth in Section 6 of this Award Notice.

    

    (c) The
      Option may be exercised in whole or in part. The exercise generally must be
      accompanied by, or make provision for, full payment in cash; by check; by a
      broker-assisted cashless method; or by surrendering unrestricted shares of
      Common Stock having a value on the date of exercise equal to the exercise price,
      or in any combination of the foregoing; however, if you wish to pay with shares
      of Common Stock already held by you, you may submit an Affidavit of Ownership
      form attesting to the ownership of the shares instead of sending in actual
      share
      certificates.

     

    4. Nontransferability.
      The
      Option is not transferable except by will or by the laws of descent and
      distribution, and may not be sold, assigned, pledged or encumbered in any way,
      whether by operation of law or otherwise. The Option may be granted only to,
      and
      exercised only by you during your lifetime, except in the case of a permanent
      disability involving mental incapacity.

    

    5. Limitation
      of Rights.
      You
      will not have any rights as a stockholder with respect to the shares covered
      by
      the Option until you become the holder of record of such shares by exercising
      the Option. Neither the Plan, the granting of the Option nor this Award Notice
      gives you any right to remain employed by the Company and its
      Subsidiaries.

    

    6.
      Termination.
      Upon
      termination of your employment with the Company and its Subsidiaries
      ("termination") by reason of death, disability, or retirement, the Option will
      remain exercisable for the lesser of: 1) five (5) years following your date
      of
      termination, or, 2) the Expiration Date. Upon termination due
      to
      resignation, the Option will remain exercisable for the lesser of: 1) ninety
      (90) days following your date of termination, or, 2) the Expiration Date. Upon
      termination for cause, any portion of the Option not previously exercised by
      you
      will be canceled and forfeited by you, without payment of any consideration
      by
      the Company. Upon termination for a reason other than those described in this
      Section (e. g., reduction in force, divestiture, special separation, termination
      by mutual consent), the Option will remain exercisable until the Expiration
      Date, unless the Committee determines that any portion of the Option will not
      be
      exercisable, or the Option will be exercisable for a period less than the
      Expiration Date. 

    

    7. Noncompetition;
      Confidentiality.
      You
      will forfeit all rights under the Option if you violate the noncompetition
      and
      confidentiality provisions contained in Section 20 of the Plan.

    

    8. Restrictions
      on Issuance of Shares.
      If at
      any time the Company determines that listing, registration or qualification
      of
      the shares covered by the Option upon any securities exchange or under any
      state
      or federal law, or the approval of any governmental agency, is necessary or
      advisable as a condition to the exercise of the Option, the Option may not
      be
      exercised in whole or in part unless and until such listing, registration,
      qualification or approval shall have been effected or obtained free of any
      conditions not acceptable to the Company.

    

    9. Change
      in Ownership; Change in Control.
      Sections 25 and 26 of the Plan contain certain special provisions that will
      apply to the Option in the event of a Change in Ownership or Change in Control,
      respectively.

    

    10. Adjustment
      of Option Terms.
      The
      adjustment provisions of Section 18 of the Plan will control in the event of
      a
      nonreciprocal transaction between the company and its stockholders that causes
      the per-share value of the Common Stock to change (including, without
      limitation, any stock dividend, stock split, spin-off, rights offering, or
      large
      nonrecurring cash dividend) or upon the occurrence of in anticipation of any
      other corporate event or transaction involving the Company (including, without
      limitation, any merger, combination, or exchange of shares). 

    

    11. Plan
      Controls.
      In the
      event of any conflict between the provisions of the Plan and the provisions
      of
      this Award Notice, the provisions of the Plan will be controlling and
      determinative.

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