Exhibit 10.21
Dated                                          2007
TALBOT UNDERWRITING SERVICES LTD
- and -
Michael Edward Arscott Carpenter
 
SERVICE AGREEMENT
 

 

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THIS AGREEMENT is made on                     
BETWEEN

(1)   TALBOT UNDERWRITING SERVICES LTD (Company No. 03043304), whose registered
office is Gracechurch House, 55 Gracechurch Street, London, EC3V 0JP (the
“Company”); and   (2)   Michael Edward Arscott Carpenter of 14 Dynevor Road,
Richmond, Surrey TW10 6PF (the “Executive”)

WHEREBY IT IS AGREED as follows: -

1.   Definitions       In this Agreement:

     
Accrued Bonus
  means in respect of the Executive’s bonus allocated for the 2006 Year and in
respect of the Executive’s bonus awarded in May 2007, conditional upon the sale
of Talbot Holdings Ltd to Validus Holdings, Ltd as set out in Appendix 3.
 
   
Associated Company
  means any company with which the Company is connected in accordance with
section 839 of the Income and Corporation Taxes Act 1988.
 
   
Board
  means the Board of Directors for the time being of Talbot Holdings Ltd.
 
   
Commencement Date
  01 June 2001.
 
   
Good Leaver
  means if, at the time of the Executive’s termination of employment, the
Executive’s employment has terminated other than due to one of the following
reasons:
 
   
 
  (i) he has ceased to be an Employee before the date of 2 July 2007
 
   
 
  (ii) he has ceased to be an Employee after 2 July 2007 in circumstances
justifying summary dismissal without notice
 
   
 
  (iii) he has been dismissed for material or persistent breaches of his duties
as employee or
 
   
 
  (iv) he has given notice of termination of his employment before or after 2
July 2007 except in circumstances where he has been advised by his employer of a
materially ad-

      Service Agreement July 2007   -1-

 

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  verse change to his position in the Group or the terms and conditions of his
employment.
 
   
Termination Date
  means the date of termination of the Executive’s employment under this
Agreement.
 
   
Warranties
  means the Warranties as defined in the Share Sale Agreement dated 15 May 2007
between (1) the persons named in Schedule 1 (2) Talbot Holdings Limited and
(3) Validus Holdings, Ltd.
 
   
Year
  is as defined in the Talbot Group Staff Profit Share Plan

2.   Term of Appointment   2.1   The Executive shall be employed by the Company
subject to the terms and conditions set out in this Agreement as Chief Executive
of the Talbot Group.   2.2   The Executive’s employment commenced on the
Commencement Date and shall continue, subject to the remaining terms of this
Agreement, until terminated by either party giving the other not less than
12 months’ prior notice in writing. If the Executive has any previous employment
which counts as part of their continuous period of employment for the purposes
of this employment, the Commencement Date of their previous employment will be
shown above.   2.3   Notwithstanding Clause 2.2, the Company may, in its sole
and absolute discretion, terminate the Executive’s employment with immediate
effect by paying a sum in lieu of notice (“Payment in Lieu”) equal to the base
salary (as at the Termination Date) which the Executive would have been entitled
to receive under this Agreement during the notice period referred to at Clause
2.2 (or, if notice has already been given, during the remainder of the notice
period) less applicable income tax and National Insurance contributions. For the
avoidance of doubt, the Payment in Lieu shall not include any element in
relation to:

  (i)   any bonus or commission payments that might otherwise have been due
during the period for which the Payment in Lieu is made other than any unpaid
amount of the Accrued Bonus if the Executive is a Good Leaver; and     (ii)  
any payment in respect of benefits (excluding pension) which the Executive would
have been entitled to receive during the period for which the Payment in Lieu is
made.

2.4   The Executive’s employment shall terminate on the date on which the
Executive reaches the age of 65. This is the subject to the Company complying
with the relevant provisions of the Employment Equality (Age) Regulations 2006
relating to retirement.

      Service Agreement July 2007   -2-

 

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3.   Powers and Duties   3.1   The Executive’s position is contained in clause
2.1 above. The Executive may be reasonably required by the Company to undertake
such other duties within their range of experience and skills as may be
necessary from time to time.   3.2   The Executive shall:   3.2.1   comply with
all reasonable directions from, and all regulations of, the Company or, as
appropriate, any Associated Company;   3.2.2   report to the The Board of Talbot
Holdings Ltd and shall at all times promptly give to the The Board of Talbot
Holdings Ltd or to their nominated representative (in writing if so requested)
all information, advice and explanations as they may reasonably require in
connection with matters relating to their employment or directorship under this
Agreement or in relation to the business of the Company or any Associated
Company generally;   3.2.3   devote the whole of their time, attention and
abilities during their working hours to carrying out their duties under this
agreement in a proper, loyal and efficient manner;   3.2.4   at all times
promote the interests of and maintain the goodwill of the Company and any
Associated Company and not knowingly do or willingly permit to be done anything
that may result in loss, other than in the normal course of business, or harm to
the Company or any Associated Company; and   3.2.5   not at any time make any
untrue or misleading statement relating to the Company or any Associated
Company.   4.   Hours of Work   4.1   The Executive is normally required to work
40 hours per week including a daily lunch break of one hour. There will be no
additional payment for hours worked in excess of the Executive’s normal hours of
work.   4.2   The normal hours of work will be 9.30am to 5.30pm, Monday to
Friday or such other hours as may from time to time be notified to the Executive
in writing.   4.3   The Executive may also be required to work such additional
hours as may be necessary for the proper performance of their duties but that
will not exceed an average of 48 hours in any 17 week period.   5.   Place of
Work   5.1   The Executive’s normal place of work shall be 55 Gracechurch
Street, London, EC3V 0JP or at such other place within London as the Company may
from time to time determine.

      Service Agreement July 2007   -3-

 

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5.2   In addition, the Executive shall, in the proper performance of his duties
and for the purpose of business trips, travel to such places both within the
United Kingdom and abroad as the Company may from time to time require. The
Company does not envisage at the present time that the Executive will be
required to work outside the United Kingdom for a continuous period of more than
one month during their employment. The Executive will be given written
notification if there is a change in this position.   6.   Salary   6.1   The
Executive shall receive a base salary of £270,400 per annum (subject to normal
PAYE deductions) payable in arrears by twelve monthly instalments by direct
credit transfer to the Executive’s bank account by no later than the 24th day of
each month.   6.2   It is the policy of the Company to review salaries annually
in April although there is no obligation on the Company to increase them. You
will be notified in writing of any change to your salary.   6.3   The Executive
shall be eligible to be considered for a discretionary bonus at the sole
discretion of the board of directors of Validus Holdings, Ltd (“Validus”). The
portion of the Executive’s bonus for 2006 payable in April 2008, if any, shall
be paid in accordance with existing Talbot Group Staff Profit Share Plan. In
addition the Executive’s bonus for 2007 shall be calculated and be payable in
accordance with the existing Talbot Group Staff Profit Share Plan. The Executive
shall not be entitled to receive any bonus, other than any unpaid amount of his
Accrued Bonus if he is a Good Leaver, if, on the date such bonus is due to be
paid, the Executive is under notice of termination (regardless of whether the
Company or the Executive has given such notice), he is on garden leave pursuant
to Clause 17 or if his employment has terminated.   6.4   The Executive shall
not be entitled to any other salary or fees as an ordinary or executive director
or employee of the Company or any Associated Company and the Executive shall, as
the Company may direct, either waive his right to any such salary or fees or
account for the same to the Company.   7.   Restricted Shares   7.1   The
Executive shall be awarded 43,478 restricted shares of Validus under the Validus
Long Term Incentive Plan. The terms of this award are subject to the Restricted
Share Agreement between the Executive and Validus at Appendix 2 (“RSA”), which
the Executive is required to enter into before the shares are awarded.   8.  
Pension   8.1   During each year of the Executive employment, the Company shall
contribute an amount equal to 20% of the Executive’s base salary in equal
monthly instalments in arrears to the Talbot Underwriting Services Ltd Group
Personal Pension Plan or such other scheme that the Company may put in place
from time to time. The Company’s contributions to such scheme shall be subject
to the rules of the scheme and the tax relief and exemptions available from
HMRC, as amended from time to time.

      Service Agreement July 2007   -4-

 

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8.2   No contracting out certificate under the Pensions Schemes Act 1993 is in
force in respect of the Executive’s employment under this Agreement.   9.  
Other Benefits   9.1   The Executive will be eligible to participate in the
private medical insurance scheme operated by the Company which provides cover
for the Executive, their spouse, civil partner or long term partner and
dependent children, subject to cover being accepted by the insurance company and
to any conditions that the insurance company may impose.   9.2   The Executive
shall be entitled to participate in the Company’s life assurance scheme which
shall pay to the Executive’s dependents, if the Executive dies during his
employment, a sum equal to: four times the Executive’s salary if the Executive’s
marital status is single; or eight times the Executive’s salary if the Executive
is married or has a civil partner or long term partner. Participation is subject
to:

  (i)   the terms of the Company’s life assurance scheme, as amended from time
to time;     (ii)   the rules or the insurance policy of the relevant insurance
provider, as amended from time to time; and     (iii)   the Executive satisfying
the normal underwriting requirements of the relevant insurance provider.

9.3   The Executive will be eligible to join the permanent health insurance plan
operated by the Company from time to time and the premium in connection with
such plan will be paid for by the Company. Benefit will be payable only in
accordance with the terms of the plan. If benefit is refused by the insurer
there will be no obligation on the Company to make any payment to the Executive.
If the insurer accepts a claim under the terms of the plan from time to time in
force, the Executive shall, from the date of such acceptance, no longer be
eligible to receive any base salary but the Executive will continue to be
eligible to participate in the private medical insurance scheme pursuant to
Clause 9.1 above, subject to cover being accepted by the insurance company and
to any conditions that the insurance company may impose. Further details are set
out in the Staff Handbook.   9.4   Details of other benefits to which the
Executive may be entitled are set out in the Staff Handbook.   10.   Expenses  
10.1   The Company shall reimburse to the Executive against production of
receipts, if requested, all reasonable traveling (other than to and from the
usual place of work), hotel, entertainment and other out-of-pocket expenses
which the Executive may from time to time be authorised to incur in the
execution of his duties under this agreement. Further details are set out in the
Staff Handbook.

      Service Agreement July 2007   -5-

 

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11.   Holidays   11.1   In addition to normal bank and public holidays
applicable in England the Executive will be entitled to 30 working days paid
holiday in every calendar year, which are to be taken at such time or times as
may be approved by the Executive’s direct report as set out in Clause 3.2.2. If
the Executive is working part-time, the amount of paid holiday will be
calculated on a pro rata basis and notified to them.   11.2   The Company’s
holiday year runs from 1 January to 31 December.   11.3   Upon termination the
Company may at its discretion require the Executive to take, during his notice
period, any holiday entitlement which has accrued by the Termination Date but
which has not been taken.   11.4   If the Executive’s employment commences or
terminates part way through a holiday year, the Executive’s entitlement to
holiday during that year will be assessed on a pro rata basis. Subject to the
Company’s discretion at Clause 11.2 above, payment for holiday entitlement
accrued but not taken will only be made on termination of employment. If, on
termination, the Executive has taken more holiday than his accrued holiday
entitlement, he will be required to reimburse to the Company in respect of the
excess days taken and the Executive hereby authorises the Company to make
deductions in respect of the same from his final salary payment. For the
avoidance of doubt, a day’s holiday pay is 1/260 of the Executive’s base salary.
  11.5   Further details regarding holidays are set out in the Staff Handbook.  
12.   Confidential Information   12.1   For the purposes of this Clause 12,
confidential information means, without limitation:

  (i)   trade secrets;     (ii)   any inventions or improvements which the
Executive may from time to time make or discover in the course of his duties;  
  (iii)   details of clients including insureds and reinsureds, premiums charged
to them and premiums paid to reinsurers, claims, account information, the
services provided and the Company’s or any Associated Company’s terms of
business with clients, brokers, coverholders and other agents;     (iv)  
business marketing plans, budgets and accounts;     (v)   any proposals relating
to the future of the Company or any Associated Company or its or their business
or any part thereof;     (vi)   details of employees and officers of the Company
or any Associated Company and of the remuneration and other benefits paid to
them;

      Service Agreement July 2007   -6-

 

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  (vii)   information relating to business matters, corporate plans, management
systems, finances, marketing or sales of any past, present or future products or
services, processes, designs, know how, pitch lists, policy wordings, broker
lists, intermediary lists, customer lists, analyses, data, spreadsheets, models,
software, applications and technical information relating to the creation,
production or supply of any past, present or future products or services of the
Company or any Associated Company, any information given to the Company or any
Associated Company in confidence by clients, insureds, reinsureds, brokers,
agents, intermediaries, coverholders or other persons and any other information
(whether or not recorded in documentary form, or on computer disk or tape) which
is confidential or commercially sensitive and is not in the public domain; and  
  (viii)   any other information which is notified to the Executive as
confidential.

12.2   The Executive shall not, either during his employment or thereafter,
except in the proper course of his duties or as required by law or
regulation/regulators, use for his own or another party’s benefit, or divulge or
disclose to any person any Confidential Information concerning the business or
affairs of the Company or any Associated Company, or any of its or their
clients, customers, insureds, reinsureds, brokers, agents, intermediaries or
coverholders which may have come to his knowledge at any time during his
employment by the Company or any Associated Company. This Clause will cease to
apply to information which enters the public domain other than (directly or
indirectly) through the acts or omissions of the Executive.   13.   Competitive
Activities   13.1   During the term of this Agreement the Executive shall not
(unless otherwise agreed in writing by the Company) undertake any other business
or profession or be or become an employee or agent of any other firm, company or
other person or assist, be concerned in or have any financial interest, whether
directly or indirectly, in any other business or profession including a business
that is not trading that is in competition with the Company or any Associated
Company. The Executive may hold or acquire not more than 4%, by way of bona fide
investment only, of the shares or other securities of any company in competition
with the Company or any Associated Company which are listed or dealt in on any
recognised Stock Exchange, provided that the Executive promptly discloses such
holding or acquisition to the Company or Associated Company. The Company may
require the Executive to divest of any investment in any particular case on the
ground that such other company is or may be carrying on a business competing or
intending to compete with the business of the Company or any Associated Company
or may cause a conflict of interests between those of the Company or any
Associated Company and those of such company or the Executive or may breach any
law or regulation binding on the Company, any Associated Company or the
Executive.   13.2   In addition the Executive shall be entitled to engage in
such activities as may be appropriate in order to manage his personal
investments in so far as such activities do not materially interfere or conflict
with the Executive’s performance of his duties under this Agreement.

      Service Agreement July 2007   -7-

 

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14.   Post-Termination Restrictions   14.1   The Executive will not, directly or
otherwise or on behalf of any other person, without the prior written consent of
the Board, for the Restricted Period, in respect of any business which is in
competition with any Restricted Business, offer employment to or otherwise
endeavour to entice away from the Company or any Associated Company any
Restricted Executive.       In the above Clause 14.1 the following words and
phrases have the following meanings:       “Restricted Business” means those of
the businesses of the Company and any Associated Company with which the
Executive was involved to a material extent at any time during the period of
12 months ending on the Termination Date;       “Restricted Executive” means any
person who at the Termination Date was an employee of the Company or any
Associated Company (excluding secretarial, administrative and clerical staff),
who could materially damage the interests of the Company or any Associated
Company if he became engaged or employed in any business concern in competition
with any Restricted Business and with whom the Executive worked closely during
the period of 12 months ending on the Termination Date;       “Restricted
Period” means the period of 12 months after the Termination Date, less:

  (i)   any period that the Executive has spent on garden leave pursuant to this
Agreement; and     (ii)   any period between the date of notice and the
Termination Date during which the Executive was not on garden leave.

14.2   The Executive agrees and acknowledges that before entering into this
Agreement he had the opportunity to obtain independent legal advice on the
restrictions in this Clause 14 that the restrictions set out above are no wider
or more restrictive than is reasonably necessary for the protection of the
legitimate business interests of the Company and/or any Associated Company and
further that the effect of those restrictions is not such as to prevent the
Executive from earning a living.   14.3   The Executive agrees that the
restrictions contained in Clause 14 of this Agreement shall be read and
construed independently of the others and that all such restrictions are
considered reasonable by the parties to this Agreement. In the event that any
such restriction shall be found or held to be void in circumstances where it
would be valid if some part of it were deleted or the period scope or distance
of application reduced the parties to this Agreement agree that such restriction
shall apply with such modification as may be necessary to make it valid and
effective and that any such modification shall not affect the validity of any
other restriction contained in this Agreement.   14.4   Without prejudice to the
Company’s right to enforce this Agreement in respect of any Associated Company
it is agreed that the covenants contained in this Clause 14 shall inure for the
benefit of any relevant Associated Company and that the same shall be

      Service Agreement July 2007   -8-

 

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    enforceable against the Executive by that Associated Company as if it were a
party to this Agreement.   15.   Return of Property   15.1   For the purposes of
this Clause 15, Property means keys, computer equipment, all lists of clients or
customers, correspondence and all other documents, papers and records
(including, without limitation, any records stored by electronic means, together
with any codes or implements necessary to give full access to such records),
system designs, software designs, software programmes (in whatever media),
presentations, proposals or specifications which may have been prepared by the
Executive or have come into their possession, custody or control in the course
of their employment.   15.2   The Executive shall promptly whenever requested by
the Company and in any event upon the termination of their employment or during
any period of garden leave pursuant to Clause 18 deliver up to the Company all
Property of the Company or any Associated Company and the Executive shall not be
entitled to and shall not retain any copies thereof.   16.   Sickness   16.1  
If the Executive is unable to work due to illness or injury, they should inform
the HR Manager by 9.30am on the first day of absence. The Executive must also
comply with the absence procedures set out in the Staff Handbook.   16.2  
Subject to the Executive complying with Clause 16.1, the number of working days
for which the Company will pay their base salary while they are absent due to
sickness or injury is set out in the Staff Handbook. Such remuneration shall
include any sums the Company is obliged to pay to the Executive pursuant to any
social security or sick pay legislation. The Company may reduce remuneration
during incapacity by an amount equal to the benefit (excluding any lump sum
benefit) which the Executive would be entitled to claim during such incapacity
under the then current social security legislation (whether or not such benefit
is claimed by the Executive).   16.3   If the Executive either:

  (i)   becomes entitled to payment of benefit under the terms of any permanent
health insurance scheme from time to time in force; or     (ii)   is refused
benefit under that scheme,

    all entitlement to base salary shall cease from the earlier of the
commencement of the payment of such benefit or the expiry of the relevant period
referred to in Clause 16.2.   16.4   If the Executive is unable to work due to
illness or injury the Company may require the Executive from time to time to
undergo a medical examination by a medical practitioner nominated by the
Company. The Company shall bear the cost of any such examination. The Executive
agrees that this Agreement shall be taken as the Executive’s written

      Service Agreement July 2007   -9-

 

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    authorisation to the nominated medical practitioner to disclose to and
discuss with the Company the results of the examination and the matters which
arise from it so that the Company can be notified of any matters it considers
might impair the Executive’s ability properly to discharge his duties. The
Company undertakes that, where such information is disclosed to it, it shall be
disclosed at the same time to the Executive. The Company shall keep such
information confidential and shall limit disclosure of such medical information
to only those officers and employees of the Company who have a proper and
necessary need to be given the information.   17.   Garden Leave   17.1   Once
notice to terminate the Executive’s employment has been given by the Company or
the Executive pursuant to Clause 2.2, the Company shall be under no obligation
to vest in or assign to the Executive any powers or duties or to provide any
work for the Executive and may exclude the Executive from any premises of the
Company or any Associated Company.   17.2   During any period of Garden Leave
the Executive shall:

  (i)   continue to receive their salary and all contractual benefits in the
usual way subject to clause 6.3 and subject to the terms of any benefit
arrangement;     (ii)   remain an employee of the Company and bound by the terms
of this Agreement; and     (iii)   not, without the prior written consent of the
Company, contact or deal with any consultant, client, customer, supplier, agent,
distributor, shareholder, adviser or other business contact of the Company or
any Associated Company.

18.   Summary Termination of Employment   18.1   The Company may terminate the
employment of the Executive, without notice or payment in lieu of notice, if the
Executive:

  (i)   is convicted of any criminal offence (other than a motoring offence for
which no custodial sentence is given to him) which in the reasonable opinion of
the Company demonstrated unsuitability for further employment with the Company;
or     (ii)   shall be or become prohibited by law from being a director
(applicable only to directors); or     (iii)   shall be guilty of fraud,
dishonestly or serious misconduct (which, for the avoidance of doubt, includes
any conduct which tends to bring the Company or any Associated Company into
disrepute) or shall commit any serious or persistent breach of any of his
obligations (for which warnings have been given to the Executive) to the Company
or any Associated Company (under this Agreement); or     (iv)   shall be guilty
of fraud or wilful default in relation to the Warranties.

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18.2   Any delay or forbearance by the Company in exercising any right of
termination under this Clause shall not constitute a waiver of it.   18.3   In
order to investigate a complaint of misconduct against the Executive the Company
is entitled to suspend the Executive on full pay. The Company shall ensure that
any suspension is kept for as short a time as is possible.   19.   Intellectual
Property   19.1   The definitions in this Clause apply in this Agreement:

  (i)   “Intellectual Property Rights” means patents, rights to Inventions,
copyright and related rights, trade marks, trade names and domain names, rights
in get-up, rights in goodwill or to sue for passing off, rights in designs,
computer software, analyses, data, spreadsheets, models, software, applications,
technical information, confidential information (including know-how and trade
secrets) and any other intellectual property rights, in each case whether
registered or unregistered and including all applications (or rights to apply)
for, and renewals or extensions of, such rights and all similar or equivalent
rights or forms of protection which may now or in the future subsist in any part
of the world; and     (ii)   “Inventions” means inventions, ideas and
improvements, whether or not patentable, and whether or not recorded in any
medium.

19.2   The Executive shall give the Company full written details of all
Inventions and of all works embodying Intellectual Property Rights made wholly
or partially by him at any time during the course of the Executive’s employment
which relate to, or are reasonably capable of being used in, the business of the
Company or any Associated Company. The Executive acknowledges that all
Intellectual Property Rights subsisting (or which may in the future subsist) in
all such Inventions and works shall automatically, on creation, vest in the
Company absolutely. To the extent that they do not vest automatically, the
Executive holds them on trust for the Company. The Executive agrees promptly to
execute all documents and do all acts as may, in the opinion of the Company, be
necessary to give effect to this Clause 19.2.   19.3   The Executive hereby
irrevocably waives all moral rights under the Copyright, Designs and Patents Act
1988 (and all similar rights in other jurisdictions) which he has or will have
in any existing or future works referred to in Clause 19.2.   19.4   The
Executive hereby irrevocably appoints the Company to be his attorney to execute
and do any such instrument or thing and generally to use his name for the
purpose of giving the Company or its nominee the benefit of this Clause 19 and
acknowledges in favour of a third party that a certificate in writing signed by
any Director or the Secretary of the Company that any instrument or act falls
within the authority conferred by this Clause 20 shall be conclusive evidence
that such is the case.

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20.   Other Agreements   20.1   The following documents have been superseded by
this Agreement:

  (i)   the letter dated 18 May 2007 from Michael Carpenter to the Executive
concerning the restricted shares referred to in Clause 7; and     (ii)   the
Executive’s former contract of employment with the Company.

20.2   The Executive acknowledges and warrants that there are no agreements or
arrangements whether written, oral or implied between the Company or any
Associated Company and the Executive relating to the employment of the Executive
other than those expressly set out in this Agreement, the Staff Handbook and the
RSA and that they the Executive is not entering into this Agreement in reliance
on any representation not expressly set out in this Agreement, the Staff
Handbook or the RSA.   21.   Waiver of Rights       If the Executive’s
employment is terminated:

  (i)   by reason of liquidation of the Company for the purpose of amalgamation
or reconstruction; or     (ii)   as part of any arrangement for the amalgamation
of the undertaking of the Company not including liquidation or the transfer of
the whole or part of the undertaking of the Company to any Associated Company;
and     (iii)   the Executive is offered suitable alternative employment with
the amalgamated or reconstructed company and on terms not generally less
favourable to the Executive than the terms of this Agreement,

    the Executive will have no claim against the Company under this Agreement in
respect of that termination.   22.   Data Protection   22.1   The Executive
consents to the Company or any Associated Company holding and processing both
electronically and manually the data it collects which relates to the Executive
for the purposes of the administration and management of its employees and its
business and for compliance with applicable procedures, laws and regulations.
The Executive also consents to the transfer of such personal information (save
in respect of sensitve personal data) to other offices the Company may have or
to an Associated Company or to other third parties whether or not outside the
European Economic Area for administration purposes and other purposes in
connection with the Executive’s employment where it is necessary or desirable
for the Company to do so.

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23.   Communications   23.1   Telephone calls made and received by the Executive
using the Company’s equipment and use of the Company’s e-mail system to send or
receive personal correspondence may be recorded by the Company on its
communications systems. Any recordings made shall at all times remain the
property of the Company and, if necessary, will be used as evidence in the case
of disputes with employees or clients.   24.   Severability   24.1   If any
provision of this Agreement is determined to be void, invalid, unenforceable or
against public policy, such provisions shall be deemed severable from the
Agreement, and the remaining provisions of the Agreement will remain unaffected
and in full force and effect.   25.   Confirmation of Agreement   25.1   The
Executive represents and warrants that he has read and understood each and every
provision of this Agreement, and the Executive understands that he has the right
to obtain legal advice, if necessary and desired, in order to interpret any and
all provisions of this Agreement, and that he has freely and voluntary entered
into this Agreement.   26.   Miscellaneous Matters   26.1   The Company’s
grievance procedures apply to the Executive and are outlined in the Appendix.
For the avoidance of doubt, these procedures are not contractual.   26.2   The
Company’s disciplinary procedures apply to the Executive and are contained in
the Staff Handbook. For the avoidance of doubt, these procedures are not
contractual.   26.3   There are no collective agreements which directly affect
the terms and conditions set out in this Agreement.   26.4   At any time during
the period of this Agreement, and, in any event, upon the termination of the
Executive’s employment (for whatever reason and howsoever arising) the Executive
shall immediately repay all outstanding debts or loans due to the Company or any
Associated Company and the Company is hereby authorised to deduct from any
payment of wages due to the Executive a sum in repayment of all or any part of
such debts or loans.   27.   Notices   27.1   Any notice may be given personally
to the Executive or to the Secretary of the Company (as the case may be) or may
be posted to the Company (for the attention of its Secretary) at its registered
office for the time being or to the Executive either at his address given above
or at his last known address. Any such notice sent by post shall be deemed
served forty-eight hours after it is posted and in proving such service it shall
be sufficient to prove that the notice was properly addressed and put in the
post.

      Service Agreement July 2007   -13-

 

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28.   Variation   28.1   The Company reserves the right, at any time and from
time to time, to make reasonable non-material changes to any of the Executive’s
terms and conditions of employment.   28.2   The Executive will be notified of
minor changes by way of a general written notice to all employees and any such
changes will take effect from the date of the notice.   28.3   The Executive
will be given not less than one month’s notice of any significant changes. Such
changes will be deemed to be accepted unless the Executive notifies the Company
in writing of any objections before the expiry of that notice period.   29.  
Governing Law   29.1   This Agreement shall be governed by and construed under
English law and each of the parties hereby irrevocably agrees for the exclusive
benefit of the Company that the Courts of England are to have jurisdiction to
settle any disputes which may arise out of or in connection with this Agreement.

IN WITNESS whereof this Agreement has been signed by or on behalf of the parties
hereto the day and year first before written.

             
 
           
SIGNED on behalf of the Company:
  Signature   /s/ ND Wachman    
 
           
 
    Name ND Wachman    
 
    Title    Finance Director    
 
  Date   12 July 2007    
 
           
 
           
SIGNED by the Executive
  Signature   MEA Carpenter    
 
           
 
    Name Michael Carpenter    
 
           
In the presence of:
  Signature   /s/ Jane Williams    
 
           
 
    Name Jane Williams    
 
  Date   12 July 2007    
 
           

      Service Agreement July 2007   -14-

 

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Appendix 1
Grievance Procedure
If the Executive has any grievance relating to this employment, they should
refer the matter initially to either their immediate supervisor or director or
the person to whom they are required to report. In the event the grievance
relates to a complaint of victimisation or harassment and the person to whom the
Executive should report the matter is involved in the complaint, they should
refer the complaint to the HR Manager. The Executive may be required to set out
their grievance in writing. A formal meeting will normally be arranged at which
the Executive will have the right to be accompanied by a work colleague. The
grievance will be considered and the Executive will be notified in writing of
the decision. If the Executive considers that decision is not satisfactory, they
may then appeal in writing to the Chief Executive or Chief Operating Officer,
whose decision will be final and binding. An appeal should be raised within 5
working days of the original decision and should set out full grounds explaining
the basis of the appeal. In most cases after the Executive’s employment has
ended, the procedure outlined above will continue to apply. However, in certain
circumstances a shorter process may be used if the Executive and the Company
agree. Further details can be obtained from the HR Manager.

      Service Agreement July 2007   -15-

 

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Appendix 2
Restricted Share Agreement
VALIDUS HOLDINGS, LTD.
RESTRICTED SHARE AGREEMENT
          THIS AGREEMENT, dated as of                         , 2007, between
Validus Holdings, Ltd. (the “Company”), a Bermuda Corporation, and Michael
Edward Arscott Carpenter (the “Employee”).
          WHEREAS, the Employee has been granted the following award under the
Company’s Amended and Restated 2005 Long Term Incentive Plan (the “Plan”);
          NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and for other good and valuable consideration, the parties
hereto agree as follows.

1.   Award of Shares. Pursuant to the provisions of the Plan, the terms of which
are incorporated herein by reference, the Employee is hereby awarded 43,478
Restricted Shares (the “Award”), subject to the terms and conditions of the Plan
and those herein set forth. The Award is granted on                     , 2007
(the “Date of Grant”). Capitalized terms used herein and not defined shall have
the meanings set forth in the Plan. In the event of any conflict between this
Agreement and the Plan, the Plan shall control.   2.   Terms and Conditions. It
is understood and agreed that the Award of Restricted Shares evidenced hereby is
subject to the following terms and conditions:

  (a)   Vesting of Award. Subject to the provisions of this Section 2 below and
the other terms and conditions of this Agreement, this Award shall become vested
in two (2) equal annual installments, on July 2, 2008 and on July 2, 2009. All
dividends and other amounts receivable in connection with any adjustments to the
Shares under Section 4(b) of the Plan shall be subject to the vesting schedule
herein and shall be paid to the Employee upon any vesting of the Restricted
Shares hereunder in respect of which such dividends or other amounts are
payable. Except as otherwise provided in Sections 2 (b) and (c) below, any
portion of the Award that is not vested on the date of Termination of Service of
the Employee shall be forfeited by the Employee and become the property of the
Company. Notwithstanding any provision of the Plan to the contrary, the Employee
shall be considered to have incurred a Termination of Service for purposes
hereof on the date notice of termination of the Employee’s employment is given
either by the Employee or the Company, a Subsidiary or an Affiliate unless the
Employee remains actively employed with the Company, a Subsidiary or an
Affiliate after such date, in which case a Termination of Service will be deemed
to occur hereunder on the date the Employee ceases to be so actively employed.

      Service Agreement July 2007   -16-

 

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  (b)   The Award shall become fully vested if the Employee is a “Good Leaver”,
which means the Employee’s employment has terminated due to one of the following
reasons (and no Termination of Service for the purposes of clause 2(a) above
shall be deemed to have incurred):

  1.   agreed termination of employment;     2.   injury, ill-health, disability
or redundancy;     3.   his/her death;     4.   wrongful or unfair dismissal by
the relevant “Validus Group Company” (meaning the Company or any of its
subsidiaries);     5.   the company in which he/she is employed ceasing to be a
Validus Group Company;     6.   the entire or substantially the whole of the
business carried on by the Company being transferred to a person other than a
Validus Group Company; or     7.   retirement at the normal retirement age of
the relevant Validus Group Company or early retirement on the grounds of ill
health or with the consent of the board of the relevant Validus Group Company
and in accordance with the terms of the pension plan of which the Employee is a
member.

  (c)   Change in Control. Notwithstanding any provision of this Agreement to
the contrary, if, within two years following a Change in Control, the Employee’s
employment is terminated by the Company not for Cause, the Award shall become
immediately vested in full upon such termination of employment. For purposes of
this Agreement, “Change in Control” shall have the meaning set forth in the
Plan. For purposes of this Agreement, “Cause” means (a) conviction of the
Employee of any criminal offence (other than a motoring offence for which no
custodial sentence is given to him) which in the reasonable opinion of the
Company demonstrates unsuitability for further employment with the Company;
(b) the Employee shall be or become prohibited by law from being a director
(applicable only to directors); (c) the Employee shall be guilty of fraud,
dishonestly or serious misconduct (which, for the avoidance of doubt, includes
any conduct which tends to bring the Company or any Affiliate into disrepute) or
shall commit any serious or persistent breach of any of his obligations (for
which warnings have been given to the Employee) to the Company or any Affiliate;
or (d) the Employee shall be guilty of fraud or wilful default in relation to
the Warranties (as defined in the service agreement between the Employee and
Talbot Underwriting Services Limited).     (d)   Certificates. Each certificate
or other evidence of ownership issued in respect of Restricted Shares awarded
hereunder shall be deposited with the Company, or its

      Service Agreement July 2007   -17-

 

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      designee, together with, if requested by the Company, a stock power
executed in blank by the Employee, and shall bear a legend disclosing the
restrictions on transferability imposed on such Restricted Shares by this
Agreement (the “Restrictive Legend”). Upon the vesting of Restricted Shares
pursuant to Section 2 hereof and the satisfaction of any withholding tax
liability pursuant to Section 5 hereof, the certificates evidencing such vested
Shares, not bearing the Restrictive Legend (but still bearing the legend set
forth in Section 7(d) below), shall be delivered to the Employee or other
evidence of vested Shares shall be provided to the Employee.     (e)   Rights of
a Stockholder. Prior to the time a Restricted Share is fully vested hereunder,
the Employee shall have no right to transfer, pledge, hypothecate or otherwise
encumber such Restricted Share. During such period, the Employee shall have all
other rights of a stockholder, including, but not limited to, the right to vote
and to receive dividends (subject to Section 2(a) hereof) at the time paid on
such Restricted Shares.     (f)   No Right to Continued Employment. This Award
shall not confer upon the Employee any right with respect to continuance of
employment by the Company nor shall this Award interfere with the right of the
Company to terminate the Employee’s employment.

3.   Transfer of Shares. Any vested Shares delivered hereunder, or any interest
therein, may be sold, assigned, pledged, hypothecated, encumbered, or
transferred or disposed of in any other manner, in whole or in part, only in
compliance with the terms, conditions and restrictions as set forth in the
governing instruments of the Company, the provisions of this Agreement,
applicable federal and state securities laws or any other applicable laws or
regulations and the terms and conditions hereof.   4.   Expenses of Issuance of
Shares. The issuance of stock certificates hereunder shall be without charge to
the Employee. The Company shall pay, and indemnify the Employee from and against
any issuance, stamp or documentary taxes (other than transfer taxes) or charges
imposed by any governmental body, agency or official (other than income taxes)
by reason of the issuance of Shares.   5   Withholding. No later than the date
of vesting of (or the date of an election by the Employee under Section 83(b) of
the Code with respect to) the Award granted hereunder, the Employee shall pay to
the Company or make arrangements satisfactory to the Committee regarding payment
of any federal, state or local taxes of any kind required by law to be withheld
at such time with respect to such Award and the Company shall, to the extent
permitted or required by law, have the right to deduct from any payment of any
kind otherwise due to the Employee, federal, state and local taxes of any kind
required by law to be withheld at such time.   6.   Market Stand Off Period. The
Employee covenants and agrees that he or she shall not, without the prior
written consent of the Company, sell or otherwise dispose of any shares of stock
of the Company during such period (a “Market Stand Off Period”) as the Com-

      Service Agreement July 2007   -18-

 

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    pany or its underwriters shall establish in connection with the filing of a
registration statement in connection with an initial public offering of the
stock of the Company (an “Initial Public Offering”).   7.   Purchase Option. The
Employee’s Shares are subject to repurchase as provided below in subsections
(a) through (g) below:

  (a)   If the Employee’s active service with the Company or a Subsidiary is
terminated by the Employee or by the Company for Cause, the Company and/or its
designee(s) shall have the option (the “Purchase Option”) to purchase, and if
the Purchase Option is exercised, the Grantor (as defined below) shall sell to
the Company and/or its assignee(s), all or any portion (at the Company’s option)
of the Shares held by the Grantor (such Shares collectively being referred to as
the “Purchasable Shares”).     (b)   The Company shall give notice in writing to
the Grantor of the exercise of the Purchase Option within one (1) year after the
date of Termination of Service of the Employee. Such notice shall state the
number of Purchasable Shares to be purchased by the Company and the
determination of the purchase price of such Purchasable Shares. If no notice is
given within the time limit specified above, the Purchase Option shall be deemed
to have terminated.     (c)   The purchase price to be paid for the Purchasable
Shares purchased pursuant to the Purchase Option shall be the Book Value (as
defined below) per share as of the date of the notice of exercise of the
Purchase Option times the number of Shares being purchased. The purchase price
for the Purchasable Shares shall be paid in cash or by wire transfer of
immediately available funds. The closing of such purchase shall take place at
the Company’s principal executive offices within ten (10) days after the
purchase price has been determined. At such closing, the Grantor shall deliver
to the purchaser(s) the certificates or instruments evidencing the Purchasable
Shares being purchased, duly endorsed (or accompanied by duly executed stock
powers) and otherwise in good form for delivery, against payment of the purchase
price by check of the purchaser(s). In the event that, notwithstanding the
foregoing, the Grantor shall have failed to obtain the release of any pledge or
other encumbrance on any Purchasable Shares by the scheduled closing date, at
the option of the purchaser(s) the closing shall nevertheless occur on such
scheduled closing date, with the cash purchase price being reduced to the extent
of, and paid to the holder of, all unpaid indebtedness for which such
Purchasable Shares are then pledged or encumbered.     (d)   To ensure the
enforceability of the Company’s rights hereunder, each certificate or instrument
representing Shares shall bear a conspicuous legend in substantially the
following form:         “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO AN OPTION TO REPURCHASE PROVIDED UNDER THE PROVISIONS OF THE COMPANY’S 2005
LONG TERM INCENTIVE

      Service Agreement July 2007   -19-

 

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      PLAN AND A STOCK OPTION AGREEMENT ENTERED INTO PURSUANT THERETO. A COPY OF
SUCH LONG TERM INCENTIVE PLAN AND STOCK OPTION AGREEMENT ARE AVAILABLE UPON
WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.”     (e)  
The Company’s rights under this Section 7 shall terminate upon the consummation
of an Initial Public Offering.     (f)   “Book Value” shall mean the book value
of a Share at the end of the fiscal quarter in which the termination of active
service occurs, as determined on a fully diluted basis by the Board of Directors
in good faith. Such determination shall be conclusive and binding on all
persons.     (g)   “Grantor” shall mean, collectively, the Employee, the
Employee’s assignee, the executor or the administrator of the Employee’s estate
in the event of the Employee’s death, and the Employee’s legal representative in
the event of the Employee’s incapacity.

8.   Forfeiture Upon Breach of Certain Other Agreements. The Employee’s breach
of any nonhire, nonentice, confidentiality, assignment of inventions, or other
intellectual property agreement that he may be a party to with the Company or a
Subsidiary, in addition to whatever other equitable relief or monetary damages
that the Company or a Subsidiary may be entitled to, shall result in automatic
rescission, forfeiture, cancellation, and return of any Shares (whether or not
otherwise vested) held by the Employee or Grantor, and all profits, proceeds,
gains, or other consideration received through the sale or other transfer of the
Shares shall be promptly returned and repaid to the Company.   9.  
Shareholders’ Agreement. If any Restricted Shares are scheduled to vest
hereunder at a time when the Company is not a publicly-traded entity and the
Employee is not a party to the Shareholders’ Agreement by and among the Company
and its shareholders, as the same may be amended from time to time (the
“Shareholders’ Agreement”), the Employee shall, as a condition to the Employee’s
right to have such Restricted Shares vest, become a party to the Shareholders’
Agreement by execution of a joinder agreement in form and substance satisfactory
to the Company.   10.   References. References herein to rights and obligations
of the Employee shall apply, where appropriate, to the Employee’s legal
representative or estate without regard to whether specific reference to such
legal representative or estate is contained in a particular provision of this
Agreement.   11.   Notices. Any notice required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been given when
delivered personally or by courier, or sent by certified or registered mail,
postage prepaid, return receipt requested, duly addressed to the party concerned
at the address indicated below or to such changed address as such party may
subsequently by similar process give notice of:

      Service Agreement July 2007   -20-

 

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               If to the Company:
               Validus Holdings, Ltd.
               Mintflower Place
               8 Par-La-Ville Road, Third Floor
               Hamilton HMO8 Bermuda
               Attn.: Chief Financial Officer
               If to the Employee:

      At the Employee’s most recent address shown on the Company`s corporate
records, or at any other address which the Employee may specify in a notice
delivered to the Company in the manner set forth herein.

12.   Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Bermuda, without giving effect to principles of
conflict of laws.   13.   Counterparts. This Agreement may be executed in two
counterparts, each of which shall constitute one and the same instrument.      
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first above written.

            VALIDUS HOLDINGS, LTD.
      By:   /s/ EJ Noonan         Edward Noonan        Chief Executive Officer
and Chairman     

            /s/ MEA Carpenter       (Employee)           

      Service Agreement July 2007   -21-

 

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Appendix 3
Accrued Bonus: Michael Carpenter
In respect of Executive’s bonus allocated for the 2006 year $801,150

      Service Agreement July 2007   -22-