Exhibit 10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”), is dated as of May 31, 2007 and is
entered into between Endurance Specialty Holdings Ltd. (the “Company”), and
Kenneth J. LeStrange (the “Executive”).

WHEREAS, the Company desires to enter into this Agreement in order to embody the
terms of the Executive’s continued employment and the Executive desires to enter
into this Agreement and to accept such continued employment, subject to the
terms and provisions of this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the Company and the Executive hereby agree as follows:

ARTICLE I.

Definitions

1.1 “Board” shall mean the Board of Directors of the Company.

1.2 “Business” shall mean the brokerage, underwriting, advising or consulting of
or with respect to any line of property or casualty insurance or reinsurance
underwritten by the Company or any of its divisions, subsidiaries or affiliates
as an insurer or reinsurer during the Term.

1.3 “Cause” shall mean:

(a) any willful and material act of fraud, embezzlement or theft by the
Executive in connection with his duties hereunder or in the course of his
employment hereunder or the Executive’s admission or conviction of, or plea of
nolo contendere to either, (i) a felony or (ii) a misdemeanor involving moral
turpitude, fraud, embezzlement, theft or misrepresentation;

(b) any gross negligence or willful misconduct of the Executive resulting in a
demonstrable and material economic loss to the Company or any of its
subsidiaries;

(c) any willful breach by the Executive of any one or more of the covenants
contained in Section 5.2, 5.3, 5.4 or 5.5 hereof, provided the Executive has
received 15 calendar days’ prior written notice of such breach in accordance
with Section 7.3 of this Agreement; or

(d) any willful and material violation of any statutory or common law duty of
loyalty to the Company or any of its subsidiaries. For purposes of determining
Cause, no act or failure to act on the Executive’s part shall be deemed
“willful” unless done, or omitted to be done, by the Executive not in good faith
and without reasonable belief that the Executive’s act, or failure to act, was
in the best interest of the Company.

 

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1.4 “Change in Control” shall mean:

(a) the acquisition by any individual, entity or group (a “Person”), including
any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), of beneficial
ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act,
of 50% or more of either (i) the then outstanding ordinary shares, par value
$1.00 per share, of the Company (the “Outstanding Ordinary Shares”) or (ii) the
combined voting power of the then outstanding securities of the Company entitled
to vote generally in the election of directors pursuant to the Bye-Laws of the
Company (the “Outstanding Voting Securities”); excluding, however, the
following: (A) any acquisition directly from the Company (excluding any
acquisition resulting from the exercise of an exercise, conversion or exchange
privilege unless the security being so exercised, converted or exchanged was
acquired directly from the Company), (B) any acquisition by the Company, (C) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or (D)
any acquisition by any corporation pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of subsection (c) of this definition of Change in
Control; provided‚ further‚ that for purposes of clause (B), if any Person
(other than the Company or any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company) shall become the beneficial owner of 50% or more of the Outstanding
Ordinary Shares or 50% or more of the Outstanding Voting Securities by reason of
an acquisition by the Company, and such Person shall, after such acquisition by
the Company, become the beneficial owner of any additional Outstanding Ordinary
Shares or any additional Outstanding Voting Securities and such beneficial
ownership is publicly announced, such additional beneficial ownership shall
constitute a Change in Control;

(b) individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of such Board
within a 24 month period; provided, that any individual who becomes a director
of the Company subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by the vote of at least a
majority of the directors then comprising the Incumbent Board shall be deemed a
member of the Incumbent Board; and provided, further, that any individual who
was initially elected as a director of the Company as a result of an actual or
threatened solicitation by a Person other than the Board for the purpose of
opposing a solicitation by any other Person with respect to the election or
removal of directors, or any other actual or threatened solicitation of proxies
or consents by or on behalf of any Person other than the Board shall not be
deemed a member of the Incumbent Board;

(c) the consummation of a reorganization, amalgamation, merger or consolidation
or sale or other disposition of all or substantially all of the assets of the
Company (a “Corporate Transaction”); excluding, however, a Corporate Transaction
pursuant to which (i) all or substantially all of the individuals or entities
who are the beneficial owners, respectively, of the Outstanding Ordinary Shares
and the Outstanding Voting Securities immediately prior to such Corporate
Transaction will beneficially own, directly or indirectly, more than 55% of,
respectively, the outstanding shares of common

 

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stock, and the combined voting power of the outstanding securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns the Company
or all or substantially all of the Company’s assets either directly or
indirectly) in substantially the same proportions relative to each other as
their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Ordinary Shares and the Outstanding Voting Securities, as the case
may be, (ii) no Person (other than: the Company; any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company; the corporation resulting from such Corporate
Transaction; and any Person which beneficially owned, immediately prior to such
Corporate Transaction, directly or indirectly, 50% or more of the Outstanding
Ordinary Shares or the Outstanding Voting Securities, as the case may be) will
beneficially own, directly or indirectly, 50% or more of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the outstanding securities
of such corporation entitled to vote generally in the election of directors and
(iii) individuals who were members of the Incumbent Board will constitute at
least a majority of the members of the board of directors of the corporation
resulting from such Corporate Transaction; or

(d) the consummation of a plan of complete liquidation or dissolution of the
Company.

1.5 “Change in Control Period” shall mean the period commencing six months prior
to the date of a Change in Control and ending on the second annual anniversary
of the date of a Change in Control.

1.6 “Code” means the Internal Revenue Code of 1986, as amended.

1.7 “Confidential Information” shall mean any confidential or proprietary
information, trade secrets, customer lists, drawings, designs, information
regarding product development, marketing plans, sales plans, manufacturing
plans, management organization information, operating policies or manuals,
business plans, financial records, packaging design or other financial,
commercial, business or technical information relating to the Company or any of
its divisions, subsidiaries or affiliates, or that the Company or any of its
divisions, subsidiaries or affiliates may have received belonging to suppliers,
customers or others who do business with the Company or any of its divisions,
subsidiaries or affiliates.

1.8 “Date of Termination” shall mean the following:

(a) if the Executive’s employment is terminated for Cause, the date specified in
the Notice of Termination;

(b) if the Executive’s employment is terminated by the Executive’s death, the
date of the Executive’s death;

(c) if the Executive’s employment is terminated for Disability, 15 calendar days
after the Notice of Termination is given (provided that the Executive shall not
have

 

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returned to the full-time performance of the Executive’s duties during such 15
calendar day period);

(d) if the Executive’s employment is terminated by the Executive with Good
Reason, 30 calendar days after the Notice of Termination is given (provided that
the Company shall not have cured the event giving rise to the Executive’s right
to termination for Good Reason during such 30 calendar day period); and

(e) if the Executive’s employment is terminated by the Executive or the Company
for any other reason, the date specified in the Notice of Termination (which, in
the case of a termination by the Executive, shall not be less than 14 calendar
days nor more than 30 calendar days from the date such Notice of Termination is
given).

1.9 “Disability” shall mean any condition which (i) prevents the Executive from
substantially performing his duties under this Agreement for a period of at
least 120 consecutive days, or 180 non-consecutive days within any 365-day
period, and (ii) causes the Executive to become eligible for the Company’s
long-term disability plan.

1.10 “Good Reason” shall mean:

(a) any action taken or failed to be taken by the Company or any of its officers
which, without the Executive’s prior written consent, materially reduces the
Executive’s position (including titles, other than any legally required
separation of the positions of Chairman and Chief Executive Officer), authority,
duties or responsibilities from those in effect, or materially reduces the
Executive’s ability to carry out such duties and responsibilities; provided that
Good Reason shall not be deemed to exist pursuant to the any of the foregoing
actions occurring solely on account of the Company no longer being a publicly
traded entity or on account of any change to the Executive’s position (including
titles), authority, duties or responsibilities as a result of his physical or
mental incapacity;

(b) any failure by the Company to comply with any of the provisions of Article
IV of this Agreement, other than an insubstantial or inadvertent failure which
is remedied by the Company promptly after receipt of written notice thereof in
accordance with Section 7.3 of this Agreement from the Executive;

(c) the Company’s requiring the Executive to be employed at any location more
than 50 miles further from his current principal residence than the location at
which the Executive was previously employed;

(d) any failure by the Company to obtain the assumption of and agreement to
perform this Agreement by a successor as contemplated by Section 7.2 of this
Agreement; or

(e) receipt by the Executive of notice of non-renewal of this Agreement in
accordance with Section 3.1 delivered by the Company in accordance with Section
7.3.

 

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1.11 “Maximum Annual Incentive Compensation Percentage” shall mean the
percentage set forth as the Maximum Annual Incentive Compensation Percentage in
Exhibit A, subject to adjustment from time to time by the Board; provided that
any such adjustment shall not cause the sum of the Maximum Annual Incentive
Compensation Percentage plus the Maximum Long-Term Compensation Percentage to be
lower than the sum of the Maximum Annual Incentive Compensation Percentage plus
the Maximum Long-Term Compensation Percentage set forth in Exhibit A.

1.12 “Maximum Long-Term Incentive Compensation Percentage” shall mean the
percentage set forth as the Maximum Long-Term Incentive Compensation Percentage
in Exhibit A, subject to adjustment from time to time by the Board; provided
that any such adjustment shall not cause the sum of the Maximum Annual Incentive
Compensation Percentage plus the Maximum Long-Term Compensation Percentage to be
lower than the sum of the Maximum Annual Incentive Compensation Percentage plus
the Maximum Long-Term Compensation Percentage set forth in Exhibit A.

1.13 “Notice of Termination” shall mean a notice that shall indicate the
specific termination provision in this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated.

1.14 “Target Annual Incentive Compensation Percentage” shall mean the percentage
set forth as the Target Annual Incentive Compensation Percentage in Exhibit A,
subject to adjustment from time to time by the Board; provided that any such
adjustment shall not cause the sum of the Target Annual Incentive Compensation
Percentage plus the Target Long-Term Compensation Percentage to be lower than
the sum of the Target Annual Incentive Compensation Percentage plus the Target
Long-Term Compensation Percentage set forth in Exhibit A.

1.15 “Target Long-Term Incentive Compensation Percentage” shall mean the
percentage set forth as the Target Long-Term Incentive Compensation Percentage
in Exhibit A, subject to adjustment from time to time by the Board; provided
that any such adjustment shall not cause the sum of the Target Annual Incentive
Compensation Percentage plus the Target Long-Term Compensation Percentage to be
lower than the sum of the Target Annual Incentive Compensation Percentage plus
the Target Long-Term Compensation Percentage set forth in Exhibit A.

1.16 “Term” shall mean the term of employment of the Executive with the Company,
which shall commence as of the date first written above and continue until the
earlier of (a) the first anniversary of the date first written above or (b) the
Executive’s Date of Termination, and shall be subject to successive one year
renewals in accordance with Section 3.1.

1.17 “Threshold Annual Incentive Compensation Percentage” shall mean the
percentage set forth as the Threshold Annual Incentive Compensation Percentage
in Exhibit A, subject to adjustment from time to time by the Board.

 

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1.18 “Threshold Long-Term Incentive Compensation Percentage” shall mean the
percentage set forth as the Threshold Long-Term Incentive Compensation
Percentage in Exhibit A, subject to adjustment from time to time by the Board.

ARTICLE II.

Employment, Duties and Responsibilities

2.1 Employment. During the Term, the Company agrees to employ the Executive and
the Executive hereby agrees to be employed as the Chairman of the Board,
President and Chief Executive Officer of the Company upon the terms and subject
to the conditions contained in this Agreement.

2.2 Duties and Responsibilities. The Executive shall report exclusively to the
Board. The Executive shall have such duties and responsibilities during the Term
as specified by the Board. The Executive’s duties and responsibilities may be
modified by the Board from time to time in a manner consistent with the
Executive’s position. The Executive agrees to continue to serve as a director
and/or officer of any subsidiary of the Company at a level commensurate with his
position as may be reasonably requested by the Board.

2.3 Base of Operation. The Executive’s principal base of operation for the
performance of his duties and responsibilities under this Agreement shall be the
offices of the Company in Pembroke, Bermuda; provided, however, that the
Executive shall perform such duties and responsibilities outside of Pembroke,
Bermuda as shall from time to time be reasonably necessary to fulfill his
obligations hereunder. The Company and the Executive may at any time during the
Term mutually agree to change the principal base of operation for the
performance of the Executive’s duties and responsibilities. The Executive’s
performance of any duties and responsibilities shall be conducted in a manner
consistent with any tax operating guidelines promulgated from time to time by
the Board.

ARTICLE III.

Term

3.1 Term. The employment of the Executive under this Agreement shall be for the
Term. The Term shall be extended for successive one-year periods as of each
annual anniversary date of the date first written above (each, a “Renewal Date”)
unless, with respect to any such Renewal Date, either party hereto gives the
other party at least 90 days prior written notice of its election not to so
extend the Term.

ARTICLE IV.

Compensation and Expenses

4.1 Salary, Bonuses, Incentive Awards and Benefits. As compensation and
consideration for the performance by the Executive of his obligations under this
Agreement, the Executive

 

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shall be entitled, during the Term, to the following (subject, in each case, to
the provisions of Article VI hereof):

(a) Base Salary. During the Term, the Company shall pay to the Executive a base
salary of $1,000,000 per annum, effective as of January 1, 2007 and subject to
increase from time to time as determined by the Board (“Base Salary”). The
Executive’s Base Salary shall be payable in accordance with the Company’s normal
payroll procedures and shall not during the Term be reduced without the written
consent of the Executive.

(b) Annual Incentive Compensation. The Executive shall be eligible each calendar
year for incentive compensation payable in cash (“Annual Incentive
Compensation”), the amount of which shall be between the Threshold Annual
Incentive Compensation Percentage and the Maximum Annual Incentive Compensation
Percentage of the Executive’s Base Salary as of the immediately preceding
December 31st and shall be determined by the Board. The Annual Incentive
Compensation shall be based upon the performance of the Company, determined in
accordance with performance criteria established by the Board (following
consultation with the Executive) at the commencement of each calendar year. The
performance criteria for the determination of the Executive’s Annual Incentive
Compensation for the 2007 calendar are as set forth on Exhibit A attached
hereto. The Annual Incentive Compensation payable to the Executive upon the
Company attaining the target financial performance agreed by the Executive and
the Board at the commencement of each calendar year shall be the Target Annual
Incentive Compensation Percentage of the Executive’s Base Salary as of the
immediately preceding December 31st. The Annual Incentive Compensation shall be
paid to the Executive at the same time as annual incentive compensation is paid
to other employees of the Company in accordance with the Company’s normal
payroll procedures and shall be conditioned upon the Executive’s continued
employment with the Company through and including the scheduled date of payment
of annual incentive compensation by the Company to its employees generally.

(c) Equity Incentive Awards. The Executive shall also be eligible each calendar
year during the Term for incentive compensation in the form of equity incentive
awards (the “Equity Incentive Awards”), the amount of which shall be between the
Threshold Long Term Incentive Compensation Percentage and the Maximum Long-Term
Incentive Compensation Percentage of the Executive’s Base Salary as of the
immediately preceding December 31st and shall be determined by the Board. The
Equity Incentive Awards shall be based upon the performance of the Company,
determined in accordance with performance criteria established by the Executive
and the Board at the commencement of each calendar year. The performance
criteria for the determination of the Executive’s Equity Incentive Award for the
2007 calendar are as set forth on Exhibit A attached hereto. The Equity
Incentive Award deliverable to the Executive upon the Company attaining the
target financial performance agreed by the Executive and the Board at the
commencement of each calendar year shall be the Target Long-Term Incentive
Compensation Percentage of the Executive’s Base Salary as of the immediately
preceding December 31st. The Equity Incentive Awards shall be delivered to the
Executive at the same time as equity incentive awards are delivered to other
employees of the Company in accordance with the Company’s normal procedures and
shall be conditioned upon the Executive’s continued employment with the Company
through and

 

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including the scheduled date of delivery of equity incentive awards by the
Company to its employees generally. The Equity Incentive Awards shall be in a
form determined by the Board, consistent with equity incentive awards to
employees of the Company generally and shall be issued in accordance with the
terms of the equity incentive plans of the Company, as amended through the date
hereof and hereafter from time to time (the “Plans”). The Executive shall enter
into separate award agreements with respect to such Equity Incentive Awards and
his rights with respect to such Equity Incentive Awards shall be governed by the
Plans and such award agreements. On June 1, 2007, the Company shall grant to the
Executive an Equity Incentive Award determined in accordance with the formula
set forth in Exhibit A, which shall vest in equal quarters on each of June 1,
2008, June 1, 2009, June 1, 2010 and June 1, 2011, subject to the terms and
conditions set forth in the Restricted Share Agreement attached hereto as
Exhibit B.

(d) Housing Expense Reimbursement. The Company shall reimburse the Executive for
expenses relating to the rental and maintenance of the Executive’s residence in
Bermuda which are properly and reasonably incurred by the Executive during the
Term and are reimbursable under the Company’s housing expense reimbursement
policy, as amended from time to time. Prior to such payment the Executive shall
provide to the Company any written substantiation for such expenses requested by
the Company. The maximum amount of rental and maintenance expenses the Company
shall reimburse the Executive pursuant to this Section 4.1(d) shall be $200,000
per 12 month period, which maximum amount shall be prorated if the Executive’s
employment with the Company terminates prior to the scheduled expiration of the
Term.

(e) Travel Reimbursement. During the Term, the Company shall provide the
Executive in connection with business travel (to and from Bermuda and elsewhere
as required) with at least 400 hours of usage of a Learjet 60 or comparable
private aircraft. If a private aircraft is not available for any one or more of
the Executive’s business travels, in lieu thereof the Company shall reimburse
the Executive for his cost of first class travel on a commercial airline during
the Term. In connection therewith, the Executive shall be entitled to
participate during the Term, at the Company’s expense, in an air travel club
selected by the Executive. Prior to such payment the Executive shall provide to
the Company any written substantiation for such expenses requested by the
Company.

(f) Tax Gross-Up. To the extent that the Executive incurs any United States
federal or state ordinary income tax liability on account of the housing expense
reimbursement and travel expense reimbursement specified in Section 4.1(d) and
(e) hereof, the Company shall reimburse the Executive for all such tax liability
incurred and all United States federal and state ordinary income tax liability
incurred as a result of the tax gross-up payments specified pursuant to this
Section 4.1(f).

(g) Tax Preparation Expense Reimbursement. The Company shall reimburse the
Executive for the reasonable cost of the preparation of the Executive’s home
country federal and state income tax returns by KPMG, or an alternate tax
preparation service provider elected by the Executive and approved by the
Company, for those calendar years falling entirely within the Term; provided
that the maximum amount of tax

 

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preparation expense reimbursable by the Company pursuant to this sentence shall
be $2,500 per annum. Prior to such payment the Executive shall provide to the
Company any written substantiation for such expenses requested by the Company.

(h) Benefits. The Executive shall be eligible to participate in such 401(k)
savings plan, life insurance, health insurance, disability insurance and major
medical insurance benefits, and in such other employee benefit plans and
programs for the benefit of the employees and officers of the Company generally,
as may be maintained from time to time during the Term, in each case to the
extent and in the manner available to other employees of the Company, subject to
the terms and provisions of such plan or program.

(i) Vacation. The Executive shall be entitled to 25 paid vacation days per
annum, to be taken in the Executive’s discretion, in a manner consistent with
the Executive’s obligations to the Company under this Agreement. Up to a maximum
of 5 accrued and unused vacation days may be carried over each calendar year.

(j) Indemnification/Liability Insurance. The Company shall indemnify the
Executive as required by the Bye-laws of the Company, and may maintain customary
insurance policies providing for indemnification of the Executive. In addition
to the foregoing, the Executive and the Company agree to enter into the
Indemnification Agreement attached hereto as Exhibit C concurrent with the
execution and delivery of this Agreement.

4.2 Expenses; Other Benefits. During the Term, the Company shall provide the
Executive with the following expense reimbursements and perquisites:

(a) Business Expenses. The Company will reimburse the Executive for reasonable
business-related expenses incurred by the Executive in connection with the
performance of the Executive’s duties hereunder during the Term, subject,
however, to the Company’s policies relating to business-related expenses as in
effect from time to time.

(b) Other Benefits. The Company may also provide for or withdraw other benefits
for the Executive as it determines from time to time during the Term, consistent
with practices governing similarly situated senior executives of the Company.

4.3 Tax Withholding. The Company shall be permitted to deduct from the amounts
payable to the Executive pursuant to this Agreement the amount of taxes that the
Company is required to withhold pursuant to applicable laws, rules and
regulations.

ARTICLE V.

Exclusivity, Etc.

5.1 Exclusivity. The Executive agrees to devote substantially all the
Executive’s full working time, attention and energies during normal business
hours to the performance of the Executive’s duties for the Company; provided
that the Executive may engage in charitable, civic or community activities,
serve on corporate boards or committees, manage personal investments,

 

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and deliver lectures and fulfill speaking engagements, but only if, and to the
extent that, such activities do not interfere with the Executive’s duties
hereunder or violate the terms of any of the covenants contained in Sections
5.2, 5.3, 5.4 or 5.5 hereof.

5.2 Non-Competition; Non-Solicitation.

(a) General. The Executive acknowledges that in the course of the Executive’s
employment with the Company the Executive will become familiar with trade
secrets and other confidential information concerning the Company and its
subsidiaries and that the Executive’s services will be of special, unique and
extraordinary value to the Company and its subsidiaries.

(b) Non-Competition. The Executive agrees that during the Term and the period
from the Termination Date until the 12 month anniversary of the Termination
Date, the Executive shall not in any manner, directly or indirectly, through any
person, firm or corporation, alone or as a member of a partnership or as an
officer, director, stockholder, investor, broker, advisor, employee of or
consultant to any other corporation or enterprise or otherwise, engage or be
engaged, or assist any other person, firm, corporation or enterprise in engaging
or being engaged, in the Business in any geographic area in which the Company or
any of its subsidiaries is then conducting the Business.

(c) Non-solicitation. The Executive further agrees that during the Term and the
period from the Termination Date until the 12 month anniversary of the
Termination Date, the Executive shall not (i) in any manner, directly or
indirectly, induce or attempt to induce any employee of the Company or any of
its divisions, subsidiaries or affiliates to terminate or abandon his or her
employment for any purpose whatsoever or (ii) in connection with the Business,
call on, service, solicit or otherwise do business with any customer of the
Company or any of its divisions, subsidiaries or affiliates.

(d) Exceptions. Nothing in this Section 5.2 shall prohibit the Executive from
being (i) a stockholder in a mutual fund or a diversified investment company or
(ii) an owner of not more than two percent of the outstanding stock of any class
of a corporation, any securities of which are publicly traded, so long as the
Executive has no active participation in the business of such corporation.

5.3 Confidential Information.

(a) General. The Executive agrees that the Executive will not, at any time
during or after the Term, make use of or divulge to any other person, firm or
corporation any Confidential Information which he may have learned in connection
with his employment hereunder.

(b) Exceptions. The Executive’s obligation under this Section 5.3 shall not
apply to any information which (i) is disclosed or used during the Term by the
Executive as required or appropriate in connection with his duties as Chairman,
President and Chief Executive Officer of the Company, (ii) is disclosed as
required by a court of law, by any governmental agency having supervisory
authority over the business of the Company or any of its divisions, subsidiaries
or affiliates or by any administrative or legislative body,

 

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including a committee thereof) with apparent jurisdiction to order the Executive
to divulge, disclose or make accessible such information, (iii) is disclosed to
the Executive’s spouse, attorney and/or his personal tax and financial advisors
as reasonably necessary or appropriate to advance the Executive’s tax, financial
and other personal planning (iv) is known publicly; (v) is in the public domain
or hereafter enters the public domain without the fault of the Executive; (vi)
is known to the Executive prior to his receipt of such information from the
Company or any of its divisions, subsidiaries or affiliates, as evidenced by
written records of the Executive or (vii) is hereafter disclosed to the
Executive by a third party not under an obligation of confidence to the Company
or any of its divisions, subsidiaries or affiliates.

(c) Executive Obligations. The Executive agrees that he shall, immediately after
he gains knowledge of any required disclosure of Confidential Information
pursuant to clause (ii) of subsection (b) above, give the Company written notice
promptly upon obtaining knowledge of the required disclosure of Confidential
Information and, in any event, prior to such required disclosure of Confidential
Information, and use commercially reasonable efforts to cooperate with the
Company (at the Company’s sole expense) in obtaining an adequate protective
order for such Confidential Information. The Executive further agrees to
properly advise any recipient of Confidential Information pursuant to clause
(iii) of subsection (b) above of the obligations of the Executive hereunder, to
obtain the agreement of such recipient to be bound by the terms of this Section
5.3 as if a signatory to this Agreement and to be responsible for any breach by
any such recipient of the terms of this Section 5.3. The Executive further
agrees not to remove from the premises of the Company, or as applicable, the
premises of any of its divisions, subsidiaries or affiliates, except as an
employee of the Company in pursuit of the business of the Company, its
divisions, subsidiaries or affiliates, or except as specifically permitted in
writing by the Board, any document or other object containing or reflecting any
Confidential Information. On or before the Termination Date, the Executive shall
forthwith deliver to the Company all such Confidential Information, including
without limitation all lists of customers, correspondence, accounts, records and
any other documents or property made or held by the Executive or under the
Executive’s control in relation to the business or affairs of the Company or its
subsidiaries or affiliates, and no copy of any such Confidential Information
shall be retained by the Executive.

5.4 Inventions. The Executive hereby assigns to the Company the Executive’s
entire right, title and interest in and to all discoveries and improvements,
patentable or otherwise, trade secrets and ideas, writings and copyrightable
material, which may be conceived by the Executive or developed or acquired by
the Executive during the Term, which may pertain directly or indirectly to the
business of the Company or any of its divisions, subsidiaries or affiliates. The
Executive agrees to disclose fully all such developments to the Company upon its
request, which disclosure shall be made in writing promptly following any such
request. The Executive shall, upon the Company’s request, execute, acknowledge
and deliver to the Company all instruments and do all other acts which are
necessary or desirable to enable the Company or any of its subsidiaries to file
and prosecute applications for, and to acquire, maintain and enforce, all
patents, trademarks and copyrights in all countries.

 

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5.5 Non-Disparagement. Each party hereto acknowledges and agrees that such party
will not defame or publicly criticize the services, business, integrity,
veracity or personal or professional reputation of the other party and, in the
case of the Company, its officers, directors, partners, employees, affiliates or
agents thereof, in either a professional or personal manner, except that the
foregoing shall not limit normal competitive activities; provided that, in the
case of the Executive, such competitive activities are in compliance with the
Executive’s obligations under Section 5.2.

5.6 Remedies. The Executive acknowledges that the Company’s remedy at law for a
breach by him of the provisions of this Article V will be inadequate.
Accordingly, in the event of a breach or threatened breach by the Executive of
any provision of this Article V, the Company shall be entitled to injunctive
relief (without posting a bond or other security) in addition to any other
remedy it may have. If any of the provisions of, or covenants continued in, this
Article V are hereafter construed to be invalid or unenforceable in any
jurisdiction, the same shall not affect the remainder of the provisions or the
enforceability thereof in any jurisdiction, which shall be given full effect,
without regard to the invalidity or unenforceability in such other jurisdiction.
If, at any time of enforcement of this Article V, a court or an arbitrator holds
that the restrictions stated herein are unreasonable and/or unenforceable under
circumstances then existing, the parties hereto agree that the maximum period,
scope or geographical area reasonable and/or enforceable under such
circumstances shall be substituted for the stated period, scope or area and that
the court or arbitrator shall be allowed to revise the restrictions contained
herein to cover the maximum period, scope and area permitted by law provided,
however, that the determination of such court or arbitrator shall not affect the
enforceability of this Article V in any other jurisdiction.. This Agreement
shall not authorize a court or arbitrator to increase or broaden any of the
restrictions in this Article V.

5.7 Blue Pencil. If, at any time, the provisions of this Article V shall be
determined to be invalid or unenforceable under any applicable law, by reason of
being vague or unreasonable as to area, duration or scope of activity, this
Article V shall be considered divisible and shall become and be immediately
amended to only such area, duration and scope of activity as shall be determined
to be reasonable and enforceable by the court or other body having jurisdiction
over the matter. The Executive and the Company agree that this Article V as
amended pursuant to the immediately preceding sentence, shall be valid and
binding as though any invalid or unenforceable provision had not been included
therein.

ARTICLE VI.

Termination

6.1 Company Termination of Employment

(a) Termination for Cause. The Company shall have the right to terminate the
Executive’s employment at any time for Cause by delivery of a Notice of
Termination.

(b) Death. In the event the Executive dies during the Term, the Executive’s
employment with the Company shall automatically terminate, such termination to
be effective on the date of the Executive’s death.

 

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(c) Disability. In the event that the Executive suffers a Disability, the
Company shall have the right to terminate the Executive’s employment by delivery
of a Notice of Termination.

(d) Termination Without Cause. The Company may at any time terminate the
Executive’s employment by delivery of a Notice of Termination for any reason
other than Cause or the Executive’s death or disability.

6.2 Executive Termination of Employment.

(a) Termination without Good Reason. The Executive may terminate his employment
at any time without Good Reason by delivery of a Notice of Termination to the
Company.

(b) Termination with Good Reason. The Executive may terminate his employment for
Good Reason only by delivery of Notice of Termination to the Company within 30
calendar days of the Executive first becoming aware of the circumstances giving
rise to the Executive’s right to terminate his employment for Good Reason.

6.3 Notice of Termination. Any purported termination of the Executive’s
employment (other than termination pursuant to Section 6.1(b) hereof) shall be
communicated by written Notice of Termination to the other party hereto
delivered in accordance with Section 7.3 hereof.

6.4 Effect of Termination.

(a) Termination by Company for Cause or by Executive without Good Reason. In the
event of any termination of the Executive’s employment during the Term (x) by
the Company for Cause or (y) by the Executive without Good Reason, the Company
shall pay to or provide the Executive with the following compensation and
benefits:

(i) Any earned but unpaid Base Salary up to and including the Date of
Termination, payable in accordance with the Company’s customary payroll
procedures;

(ii) Any unreimbursed business expenses incurred by the Executive in the
performance of his duties for the Company prior to the Date of Termination, upon
receipt by the Company of documentation in such form as customarily required by
the Company to report business expenses, payable in accordance with the
Company’s customary business expense reimbursement procedures;

(iii) The Executive’s Base Salary for any vacation days accrued and unused
(determined in accordance with Company policy) by the Executive from the
immediately preceding January 1st until the Date of Termination, payable in
accordance with the Company’s customary payroll procedures;

(iv) Any housing expense reimbursement payable in accordance with Section 4.1(d)
until the earlier of (A) the end of the lease for the Executive’s residence in
Bermuda or (B) the three month anniversary of the Date of

 

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Termination, payable in accordance with the Company’s customary business housing
allowance reimbursement procedures; and

(v) Any other benefits available to employees of the Company generally, through
and including the Date of Termination, payable or deliverable in accordance with
the terms and conditions applicable to such benefits.

(b) Termination as a Result of Death or Disability. In the event of any
termination of the Executive’s employment during the Term as a result of the
Executive’s death or Disability, the Company shall pay to or provide the
Executive (or the Executive’s heirs) with the following compensation and
benefits:

(i) Any earned but unpaid Base Salary up to and including the Date of
Termination, payable in accordance with the Company’s customary payroll
procedures;

(ii) Any earned but unpaid Annual Incentive Compensation for the last completed
calendar year during the Term, which Annual Incentive Compensation shall be
determined (A) in accordance with the Company’s annual incentive plan, (B)
utilizing the Threshold Annual Incentive Compensation Percentage, Maximum Annual
Incentive Compensation Percentage, Target Annual Incentive Compensation
Percentage and performance criteria previously established by the Board for such
completed calendar year in accordance with Section 4.1(b) and (C) by the Board
(1) without the exercise by the Board of any discretionary adjustment to such
Annual Incentive Compensation and (2) with the Board ascribing to any individual
evaluation of the Executive the same result as occurs based upon the Company’s
performance under its annual incentive plan, and which Annual Incentive
Compensation shall be payable within 15 business days of the six month
anniversary of the Date of Termination;

(iii) A cash sum equal to the Target Annual Incentive Compensation Percentage of
the Executive’s Base Salary as of the Date of Termination multiplied by a
fraction (x) the numerator of which is the number of calendar days elapsed in
the calendar year up to and including the Date of Termination and (y) the
denominator of which is 365, payable within 15 business days of the six month
anniversary of the Date of Termination;

(iv) Any unreimbursed business expenses incurred by the Executive in the
performance of his duties for the Company prior to the Date of Termination, upon
receipt by the Company of documentation in such form as customarily required by
the Company to report business expenses, payable in accordance with the
Company’s customary business expense reimbursement procedures;

(v) The Executive’s Base Salary for any vacation days accrued and unused
(determined in accordance with Company policy) by the Executive from the
immediately preceding January 1st until the Date of Termination, payable in
accordance with the Company’s customary payroll procedures;

 

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(vi) Any housing expense reimbursement payable in accordance with Section 4.1(d)
until the earlier of (A) the end of the lease for the Executive’s residence in
Bermuda or (B) the three month anniversary of the Date of Termination, payable
in accordance with the Company’s customary business housing allowance
reimbursement procedures;

(vii) Reimbursement for the reasonable cost of the preparation of the
Executive’s home country federal and state income tax returns by KPMG, or an
alternate tax preparation service provider elected by the Executive and approved
by the Company, for the calendar year during which the Date of Termination
occurred; provided that the maximum amount of tax preparation expense
reimbursable by the Company pursuant hereto shall be $2,500 and the Company
shall have received from the Executive satisfactory written substantiation for
such tax expenses, which reimbursement shall be payable on the later to occur of
the six month anniversary of the Date of Termination or 15 business days after
the submission to the Company of satisfactory written substantiation for such
tax expenses;

(viii) Any proper and reasonable expense reimbursement relating to the
relocation of the Executive’s residence from Bermuda, in the event the Executive
and the Executive’s family relocate their permanent residence from Bermuda
during the 12 months immediately following the Date of Termination, which
relocation expense reimbursement shall be made in a manner agreeable to the
Company and the Executive and subject to receipt by the Company of satisfactory
written substantiation for such relocation expenses, which reimbursement shall
be payable on the later to occur of the six month anniversary of the Date of
Termination or15 business days after the submission to the Company of
satisfactory written substantiation for such relocation expenses; and

(ix) Any other benefits available to employees of the Company generally, through
and including the Date of Termination, payable or deliverable in accordance with
the terms and conditions applicable to such benefits.

(c) Termination by the Company without Cause or by the Executive with Good
Reason other than During a Change in Control Period. In the event of any
termination of the Executive’s employment during the Term (x) by the Company
without Cause or (y) by the Executive with Good Reason, in either case other
than during a Change in Control Period, the Company shall pay to or provide the
Executive with the following compensation and benefits:

(i) Any earned but unpaid Base Salary up to and including the Date of
Termination, payable in accordance with the Company’s customary payroll
procedures;

(ii) Any earned but unpaid Annual Incentive Compensation for the last completed
calendar year during the Term, which Annual Incentive Compensation shall be
determined (A) in accordance with the Company’s annual incentive plan, (B)
utilizing the Threshold Annual Incentive Compensation Percentage,

 

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Maximum Annual Incentive Compensation Percentage, Target Annual Incentive
Compensation Percentage and performance criteria previously established by the
Board for such completed calendar year in accordance with Section 4.1(b) and (C)
by the Board (1) without the exercise by the Board of any discretionary
adjustment to such Annual Incentive Compensation and (2) with the Board
ascribing to any individual evaluation of the Executive the same result as
occurs based upon the Company’s performance under its annual incentive plan, and
which Annual Incentive Compensation shall be payable within 15 business days of
the six month anniversary of the Date of Termination;

(iii) A cash sum equal to the Target Annual Incentive Compensation Percentage of
the Executive’s Base Salary as of the Date of Termination multiplied by a
fraction (x) the numerator of which is the number of calendar days elapsed from
the January 1st immediately preceding the Date of Termination to the Date of
Termination and (y) the denominator of which is 365, payable within 15 business
days of the six month anniversary of the Date of Termination;

(iv) A cash sum equal to the average Annual Incentive Compensation paid by the
Company to the Executive in respect of the three most recent completed calendar
years, payable within 15 business days of the six month anniversary of the Date
of Termination;

(v) A cash sum equal to six months of the Executive’s Base Salary, payable on
the six month anniversary of the Date of Termination and, thereafter, the
continuation of the Executive’s Base Salary, paid in accordance with the
Company’s payroll policy, from the six month anniversary of the Date of
Termination to the twelve month anniversary of the Date of Termination, if any;

(vi) A cash sum equal to the product of the following:

(A) the greater of (I) the unvested Equity Incentive Awards lapsing immediately
following the Date of Termination which, absent such Date of Termination, would
otherwise vest during the 12 month period immediately following the Date of
Termination and (II) 50% of the Equity Incentive Awards lapsing immediately
following the Date of Termination, multiplied by

(B) either (x) the per share closing price on the New York Stock Exchange for
Endurance Specialty Holdings Ltd. ordinary shares on the Date of Termination for
Equity Incentive Awards with no exercise price or (y) the difference between (1)
the per share closing price on the New York Stock Exchange for Endurance
Specialty Holdings Ltd. ordinary shares on the Date of Termination and (2) the
applicable per share exercise price for Equity Incentive Awards with an exercise
price, payable within 15 business days of the six month anniversary of the Date
of Termination.

 

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(vii) The continuation during the 12 months immediately following the date of
Termination of the eligibility of the Executive, his spouse and his dependent
children to participate in the Company’s medical, dental, vision and life
insurance plans in which the Executive, his spouse and his dependent children
participated immediately preceding the Date of Termination; provided, however,
that participation in such medical, dental, vision and life insurance plans
shall be subject to the Executive’s payment of the applicable employee portion
of the monthly premium cost, if any.

(viii) Any unreimbursed business expenses incurred by the Executive in the
performance of his duties for the Company prior to the Date of Termination, upon
receipt by the Company of documentation in such form as customarily required by
the Company to report business expenses, payable in accordance with the
Company’s customary business expense reimbursement procedures;

(ix) The Executive’s Base Salary for any vacation days accrued and unused
(determined in accordance with Company policy) by the Executive from the
immediately preceding January 1st until the Date of Termination, payable in
accordance with the Company’s customary payroll procedures;

(x) Any housing expense reimbursement payable in accordance with Section 4.1(d)
until the earlier of (A) the end of the lease for the Executive’s residence in
Bermuda or (B) the three month anniversary of the Date of Termination, payable
in accordance with the Company’s customary business housing allowance
reimbursement procedures;

(xi) Reimbursement for the reasonable cost of the preparation of the Executive’s
home country federal and state income tax returns by KPMG, or an alternate tax
preparation service provider elected by the Executive and approved by the
Company, for the calendar year during which the Date of Termination occurred;
provided that the maximum amount of tax preparation expense reimbursable by the
Company pursuant hereto shall be $2,500 and the Company shall have received from
the Executive satisfactory written substantiation for such tax expenses, which
reimbursement shall be payable on the later to occur of the six month
anniversary of the Date of Termination or 15 business days after the submission
to the Company of satisfactory written substantiation for such tax expenses;

(xii) Any proper and reasonable expense reimbursement relating to the relocation
of the Executive’s residence from Bermuda, in the event the Executive and the
Executive’s family relocate their permanent residence from Bermuda during the 12
months immediately following the Date of Termination, which relocation expense
reimbursement shall be made in a manner agreeable to the Company and the
Executive and subject to receipt by the Company of satisfactory written
substantiation for such relocation expenses, which reimbursement shall be
payable on the later to occur of the six month anniversary of the Date of
Termination or 15 business days after the submission to the Company of
satisfactory written substantiation for such relocation expenses; and

 

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(xiii) Any other benefits available to employees of the Company generally,
through and including the Date of Termination, payable or deliverable in
accordance with the terms and conditions applicable to such benefits.

(d) Termination by the Company without Cause or by the Executive with Good
Reason During a Change in Control Period. In the event of any termination of the
Executive’s employment during the Term (x) by the Company without Cause or (y)
by the Executive with Good Reason, in each case during a Change in Control
Period, the Company shall pay to or provide the Executive with the following
compensation and benefits:

(i) Any earned but unpaid Base Salary up to and including the Date of
Termination, payable in accordance with the Company’s customary payroll
procedures;

(ii) Any earned but unpaid Annual Incentive Compensation for the last completed
calendar year during the Term, which Annual Incentive Compensation shall be
determined (A) in accordance with the Company’s annual incentive plan, (B)
utilizing the Threshold Annual Incentive Compensation Percentage, Maximum Annual
Incentive Compensation Percentage, Target Annual Incentive Compensation
Percentage and performance criteria previously established by the Board for such
completed calendar year in accordance with Section 4.1(b) and (C) by the Board
(1) without the exercise by the Board of any discretionary adjustment to such
Annual Incentive Compensation and (2) with the Board ascribing to any individual
evaluation of the Executive the same result as occurs based upon the Company’s
performance under its annual incentive plan, and which Annual Incentive
Compensation shall be payable within 15 business days of the six month
anniversary of the Date of Termination;

(iii) A cash sum equal to the Target Annual Incentive Compensation Percentage of
the Executive’s Base Salary as of the Date of Termination multiplied by a
fraction (x) the numerator of which is the number of calendar days elapsed in
the calendar year up to and including the Date of Termination and (y) the
denominator of which is 365, payable within 15 business days of the six month
anniversary of the Date of Termination;

(iv) A cash sum equal to (A) two times the Executive’s annual Base Salary as of
the Date of Termination plus (B) two times the average Annual Incentive
Compensation paid by the Company to the Executive in respect of the three most
recent completed calendar years, payable within 15 business days of the six
month anniversary of the Date of Termination;

(v) A cash sum equal to (A) the product of the unvested Equity Incentive Awards
lapsing immediately following the Date of Termination multiplied by (B) either
(x) the per share closing price on the New York Stock Exchange for Endurance
Specialty Holdings Ltd. ordinary shares on the Date of Termination for Equity
Incentive Awards with no exercise price or (y) the difference between

 

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(1) the per share closing price on the New York Stock Exchange for Endurance
Specialty Holdings Ltd. ordinary shares on the Date of Termination and (2) the
applicable per share exercise price for Equity Incentive Awards with an exercise
price, payable within 15 business days of the six month anniversary of the Date
of Termination;

(vi) The continuation during the period from the Date of Termination until the
24 month anniversary of the Date of Termination, of the eligibility of the
Executive, his spouse and his dependent children to participate in the Company’s
medical, dental, vision and life insurance plans in which the Executive, his
spouse and his dependent children participated immediately preceding the Date of
Termination; provided, however, that participation in such medical, dental,
vision and life insurance plans shall be subject to the Executive’s payment of
the applicable employee portion of the monthly premium cost, if any;

(vii) Any unreimbursed business expenses incurred by the Executive in the
performance of his duties for the Company prior to the Date of Termination, upon
receipt by the Company of documentation in such form as customarily required by
the Company to report business expenses, payable in accordance with the
Company’s customary business expense reimbursement procedures;

(viii) The Executive’s Base Salary for any vacation days accrued and unused
(determined in accordance with Company policy) by the Executive from the
immediately preceding January 1st until the Date of Termination, payable in
accordance with the Company’s customary payroll procedures;

(ix) Any housing expense reimbursement payable in accordance with Section 4.1(d)
until the earlier of (A) the end of the lease for the Executive’s residence in
Bermuda or (B) the three month anniversary of the Date of Termination, payable
in accordance with the Company’s customary business housing allowance
reimbursement procedures;

(x) Reimbursement for the reasonable cost of the preparation of the Executive’s
home country federal and state income tax returns by KPMG, or an alternate tax
preparation service provider elected by the Executive and approved by the
Company, for the calendar year during which the Date of Termination occurred;
provided that the maximum amount of tax preparation expense reimbursable by the
Company pursuant hereto shall be $2,500 per annum and the Company shall have
received from the Executive satisfactory written substantiation for such tax
expenses, which reimbursement shall be payable on the later to occur of the six
month anniversary of the Date of Termination or 15 business days after the
submission to the Company of satisfactory written substantiation for such tax
expenses;

(xi) Any proper and reasonable expense reimbursement relating to the relocation
of the Executive’s residence from Bermuda, in the event the Executive and the
Executive’s family relocate their permanent residence from Bermuda during the 12
months immediately following the Date of Termination, which

 

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relocation expense reimbursement shall be made in a manner agreeable to the
Company and the Executive and subject to receipt by the Company of satisfactory
written substantiation for such relocation expenses, which reimbursement shall
be payable on the later to occur of the six month anniversary of the Date of
Termination or15 business days after the submission to the Company of
satisfactory written substantiation for such relocation expenses; and

(xii) Any other benefits available to employees of the Company generally,
through and including the Date of Termination, payable or deliverable in
accordance with the terms and conditions applicable to such benefits.

6.5 Section 280G Gross Up.

(a) Gross-Up Obligation. In the event that any payment, award, benefit or
distribution (or any acceleration of any payment, award, benefit or
distribution) by the Company or any entity which effectuates a change in
ownership or effective control of the Company or a change in the ownership of a
substantial portion of the assets of the Company, in either case, within the
meaning of Section 280G(b)(2)(A)(i) of the Code and the regulations promulgated
thereunder (a “Change in Ownership”), to or for the benefit of the Executive
(the “Payments”) is subject to the excise tax imposed by Section 4999 of the
Code, or any interest or penalties are incurred by the Executive with respect to
such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the “Excise Tax”), then, subject to
the limitation in Section 6.5(b), the Company shall pay to the Executive an
additional payment (a “Gross-Up Payment”) in an amount such that after payment
by the Executive of all taxes (including any Excise Tax, but excluding any taxes
or penalties under Section 409A of the Code) imposed upon the Gross-Up Payment,
Executive retains an amount of the Gross-Up Payment equal to the sum of (x) the
Excise Tax imposed upon the Payments and (y) the product of any deductions
disallowed because of the inclusion of the Gross-Up Payment in the Executive’s
adjusted gross income and the highest applicable marginal rate of taxation for
the calendar year in which the Gross-Up Payment is to be made. For purposes of
determining the amount of the Gross-Up Payment, Executive shall be deemed to (A)
pay federal income taxes at the highest marginal rate of taxation for the
calendar year in which the Gross-Up Payment is to be made, (B) pay applicable
state and local income taxes at the highest marginal rate of taxation for the
calendar year in which the Gross-Up Payment is to be made, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such
state and local taxes and (C) have otherwise allowable deductions for federal
income tax purposes at least equal to those which could be disallowed because of
the inclusion of the Gross-Up Payment in Executive’s adjusted gross income.

(b) Limitation on Gross-Up Obligation. In the event the Executive is entitled to
a Gross-Up Payment, but that the Payments would not be subject to the Excise Tax
if the Payments were reduced by an amount that is less than 10% of the portion
of the Payments that would be treated as “parachute payments” under Section 280G
of the Code, then the amounts payable to the Executive under this Agreement
shall be reduced (but not below zero) to the maximum amount that could be paid
to the Executive without giving rise to the Excise Tax (the “Safe Harbor Cap”),
and no Gross-Up Payment shall be

 

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made to the Executive. The reduction of the amounts payable hereunder, if
applicable, shall be made by reducing first the payments under Section
6.4(d)(iv), unless an alternative method of reduction is elected by the
Executive. For purposes of reducing the Payments to the Safe Harbor Cap, only
amounts payable under this Agreement (and no other Payments) shall be reduced.
If the reduction of the amounts payable hereunder would not result in a
reduction of the Payments to the Safe Harbor Cap, no amounts payable under this
Agreement shall be reduced pursuant to this provision.

(c) Method of Determining Gross-Up. All determinations required to be made under
this Section 6.5, including whether and when a Gross-Up Payment is required, the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determinations, shall be made by KPMG, or such other public accounting
firm as shall be mutually agreed by the Company and the Executive (the
“Accounting Firm”), which shall provide detailed supporting calculations both to
the Company and the Executive within 15 business days of receipt of notice from
the Company or Executive that there has been a Payment, or such earlier time as
is requested by the Company. All fees and expenses of the Accounting Firm shall
be borne solely by the Company in connection with the performance of the
services hereunder. The Executive shall cooperate with the Company and the
Accounting Firm in connection with the determination of the Gross-Up Payment.
The Gross-Up Payment under this Section 6.5 with respect to any Payments made to
the Executive shall be made no later than the earlier of (i) 30 calendar days
following the final determination of the amount of the Gross-Up Payment by the
Accounting Firm or (ii) the end of the taxable year following the taxable year
during which the Excise Tax is paid by the Executive. The final determination of
the amount of the Gross-Up Payment by the Accounting Firm shall be binding upon
the Company and the Executive. The parties hereto agree to cooperate with each
other and the Accounting Firm in connection with any contest or disputes with
the Internal Revenue Service in connection with the Excise Tax.

(d) Underpayment or Overpayment of Gross-Up. In the event that the calculations
prepared by the Accounting Firm result in the Gross-Up Payment made by the
Company on behalf of the Executive being in excess of the amount (“Overpayment”)
or insufficient to fulfill the Company’s obligations under Section 6.5(a),
subject to the limitation set forth in Section 6.5(b) (“Underpayment”), the
Accounting Firm, upon receipt of written notice from either the Executive or the
Company, with a copy to the other party to this Agreement, shall determine the
amount of the Underpayment or Overpayment, if any. In the event the Accounting
Firm determines there is an Underpayment, the Company shall promptly pay to the
Executive the amount of such Underpayment, which payment shall be made by the
Company no later than the end of the taxable year following the taxable year
during which the Excise Tax is paid by the Executive. In the event there is an
Overpayment, the Executive shall promptly pay to the Company the amount of the
Overpayment; provided, that in the event the Executive has previously paid the
applicable Excise Tax to the Internal Revenue Service, the Executive shall not
be obligated to pay to the Company the amount of the Overpayment until the
Executive has received the applicable refund from the Internal Revenue Service.
All fees and expenses of the Accounting Firm in calculating the Underpayment or
Overpayment shall be borne solely by the Company. The Executive shall cooperate
with the Company

 

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and the Accounting Firm in connection with the determination of the Underpayment
or Overpayment.

6.6 Executive Release. The execution by the Executive of the Executive Release
attached hereto as Exhibit D shall be a condition precedent to the delivery to
the Executive by the Company of any payment or benefit under Section 6.4(c) or
Section 6.4(d). In addition, the Executive Agrees that, to the extent
applicable, a portion of the payments made by the Company to the Executive under
Section 6.4(c) or Section 6.4(d) shall be deemed severance pay in lieu of notice
under the Bermuda Employment Act 2000 and that the Company shall have no other
liability to the Executive thereunder.

6.7 Resignations. The resignation by the Executive from all director and officer
positions held by the Executive with the Company and any subsidiary or affiliate
of the Company shall be a condition precedent to the delivery to the Executive
by the Company of any payment or benefit under Section 6.4 (other than in
connection with a termination of the Executive’s employment wit the Company as a
result of the Executive’s death).

6.8 Compliance with Restrictive Covenants. The Executive’s continued compliance
with the restrictive covenants set forth in Sections 5.2, 5.3, 5.4 and 5.5 shall
be a condition precedent to the receipt by the Executive of the payments and
benefits set forth in Sections 6.4(b)(iii), 6.4(b)(vii), 6.4(b)(viii),
6.4(c)(iii), 6.4(c)(iv), 6.4(c)(v), 6.4(c)(vi), 6.4(c)(vii), 6.4(c)(xi),
6.4(c)(xii), 6.4(d)(iii), 6.4(d)(iv), 6.4(d)(v), 6.4(d)(vi), 6.4(d)(x) and
6.4(d)(xi) on or after the Date of Termination and, in the event the Executive
breaches one or more of the covenants set forth in Sections 5.2, 5.3, 5.4 or
5.5, the Company shall be entitled to recover from the Executive the value of
any payment or benefit made or provided by the Company to the Executive pursuant
to the above-referenced Sections of this Agreement on and after the first date
of such breach.

6.9 Equity Incentive Awards. The Executive’s rights with respect to his Equity
Incentive Awards upon any termination of his employment with the Company shall
be governed exclusively by the terms and conditions of the Plans and any award
agreements executed by the Executive in connection with such Equity Incentive
Awards. For the avoidance of doubt, under no circumstances shall the Executive
be entitled to any cash payment under Section 6.4(c)(vi) or Section 6.4(d)(v)
with respect to any Equity Incentive Award which is either exercisable or
convertible in accordance with its terms at any time after the Date of
Termination.

6.10 Other Compensation and Benefits. Except as specified in Section 6.4, the
Executive shall not be entitled to any compensation, benefits or other payments
or distributions, and references in the Executive Release to the release of
claims against the Company shall be deemed to also include reference to the
release of claims against all compensation and benefit plans and arrangements
established or maintained by the Company and its subsidiaries and affiliates.

6.11 Obligations of the Executive. The Executive shall have no obligations to
the Company under this Agreement after the Date of Termination, other than as
provided in Sections 6.5 and 6.12, and except and to the extent Sections 5.2,
5.3, 5.4 or 5.5 shall apply.

6.12 Post-Termination Cooperation. Following any termination of the Executive’s
employment for any reason, the Executive shall reasonably cooperate with the
Company to assist

 

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with existing or future investigations, proceedings, litigations or examinations
involving the Company or any of its divisions, subsidiaries or affiliates. For
each business day, or part thereof, that the Executive provides assistance as
contemplated under this Section 6.12, the Company shall pay the Executive an
amount equal to (i) the Executive’s annual Base Salary as in effect on the date
of the Executive’s termination of employment, divided by (ii) 200. In addition,
upon presentment of satisfactory written documentation, the Company will
reimburse the Executive for reasonable out-of-pocket travel, lodging and other
incidental expenses he incurs in providing such assistance. If requested by the
Company, the Executive shall make reasonable good faith efforts to travel to
such locations as the Company may reasonably request.

ARTICLE VII.

Miscellaneous

7.1 Life Insurance. The Executive agrees that the Company or any of its
divisions, subsidiaries or affiliates may apply for and secure and own insurance
on the Executive’s life (in amounts determined by the Company) for the benefit
of the Company. The Executive agrees to cooperate fully in the application for
and securing of such insurance, including the submission by the Executive to
such physical and other examinations, and the answering of such questions and
furnishing of such information by the Executive, as may be required by the
carrier(s) of such insurance. Notwithstanding anything to the contrary contained
herein, neither the Company nor any of its divisions, subsidiaries or affiliates
shall be required to obtain any insurance for or on behalf of the Executive.

7.2 Benefit of Agreement; Assignment; Beneficiary. This Agreement shall inure to
the benefit of and be binding upon the Company and its successors and assigns,
including, without limitation, any corporation or person which may acquire all
or substantially all of the Company’s assets or business, or with or into which
the Company may be consolidated or merged. This Agreement shall also inure to
the benefit of, and be enforceable by, the Executive and his personal or legal
representatives, executors, administrators, successors, heirs, distributes,
devisees and legatees. The Company shall require any successor (whether direct
or indirect, by operation of law, purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.

7.3 Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed given when (a) delivered
personally or by overnight courier to the following address of the other party
hereto (or such other address for such party as shall be specified by notice
given pursuant to this Section 7.3) or (b) sent by facsimile to the following
facsimile number of the other party hereto (or such other facsimile number for
such party as shall be specified by notice given pursuant to this Section 7.3),
with the confirmatory copy delivered by overnight courier to the address of such
party pursuant to this Section 7.3:

If to the Company, to:

Endurance Specialty Holdings Ltd.

Wellesley House

90 Pitts Bay Road

Pembroke HM 08, Bermuda

Attention: General Counsel

Facsimile: (441) 278-0401

 

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If to the Executive, to the residence address or residence facsimile number of
the Executive set forth in the records of the Company.

7.4 Entire Agreement: This Agreement contains the entire agreement of the
parties hereto with respect to the terms and conditions of the Executive’s
employment and supersedes any and all prior agreements and understandings,
whether written or oral, between the parties hereto with respect to compensation
due for services rendered hereunder.

7.5 Amendment and Waiver. This Agreement may not be changed or modified except
by an instrument in writing signed by both of the parties hereto. The waiver by
either party of a breach of any provision of this Agreement shall not operate or
be construed as a continuing waiver or as a consent to or waiver of any
subsequent breach hereof.

7.6 Headings. The Article and Section headings herein are for convenience of
reference only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof.

7.7 Arbitration. Except as otherwise set forth in Section 5.6 hereof, any
dispute or controversy between the Company and the Executive, whether arising
out of or relating to this Agreement, the breach of this Agreement, or
otherwise, shall be settled by arbitration in Hamilton, Bermuda administered in
accordance with the Arbitration Act 1986, and judgment on the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof. The
arbitrator shall have the authority to award any remedy or relief that a court
of competent jurisdiction could order or grant, including, without limitation,
the issuance of an injunction. However, either party may, without inconsistency
with this arbitration provision, apply to any court having jurisdiction over
such dispute or controversy and seek interim provisional, injunctive or other
equitable relief until the arbitration award is rendered or the controversy is
otherwise resolved. Except as necessary in court proceedings to enforce this
arbitration provision or an award rendered hereunder, or to obtain interim
relief, neither a party nor an arbitrator may disclose the existence, content or
results of any arbitration hereunder without the prior written consent of the
Company and the Executive. The Executive shall have no right to enforce any of
his rights hereunder by seeking or obtaining injunctive or other equitable
relief and acknowledges that damages are an adequate remedy for any breach by
the Company of this Agreement.

7.8 Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the internal laws of Bermuda, without regard to
principles of conflict of laws.

7.9 No Mitigation; No Offset. The Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking (and, without limiting the generality of this sentence, no payment
otherwise required under this Agreement shall be reduced on account of) other
employment or otherwise, and payments under this

 

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Agreement shall not be subject to offset in respect of any claims which the
Company may have against the Executive.

7.10 Attorneys’ Fees. Each party to this Agreement will bear its own expenses in
connection with any dispute or legal proceeding between the parties arising out
of the subject matter of this Agreement, including any proceeding to enforce any
right or provision under this Agreement; provided, that in the event the
Executive prevails on any material claim raised in such dispute or legal
proceeding, the Company shall reimburse the Executive for his reasonable
out-of-pocket legal fees and expenses incurred in connection with such dispute
or legal proceeding.

7.11 Compliance with Section 409A. This Agreement is intended to comply with
Section 409A of the Code and shall be construed and interpreted in accordance
with such intent. To the extent that the delivery of any cash or benefits to the
Executive under this Agreement, or the payment, settlement or deferral thereof,
is subject to Section 409A of the Code, such cash or benefits shall be paid,
settled or deferred in a manner that will comply with Section 409A of the Code,
including regulations or other guidance issued with respect thereto, except as
otherwise agreed by the Company and the Executive. In the event that the
Executive becomes subject to any additional tax under Section 409A(a)(1)(B) of
the Code as a direct result of unilateral action taken by the Company without
the prior approval of the Executive, the Company shall indemnify and hold the
Executive harmless against any such additional tax.

7.12 Termination; Survivorship. This Agreement shall terminate upon termination
of the Executive’s employment, except that the respective rights and obligations
of the parties under this Agreement as set forth herein shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.

7.13 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under applicable law or rule in any jurisdiction,
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision of this Agreement or the
validity, legality or enforceability of such provision in any other
jurisdiction, but this Agreement shall be reformed, construed and enforced in
such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

7.14 Other Agreements. The Executive represents and warrants to the Company that
to the best of his knowledge, neither the execution and delivery of this
Agreement nor the performance of his duties hereunder violates or will violate
the provisions of any other agreement to which he is a party or by which he is
bound.

7.15 Subsidiaries, etc.

(a) Company Obligations. The obligations of the Company under this Agreement may
be satisfied by any subsidiary or affiliate of the Company for which the
Executive serves as an employee under this Agreement, to the extent such
obligations relate to the Executive’s employment by such subsidiary or
affiliate.

 

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(b) Company Rights The rights of the Company under this Agreement may be
enforced by any Subsidiary or affiliate of the Company for which the Executive
serves as an employee under this Agreement, to the extent such rights relate to
the Executive’s employment by such subsidiary or affiliate.

7.16 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

 

 

ENDURANCE SPECIALTY HOLDINGS LTD.

 

By: 

/s/ John V. Del Col

 

 

Name: 

     John V. Del Col

 

 

Title:

     General Counsel & Secretary

               /s/ Kenneth J. LeStrange             Kenneth J. LeStrange

 

 

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