EXHIBIT 10.4
 
 CONFIDENTIAL
  
  th
 1.
    
    Separation of Employment. You acknowledge that your employment with the
Company will terminate effective as of November 1, 2010 (the Separation Date). You hereby
resign from all positions as an officer and director of the Company, Primus Guaranty, Ltd.
(Primus Guaranty) and their subsidiaries and affiliates as of the Separation Date. You
acknowledge that from and after the Separation Date, you shall have no authority with
respect to the Company and its subsidiaries and affiliates and you shall not be, and shall
not represent yourself as, an officer, employee or director of the Company or its
subsidiaries and affiliates. By no later than the Separation Date, the Company will
provide you with your final paycheck, which will include all salary owed to you for work
performed through the Separation Date for the Company and its subsidiaries and affiliates.
You confirm that you have no accrued, but unused vacation time.




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2.
    
    Payments and Benefits. In exchange for the mutual covenants set forth in this
Agreement, and provided you sign, return and do not revoke this Agreement, including the
release of claims contained herein, the Company agrees to provide you with the following:
 a.
    
    A lump sum cash payment of $500,000, in lieu of your 2010 annual bonus,
which shall be paid within 21 days after the Separation Date.
 b.
    
    A lump sum cash payment of $750,000, in lieu of the 2011 equity awards
that were to be valued at $1.6 million and granted to you under the employment
letter agreement between you and the Company as amended and restated on June 13,
2008 (the Employment Agreement). The $750,000 lump sum payment shall be paid
within 21 days after the Separation Date.
 c.
    
    A cash payment in the aggregate amount of $250,000, which shall be paid
as additional consideration for the covenants described in Section 6 of this
Agreement. This payment will be made in equal payroll installments over the
12-month period following the Separation Date; provided, however, that any amounts
that would otherwise be payable during the six-month period immediately following
the Separation Date shall be postponed and paid to you on the first business day
after the date that is six months after the Separation Date.
 d.
    
    Your outstanding stock options, restricted stock units, performance
 shares and deferred shares shall be subject to vesting and payment as described in
Section 3 below.
 e.
    
    You (and your dependents) will have the right to elect to continue your
medical and dental insurance under the Companys benefit plan pursuant to the
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (COBRA). In the event you elect to continue your coverage under the
Companys medical and dental plans and pay the applicable COBRA premiums, the
Company shall reimburse you monthly for your COBRA premiums paid for such coverage
each month for the period beginning on the Separation Date and ending on May 1,
2011. You (and your dependents) will receive a COBRA election packet under
separate cover that sets forth the details of the continuation coverage available
under COBRA. Except as provided herein, your active participation in the Companys
employee benefit plans shall cease effective as of the Separation Date.
 f.
    
    You acknowledge and agree that the payments provided in this Agreement
shall be in full settlement and satisfaction of the amounts payable to you under
the Employment Agreement, and are in addition to amounts otherwise due or owing to
you by the Company. You acknowledge and agree that the payments under this
Agreement are not intended to, and shall not constitute, a severance plan, and
shall confer no benefit on anyone other than the parties hereto. You further
acknowledge that except for the specific consideration set forth in this Agreement,
you are not and shall not in the future be entitled to, and you are not owed, any
other compensation including, without limitation, wages, bonuses, vacation pay,
holiday pay or any other form of compensation benefit. You further acknowledge
that the payments provided in this Agreement exceed any payment, benefit, or other
thing of value to which you might otherwise be entitled under any policy,
plan or procedure of the Company and/or any agreement between you and the Company;
and are just and sufficient consideration for the waivers, releases and commitments
set forth herein; and no promise or inducement has been offered to you, except as
expressly set forth herein, and you are not relying upon any such promise or
inducement in entering into this Agreement.
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3.
    
    Equity Awards. In exchange for the mutual covenants set forth in this
Agreement, and provided you sign, return and do not revoke this Agreement, including the
release of claims contained herein, the Company confirms and agrees as follows regarding
your outstanding equity awards:
 a.
    
    Restricted Stock Units.Your outstanding restricted stock units with
respect to 822,395 Primus Guaranty shares (RSUs) shall become fully vested as of
the Separation Date and shall be paid in Primus Guaranty shares within 21 days
after the Separation Date.
 b.
    
    Options.Your outstanding options as listed on Exhibit A to this
Agreement (Options) shall become fully vested as of the Separation Date. Your
vested Options shall remain exercisable until the first to occur of (i) one year
after the Separation Date; or (ii) the expiration of the maximum term of the
Options under the applicable grant agreement. The Options shall remain subject to
the terms and conditions of the Primus Guaranty, Ltd. Incentive Compensation Plan
(the Incentive Compensation Plan) and the applicable grant agreements.
 c.
    
    Performance Shares.Your outstanding performance shares with respect
to 161,128 Primus Guaranty shares (Performance Shares) shall remain outstanding
and will be subject to vesting as follows:
  
    
    80,564 Performance Shares shall vest if a price of $5.50 is achieved;
and an additional
 
    
    80,564 Performance Shares shall vest if a price of $6.50 is achieved.
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(i)
    
    The unvested Performance Shares shall vest in the event that a
change in control of Primus Guaranty, as defined in the Incentive Compensation
Plan (Change in Control), occurs and, on or after the date of the Change in
Control, Primus Guaranty shares cease to be traded on all public securities
exchanges for a period that is, at the time, long-term and indefinite;
 (ii)
    
    The unvested Performance Shares shall be forfeited immediately
if you materially breach any of the terms and conditions of Section 9, 10 or 11
of the Employment Agreement or Section 6 of this Agreement and you do not cure
such breach after being given a reasonable opportunity to cure;
 (iii)
    
    The unvested Performance Shares shall be forfeited if they do
not vest according to this Agreement on or before January 28, 2013; and
 (iv)
    
    The terms of this Agreement shall replace and supersede any and
all prior terms of grant of the Performance Shares.
  d.
    
    Deferred Shares.Your deferred restricted share units with respect to
390,658 Primus Guaranty shares (Deferred Shares) shall be paid to you in Primus
Guaranty shares within five business days after the date that is six months after
the Separation Date. Payment of your Deferred Shares shall be made pursuant to the
terms of the Primus Restricted Share Unit Deferral Plan.
 4.
    
    Cooperation. You agree that through May 1, 2011, upon reasonable request by
the Company or the Releasees, you shall cooperate fully with the Company and the Releasees
(as defined in Section 7 below) in connection with any matter or event relating to your
employment or events that occurred during your employment with the Company and its
predecessors, including, without limitation, in the defense or prosecution of any claims or
actions now in existence or which may be brought or threatened in the future against or on
behalf of the Company and the Releasees, including any claims or actions against their
affiliates and their respective members, shareholders, directors, officers and employees
and including any transitional matters related to the transition of your role and
responsibilities as a director and officer of the Company and Primus Guaranty to another
individual. Your cooperation in connection with such matters, actions and claims shall
include, without limitation, being available, upon reasonable notice, to meet with the
Company and the Releasees regarding matters in which you have been involved, and any
contract matters or audits; to prepare for, attend and participate in any proceeding
(including, without limitation, depositions, consultation, discovery or trial); to provide affidavits; to
assist with any audit, inspection, proceeding or another inquiry; and to act as a
witness in connection with any litigation or other legal proceeding affecting the
Company and the Releasees. You further agree that should you be contacted (directly or
indirectly) by any person or entity (for example, by any party representing an
individual or entity) adverse to the Company and the Releasees, you shall, to the extent
permitted by law, promptly notify the General Counsel of Primus Guaranty. You shall be
reimbursed for any reasonable costs and expenses incurred in connection with providing
such cooperation under this section.
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5.
    
    Additional Covenants. You expressly acknowledge and agree to the following:
 a.
    
    You will continue to be subject to the Return of Property, Proprietary
Information, Innovations, Nondisparagement and Enforcement provisions contained in
Sections 9, 10, 11, 14 and 15 of your Employment Agreement, respectively;
 b.
    
    Other then as specifically provided in Section 3(c) of this Agreement,
you shall receive no additional compensation or benefits in the event of a change
in control of the Company, Primus Guaranty or any of their subsidiaries or
affiliates;
 c.
    
    Nothing in this Agreement shall prohibit or restrict you, the Company
and the Releasees, or their respective attorneys from: (i) making any disclosure
of relevant and necessary information or documents in any action, investigation, or
proceeding relating to this Agreement, or as required by law or legal process; or
(ii) participating, cooperating, or testifying in any action, investigation, or
proceeding with, or providing information to any self-regulatory organization, any
governmental agency or legislative body, including but not limited to the Equal
Employment Opportunity Commission (EEOC), or the Companys Legal Department,
and/or pursuant to the Sarbanes-Oxley Act; provided that, to the
extent permitted by law, upon receipt of any subpoena, court order or other legal
process compelling the disclosure of any such information or documents, the
disclosing party gives prompt written notice to the other party so as to permit
such other party to protect such partys interests in confidentiality to the
fullest extent possible. You acknowledge and agree, however, that pursuant to
Section 7, you are waiving any right to recover monetary damages or any other form
of personal relief in connection with any such action, investigation or proceeding.
To the extent you receive any personal or monetary relief in connection with any
such charge, action, investigation or proceeding, the Company will be entitled to
an offset for the payments made in connection with Section 2 and Section 3 of this
Agreement; and
 d.
    
    The material breach of any of the terms and conditions of Section 9, 10
or 11 of the Employment Agreement or Section 6 of this Agreement, if you fail to
cure such breach after being given a reasonable opportunity to cure, shall
constitute a
material breach of this Agreement and shall relieve the Company of any further
obligations hereunder.
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6.
    
    Business Relationships. You acknowledge that the relationships of the Company,
Primus Guaranty and their subsidiaries and affiliates with their employees, customers and
vendors are valuable business assets. You agree that, during the one-year period following
the Separation Date (the Restricted Period), you will not directly or indirectly (for
yourself or for any third party) divert or attempt to divert from the Company, Primus
Guaranty or their subsidiaries and affiliates, any business, employee, customer or vendor,
through solicitation or otherwise.
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7.
    
    Release of Claims. In return for the payments and benefits provided under this
Agreement, and for other good and valuable consideration that you would not otherwise be
entitled to, you hereby irrevocably and unconditionally release, remise, waive and forever
discharge the Company and the Releasees (as defined below) from any and all agreements,
promises, liabilities, claims, demands, rights and entitlements of any kind, at law or in
equity, whether known or unknown, suspected or unsuspected, asserted or unasserted, fixed
or contingent, apparent or concealed, to the maximum extent permitted by law (Claims),
which you, your heirs, executors, administrators, legal representatives, successors or
assigns ever had, now have or hereafter can, shall or may have, against the Company and the
Releases, based upon or arising from any set of facts, whether known or unknown to you, at
any time on or prior to the date you execute this Agreement, including, but not in any way
limited to, any and all matters arising out of, occurring or relating to your employment
and/or termination thereof with the Company, other than those relating to your enforcement
of the terms of this Agreement. This Release specifically includes, without limitation,
any and all rights and Claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C. §
2000(e); the Civil Rights Acts of 1866, 1871 and 1991; the Americans with Disabilities Act,
42 U.S.C. § 1201, et seq.; the Employee Retirement Income Security Act of
1974 (ERISA) (including but not limited to claims for breach of fiduciary duty under
ERISA); the Rehabilitation Act of 1973; the Worker Adjustment and Retraining Notification
Act, 42 U.S.C. § 1981; the Family and Medical Leave Act of 1993; the Equal Pay Act of 1963;
the Age Discrimination in Employment Act, (29 U.S.C. § 621, et seq.)
(ADEA); the Older Workers Benefits Protection Act; the Corporate and Criminal Fraud
Accountability Act of 2002, 18 U.S.C. § 1514A, also known as the Sarbanes-Oxley Act; the
Genetic Information Nondiscrimination Act of 2008; the New York State Human Rights Law; the
New York City Human Rights Law, and all amendments to the foregoing, and any and all other
federal, state and/or local statutes, ordinances, regulations, common laws or
constitutional provisions. For purposes of this Agreement, the term the Company and the
Releasees means and includes the Company, Primus Guaranty, their past, present and future
direct or indirect subsidiaries, divisions, insurers, direct or indirect corporate parents,
affiliates, their past, present and future predecessors, successors and assigns, and their
current, former and future partners, members, managers, officers, directors, employees,
shareholders, representatives, agents, and attorneys, in their official and/or individual
capacities, and all other related individuals and entities, jointly and individually, and
this Release shall inure to the benefit of and shall be binding and enforceable by all such
entities and individuals.
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8.
    
    Director and Officer Insurance. The Company agrees to continue to maintain
directors and officers liability insurance covering you, on the same basis and terms as
the Company provides generally for its active employees and directors, if such insurance is
available under commercially reasonable terms, until such time as lawsuits against you with
respect to your employment with the Company are no longer permitted by law, but not beyond
six years after the Separation Date.
 9.
    
    Continued Use of Office Space and Administrative Assistant. You may continue
to use your office in the Companys New York City office at 360 Madison Avenue, 23rd Floor,
New York, NY 10017 through December 31, 2010. During this time, the Company will continue
to make available to you the reasonable use of a telephone and internet connectivity, as
well as appropriate means of access necessary to gain entrance to the office. You agree to
use your personal email address and not the Companys email address after the Separation
Date, although you may use the Companys email address to receive (but not send) email on a
transition basis and the Company will provide you a reasonable period for transition to a
new computer and email address. You agree that you will not hold yourself out as an
employee or director of the Company. Through December 31, 2010, you may continue to
receive assistance from your current administrative assistant in the same capacity as
before your Separation Date. You agree to indemnify and hold harmless the Company and the
Releasees from any liability resulting from your use of the office space and the
administrative assistance after the Separation Date. On or before December 31, 2010, you
shall return to the Company all property that was provided to you pursuant to this Section
9.
 10.
    
    Joint Announcement. You and the Company shall agree on a joint announcement
mutually acceptable to you and the Company regarding your termination of employment.
 11.
    
    Non-Admission. You understand and agree that this Agreement may not be cited
as, and does not constitute any admission by the Company and the Releasees of, any
violation or evidence of noncompliance with any federal, state, city, local or other
statute, constitution, public policy, tort law, contract law, common law, rule, ordinance,
or of any other wrongdoing, unlawful conduct, liability or breach of any duty whatsoever.
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12.
    
    Entire Agreement / Modification / Waiver / Choice of Law / Enforceability / Jury
Waiver. You acknowledge and agree that this Agreement supersedes any and all prior or
contemporaneous oral and/or written agreements between you and the Company, Primus Guaranty
and their predecessors, and sets forth the entire agreement between you and the Company and
the Releasees with respect to the subject matter hereof, except that you will continue to
be bound by terms and your commitments under Sections 9, 10, 11, 14 and 15 of the
Employment Agreement, which Sections shall remain in full force and effect. No variations
or modifications hereof shall be deemed valid unless reduced to writing and signed by the
parties hereto. The failure of the Company and the Releasees to seek enforcement of any
provision of this Agreement in any instance or for any period of time shall not be
construed as a waiver of such provision or the Companys right to seek enforcement of such
provision in the future. This Agreement shall be deemed to have been made in New York, and
shall be governed by and construed in accordance with the laws of New York, without giving
effect to conflict of law principles. You agree that any action, demand, claim or
counterclaim relating to the terms and provisions of this Agreement, or to its formation or
breach, shall be commenced in New York in a court of competent jurisdiction in New York,
New York, and you further acknowledge that venue for such actions shall lie exclusively in
New York and that material witnesses and documents would be located in New York. Both
parties hereby waive and renounce in advance any right to a trial by jury in connection
with such legal action.
 13.
    
    Legal Fees. The Company agrees to reimburse you for your legal fees in
connection with the negotiation and review of this Agreement, up to a maximum of $25,000,
upon the presentation to the Company by you of appropriate substantiation of such fees
within 21 days after the Separation Date.
 14.
    
    Severability. The provisions of this Agreement are severable, and if for any
reason any part hereof shall be found to be unenforceable, the remaining provisions shall
be enforced in full; provided that, if any provision of Section 7 of this Agreement
is held unenforceable by any court of law, and you proceed with any Claim (within the scope
of Section 7 above) against the Company and the Releasees then you agree that the Company
may seek to recoup from you the payments and benefits provided under Section 2 and Section
3 hereof, and the Company will be relieved from any further obligation to provide you with
any further payments or benefits, or any other form of consideration or compensation
described in this Agreement.
 15.
    
    Taxes. The Company shall withhold from any amounts payable under this
Separation Agreement all federal, state, city, or other taxes or amounts as shall be
required to be withheld pursuant to any law or governmental regulation or ruling. You
shall be responsible for all taxes that may apply to any payment or benefit provided under
this Agreement, except payroll taxes customarily withheld and paid by the employer. Each
payment under this Agreement shall be treated as a separate payment for purposes of Section
409A of the Internal Revenue Code, and in no event may you designate the calendar year of a
payment under this Agreement.
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16.
    
    Agreement Not To Be Construed Against Its Drafter. The language of all parts
of this Agreement shall in all cases be construed as a whole, according to its fair
meaning, and not strictly for or against either of the parties.
 17.
    
    Acknowledgments. You hereby acknowledge that:
 a.
    
    The Company advises you to consult with an attorney before signing this
Agreement;
 b.
    
    You have obtained independent legal advice from an attorney of your own
choice with respect to this Agreement, or you have knowingly and voluntarily chosen
not to do so;
 c.
    
    You freely, voluntarily and knowingly entered into this Agreement after
due consideration;
 d.
    
    You have had a minimum of twenty-one (21) days to review and consider
this Agreement;
 e.
    
    If you knowingly and voluntarily choose to do so, you may accept the
terms of this Agreement before the twenty-one (21) day consideration period
provided for in Section 17(d) above has expired;
 f.
    
    You have a right to revoke this Agreement by notifying the undersigned
Company representative in writing within seven (7) days of your execution of this
Agreement;
 g.
    
    In exchange for your waivers, releases and commitments set forth
herein, including your waiver and release of all claims arising under the ADEA, the
payments, benefits and other considerations that you are receiving pursuant to this
Agreement exceed any payment, benefit or other thing of value to which you would
otherwise be entitled, and are just and sufficient consideration for the waivers,
releases and commitments set forth herein; and
 h.
    
    No promise or inducement has been offered to you, except as expressly
set forth herein, and you are not relying upon any such promise or inducement in
entering into this Agreement.
 18.
    
    Revocation by the Company. You agree that if you fail to execute and return
this Agreement to the Company within twenty-one (21) days of your receipt of the Agreement
for your review and consideration, the promises and agreements made by the Company herein
will have been revoked.
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19.
    
    Notice. Any notice or other communication required or permitted under this
Agreement shall be effective only if it is in writing and shall be deemed to be given when
delivered personally or four days after it is mailed by registered or certified mail,
postage prepaid, return receipt requested or one day after it is sent by a reputable
overnight courier service and, in each case, addressed as follows (or if it is sent through
any other method agreed upon by the parties):
  
  
    
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By:
    
    /s/ Vincent B. Tritto
    
    
    
    Dated: October 29, 2010Confirmed and Agreed:/s/ Thomas W. Jasper
    
    
    
    Dated: October 29, 2010Thomas W. Jasper
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Exhibit A
 Options
 Grant Date
    
    Shares
    
    
    Exercise Price
    
    
    Expiration Date*2/15/03
    
    
    50,000
    
    
    $
    6.94
    
    
    
    11/1/112/15/04
    
    
    61,250
    
    
    $
    9.76
    
    
    
    11/1/112/1/07
    
    
    200,000
    
    
    $
    11.75
    
    
    
    11/1/112/15/06
    
    
    65,000
    
    
    $
    12.74
    
    
    
    11/1/1110/5/04
    
    
    78,750
    
    
    $
    13.50
    
    
    
    10/4/11
 *
    
    The expiration date shown in the table is the earlier of (i) one year after the Separation Date
or (ii) the maximum term of the options in the applicable grant agreement.  13