exv10w1



 





Exhibit 10.1




EXECUTION COPY




Robert M. Fishman

Chief Executive Officer

United America Indemnity, Ltd.



This document sets forth the agreement between Robert M. Fishman (“CEO”) and United America
Indemnity, Ltd. (the “Company”) regarding all matters relating to CEO’s prospective employment by
the Company, but shall constitute the legally binding agreement of CEO and the Company (the
“Agreement”) if and only if it is manually executed by (i) CEO and Saul Fox, in his capacity as
chairman of the board of directors (the “Board”) of the Company (the “Chairman”), and (ii) is
confirmed by the affirmative vote of a majority of the Board.




	 	 	 
	Positions & Titles:

	 	On November 27, 2006 (“Effective Date”), CEO
shall assume the position of chief executive
officer of the Company as well as chief
executive officer of any Company Affiliates
(as defined below) of the Company (as may be
specified in writing by the Chairman from
time to time). CEO shall also serve on the
Board as a director of the Company (a
“Director”).
	 
	 	 
	Responsibilities:

	 	CEO shall have such responsibilities and
duties as are customary for a chief executive
officer of a company conducting business
comparable to the Company (except as may be
otherwise provided by the Board from time to
time). CEO shall devote his full business
time and efforts to his service as chief
executive officer and as a Director and shall
not engage in any other non-Company or
non-Company Affiliate business activities
without the written approval of the Board.
Notwithstanding the foregoing, CEO shall be
permitted to manage his and his family’s
personal investments and affairs, engage in
charitable activities and community affairs,
and act as a member, director, or officer of
industry trade associations or groups,
provided that such activities do not
interfere with his chief executive officer
duties.
	 
	 	 
	Reporting:

	 	During the Term (as defined below), CEO shall
report to the Board regarding the affairs of
the Company and Company Affiliates at
scheduled meetings of the Board and shall
otherwise report to the Chairman. All other
executives and other employees of the Company
shall report to CEO (or his designees as
approved by the Board).
	 
	 	 
	Location:

	 	Within six months of the Effective Date, CEO
shall establish his and his family’s primary
residence in the greater Philadelphia
metropolitan area and shall be






 









 






	 	 	 
	 

	 	provided by the Company with an office at the headquarters of
the Company’s Affiliate in Bala Cynwyd, Pennsylvania. CEO
shall be reimbursed, or the Company shall pay, for his and
his family’s reasonable relocation and closing expenses
(including documented realtor commissions incurred in selling
his primary residence, but not to exceed 6%); provided that
such reimbursement shall not exceed $180,000; provided
further that CEO shall be responsible for repaying to the
Company all such reimbursed amounts in the event that CEO
resigns or is terminated for Cause (as defined below), in
each case on or before the first anniversary of the Effective
Date. Prior to establishing his family’s primary residence
in the greater Philadelphia metropolitan area, CEO may
commute from his current residence, but shall be present at
the Company’s or the Company’s Affiliates’ facilities or at
third party commercial facilities on behalf of the Company at
least five days per week, except as may otherwise be approved
by the Chairman. The Company shall reimburse CEO for his
reasonable commuting expenses during the 135-calendar-day
period commencing with the Effective Date, subject to
applicable taxes and withholding.
	 
	 	 
	Term:

	 	The initial term of CEO’s employment under
this Agreement shall be from the Effective
Date through December 31, 2010. Such term
will automatically be extended for
additional one-year periods on a
year-to-year basis unless CEO or the Company
notifies in writing the other to the
contrary not less than three months and not
more than five months prior to the
expiration of the initial term of this
Agreement and of any renewal term (the
initial term and any renewal term,
collectively, the “Term”). Prior to the
commencement of the Term and following the
execution of this Agreement, CEO shall
provide services to the Company as requested
and as the Company determines are
appropriate in light of any pre-Term
commitments of CEO.
	 
	 	 
	Annual Compensation:

	 	$2,100,000+. Commencing on the Effective
Date, CEO will accrue base salary and be
eligible for an annual bonus as provided
below in consideration of his services to
the Company and its Affiliates.
	 
	 	 
	Base Salary:

	 	The Company agrees to pay CEO an annual base salary of
$600,000 (“Base Salary”), commencing as of the Effective Date, in accordance
with the Company’s normal payroll practices for executives. Following a
termination by the






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	 	Company of CEO without Cause (as defined below) or a
resignation by CEO for Good Reason (as defined below), CEO
will receive salary payments over an 18-month period totaling
$900,000, less any amounts paid during the relevant notice
period and any taxes and withholdings, subject to the
conditions described in the “Termination” Section below.
	 
	 	 
	Annual Bonus:

	 	In respect of 2006, CEO shall receive (i) a lump sum payment of
$100,000 on December 30, 2006 and (ii) a lump sum payment of $400,000 on or
about March 15, 2007, in each case subject to applicable taxes and withholding
and to CEO’s being employed by the Company in good standing on each such date.
CEO shall repay any amounts received pursuant to the foregoing sentence to the
Company if he is terminated for Cause or resigns without Good Reason on or
before the first anniversary of the Effective Date, and such repayment shall
occur within ten calendar days of CEO’s termination of employment.
	 
	 	 
	 

	 	In respect of each full calendar year (commencing in respect
of 2007) during the Term (a “Bonus Year”), the Company shall
provide CEO with a bonus opportunity of $1,500,000+ (“Annual
Bonus”), subject to the following and determined, awarded and
paid as follows:
	 
	 	 
	 

	 	A. Plan & Performance Score:
	 
	 	 
	 

	 	   a. Plan: Prior to the commencement of each
Bonus Year, CEO shall prepare and submit to the
Board for its approval a comprehensive business
plan for the Company and its Affiliates
projecting the business performance (including
among other matters, consolidated net income per
share) of the Company and its Affiliates in
respect of the forthcoming Bonus Year (including
any changes made in the good faith judgment of
the Board at the time of its approval, the
“Plan”). The Plan shall be prepared and
presented both (1) in accordance with Generally
Accepted Accounting Principles (“GAAP”) and (2)
on an accident year basis (“Accident Year
Basis”).







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	 	   b. Performance Score: Within 75 days after
completion of each Bonus Year, a performance
score (“Performance Score”) for such Bonus Year
shall be determined by the Board in accordance
with the following steps: (1) dividing (i) the
actual consolidated net income per share
of the Company (adjusted to account for all
items of gain, loss or expenses determined by
the Board in its sole discretion to be
unanticipated and/or extraordinary), determined
on an Accident Year Basis and as verified by the
Company’s independent auditors for such Bonus
Year by (ii) the projected consolidated net
income per share of the Company (determined on
an Accident Year Basis) as set forth in the Plan
for such Bonus Year (and as approved by the
Board prior to the commencement of such Bonus
Year in accordance with paragraph a.
(immediately preceding)), (2) multiplying the
quotient determined in accordance with Step (1)
(immediately preceding) by 100, and (3) rounding
the result obtained in Step (2) (immediately
preceding) to the nearest tenth.

	 
	 	 
	 

	 	B. Bonus Computation: The Annual Bonus shall equal:
	 
	 	 
	 

	 	   a. $50,000 multiplied by the excess of the
Performance Score over 90, plus

	 
	 	 
	 

	 	   b. $200,000 multiplied by the excess of the
Performance Score (capped at 100 for this
purpose) over 95, plus

	 
	 	 
	 

	 	   c. A cash payment equal to CEO’s net federal and
state tax liability directly resulting from the
vesting of the restricted shares comprising the
restricted shares portion of the Annual Bonus
(to the extent provided for in Section C below),
if CEO is employed by the Company and in good
standing at the time of such vesting, with such
payment to be made prior to CEO’s actual payment
of such tax liability.

	 
	 	 
	 

	 	Example: If the Performance Score in
respect of the 2007 Original Bonus Year
equaled 100, the Annual Bonus in respect of
2007 would be equal to







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	 	 	 	$1,500,000 [($50,000 x (100-90)) + ($200,000 x
(100-95))= $1,500,000].
	 
	 	 	 	Example: If the Performance Score in respect
of the 2007 Original Bonus Year equaled 110,
the Annual Bonus in respect of 2007 would be
equal to $2,000,000 [($50,000 x (110-90)) +
($200,000 x (100-95))=$2,000,000].






	C.	 	First $500,000 of each Annual Bonus:






	 	a.	 	Restricted Shares. Subject to the
immediately succeeding paragraph b., the first
$500,000 of each Annual Bonus (determined in
accordance with the immediately preceding
Section B but not including the tax liability
payments made pursuant to paragraph c. of such
Section) shall be satisfied by the issuance to
CEO of restricted Class A common shares of the
Company as of March 15 of the year following the
Bonus Year, subject to CEO being employed by the
Company in good standing as of such date (or if
such date is not a business day, the immediately
preceding business day) (valued for this purpose
at the closing price of the Company’s Class A
common shares on the last trading day of the
relevant Bonus Year as reported in the Wall
Street Journal). Twenty-five percent (25%)
of the Company shares that may be issued to CEO
pursuant to this paragraph with respect to the
2007 Bonus Year, 2008 Bonus Year and the 2009
Bonus Year during the Term shall vest and become
transferable on each of the first four
anniversaries of the issuance thereof.
One-third of the Company shares that may be
issued to CEO pursuant to this paragraph with
respect to the 2010 Bonus Year and subsequent
Bonus Years during the Term shall vest and
become transferable on each of the first three
anniversaries of the issuance thereof.
Notwithstanding the foregoing sentence, vesting
of any such restricted shares issued to CEO
pursuant to this Section C shall cease in the
event and at such time as (1) CEO resigns from
the Company without Good Reason, (2) CEO is
terminated by the Company for Cause, (3) the
Term expires, if at the time of such expiration
(x) CEO declined the Company’s proposal to
















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	 	 	 	extend the duration of this Agreement on terms at
least substantially equivalent to the terms
hereof, or (y) the Company had Cause (as defined
below) to terminate CEO, or (4) CEO does not
comply with the Non-Competition,
Non-Solicitation, Confidential Information and
Cooperation “Covenants” set forth in Schedule I
hereto along with his obligations, if applicable,
under any release which he is required to provide
in favor of the Company and those under any
separation agreement to which he is party with
the Company and/or its Affiliates (collectively,
the “Post-Termination Obligations”).
	 
	 	b.	 	Operational Goals & Milestones. Prior
to the commencement of a Bonus Year, it shall be
CEO’s responsibility to propose in writing,
based upon CEO’s discussions with the Chairman,
Company milestones and operational goals for the
forthcoming Bonus Year that must be achieved for
CEO to become entitled to the restricted shares
award provided in this Section C. The absence
of such a proposal as of the commencement of a
Bonus Year will result in no achievement of such
milestones and goals. The Chairman shall review
and revise such milestones and goals in his
discretion and refer them to the Board in
writing for its approval, in its discretion. In
addition to the other requirements of paragraphs
a., b., and c. of this Section C, the Board
shall make a good faith determination, which
shall be conclusive, as to whether the
milestones and operational goals as earlier
approved by the Board have been satisfied
thereby entitling CEO to the amount of
restricted shares determined in accordance with
paragraphs a. and b. of this Section C.
	 
	 	c.	 	Bonus Year 2007 Goals & Milestones. The
following shall constitute the Bonus Year 2007
operational goals and milestones for purposes of
this paragraph c.:






	 	1.	 	Creation of a “wholesale brokerage”
division fully complimenting the range















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	 	 	 	of the Company’s property and casualty
insurance program operations.
	 
	 	2.	 	Creation of a proactive program division
that originates, fully develops, and
takes to market for distribution by
managing general agents or other third
parties excess and surplus lines
insurance programs.
	 
	 	3.	 	Establishment of an internal, cost
effective, investment management and
investment accounting division.
	 
	 	4.	 	Assist the Company’s Bermuda Affiliate
in writing at least $30,000,000 in “third
party” reinsurance in compliance with the
Company’s existing “limited appetite for
reinsurance risk” strategic plan for such
business.
	 
	 	5.	 	Meaningfully enhance the Company’s
executive capabilities.
	 
	 	6.	 	Establishment of an effective investor
relations initiative.






	D.	 	Annual Bonus Cash
Portion: To the extent an Annual Bonus amount exceeds
$500,000 (but not including the tax liability payments
made pursuant to paragraph c. of Section B above):






	 	a.	 	Fifty percent (50%) of such excess shall be paid
in cash to CEO (the “Paid Cash Bonus”) within
thirty days of the Board’s determination with
respect to such bonus as provided for in
Sections A and B above; and
	 
	 	b.	 	Fifty percent (50%) of such excess shall be
retained by the Company (the “Retained Cash
Bonus”) to satisfy the true-up adjustments
provided in Section E (immediately succeeding).











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	E.	 	Accident Year True-Up Provisions:






	 	a.	 	The Performance Score and the amount of the
Annual Bonus Cash Portion in respect to a Bonus
Year (for purposes of this Section “Annual
Bonus” and the Section “Additional Equity
Participation” below, “Target Year”) shall be
redetermined or trued-up on an Accident Year
Basis within 15 days following the completion of
the Company’s audited financial statements in
respect of the third full calendar year
succeeding such Target Year, with such
redetermination or true-up assuming the capital
structure of the Company as of the last day of
the applicable Target Year (for purposes of
computing consolidated net income, consolidated
net income per share, and other capital
structure dependent items that would affect
computation of the true-up contemplated by this
Section E). (The Performance Score and Annual
Bonus Cash Portion as so redetermined are
referred to hereinbelow as the “Trued-Up
Performance Score” and the “Trued-Up Annual
Bonus Cash Portion,” respectively.) Computation
of the Trued-Up Performance Score and the
Trued-Up Annual Bonus Cash Portion shall be
verified by Company’s independent auditors and
confirmed by the Board. All redeterminations
hereunder shall (i) be made without regard to
the tax liability payments made pursuant to
paragraph c. of Section B above and (ii) not
increase or reduce the number of restricted
shares previously awarded to CEO pursuant to
Section C of this “Annual Bonus” Section.
	 
	 	b.	 	Subject to paragraph c. (immediately
succeeding), if the Trued-Up Annual Bonus Cash
Portion in respect to a Target Year equals or
exceeds the amount of the Annual Bonus Cash
Portion originally determined in respect of such
Target Year, then the following amounts shall be
paid to CEO (whether or not CEO is then employed
by the Company, unless pursuant to paragraph c.
(immediately succeeding) CEO is no longer then
entitled to payments under this












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	 	 	 	paragraph b.) within thirty days of the
redetermination:






	 	1.	 	The excess of the Trued-Up Annual Bonus
Cash Portion in respect of the Target
Year over the Annual Bonus Cash Portion
originally determined in respect of the
Target Year; plus
	 
	 	2.	 	The Retained Cash Bonus in respect to
the Target Year; plus
	 
	 	3.	 	A deemed investment return on the
amounts to be paid to CEO pursuant to
paragraphs 1 & 2 (immediately preceding),
which shall be calculated by utilizing
the investment return realized by the
Company and the Company Affiliates on
their investable assets (including cash)
over the period said amounts to be paid
to CEO had been retained by the Company.






	 	c.	 	CEO shall not be entitled to receive any
payments pursuant to paragraph b. (immediately
preceding) from and after the first to occur of
the following: (1) CEO resigns from the Company
without Good Reason; (2) CEO is terminated by
the Company for Cause; (3) the expiration of the
Term, if at the time of such expiration (x) CEO
declined the Company’s proposal to extend the
duration of this Agreement on terms at least
substantially equivalent to the terms hereof, or
(y) the Company had Cause to terminate CEO; or
(4) CEO does not comply with the
Post-Termination Obligations.
	 
	 	d.	 	If the amount of the Annual Bonus Cash Portion
originally determined in respect of a Target
Year exceeds the amount of the Trued-Up Annual
Bonus Cash Portion in respect of such Target
Year, then the amount of such excess shall be
offset against and reduce dollar-for-dollar
(whether or not CEO is then employed by the
Company) the aggregate amount of Retained











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	 	 	 	 	 	 	 	Cash Bonuses then or thereafter held by the
Company. The remaining Retained Cash Bonus with
respect to the Target Year, if any, shall then be
paid to CEO within thirty days of the foregoing
redetermination, along with a deemed investment
return thereon, which shall be calculated by
utilizing the investment return realized by the
Company and the Company Affiliates on their
investable assets (including cash) over the
period such remaining Retained Cash Bonus had
been retained by the Company.
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Attached as Schedule II is an example of application
of the Bonus provisions of this Agreement.
	 
	 	 	 	 	 	 	 	 
	 	 	F.	 	Additional
Matters: All bonus payments hereunder are intended to
comply with Sections 162(m) and 409A of the Internal
Revenue Code of 1986, as amended (the “Code”), and to
the extent applicable shall be governed by the terms of
the Company’s incentive award plans.
	 
	 	 	 	 	 	 	 	 
	Employee Benefits/Expenses:	 	During the Term:
	 
	 	 	 	 	 	 	 	 
	 	 	A.	 	CEO shall be
entitled to participate in or receive benefits under all
employee benefit plans, including, but not limited to,
any pension or retirement plan, savings plan, medical or
health-and-accident plan, life, disability, and other
insurance plans or arrangements generally made available
by the Company to its executives and key management
employees, subject to and on a basis consistent with the
terms, conditions and overall administration of such
plans and arrangements and of this Agreement. Following
a termination by the Company of CEO without Cause or a
resignation by CEO for Good Reason, CEO will be entitled
to be reimbursed for the cost of COBRA continuation
coverage under the Company’s group health plans for up
to eighteen months following his termination date,
subject to CEO’s continued eligibility for such coverage
under COBRA and to the conditions described in the
“Termination” Section below;
	 
	 	 	 	 	 	 	 	 
	 	 	B.	 	CEO shall be
entitled to four weeks paid vacation per full year in
accordance with the policies periodically






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	 	 	 	 	established by the Board for other senior executives of
the Company; and
	 
	 	 	 	 	 	 	 	 
	 	 	C.	 	The Company shall
pay or reimburse CEO for all reasonable expenses
incurred or paid by CEO in the performance of CEO’s
duties hereunder in accordance with the generally
applicable policies and procedures of the Company.
	 
	 	 	 	 	 	 	 	 
	Additional Equity 
Participation:	 	A.	 	Share Purchase & Option
Grant: As a condition
precedent to all of the
Company’s obligations and all
of CEO’s rights pursuant to
this Agreement, prior to the
Effective Date, CEO shall
purchase from the Company
$1,000,000 of the Company’s
Class A common shares
(“Shares”) at the closing
price (as reported in the
Wall Street Journal) on the
trading day on the execution
of this Agreement (rounded to
the nearest whole share).
CEO further agrees that the
Shares shall not be
transferable (other than for
estate planning purposes
where the ultimate
beneficiary of the transfer
is a member of CEO’s
immediate family) earlier
than (i) the end of the Term,
(ii) the occurrence of a
“Change of Control” (as
defined below), or (iii) the
date on which CEO is
terminated. The Company
shall grant CEO stock options
in accordance with the
following (the “Stock
Options”):
	 
	 

	 	 	 	 	 	a.
	 	Each option shall represent the right to acquire
from the Company one Class A common share of the
Company, subject to paying to the Company the
“Exercise Price” (as defined in the immediately
succeeding paragraph);
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	b.
	 	The “Exercise Price” (or strike price) of each
option shall be equal to the closing price of
the Company’s Class A Common Shares on the
trading day on the execution of this Agreement
(as reported in the Wall Street
Journal), and each such option shall be
granted as of such trading day; and
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	c.
	 	The number of options granted CEO shall equal
the quotient obtained by dividing $10,000,000 by
the Exercise Price (rounded to the nearest whole
option).






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	 	 	B.	 	Time Vesting Options: 12.5% of the Stock Options shall vest on each
of December 31, 2007, December 31, 2008, December 31,
2009, and December 31, 2010 (aggregating 50% of the
Stock Options) if CEO is employed by the Company and in
good standing as of such respective dates.
	 
	 	 	 	 	 	 	 	 
	 	 	C.	 	Performance Vesting Options:
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	a.
	 	An additional 12.5% of the Stock Options shall
provisionally vest on each of December 31, 2007,
December 31, 2008, December 31, 2009 and
December 31, 2010 (aggregating the remaining 50%
of the Stock Options (the “Performance Stock
Options”)) if, in addition to the criteria
described below, on such dates CEO is employed
by the Company and in good standing. The number
of provisionally vested Performance Stock
Options in respect to a calendar year that shall
vest conclusively shall be determined by
multiplying the number of such provisionally
vested Performance Stock Options by a fraction,
the numerator of which fraction shall equal the
excess over 90 of the Trued-Up Performance Score
for the Target Year inclusive of the date on
which such Performance Stock Options
provisionally vested (capped at ten for this
purpose) and the denominator of which fraction
shall equal ten.
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	b.
	 	Provisionally vested Performance Stock Options
shall become exercisable only in the event such
options become conclusively vested as verified
by the Company’s independent auditors and
confirmed by the Board.
	 
	 	 	 	 	 	 	 	 
	 	 	D.	 	Special Vesting of Options:
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	a.
	 	Notwithstanding paragraph a. of Section C
(immediately preceding), all provisionally
vested Performance Stock Options shall vest
conclusively (and thereafter be exercisable) as
of the 120th day following a two-year
consecutive period of either calendar years (i)
2009 and 2010 or (ii) calendar years 2010 and
2011 if:







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	 	1.	 	the Company’s return on equity (determined
in accordance with GAAP) and the Company’s
percentage increase in gross written
premiums (over the relevant preceding year)
exceeded the return on equity (determined in
accordance with GAAP) and the percentage
increase in gross written premiums (over the
relevant preceding year), of more than 50%
of the Peer Group (as hereafter defined), as
determined by the Board in its discretion
within 120 days after the close of the
relevant two-year period. The Board, in its
sole discretion, may make such adjustments
to the determination required by this
paragraph as it deems appropriate to account
for unanticipated and/or extraordinary
matters affecting the Company’s or Peer
Group members’ results; and
	 
	 	2.	 	CEO was employed by the Company and in good
standing on (i) December 31 of each year in
which the Company’s performance satisfied
the conditions of paragraph 1 (immediately
preceding) and (ii) the date on which the
relevant Board determination was made.





Example: If the Company’s return on
equity for 2009 of 15% exceeded the median
return on equity for the Peer Group of
12%, the Company’s return on equity for
2010 of 18% exceeded the median return on
equity for the Peer Group of 15%, the
Company’s increase in gross written
premiums for 2009 of 5% exceeded the
median increase for the Peer Group of 3%,
and the Company’s increase in gross
written premiums for 2010 of 8% exceeded
the median increase for the Peer Group of
7%, then all necessary targets will have
been achieved and all provisionally vested
Performance Options may be conclusively
vested, subject to CEO being employed in
good standing on the required dates.




	 	3.	 	For purposes of paragraph 1 of this
Section D, the “Peer Group” shall consist of
W.R. Berkley Corporation (BER), RLI
Corporation (RLI), James River Group, Inc.
(JRVR), Navigators Insurance Group




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	 	 	 	(NAVG), Philadelphia Consolidated Group
(PHLY), Markel Corporation (MKL), HCC
Insurance Holdings, Inc. (HCC), Argonaut Group
(AGII) and NYMAGIC, Inc. (NYM). The companies
constituting the Peer Group may be modified by
the Board from time to time in its discretion
so as to take into account new competitive
entrants to the Company’s market niche, the
departure of companies from the Company’s
market niche, as well as mergers, acquisitions
and other changes affecting companies included
in the Peer Group.






	 	b.	 	Notwithstanding any other provision of this
Agreement, upon the consummation of a Change in
Control (as defined below), if CEO is then
employed by the Company in good standing and has
not given notice of resignation, all unvested
and provisionally vested Stock Options shall
vest conclusively (and thereafter become
exercisable) if the Company’s publicly traded
shares appreciated in value by a 15% or greater
annual compounded rate measured from the closing
price on the Effective Date through the closing
price on the date of the consummation of the
Change in Control (in each case as reported in
the Wall Street Journal). In
determining such compounded rate of the
Company’s publicly traded shares for purposes of
this paragraph, the Board shall give appropriate
credit to dividends and other distributions made
in respect to the Company’s shares to all
shareholders as well as other relevant items
(such as stock splits).
	 
	 	 	 	c.
For purposes of this Section D:






	 	1.	 	A “Change of Control” shall mean (i) the
acquisition of all or substantially all of
the Company’s assets by an Unaffiliated
Person, (ii) a merger, consolidation,
statutory share exchange or similar form of
corporate transaction after which the
resulting entity is controlled by an
Unaffiliated Person, or (iii) the
acquisition by an Unaffiliated Person of
sufficient voting shares of the




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	 	 	 	Company to cause the election of a majority of
the Company’s Directors.






	 	2.	 	“Unaffiliated Person” shall mean a “person”
(as such term is defined in Section 3(a)(9)
of the Securities Exchange Act of 1934 and
as such term is used in Section 13(d)(3) and
14(d)(2) of such Act) or a group of
“persons” which is not an Affiliate of Fox
Paine & Company, LLC (“Fox Paine”), the
members thereof, or Fox Paine Capital Fund
II, L.P.






	 	E.	 	Shareholding
Guidelines. In addition to any other transfer
restrictions contained herein, beginning as of January
1, 2009 and for the remainder of the Term, CEO shall be
obligated at all times to hold shares in the Company
with a value of no less than two times his “Annual
Compensation” (as defined below) (or if less, the
aggregate value of the Shares, any shares which he has
been granted pursuant to this Agreement and any vested
“in the money” Time Vesting Options which he has been
granted pursuant to this Agreement), or such higher
amount as may be required by the Board pursuant to share
ownership guidelines adopted with respect to the
Company’s senior executive team. Such value shall
include vested share options, assuming their exercise
for the underlying shares. For purposes of this Section
E, “Annual Compensation” shall be the Base Salary plus
the Annual Bonus payable upon the achievement of a
Performance Score of 100 and all applicable milestones
and goals (including any retained portion of the Annual
Bonus but excluding all tax liability payments).
	 
	 	F.	 	Equity
Agreements. Any restricted shares or options which are
granted pursuant to this Agreement shall be granted
pursuant to the restricted share and share option
agreements attached as Exhibits A, B and C hereto, and
any grants hereunder shall be conditioned on (i) CEO’s
execution of such agreements; and (ii) the Company’s
shareholder-approved, publicly-filed equity compensation
plan, i.e., its Share Incentive Plan, as such plan may
be amended from time to time (or any successor thereto).






-15-









 





	 	 	 
	Compliance with
Section 409A:

	 	The parties have attempted in good faith to
structure this Agreement to comply with or be
exempt from Section 409A of the Code and the
regulations and guidance relating thereto
(“Section 409A”). Therefore, notwithstanding any
other provisions hereof, this Agreement shall be
administered in good faith compliance with
Section 409A, and accordingly any payment or
vesting in severance benefits hereunder may be
subject to a six-month delay as required by
Section 409A, as determined by the Board in good
faith.
	 
	 	 
	Termination:

	 	The Board may, in its absolute discretion,
terminate CEO’s employment with the Company at
any time prior to the expiration of the Term,
with or without Cause, upon three full calendar
months written notice (in which event CEO shall
receive accrued and unpaid Base Salary through
the termination date) and during such three-month
period the Company may request that CEO resign
his officerships and direct CEO to perform only
those services (if any) it determines are
necessary. If CEO’s employment terminates as a
result of his death or “Disability” (such
Disability occurring when a licensed physician
selected by the Company determines that CEO is
disabled and CEO is unable to perform or complete
his duties under this Agreement for a period of
180 consecutive days or 180 days within any
twelve-month period), CEO or his successors shall
receive accrued and unpaid Base Salary through to
the termination date. In the event CEO’s
employment with the Company is terminated by the
Company without Cause or as a result of a
resignation by the CEO for Good Reason, CEO shall
receive from the Company the salary amounts
payable pursuant to the second sentence of the
“Base Salary” paragraph of the “Annual
Compensation” Section hereof, continued benefits
as provided in the “Employee Benefits/Expenses”
Section hereof, and continued vesting in any
equity awarded as provided in this Agreement,
provided that such payments, benefits and vesting
shall be conditioned on (i) CEO executing a
general release in favor of the Company, its
Directors, and employees, Fox Paine, and its
members and employees, and all Affiliates of each
of the foregoing, (ii) CEO remaining in
compliance with all of his Post-Termination
Obligations, and (iii) the Company determining
that it did not have Cause to terminate CEO while
he was employed. CEO may terminate his
employment with the Company at any time without
Good






- 16 -









 






	 	 	 
	 

	 	Reason upon written notice to the Chairman of at least three full calendar
months (and upon such notice the Company may elect to terminate CEO without any
further payment obligations whatsoever as if CEO was terminated with Cause).
Any termination by the Executive for Good Reason shall be upon thirty (30) days
advance written notice and subject to the cure and other provisions related to
“Good Reason” as set forth in the “Cause/Good Reason” section below.
	 
	 	 
	Cause / Good Reason:

	 	“Cause” shall mean (i) the engaging by CEO
in malfeasance, fraud, dishonesty or gross
misconduct adverse to the interests of the
Company or its Affiliates, (ii) the material
violation by CEO of any of the covenants
hereof or other provisions of this Agreement
after notice from the Company and a failure
to cure such violation within 10 days of
said notice (to the extent the Board
reasonably determines such violation is
curable and subject to notice), (iii) a
breach by CEO of any representation or
warranty contained herein, (iv) the Board’s
determination that CEO has exhibited
incompetence or gross negligence in the
performance of his duties hereunder, (v)
receipt of a final written directive or
order of any governmental body or entity
having jurisdiction over the Company
requiring termination or removal of CEO,
(vi) CEO being charged with a felony or
other crime involving moral turpitude, (vii)
failure to establish his and his family’s
primary residence in the greater
Philadelphia metropolitan area within six
months of the Effective Date, or (viii) CEO
substantially failing to perform his duties
hereunder after notice from the Company and
failure to cure such non-performance within
10 days of said notice (to the extent the
Board reasonably determines such failure to
perform is curable and subject to notice) or
violating any material Company policies,
including, without limitation, the Company’s
corporate governance and ethics guidelines,
conflicts of interests policies and code of
conduct applicable to all Company employees
or senior executives.
	 
	 	 
	 

	 	“Good Reason” shall mean a willful and
substantial reduction in CEO’s material
responsibilities and reporting as provided
for in the “Responsibilities” and
“Reporting” Sections of this Agreement which
remains uncured for thirty (30) days after
written notice thereof is provided by CEO to
the Company setting forth in reasonable
detail the alleged breach at issue; provided
that CEO must provide such written notice
within ten (10) days of the event






- 17 -









 






	 	 	 
	 

	 	allegedly giving rise to Good Reason or such alleged event shall not provide a
basis for such notice; provided further that (i) “dotted-line” or dual
reporting to the Chairman by any Company or Company Affiliate executive shall
not constitute Good Reason and (ii) a modification as to whom CEO shall report
resulting from a Change of Control shall not constitute Good Reason.
	 
	 	 
	Covenants:

	 	As consideration for the payments made and
equity awarded pursuant to this Agreement,
along with other good and valuable
consideration, including, without
limitation, the trade secrets provided to
CEO in connection with the performance of
his duties, CEO agrees and acknowledges
that he will be bound by the restrictive
covenants set forth on Schedule II hereof.
	 
	 	 
	Policies:

	 	CEO covenants and agrees to be subject to
the policies applicable to a senior
executive of the Company, including
without limitation the Company’s corporate
governance rules, procedures, and policies
as may be adopted by the Board from time
to time.
	 
	 	 
	Miscellaneous:

	 	CEO represents that he is not a party to
any agreement or arrangement that would
limit in any manner his ability to perform
the duties contemplated hereunder and that
he will not use any confidential
information belonging to his previous
employer(s) in the performance of his
duties hereunder. The Company may set-off
against or otherwise deduct from any
amounts owed or due CEO or Company shares
or options in respect of Company shares
held by CEO if and to the extent that CEO
is in default in respect of amounts he is
obligated to pay to the Company (or any
Company Affiliate).
	 
	 	 
	Binding Agreement:

	 	The obligations of CEO under this
Agreement will continue after the
termination of his employment with the
Company for any reason, to the extent
provided herein, and will be binding on
his heirs, executors, and legal
representatives.
	 
	 	 
	Assignment:

	 	This Agreement shall not be assignable by
CEO. This Agreement is assignable by the
Company to an Affiliate. The rights and
obligations hereunder shall be binding
upon and take effect for the benefit of
any successor in interest of the Company
created by merger, reorganization, sale of
assets, assignment or otherwise, and the
Company shall use commercially reasonable
efforts to obtain an assumption






- 18 -









 






	 	 	 
	 

	 	agreement with respect to this Agreement from such successor.
	 
	 	 
	Indemnity:

	 	The Company shall, as provided for by its
by-laws and charter, defend and indemnify
CEO. The Company shall also include CEO
in the coverage provisions of the
directors and officers liability insurance
policy that it maintains for its Directors
and officers, including any applicable
tail coverage that it provides to its
current and former Directors, as may be
applicable.
	 
	 	 
	Board Approval:

	 	This Agreement is subject to the approval
of the Board and its Compensation
Committee. Only upon such approval and
the manual execution hereof by CEO and the
Chairman shall the Agreement become a
legally binding agreement of the Company
and CEO.
	 
	 	 
	Governing Law:

	 	CEO and the Company agree that, due to the
Company’s significant and ongoing contacts
and business relationships (including its
listing on NASDAQ) with the State of New
York, this Agreement shall be governed by
and construed in accordance with the laws
of such state, without reference to
principles of conflict of laws of that
jurisdiction or any other jurisdiction.
	 
	 	 
	Arbitration:

	 	All disputes between the Company and CEO
or between CEO and any Affiliate shall be
resolved by binding confidential
arbitration in front of a single
arbitrator in Philadelphia, Pennsylvania,
United States conducted by the Judicial
Arbitration and Mediation Services, Inc.
(“JAMS”) in accordance with the
comprehensive rules and procedures of
JAMS, including the internal appeal
process provided for in Rule 34 of the
JAMS rules with respect to any initial
judgment rendered in an arbitration. The
Company, its Affiliates and CEO agree that
the arbitrator shall have no authority to
award any punitive or exemplary damages
and waive, to the full extent permitted by
law, any right to recover such damages in
arbitration. The Company (or its
Affiliate) shall pay the costs and fees of
the arbitrator and appeal arbitrators.
The Company (or its Affiliate) and CEO
shall each bear its own respective costs,
including attorney’s fees (and there shall
not be any award of attorney’s fees).
Judgment on the award rendered in such
arbitration may be entered in any court
having jurisdiction. Notwithstanding the
foregoing, the Company and its Affiliates
reserve the right to obtain judicial
injunctive relief arising in connection
with a prospective violation by






- 19 -









 






	 	 	 
	 

	 	CEO of the provisions hereof relating to non-competition, non-solicitation, or
Company Confidential Information and any claim or cause of action which CEO has
against the Company or Affiliates shall not be a bar or defense to the granting
of such relief.
	 
	 	 
	Affiliates/
company affiliates:

	 	The term “Affiliate(s)” includes: (i) the
Company and any person or entity
controlled by, or under common control
with, the Company; (ii) all current and
former Directors; (iii) Fox Paine, Fox
Paine Capital Fund II, L.P., and Fox Paine
Capital Fund International II, L.P.; and
(iv) each of such entities’ members,
shareholders, partners, and employees.

	 
	 	 
	 
	 	
The term “Company Affiliate(s)” includes
only the Company and any person or entity
controlled by the Company.
	 
	 	 
	Integration:

	 	This writing supersedes and integrates all
prior promises, representations, offers,
contracts, and agreements between the
Company or any Affiliate and CEO and among
CEO and Fox Paine, Saul Fox, or any
Affiliate of the foregoing. This letter
may not be amended except in a writing
which is manually executed by CEO and Saul
Fox and approved by the Board.






     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on November 9,
2006.



	 	 	 	 	 	 	 
	UNITED AMERICA INDEMNITY, LTD.	 	 	 	 
	 
	 	 	 	 	 	 
	By:

	 	/s/ Saul A. Fox
	 	 	 	/s/ Robert M. Fishman
	 

	 	 
	 	 	 	 
	 

	 	Saul A. Fox
	 	 	 	Robert M. Fishman
	 

	 	Chairman of the Board	 	 	 	 






- 20 -









 






Schedule I




Covenants of CEO





	1)	 	Non-Competition. CEO covenants and agrees that during his employment with the
Company, and for a period of eighteen (18) months following the termination of such employment
for any reason, CEO shall not directly or indirectly own, manage, operate, participate in, be
employed, associate with, otherwise have an interest or engage in, or advise as a consultant
or otherwise any “Person” (which term includes an individual, firm, trust, partnership,
venture, limited liability company, sole proprietorship, corporation, syndicate, association,
and other business vehicles) who engages in the property and casualty insurance business with
or who solicits such from any “Producer” or “Producers” (as such terms are defined below) that
either individually or in the aggregate account for 15% or more of the Company’s aggregate
premium volume. The term “Producer” or “Producer(s)” includes managing general agents,
wholesale general agents, and other producers or distributors of property and casualty
insurance business underwritten by the Company. Notwithstanding the foregoing, it shall not
be a violation of CEO’s obligations pursuant to this paragraph for CEO to hold publicly-traded
securities of his former employer or one percent or less of the outstanding publicly-traded
securities of a different company.






	2)	 	Non-Solicitation. CEO covenants and agrees that during his employment with the
Company, and for a period of eighteen (18) months following the termination of such employment
for any reason, he shall not (i) directly or indirectly nor shall he be associated with,
employed by, or in business with any Person who hire(s), attempt(s) to hire, solicit(s), or
induce(s) any employee of the Company or its Affiliates, including anyone so employed within
the twelve-month period prior to his termination of employment, to either terminate such
employment with the Company or its Affiliate or associate with, be employed by, or join in
business with any other Person operating in the property and casualty insurance industry or
(ii) directly or indirectly solicit, endeavor to entice away or otherwise interfere with the
relationship of Company or its Affiliates with any of their Producers, customers, clients or
accounts.






	3)	 	Confidential Information. CEO covenants and agrees not to, during or after his
employment with the Company (i) disclose, in whole or in part, any “Company Confidential
Information” (as defined below) to any Person unless authorized in writing to do so by the
Company or required by law or (ii) use any Company Confidential Information for his own
purpose or for the benefit of any Person other than the Company, except in the proper
performance of his duties as instructed or approved by the Company in writing.
	 
	 	 	The term “Company Confidential Information” means the knowledge and information acquired by
CEO concerning the Company’s and its Affiliates’ confidential and proprietary information
regarding business plans, software, formatting, programs, client prospects, client lists,
supplier and vendor information, client contacts, client information and data, market data,
marketing plans, data processing systems and information contained therein, products,
proposals to clients and potential clients, account reports,




- 21 -









 






	 	 	plans, studies, pricing information, loss experience information, competitive information,
price lists, financial statements and records, files and other trade secrets, know-how, or
other private, confidential or proprietary information of or about the Company or its
Affiliates which is not already available to the public or known generally in the industry.
The term “Company Confidential Information” shall not include (x) information in the public
domain or generally known in the industry (unless CEO is responsible, directly or
indirectly, for such Company Confidential Information entering the public domain or becoming
known in the industry without the Company’s consent), (y) information and know-how derived
or known by CEO from experience in the industry generally and not specific to the Company,
or (z) information disclosed by the Company to third parties without any duty or obligation
of confidentiality or non-disclosure.






	4)	 	Work for Hire. All original works of authorship which have been or are made by CEO
within the scope of and during the period of his employment with the Company and which are
protectable by copyright are “works for hire” and the Company or its designee shall own all
rights therein.






	5)	 	Assignment of Invention. CEO shall disclose promptly in writing to the Company, all
inventions, including discoveries, concepts and ideas, patentable or not, hereafter made or
conceived solely or jointly by CEO during employment with the Company (or its Affiliates), or
within six months after the termination of CEO’s employment, if based on or related to
proprietary information of the Company or its Affiliates known by CEO, provided such
invention, discovery, concepts and ideas relate in some manner to the business or activities
of the Company. CEO agrees that in connection with any invention covered by this paragraph,
CEO shall, on request of the Company, promptly execute a specific assignment of title to the
Company or its Affiliates and do anything else reasonably necessary to enable the Company or
its Affiliates to secure a patent therefor in the United States and foreign countries.






	6)	 	Cooperation. CEO agrees to be available to the Company from time to time to answer
questions or provide information relating to Company matters that he worked on during his
employment at the Company or its Affiliates for a period of six months following his
termination of employment for any reason (the “Cooperation Period”). The Company shall make
reasonable efforts to minimize any burden placed on CEO during the Cooperation Period and
shall not unreasonably interfere in CEO’s obligations to any subsequent employer. In the
event that CEO would reasonably be required to incur any cost or expense to communicate with
the Company or travel to any location requested by the Company, the Company shall advance any
such travel or other costs reasonably incurred by CEO to comply with and perform his
obligations during the Cooperation Period.






	7)	 	Acknowledgment. CEO acknowledges and agrees that the terms of these covenants: (i)
are reasonable in light of all of the circumstances; (ii) are sufficiently limited to protect
the legitimate interests of the Company and its subsidiaries; (iii) impose no undue hardship
on CEO; and (iv) are not injurious to the public. CEO further acknowledges and agrees that
(x) CEO’s breach of the provisions of these covenants will cause the Company irreparable harm,
which cannot be adequately compensated by money




- 22 -









 






	 	 	damages, and (y) if the Company elects to prevent CEO from breaching such provisions by
obtaining an injunction against CEO, there is a reasonable probability of the Company’s
eventual success on the merits. CEO consents and agrees that if he commits any such breach
or threatens to commit any breach, the Company shall (at its election and notwithstanding
the Arbitration provision hereof) be entitled to temporary and permanent injunctive relief
from a court of competent jurisdiction, without posting any bond or other security and
without the necessity of proof of actual damage, in addition to, and not in lieu of, such
other remedies as may be available to the Company for such breach, including the recovery of
money damages. All references to the Company in this paragraph shall include its
Affiliates.




- 23 -









 











Schedule II




[Example of Accident Year True-Up Provisions]




- 24 -









 








Exhibit A




TIME VESTING SHARE OPTION AGREEMENT




     TIME VESTING SHARE OPTION AGREEMENT (“Agreement”) dated as of [date] (the “Grant Date”), by
and between United America Indemnity, Ltd., a Cayman Islands exempted company with limited
liability whose office is located c/o Walkers SPV Limited, Walker House, 87 Mary Street, P.O. Box
908GT, George Town, Grand Cayman, Cayman Islands (the “Company”), and Robert M. Fishman (the
“Participant”).



     WHEREAS, pursuant to the United America Indemnity, Ltd. Share Incentive Plan (the “Plan”), the
Committee (as defined in the Plan) has decided to award share options on the terms and conditions
set forth in this Agreement.



     WHEREAS, these Options are granted to the Participant in accordance with the Employment
Agreement of ___  ___, 2006, by and between the Company and the Participant (the “Employment
Agreement”).



     NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, the parties hereto agree as
follows:



     1. Definitions.



     As used in this Agreement, the following terms shall have the meanings ascribed to them below.
Any capitalized term used in this Agreement and not defined herein shall have the meaning ascribed
to it in the Plan.



     “Acquisition” shall have the meaning set forth in Section 6.3.



     “Change of Control” shall have the meaning set forth in the Employment Agreement.



     “Class A Common Shares” shall mean the Class A common shares, par value $0.0001 per
share, of the Company, subject to adjustment pursuant to the third paragraph of Section 3 of the
Plan under certain circumstances.



     “Exercise Price” shall have the meaning set forth in Section 2.2, subject to
adjustment pursuant to the third paragraph of Section 3 of the Plan.



     “Grant Date” shall have the meaning set forth in Section 2.1.



     “Options” shall have the meaning set forth in Section 2.1.



     In addition, certain other terms used herein have definitions otherwise ascribed to them
herein.



- 25 -









 





     2. Grant and Terms of Options.



          2.1 Grant of Options. The Company hereby grants to the Participant as of the Grant
Date ___ Nonqualified Stock Options (the “Options” or “Time Vesting Options”) to purchase
one Class A Common Share per Option on the terms and conditions set forth below, and in reliance
upon the representations and covenants of the Participant set forth below. Unless sooner exercised
or cancelled as provided for in the Plan or this Agreement, the Options shall expire on the tenth
anniversary of the date of this Agreement.




          2.2 Exercise Price. The Exercise Price of the Options is $  per Class A Common
Share subject thereto.




          2.3 Vesting and Exercisability.





          (a) Subject to the terms and conditions herein, the Options shall vest and become
exercisable according to the following schedule:



	 	 	 	 	 
	 	 	Percent of Total Time Vesting Option
	Date of Vesting	 	Grant Vested
	December 31, 2007
	 	 	25	%
	December 31, 2008
	 	 	50	%
	December 31, 2009
	 	 	75	%
	December 31, 2010
	 	 	100	%







     Options that are exercisable may be exercised by the Participant only in accordance
with the terms of the Plan, this Agreement and the Employment Agreement, subject to the
termination, expiration, cancellation, lapsing and other provisions contained in each such
document.




          (b) Notwithstanding anything to the contrary in Section 2.3(a), if the Participant is
employed by the Company and in good standing at the time of a Change in Control, the Options
(or a portion thereof) may accelerate so as to vest and become exercisable in accordance
with the terms of the Employment Agreement, if so provided under the Employment Agreement.



     3. Expiration and Cancellation.



          3.1 Termination of Employment. Upon termination of Employment for any reason
(including Cause), vesting ceases, the term of unvested Options lapses and such unvested Options
will expire immediately. If the Participant’s Employment terminates for Cause, vested Options will
also expire immediately. If the Participant’s Employment terminates for any reason other than for
Cause (including as a result of the Participant’s resignation), the Options shall expire on the
earlier of the following occasions:




- 26 -









 








          (i) the expiration date determined pursuant to Section 2.1; or




          (ii) the date 90 days after the termination of the Participant’s Employment.




          The Participant may exercise all or part of the Options at any time before its expiration
under this Section 3.1, but only to the extent that the Options have vested and become exercisable
before the Participant’s Employment terminated. In the event that the Participant dies after
termination of Employment, but before the expiration of the Options, all of the Options may be
exercised (prior to expiration) by the executors or administrators of the Participant’s estate by
any person who has acquired the Options directly from the Participant by beneficiary designation,
bequest or inheritance, but only to the extent that the Options have vested and become exercisable
before the Participant’s Employment terminated.




          3.2 Cancellation. In the event the Participant (i) violates any covenant provided in
the Employment Agreement or (ii) is terminated for Cause (as defined subclauses (ii) and (vii) of
the “Cause” clause of the Employment Agreement) (a “Forfeiture Event”), all Options will be
cancelled, Class A Common shares acquired upon the previous exercise of any Options (“Option
Shares”) will be subject to repurchase by the Company at the lower of the Exercise Price or fair
market value, and the Company shall be entitled to repayment by the Participant of any Award Gain
(as defined below) realized as a result of any exercise of any Options or any sale of Option
Shares.





          (a) Company Repurchase of Shares. Payment with respect to any repurchase of
Option Shares by the Company from the Participant shall take the form of a three-year note
from the Company or its designee, accruing interest at the lowest then applicable rate
mandated by U.S. law, with the principal and interest due on the third anniversary of the
date of purchase (or such later date as may be necessary to permit the Company or its
designee to comply with any applicable borrowing covenants affecting its payment
obligations), and shall be reduced to reflect any outstanding liabilities of the Participant
to the Company or its Affiliates. The Participant promptly shall take all appropriate and
necessary action to facilitate the Company’s purchase of such equity, including the prompt
delivery to the Company (or its designee) of all share certificates or other documents that
the Company may request.




          (b) Recovery of Award Gain.




     1. The term “Award Gain” shall mean (I) in respect of a given options exercise,
the product of (X) the Fair Market Value per Option Share at the date of such
exercise (without regard to any subsequent change in the market price of such Option
Share) minus the Exercise Price times (Y) the number of Option Shares as to which
the Options were exercised at that date, and (II) in respect of any sale of Option
Shares, the value of any cash or the fair market value of the Option Shares or
property paid or payable to the Participant less any cash or the fair market value
of any Option Shares or property (other than Option Shares or Options which would
have been forfeitable hereunder and excluding any payment of tax withholding) paid
by the Participant to the Company (or its



- 27 -









 







designee) as a condition or in connection with the acquisition of such Option
Shares or amount otherwise included in subclause (I) above.




     2. The Participant will be obligated to repay to the Company (or its designee),
in cash, within ten (10) business days after demand is made therefor, by the Company
(or its designee), the total amount of Award Gain realized by the Participant (I)
upon each exercise of the Options that occurred on or after (A) the date that is six
(6) months prior to the Forfeiture Event, if the Forfeiture Event occurred while the
Participant was employed by the Company or a subsidiary or affiliate, or (B) the
date that is six (6) months prior to the date that the Participant’s employment by
the Company or a subsidiary or affiliate terminated, if the Forfeiture Event
occurred after the Participant ceased to be so employed, or (II) upon any sale,
transfer or other disposition of the Option Shares.



     4. Transferability of Plan Shares and Options.



     The Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber
any Options, except as hereinafter provided in Section 6.1 and in accordance with the Articles of
Association of the Company.



     5. Participant’s Representations, Warranties and Agreements.



     In connection with the exercise of any Options, the Participant shall make to the Company, in
writing, such representations, warranties and agreements in connection with such exercise and
investment in Class A Common Shares as the Committee shall reasonably request.



     6. Successors.



          6.1 This Agreement is personal to the Participant and, without the prior written consent of
the Company, shall not be transferable by the Participant otherwise than (i) by will or the laws of
descent and distribution, (ii) pursuant to a qualified domestic relations order (as defined in the
Code) or (iii) pursuant to a gift to the Participant’s spouse, children, grandchildren or other
living descendants, whether directly or indirectly or by means of a trust, partnership, limited
liability company or otherwise. This Agreement shall inure to the benefit of and be enforceable by
the Participant’s legal representatives.




          6.2 This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.




          6.3 The Company shall require any successor (whether direct or indirect, by purchase, merger,
consolidation, scheme of arrangement or otherwise (an “Acquisition”)) to all or substantially all
of the business and/or assets of the Company expressly to assume and to agree to perform this
Agreement in the same manner and to the same extent that the Company would have been required to
perform it if no such succession had taken place (or by substituting for such Options new options,
based upon the shares of such successor, having an aggregate spread between the Fair Market Value
of the underlying shares and the Exercise Price thereof, and the same term, immediately after such
substitution, equal to the spread on, and the term of, such Options immediately before such
substitution but in any case subject to the same terms and




- 28 -









 







conditions, including those applicable to vesting and exercise, as may otherwise be applicable
to the Options granted by the Company), and the Participant hereby agrees to such assumption (or
substitution); provided, however, that the Company or such successor may, at its option, at the
time of or promptly after such Acquisition, terminate all of its obligations hereunder with respect
to the Options by paying to the Participant or the Participant’s successors or assigns an amount
equal to the product of (i) the number of Options and (ii) the Fair Market Value per share of the
shares underlying such Options at the time of such Acquisition less the amount of such Options’
Exercise Price (but not in excess of such Fair Market Value per share), in either case, in exchange
for the Participant’s Options. As used in this Agreement, the “Company” shall mean both the
Company as defined above and any such successor that assumes and agrees to perform this Agreement,
by operation of law or otherwise.




     7. Miscellaneous.



          7.1 This Agreement shall be governed by and construed and enforced in accordance with the laws
of the State of Delaware, without regard to the principles of conflicts of law thereof. The
captions of this Agreement are not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified except by a written agreement executed by the
parties hereto or their respective successors and legal representatives.




          7.2 Plan Shares may bear legends to the extent the Committee or the Board determines it to be
necessary or appropriate.




          7.3 All notices and other communications under this Agreement shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed if to the Participant, at the address set forth on the
signature page hereto, and if to the Company: United America Indemnity, Ltd., c/o Walkers SPV
Limited, Walker House, 87 Mary Street, P.O. Box 908GT, George Town, Grand Cayman, Cayman Islands,
Attention: General Counsel, or to such other addresses as either party furnishes to the other in
writing in accordance with this Section 7.3. Notices and communications shall be effective when
actually received by the addressee.




          7.4 The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.




          7.5 No later than the date as of which an amount first becomes includible in the gross income
of the Participant for federal, state, foreign or other income tax purposes with respect to any
Options, the Participant shall pay to the Company, or if appropriate, any of its Affiliates, or
make arrangements satisfactory to the Committee regarding the payment of, any federal, state,
local, foreign or other taxes of any kind required by law to be withheld with respect to such
amount. If approved by the Committee, withholding obligations may be settled with Class A Common
Shares, including Class A Common Shares that are part of the award that gives rise to the
withholding requirement. The obligations of the Company under the Plan shall be conditional on
such payment or arrangements, and the Company and its Affiliates shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment otherwise due to the Participant.
The Committee may establish such procedures as it deems appropriate,




- 29 -









 







including making irrevocable elections, for the settlement of withholding obligations with
Class A Common Shares.




          7.6 The Participant’s or the Company’s failure to insist upon strict compliance with any
provision of, or to assert any right under, this Agreement shall not be deemed to be a waiver of
such provision or right or of any other provision of or right under this Agreement.




          7.7 The Options are granted pursuant to the Plan which is incorporated herein by reference and
the Options shall, except as otherwise expressly provided herein, be governed by the terms thereof.
The Participant hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all
the terms and provisions thereof. The Participant and the Company each acknowledges that this
Agreement (together with the Plan and the other agreements referred to herein and therein)
constitutes the entire agreement and supersedes all other agreements and understandings, both
written and oral, among the parties or either of them, with respect to the subject matter hereof;
provided, however, that the Employment Agreement shall control in the event of any conflict between
the Employment Agreement and this Agreement.




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



	 	 	 	 	 	 	 	 	 
	UNITED AMERICA INDEMNITY, LTD.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	 	 	 	 	Robert M. Fishman






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Exhibit B




PERFORMANCE VESTING SHARE OPTION AGREEMENT




     PERFORMANCE VESTING SHARE OPTION AGREEMENT (“Agreement”) dated as of [date] (the “Grant Date”)
by and between United America Indemnity, Ltd., a Cayman Islands exempted company with limited
liability whose office is located c/o Walkers SPV Limited, Walker House, 87 Mary Street, P.O. Box
908GT, George Town, Grand Cayman, Cayman Islands (the “Company”), and Robert M. Fishman (the
“Participant”).



     WHEREAS, pursuant to the United America Indemnity, Ltd. Share Incentive Plan (the “Plan”), the
Committee (as defined in the Plan) has decided to award share options on the terms and conditions
set forth in this Agreement.



     WHEREAS, these Options are granted to the Participant in accordance with the Employment
Agreement of ___  ___, 2006, by and between the Company and the Participant (the “Employment
Agreement”).



     NOW, THEREFORE, in order to implement the foregoing and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, the parties hereto agree as
follows:



     1. Definitions.



     As used in this Agreement, the following terms shall have the meanings ascribed to them below.
Any capitalized term used in this Agreement and not defined herein shall have the meaning ascribed
to it in the Plan.



     “Acquisition” shall have the meaning set forth in Section 6.3.



     “Change of Control” shall have the meaning set forth in the Employment Agreement.



     “Class A Common Shares” shall mean the Class A common shares, par value $0.0001 per
share, of the Company, subject to adjustment pursuant to the third paragraph of Section 3 of the
Plan, under certain circumstances.



     “Exercise Price” shall have the meaning set forth in Section 2.2, subject to
adjustment pursuant to the third paragraph of Section 3 of the Plan.



     “Grant Date” shall have the meaning set forth in Section 2.1.



     “Options” shall have the meaning set forth in Section 2.1.



     In addition, certain other terms used herein have definitions otherwise ascribed to them
herein.



- 1 -









 





     2. Grant and Terms of Options.



          2.1 Grant of Options. The Company hereby grants to the Participant as of the Grant
Date ___ Nonqualified Stock Options (the “Options”) to purchase one Class A Common Share per
Option on the terms and conditions set forth below, and in reliance upon the representations and
covenants of the Participant set forth below. Unless sooner exercised as provided for in the Plan
or this Agreement, the Options shall expire on the tenth anniversary of the date of this Agreement.




          2.2
Exercise Price. The Exercise Price of the Options is $ ___ per Class A Common
Share subject thereto.




          2.3 Vesting and Exercisability.





          (a) The Options shall vest as described in the Employment Agreement with the Company
and once vested shall become exercisable to the extent provided for in the Employment
Agreement. Options that are exercisable may be exercised by the Participant only in
accordance with the terms of the Plan and this Agreement and Employment Agreement, subject
to the termination, expiration, cancellation, lapsing and other provisions contained herein
and in the Plan.




          (b) Notwithstanding anything to the contrary in Section 2.3(a), if the Participant is
employed by the Company and in good standing at the time of a Change in Control, the Options
(or a portion thereof) may accelerate so as to vest and become exercisable in accordance
with the terms of the Employment Agreement, if so provided by the Employment Agreement.



     3. Expiration and Cancellation.



          3.1 Termination of Employment. Upon termination of Employment for any reason
(including Cause), vesting ceases (other than with respect Options that have vested provisionally
as of such date of termination under the terms of the Employment Agreement), the term of unvested
Options lapses and such unvested Options will expire immediately. If the Participant’s Employment
terminates for Cause, vested Options will also expire immediately. If the Participant’s Employment
terminates for any reason other than for Cause (including as a result of the Participant’s
resignation), the Options shall expire on the earlier of the following occasions:




          (i) the expiration date determined pursuant to Section 2.1; or




          (ii) the date 90 days after the termination of the Participant’s Employment.




          The Participant may exercise all or part of the Options at any time before its expiration
under this Section 3.1, but only to the extent that the Options have vested and become exercisable
before the Participant’s Employment terminated. In the event that the Participant dies after
termination of Employment, but before the expiration of the Options, all of the Options may be
exercised (prior to expiration) by the executors or administrators of the Participant’s estate by
any person who has acquired the Options directly from the Participant by beneficiary




- 2 -









 







designation, bequest or inheritance, but only to the extent that the Options have vested and
become exercisable before the Participant’s Employment terminated.




          3.2 Cancellation. In the event the Participant (i) violates any covenant provided in
the Employment Agreement or (ii) is terminated for Cause (as defined subclauses (ii) and (vii) of
the “Cause” clause of the Employment Agreement) (a “Forfeiture Event”), all Options will be
cancelled, Class A Common shares acquired upon the previous exercise of any Options (“Option
Shares”) will be subject to repurchase by the Company at the lower of the Exercise Price or fair
market value, and the Company shall be entitled to repayment by the Participant of any Award Gain
(as defined below) realized as a result of any exercise of any Options or any sale of Option
Shares.





          (a) Company Repurchase of Shares. Payment with respect to any repurchase of
Option Shares by the Company from the Participant shall take the form of a three-year note
from the Company or its designee, accruing interest at the lowest then applicable rate
mandated by U.S. law, with the principal and interest due on the third anniversary of the
date of purchase (or such later date as may be necessary to permit the Company or its
designee to comply with any applicable borrowing covenants affecting its payment
obligations), and shall be reduced to reflect any outstanding liabilities of the Participant
to the Company or its Affiliates. The Participant promptly shall take all appropriate and
necessary action to facilitate the Company’s purchase of such equity, including the prompt
delivery to the Company (or its designee) of all share certificates or other documents that
the Company may request.




          (b) Recovery of Award Gain.




     1. The term “Award Gain” shall mean (I) in respect of a given options exercise,
the product of (X) the Fair Market Value per Option Share at the date of such
exercise (without regard to any subsequent change in the market price of such Option
Share) minus the Exercise Price times (Y) the number of Option Shares as to which
the Options were exercised at that date, and (II) in respect of any sale of Option
Shares, the value of any cash or the fair market value of the Option Shares or
property paid or payable to the Participant less any cash or the fair market value
of any Option Shares or property (other than Option Shares or Options which would
have been forfeitable hereunder and excluding any payment of tax withholding) paid
by the Participant to the Company (or its designee) as a condition or in connection
with the acquisition of such Option Shares or amount otherwise included in subclause
(I) above.




     2. The Participant will be obligated to repay to the Company (or its designee),
in cash, within ten (10) business days after demand is made therefor, by the Company
(or its designee), the total amount of Award Gain realized by the Participant (I)
upon each exercise of the Options that occurred on or after (A) the date that is six
(6) months prior to the Forfeiture Event, if the Forfeiture Event occurred while the
Participant was employed by the Company or a subsidiary or affiliate, or (B) the
date that is six (6) months prior to the date that the Participant’s employment by
the Company or a subsidiary or affiliate terminated,



- 3 -









 







if the Forfeiture Event occurred after the Participant ceased to be so
employed, or (II) upon any sale, transfer or other disposition of the Option Shares.



     4. Transferability of Plan Shares and Options. 



     The Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber
any Options, except as hereinafter provided in Section 6.1 and in accordance with the Articles of
Association of the Company.



     5. Participant’s Representations, Warranties and Agreements.



     In connection with the exercise of any Options, the Participant shall make to the Company, in
writing, such representations, warranties and agreements in connection with such exercise and
investment in Class A Common Shares as the Committee shall reasonably request.



     6. Successors.



          6.1 This Agreement is personal to the Participant and, without the prior written consent of
the Company, shall not be transferable by the Participant otherwise than (i) by will or the laws of
descent and distribution, (ii) pursuant to a qualified domestic relations order (as defined in the
Code) or (iii) pursuant to a gift to the Participant’s spouse, children, grandchildren or other
living descendants, whether directly or indirectly or by means of a trust, partnership, limited
liability company or otherwise. This Agreement shall inure to the benefit of and be enforceable by
the Participant’s legal representatives.




          6.2 This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.




          6.3 The Company shall require any successor (whether direct or indirect, by purchase, merger,
consolidation, scheme of arrangement or otherwise (an “Acquisition”)) to all or substantially all
of the business and/or assets of the Company expressly to assume and to agree to perform this
Agreement in the same manner and to the same extent that the Company would have been required to
perform it if no such succession had taken place (or by substituting for such Options new options,
based upon the shares of such successor, having an aggregate spread between the Fair Market Value
of the underlying shares and the Exercise Price thereof, and the same term, immediately after such
substitution, equal to the spread on, and the term of, such Options immediately before such
substitution but in any case subject to the same terms and conditions, including those applicable
to vesting and exercise, as may otherwise be applicable to the Options granted by the Company), and
the Participant hereby agrees to such assumption (or substitution); provided, however, that the
Company or such successor may, at its option, at the time of or promptly after such Acquisition,
terminate all of its obligations hereunder with respect to the Options by paying to the Participant
or the Participant’s successors or assigns an amount equal to the product of (i) the number of
Options and (ii) the Fair Market Value per share of the shares underlying such Options at the time
of such Acquisition less the amount of such Options’ Exercise Price (but not in excess of such Fair
Market Value per share), in either case, in exchange for the Participant’s Options. As used in
this Agreement, the “Company” shall mean both the Company as defined above and any such successor
that assumes and agrees to perform this Agreement, by operation of law or otherwise.




- 4 -









 








     7. Miscellaneous.



     7.1 This Agreement shall be governed by and construed and enforced in accordance with the laws
of the State of Delaware, without regard to the principles of conflicts of law thereof. The
captions of this Agreement are not part of the provisions hereof and shall have no force or effect.
This Agreement may not be amended or modified except by a written agreement executed by the
parties hereto or their respective successors and legal representatives.



     7.2 Plan Shares may bear legends to the extent the Committee or the Board determines it to be
necessary or appropriate.



     7.3 All notices and other communications under this Agreement shall be in writing and shall be
given by hand delivery to the other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed if to the Participant, at the address set forth on the
signature page hereto, and if to the Company: United America Indemnity, Ltd., c/o Walkers SPV
Limited, Walker House, 87 Mary Street, P.O. Box 908GT, George Town, Grand Cayman, Cayman Islands,
Attention: General Counsel, or to such other addresses as either party furnishes to the other in
writing in accordance with this Section 7.3. Notices and communications shall be effective when
actually received by the addressee.



     7.4 The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.



     7.5 No later than the date as of which an amount first becomes includible in the gross income
of the Participant for federal, state, foreign or other income tax purposes with respect to any
Options, the Participant shall pay to the Company, or if appropriate, any of its Affiliates, or
make arrangements satisfactory to the Committee regarding the payment of, any federal, state,
local, foreign or other taxes of any kind required by law to be withheld with respect to such
amount. If approved by the Committee, withholding obligations may be settled with Class A Common
Shares, including Class A Common Shares that are part of the award that gives rise to the
withholding requirement. The obligations of the Company under the Plan shall be conditional on
such payment or arrangements, and the Company and its Affiliates shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment otherwise due to the Participant.
The Committee may establish such procedures as it deems appropriate, including making irrevocable
elections, for the settlement of withholding obligations with Class A Common Shares.



     7.6 The Participant’s or the Company’s failure to insist upon strict compliance with any
provision of, or to assert any right under, this Agreement shall not be deemed to be a waiver of
such provision or right or of any other provision of or right under this Agreement.



     7.7 The Options are granted pursuant to the Plan which is incorporated herein by reference and
the Options shall, except as otherwise expressly provided herein, be governed by the terms thereof.
The Participant hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all
the terms and provisions thereof. The Participant and the Company each acknowledges that this
Agreement (together with the Plan and the other agreements referred to herein and therein)
constitutes the entire agreement and supersedes all other agreements and



- 5 -









 







understandings, both written and oral, among the parties or either of them, with respect to
the subject matter hereof; provided, however, that the Employment Agreement shall control in the
event of any conflict between the Employment Agreement and this Agreement.



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



	 	 	 	 	 	 	 	 	 
	UNITED AMERICA INDEMNITY, LTD.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	 	 	 	 	Robert M. Fishman






- 6 -









 






Exhibit C




RESTRICTED SHARE AGREEMENT




     THIS
AGREEMENT, made as of the ___ day of
                    , 200___ (the “Grant Date”), by and between
United America Indemnity, Ltd., a Cayman Islands exempted company with limited liability whose
office is located c/o Walkers SPV Limited, Walker House, 87 Mary Street, P.O. Box 908GT, George
Town, Grand Cayman, Cayman Islands (the “Company”), and Robert M. Fishman (the “Participant”), with
an address of                                         .



     1. Grant of Shares. Subject to the restrictions, terms and conditions of the United
America Indemnity, Ltd. Share Incentive Plan (the “Plan”), this Agreement and, if the Participant
is party to such an agreement, the operative employment agreement between the Participant and
United America Indemnity, Ltd. (the “Employment Agreement”), the Company hereby awards to the
Participant ___ (_0) shares of the Company’s validly issued Class A common shares, par value
$.0001 per share (“Common Shares” or the “Plan Shares”). To the extent required by law, the
Participant shall pay the Company the par value ($.0001) for each Share awarded to the Participant
simultaneously with the execution of this Agreement. Pursuant to Section 2 hereof, the Plan Shares
are subject to certain restrictions, which restrictions relate to the passage of time as an
employee of the Company and/or its Affiliates. While such restrictions are in effect (such period,
the “Restricted Period”), the Plan Shares subject to such restrictions shall be referred to herein
as “Restricted Shares.”



     2. Restrictions on Transfer. The Participant shall not sell, transfer, pledge,
hypothecate, assign or otherwise dispose of the Plan Shares, except as set forth in the Plan, this
Agreement or the Employment Agreement. Any attempted sale, transfer, pledge, hypothecation,
assignment or other disposition of the Plan Shares in violation of the Plan or this Agreement shall
be void and of no effect and the Company shall have the right to disregard the same on its books
and records and to issue “stop transfer” instructions to its transfer agent.



     3. Restricted Shares.



          3.1 Retention of Certificates. Promptly after the date of this Agreement, the Company
shall issue share certificates representing the Restricted Shares unless it elects to recognize
such ownership through book entry by the transfer agent. The share certificates shall be
registered in the Participant’s name and shall bear any legend required under the Plan. Such share
certificates shall be held in custody by the Company (or its designated agent) until the
restrictions thereon shall have lapsed. Upon the Company’s request, the Participant shall deliver
to the Company a duly signed share power, endorsed in blank, relating to the Restricted Shares. In
the event the Participant receives a share dividend on the Restricted Shares or the Plan Shares of
Restricted Shares are split or the Participant receives any other shares, securities, moneys or
property representing a dividend on the Restricted Shares (other than regular cash dividends on and
after the date of this Agreement) or representing a distribution or return of capital upon or in
respect of the Restricted Shares or any part thereof, or resulting from a split-up,
reclassification or other like changes of the Restricted Shares, or otherwise received in exchange
therefor, and any warrants, rights or options issued to the Participant in respect of the
Restricted Shares (collectively “RS Property”), the Participant will also immediately deposit with
and deliver to the




- 1 -









 







Company any of such RS Property, including any certificates representing shares duly endorsed
in blank or accompanied by share powers duly executed in blank, and such RS Property shall be
subject to the same restrictions, including that of this Section 3.1, as the Restricted Shares with
regard to which they are issued and shall herein be encompassed within the term “Restricted
Shares.”




     3.2 Rights with Regard to Restricted Shares. The Participant will have the right to
vote the Restricted Shares, to receive and retain all regular cash dividends payable to holders of
Plan Shares of record on and after the transfer of the Restricted Shares (although such dividends
shall be treated, to the extent required by applicable law, as additional compensation for tax
purposes if paid on Restricted Shares), and to exercise all other rights, powers and privileges of
a holder of Common Shares with respect to the Restricted Shares set forth in the Plan, with the
exceptions that: (i) the Participant will not be entitled to delivery of the share certificate or
certificates representing the Restricted Shares until the Restricted Period shall have expired;
(ii) the Company (or its designated agent) will retain custody of the share certificate or
certificates representing the Restricted Shares and the other RS Property during the Restricted
Period; (iii) no RS Property shall bear interest or be segregated in separate accounts during the
Restricted Period; and (iv) the Participant may not sell, assign, transfer, pledge, exchange,
encumber or dispose of the Restricted Shares during the Restricted Period, except as set forth in
the Plan, this Agreement or the Employment Agreement.



     3.3 Vesting. The Restricted Shares shall become vested and cease to be Restricted
Shares in installments as follows, provided that the Participant is continuously employed by the
Company or any of its Affiliates from the Grant Date until the applicable Vesting Date (as
specified below), unless provided otherwise in the Employment Agreement:



	 	 	 	 	 	 	 	 	 
	Percent of Total	 	 	 	 
	Grant Vested	 	Shares Vested	 	Vesting Date
	 	25	%	 	 	—	 	 	First Anniversary of Grant Date

	 	50	%	 	 	—	 	 	Second Anniversary of Grant Date

	 	75	%	 	 	—	 	 	Third Anniversary of Grant Date

	 	100	%	 	 	—	 	 	Fourth Anniversary of Grant Date







          3.4 Forfeiture. The Participant shall forfeit to the Company, without compensation,
other than repayment of the par value paid for such Plan Shares, any and all unvested Restricted
Shares (but no vested portion of the Plan Shares) and RS Property upon the Participant’s
Termination with the Company and its Affiliates for any reason.




          3.5 Section 83(b). If the Participant properly elects (as required by Section 83(b)
of the Code) within thirty (30) days after the issuance of the Restricted Shares to include in
gross income for federal income tax purposes in the year of issuance the fair market value of such
Plan Shares of Restricted Shares, the Participant shall pay to the Company or make




- 2 -









 







arrangements satisfactory to the Company to pay to the Company upon such election, any
federal, state or local taxes required to be withheld with respect to the Restricted Shares. If
the Participant shall fail to make such payment, or otherwise make arrangements satisfactory to the
Company to pay to the Company, upon election, any federal state or local taxes required to be
withheld, the Company shall, to the extent permitted by law, have the right to deduct from any
payment of any kind otherwise due to the Participant any federal, state or local taxes of any kind
required by law to be withheld with respect to the Restricted Shares. The Participant acknowledges
that it is his or her sole responsibility, and not the Company’s, to file timely and properly the
election under Section 83(b) of the Code and any corresponding provisions of state tax laws if he
or she elects to utilize such election.




          3.6 Delivery Delay. The delivery of any certificate representing the Restricted
Shares or other RS Property may be postponed by the Company for such period as may be required for
it to comply with any applicable federal or state securities law, or any national securities
exchange listing requirements and the Company is not obligated to issue or deliver any securities
if, in the opinion of counsel for the Company, the issuance of such Plan Shares shall constitute a
violation by the Participant or the Company of any provisions of any law or of any regulations of
any governmental authority or any national securities exchange.




          3.7 Withholding. Participant acknowledges that the Restricted Shares is subject to
applicable withholding as described in Section 10(e) of the Plan.




     4. Not an Employment Agreement. The issuance of the Plan Shares hereunder does not
constitute an agreement by the Company to continue to employ the Participant during the entire, or
any portion of the, term of this Agreement, including but not limited to any period during which
the Restricted Shares is outstanding.



     5. Power of Attorney. The Company, its successors and assigns, is hereby appointed
the attorney-in-fact, with full power of substitution, of the Participant for the purpose of
carrying out the Company’s rights and obligations with respect to the Restricted Shares and RS
Property under the provisions of this Agreement and taking any action and executing any instruments
which such attorney-in-fact may deem necessary or advisable to accomplish the purposes thereof,
which appointment as attorney-in-fact is irrevocable and coupled with an interest. The Company, as
attorney-in-fact for the Participant, may in the name and stead of the Participant, make and
execute all conveyances, assignments and transfers of the Restricted Shares and RS Property
provided for herein, and the Participant hereby ratifies and confirms all that the Company, as said
attorney-in-fact, shall do by virtue hereof. Nevertheless, the Participant shall, if so requested
by the Company, execute and deliver to the Company all such instruments as may, in the judgment of
the Company, be advisable for the purpose.



     6. Miscellaneous.



          6.1 This Agreement shall inure to the benefit of and be binding upon the parties hereto and
their respective heirs, legal representatives, successors and assigns.




- 3 -









 








          6.2 Notwithstanding those powers granted the Company pursuant to Section 5 hereof, no
modification or waiver of any of the provisions of this Agreement shall be effective unless agreed
upon, reflected in writing and signed by the parties to this Agreement.




          6.3 This Agreement may be executed in one or more counterparts, all of which taken together
shall constitute one contract.




          6.4 The failure of any party hereto at any time to require performance by another party of any
provision of this Agreement shall not affect the right of such party to require performance of that
provision, and any waiver by any party of any breach of any provision of this Agreement shall not
be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the
provision itself, or a waiver of any right under this Agreement.




          6.5 The headings of the sections of this Agreement have been inserted for convenience of
reference only and shall in no way restrict or modify any of the terms or provisions hereof.




          6.6 All notices, consents, requests, approvals, instructions and other communications provided
for herein shall be in writing and validly given or made when delivered, or on the second
succeeding business day after being mailed by registered or certified mail, whichever is earlier,
to the persons entitled or required to receive the same, at the addresses set forth at the heading
of this Agreement or to such other address as either party may designate by like notice. Notices
to the Company shall be addressed to the General Counsel of the Company.




          6.7 This Agreement and the award hereunder are subject to all the restrictions, terms and
provisions of the Plan which are incorporated herein by reference. In the event of an
inconsistency between any provision of the Plan and this Agreement, the terms of the Plan shall
control. The capitalized terms in this Agreement that are not otherwise defined shall have the
same meaning as set forth in the Plan. The Participant and the Company each acknowledges that this
Agreement (together with the Plan and the other agreements referred to herein and therein)
constitutes the entire agreement and supersedes all other agreements and understandings, both
written and oral, among the parties or either of them, with respect to the subject matter hereof;
provided, however, that the Employment Agreement shall control in the event of any conflict between
the Employment Agreement and this Agreement.




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



	 	 	 	 	 	 	 	 	 
	UNITED AMERICA INDEMNITY, LTD.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	 	 	 	 	Robert M. Fishman







- 4 -










 










Schedule II




UAI CEO Employment Agreement

Retained Cash Bonus True-up Example




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Year Ended	 	 	2007 Payout on	 	 	Year Ended	 	 	2008 Payout on	 	 	Year Ended	 	 	2009 Payout on	 	 	Year Ended	 	 	2010 Payout on	 	 	Year Ended	 	 	2011 Payout on	 	 	Year Ended	 	 	2012 Payout on	 	 	Year Ended	 	 	2013 Payout on	 
	 	 	2007	 	 	Mar./Apr. 2008 (1)	 	 	2008	 	 	Mar./Apr. 2009	 	 	2009	 	 	Mar./Apr. 2010	 	 	2010	 	 	Mar./Apr. 2011 (13)	 	 	2011	 	 	Mar./Apr. 2012	 	 	2012	 	 	Mar./Apr. 2013	 	 	2013	 	 	Mar./Apr. 2014	 
	Projected Consolidated Net Income Per Share — (Accident Year Basis)
	 	$	2.30	 	 	 	 	 	 	$	2.53	 	 	 	 	 	 	$	2.78	 	 	 	 	 	 	$	3.06	 	 	 	 	 	 	$	3.37	 	 	 	 	 	 	$	3.70	 	 	 	 	 	 	$	4.07	 	 	 	 	 
	Actual Consolidated Net Income Per Share — (Accident Year Basis)
	 	$	2.30	 	 	 	 	 	 	$	2.67	 	 	 	 	 	 	$	2.50	 	 	 	 	 	 	$	3.34	 	 	 	 	 	 	$	3.40	 	 	 	 	 	 	$	3.65	 	 	 	 	 	 	$	4.08	 	 	 	 	 
	Performance Score — Section A.b
	 	 	100.0	%	 	 	 	 	 	 	105.5	%	 	 	 	 	 	 	90.0	%	 	 	 	 	 	 	109.1	%	 	 	 	 	 	 	101.0	%	 	 	 	 	 	 	98.5	%	 	 	 	 	 	 	100.1	%	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bonus Components:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Section B.(a) bonus (2)
	 	 	500,000	 	 	 	 	 	 	 	775,000	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	955,000	 	 	 	 	 	 	 	550,000	 	 	 	 	 	 	 	425,000	 	 	 	 	 	 	 	505,000	 	 	 	 	 
	Section B.(b) bonus (3)
	 	 	1,000,000	 	 	 	 	 	 	 	1,000,000	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	1,000,000	 	 	 	 	 	 	 	1,000,000	 	 	 	 	 	 	 	700,000	 	 	 	 	 	 	 	1,000,000	 	 	 	 	 
	Payment for Tax liability on restricted share vesting (12) — Section B.c
	 	 	 	 	 	 	—	 	 	 	 	 	 	 	46,250	 	 	 	 	 	 	 	92,500	 	 	 	 	 	 	 	92,500	 	 	 	 	 	 	 	154,167	 	 	 	 	 	 	 	169,584	 	 	 	 	 	 	 	185,000	 
	Annual Bonus
	 	 	 	 	 	 	1,500,000	 	 	 	 	 	 	 	1,821,250	 	 	 	—	 	 	 	92,500	 	 	 	 	 	 	 	2,047,500	 	 	 	 	 	 	 	1,704,167	 	 	 	 	 	 	 	1,294,584	 	 	 	 	 	 	 	1,690,000	 
	Paid in Restricted Stock (4) — Section C
	 	 	(500,000	)	 	 	500,000	 	 	 	(500,000	)	 	 	500,000	 	 	 	—	 	 	 	—	 	 	 	(500,000	)	 	 	500,000	 	 	 	(500,000	)	 	 	500,000	 	 	 	(500,000	)	 	 	500,000	 	 	 	(500,000	)	 	 	500,000	 
	Annual Bonus Cash Portion (without regard to tax liability payments) — Section D
	 	 	1,000,000	 	 	 	 	 	 	 	1,275,000	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	1,455,000	 	 	 	 	 	 	 	1,050,000	 	 	 	 	 	 	 	625,000	 	 	 	 	 	 	 	1,005,000	 	 	 	 	 
	Paid Cash Bonus — Section D.a
	 	 	500,000	 	 	 	500,000	 	 	 	637,500	 	 	 	637,500	 	 	 	—	 	 	 	—	 	 	 	727,500	 	 	 	727,500	 	 	 	525,000	 	 	 	525,000	 	 	 	312,500	 	 	 	312,500	 	 	 	502,500	 	 	 	502,500	 
	Retained Cash Bonus — Section D.b
	 	 	500,000	 	 	 	 	 	 	 	637,500	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	727,500	 	 	 	 	 	 	 	525,000	 	 	 	 	 	 	 	312,500	 	 	 	 	 	 	 	502,500	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2007 Payout on	 	 	 	 	 	2008 Payout on	 	 	 	 	 	2009 Payout on	 	 	 	 	 	2010 Payout on
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2007	 	 	April 15, 2011 (6)	 	2008	 	 	April 15, 2012	 	2009	 	 	April 15, 2013	 	2010	 	 	April 15, 2014
	Accident Year Performance Score True-Up
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Trued-up Performance Score — Section E.a
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	97.0	%	 	 	 	 	 	 	99.0	%	 	 	 	 	 	 	98.0	%	 	 	 	 	 	 	102.0	%	 	 	 	 
	Recalculated Section B.(a) Bonus
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	350,000	 	 	 	 	 	 	 	450,000	 	 	 	 	 	 	 	400,000	 	 	 	 	 	 	 	600,000	 	 	 	 	 
	Recalculated Section B.(b) Bonus
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	400,000	 	 	 	 	 	 	 	800,000	 	 	 	 	 	 	 	600,000	 	 	 	 	 	 	 	1,000,000	 	 	 	 	 
	Total recalculated Annual Bonus (without regard to tax liability payments)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	750,000	 	 	 	 	 	 	 	1,250,000	 	 	 	 	 	 	 	1,000,000	 	 	 	 	 	 	 	1,600,000	 	 	 	 	 
	Less: Restricted Stock component (5)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(500,000	)	 	 	 	 	 	 	(500,000	)	 	 	 	 	 	 	(500,000	)	 	 	 	 	 	 	(500,000	)	 	 	 	 
	Trued Up Annual Bonus Cash Portion — Section E.a
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	250,000	 	 	 	 	 	 	 	750,000	 	 	 	 	 	 	 	500,000	 	 	 	 	 	 	 	1,100,000	 	 	 	 	 
	Excess of Trued-Up Annual Bonus Cash Portion over originally determined Annual Bonus Cash Portion — Section E.b or Section E.d
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(750,000	)	 	 	 	 	 	 	(525,000	)	 	 	 	 	 	 	500,000	 	 	 	 	 	 	 	(355,000	)	 	 	 	 
	Retained Cash Bonus for Target Year — Section E.b.2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	500,000	 	 	 	 	 	 	 	637,500	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	727,500	 	 	 	 	 
	Excess + Retained Cash Bonus for Target Year— Sections E.b.1 and 2 or Section E.d (9)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(250,000	)	 	 	 	 	 	 	112,500	 	 	 	112,500	 	 	 	500,000	 	 	 	500,000	 	 	 	372,500	 	 	 	372,500	 
	Deemed Investment Return (10) — Section E.b.3
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	17,733	 	 	 	17,733	 	 	 	78,813	 	 	 	78,813	 	 	 	58,715	 	 	 	58,715	 
	Payment for Tax liability on restricted share vesting (11) — Section B.c
	 	 	 	 	 	 	—	 	 	 	 	 	 	 	46,250	 	 	 	 	 	 	 	92,500	 	 	 	 	 	 	 	92,500	 	 	 	 	 	 	 	154,167	 	 	 	 	 	 	 	169,584	 	 	 	 	 	 	 	185,000	 
	Total Bonus Paid or Awarded (8)
	 	 	 	 	 	$	1,000,000	 	 	 	 	 	 	$	1,183,750	 	 	 	 	 	 	$	92,500	 	 	 	 	 	 	$	1,320,000	 	 	 	 	 	 	$	1,309,400	 	 	 	 	 	 	$	1,560,896	 	 	 	 	 	 	$	1,618,716	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cumulative Retained Cash Bonus (7):
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cumulative Retained Cash Bonus as of the Prior Year
	 	 	—	 	 	 	—	 	 	 	500,000	 	 	 	1,137,500	 	 	 	1,137,500	 	 	 	1,137,500	 	 	 	1,137,500	 	 	 	1,115,000	 	 	 	1,115,000	 	 	 	1,115,000	 	 	 	1,002,500	 	 	 	1,315,000	 	 	 	1,315,000	 	 	 	1,462,500	 
	Current Year Retained Cash Bonus
	 	 	500,000	 	 	 	500,000	 	 	 	637,500	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	727,500	 	 	 	—	 	 	 	525,000	 	 	 	—	 	 	 	312,500	 	 	 	—	 	 	 	502,500	 	 	 	—	 
	Retained Cash Bonus which is paid out (E.b or E.d) or used to reduce other held Retained Cash Bonues (E.d)
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	(750,000	)	 	 	 	 	 	 	(525,000	)	 	 	(112,500	)	 	 	—	 	 	 	—	 	 	 	(355,000	)	 	 	(372,500	)
	Cumulative Retained Cash Bonus (7)
	 	 	500,000	 	 	 	500,000	 	 	 	1,137,500	 	 	 	1,137,500	 	 	 	1,137,500	 	 	 	1,137,500	 	 	 	1,115,000	 	 	 	1,115,000	 	 	 	1,115,000	 	 	 	1,002,500	 	 	 	1,315,000	 	 	 	1,315,000	 	 	 	1,462,500	 	 	 	1,090,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Restricted Stock Vesting Schedule (12)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2007 (Granted on March 15, 2008)
	 	 	 	 	 	 	—	 	 	 	 	 	 	 	125,000	 	 	 	 	 	 	 	125,000	 	 	 	 	 	 	 	125,000	 	 	 	 	 	 	 	125,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2008 (Granted on March 15, 2009)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	125,000	 	 	 	 	 	 	 	125,000	 	 	 	 	 	 	 	125,000	 	 	 	 	 	 	 	125,000	 	 	 	 	 	 	 	 	 
	2009 no shares granted due to original performance score of 90%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	 	 
	2010 (Granted on March 15, 2011) (13)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	166,667	 	 	 	 	 	 	 	166,667	 	 	 	 	 	 	 	166,667	 
	2011 (Granted on March 15, 2012)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	166,667	 	 	 	 	 	 	 	166,667	 
	2012 (Granted on March 15, 2013)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	166,667	 
	2013 (Granted on March 15, 2014)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Value of shares vesting per calendar year
	 	 	 	 	 	 	—	 	 	 	 	 	 	 	125,000	 	 	 	 	 	 	 	250,000	 	 	 	 	 	 	 	250,000	 	 	 	 	 	 	 	416,667	 	 	 	 	 	 	 	458,334	 	 	 	 	 	 	 	500,001	 








 




			
	(1)	 	Restricted stock grant is made as of March 15. Paid Cash Bonus is made within 30 days of the Board’s determination, which is due within 75 days of the start of the year.
	 
	(2)	 	(Performance Score -90)x50,000
	 
	(3)	 	(Performance Score <=100-95)x200,000
	 
	(4)	 	Full $500,000 payment assumes goals/milestones fully achieved.
	 
	(5)	 	Restricted stock component is deducted because it is not impacted by true-up feature.
	 
	(6)	 	Retained Cash Bonus is paid within 45 days of completion of audited financial statements, which are expected on March 1.
	 
	(7)	 	Cumulative Retained Cash Bonus equals annual Retained Cash Bonus, less payouts of retained bonus or deficits after the true-up period has ended.
	 
	(8)	 	Calendar year bonus paid consists of restricted stock and 50% of Target Year Annual Cash Bonus, plus payout of trued-up remainder for the Target Year close out scheduled for that year.
	 
	(9)	 	The Retained Cash Bonus for 2007 upon true-up was depleted, and therefore no Retained Cash Bonus is paid, and the remaining deficit is netted against the cumulative Retained Cash Bonus.
	 
	(10)	 	CEO earns interest on the Retained Cash Bonus at the invested asset earned rate of the Company over the 3-year period.
For purposes of this example, a 5% return on invested assets is assumed.
	 
	(11)	 	As per the employment contract, the CEO receives cash funding of the tax liability generated by the scheduled vesting of his restricted stock shares.
A 37% effective tax rate (assuming a PA/non-Phila — resident (35% federal, 3.07% state)) has been used for the purpose of this example.
	 
	(12)	 	Assumes flat share value over vesting period.
	 
	(13)	 	Payments and grants in 2011 and thereafter are based on CEO/Company reaching agreement on continued employment.
True-ups for 2011 and beyond are not shown.