Exhibit 10.2


 


AXIS
SPECIALTY U.S. SERVICES, INC.


430
PARK AVENUE, 15TH FLOOR


NEW
YORK, NEW YORK 10022


 


May 9,
2005


 


PERSONAL AND
CONFIDENTIAL


 


Lorraine S. Mariano


3685 Paces Ferry Road N.W.


Atlanta, Georgia 30327


 


Dear Lorraine:


 


This will
confirm the agreement (the “Agreement”), dated as of the date first set
forth above (the “Execution Date”), that has been reached with you in
connection with the termination of your employment with AXIS Specialty U.S.
Services, Inc. (the “Company”).


 


1.             Termination of Employment.


 


(a)           We
have agreed that your employment with the Company as Chief Human Resources
Officer shall terminate effective December 31, 2005 (the “Termination
Date”).  You hereby confirm that
effective December 31, 2005, you shall no longer hold any officer or
director positions with the Company or any of its parents, subsidiaries or
affiliates, or any other offices or positions that you hold in connection with
your employment with the Company, and you agree to execute such documents and
take such actions as may be necessary or desirable to effectuate the foregoing.  During
the period from the Execution Date to the Termination Date, the Employment
Agreement between you and the Company dated April 1, 2004 (the “Employment
Agreement”) shall continue in full force and effect.  Without limiting the generality of the
foregoing, the Employment Agreement shall govern any termination of your
employment which occurs prior to the Termination Date.  Upon the Termination Date, the Employment
Agreement shall terminate other than with respect to provisions identified in Section 4(a) below.  A
copy of the Employment Agreement is annexed hereto as Exhibit A.


 


(b)           The
Company agrees to engage you as a consultant following the Termination Date in
accordance with the terms and conditions set forth in a Consulting Agreement
between you and the Company, a
form of which is annexed hereto as Exhibit B (the “Consulting Agreement”),
provided, however, that this Agreement becomes effective (in
accordance with paragraph 9 below), and provided  further, that
you sign the Additional Release in the form annexed hereto as Exhibit C
(the “Additional Release”) upon the Termination Date, and such
Additional Release becomes effective pursuant to its terms.  Your
obligations as a consultant under the Consulting Agreement shall commence on January 1,
2006 and shall continue through June 30, 2006 or such


 





















 


earlier date as your Consulting Agreement terminates in accordance with
its terms (the “Consulting Period”). 
Notwithstanding the foregoing, the Company shall have no obligation to
enter into, or make any payments under, the Consulting Agreement in the event
your employment is terminated by the Company for Cause pursuant to paragraph
3(a)(iii) of the Employment Agreement prior to the Termination Date.


 


2.             Separation Payments and Benefits.  In consideration for your execution of and
compliance with the terms and conditions in this Agreement including, but not
limited to, your consent to the Release set forth in paragraph 3 below:


 


(a)           The
Company agrees to continue your current annual base salary of $262,500, to be
payable in accordance with the Company’s customary payroll practices, for a
period of twelve (12) months following the Termination Date.


 


(b)           You
shall receive, with respect to the Company’s fiscal year 2005, at least your “target”
annual bonus under AXIS Capital Holdings Limited 2004 Annual Incentive Plan in
accordance with the terms of the Plan and based upon the performance of the
Company (the “2005 Annual Bonus”). 
The 2005 Annual Bonus shall be paid at the time the Company pays such
bonuses to similarly situated employees.


 


(c)           With
respect to your outstanding equity awards set forth on Exhibit D, such
awards shall continue to vest in accordance with their original vesting schedule and
shall otherwise remain subject to the terms and conditions of the agreement
evidencing such awards; provided, however, that with respect to
your outstanding options, you shall be entitled to exercise such options within
90 days following the date on which such options vest and any option not
exercised within such 90 day period shall terminate immediately.


 


(d)           The
Company agrees to pay you an amount equal to any and all reasonable and
necessary unreimbursed business expenses incurred by you on behalf of the
Company prior to the Termination Date.


 


(e)           The
Company agrees to continue your current health insurance coverage under the
Company’s medical and dental plans for a period of twelve (12) months following
the Termination Date, in accordance with the terms and conditions of such plans
and as such plans may be amended from time to time.  The Company shall provide you with the
opportunity to elect benefits continuation for a period of eighteen (18) months
(or such additional period for which you qualify) under the Consolidated
Omnibus Reconciliation Act of 1985, as amended (referred to as COBRA),
following the first anniversary of the Termination Date at your own expense.


 


(f)            The
payments, benefits and awards contemplated by paragraphs 2(a), 2(b), 2(c), and 2(e) above
shall be made provided that this Agreement becomes effective (as provided for
in paragraph 9 below), and provided further, that you sign the Additional
Release upon the Termination Date (or upon such earlier date as your employment
terminates under the Employment Agreement), and such Additional Release becomes
effective pursuant to its terms. 
Notwithstanding the foregoing, the Company


 


2





















 


shall have no obligation to provide you with the payments, benefits or
awards contemplated by paragraphs 2(a), 2(b), 2(c), or

2(e) above in the event your employment is terminated by the Company for
Cause pursuant to paragraph 3(a)(iii) of the Employment Agreement prior to
the Termination Date.


 


(g)           You
acknowledge that the payments,
benefits and awards referred to in this Agreement are in lieu of and in full
satisfaction of any amounts that might otherwise be payable or due to you under
any contract, plan, policy or practice, past or present, of the Company or any
of the other Company Releasees (as defined below), including, without
limitation, the Employment Agreement, the AXIS Capital Holdings Long-Term
Equity Compensation Plan, and the AXIS Capital Holdings Limited 2004 Annual
Incentive Plan.  Notwithstanding the foregoing,
nothing in this Agreement shall impair or preclude your entitlement to any
vested benefits you may have as of the Termination Date under the AXIS 401(k)
Savings Plan and the AXIS Specialty U.S. Services Inc. Supplemental Retirement
Plan.


 


(h)           Notwithstanding
anything herein to the contrary, your rights to any payment or benefits during
the Consulting Period shall be governed by the terms of the Consulting
Agreement.


 


(i)            The
Company shall be entitled to withhold from amounts to be paid to you under this
paragraph 2 any applicable
foreign, federal, state or local withholding or other taxes which the Company
is from time to time required by law to withhold, and to issue W-2s and 1099s
as required by law.


 


3.             Release.


 


(a)           In
consideration of the Company’s obligations set forth in this Agreement,
including but not limited to the payments and benefits described in paragraph 2
above, you voluntarily, knowingly and willingly on behalf of yourself, your
heirs, executors, administrators, successors and assigns, hereby irrevocably
and unconditionally release the Company, its parents, their subsidiaries,
divisions and affiliates, together with their respective owners, assigns,
agents, directors, partners, officers, employees, consultants, shareholders, attorneys
and representatives, and any of their predecessors and successors and each of
their estates, heirs and assigns (collectively, the “Company Releasees”)
from any and all charges, complaints, claims, liabilities, obligations,
promises, agreements, causes of action, rights, costs, losses, debts and
expenses of any nature whatsoever, known or unknown, which you or your
heirs, executors, administrators, successors or assigns ever had, now have or
hereafter can, will or may have (either directly, indirectly, derivatively or
in any other representative capacity) against the Company or any of the other
Company Releasees by reason of any matter, cause or thing whatsoever arising on
or before the date this Agreement is executed by you (the “Release”).  This Release includes, without limitation,
any rights or claims relating in any way to your employment relationship with
the Company or any of the Company Releasees, or the termination thereof,
arising under any federal, state and local labor, employment, whistleblower
and/or anti-discrimination laws including, without limitation, the federal Age
Discrimination in Employment Act, the Older Workers


 


3





















 


Benefit Protection Act, the Employee Retirement Income Security Act,
the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964,
the Family and Medical Leave Act, the Civil Rights Act of 1991, the Fair Labor
Standards Act, the Equal Pay Act, the Immigration and Reform Control Act, the
Uniform Services Employment and Re-Employment Act, the Rehabilitation Act of
1973, Executive Order 11246, the Sarbanes-Oxley Act of 2002, the New York State
and City Human Rights Laws, the Georgia Equal Employment for Persons with
Disabilities Code, the Code of Georgia, each as amended, or any other federal,
state or local or foreign law, regulation, ordinance or common law, or under
any policy, agreement, understanding or promise, written or oral, formal or
informal, between the Company or any of the Company Releasees and you,
including, without limitation, the Employment Agreement (as defined above).


 


(b)           By
signing this Agreement, you represent that you have not commenced or joined in
any claim, charge, action or proceeding whatsoever against the Company or any
of the Company Releasees arising out of or relating to any of the matters set
forth in this paragraph 3.  You further
represent that you will not be entitled to any personal recovery in any action
or proceeding of any nature whatsoever against the Company or any of the other
Company Releasees that may be commenced on your behalf arising out of any of
the matters released hereby.


 


(c)           You
agree and acknowledge that the Company and the other Company Releasees have
fully satisfied any and all obligations owed to you arising out of your
employment with the Company (or the termination thereof), and no further sums
are owed to you by the Company or any of the other Company Releasees, except as
expressly provided in this Agreement.


 


4.             Covenants; Confidentiality.


 


(a)        You reaffirm, and agree to comply with, all of your
obligations set forth in paragraph 4 (Assignment of Intellectual Property
Rights), paragraph 5 (Non-Disclosure) and paragraph 6 (Non-Solicitation) of the
Employment Agreement (as defined above), and agree that such obligations shall
remain in full force and effect and such paragraphs are incorporated by
reference as if restated herein.


 


(b)       You agree to keep the terms of this Agreement
confidential and not to disclose the existence of this Agreement or its terms
to any person, except that you may disclose such information:  (i) as may be required in the course or
obtaining legal or tax advice; (ii) as may be required for the filing of
income tax returns or required financial disclosures; (iii) as may be
required in the enforcement or implementation of this Agreement; or (iv) as
may be required to respond to a subpoena, court order or similar legal
process.  In the case of any disclosure
to a legal or tax advisor, you shall require any person receiving such information
to maintain its confidentiality.


 


4





















 


(c)        Notwithstanding anything herein to the contrary, in
the event that you violate any of your continuing obligations referenced in
paragraph 4(a) above or any of the provisions set forth in paragraphs 4(b) or
7 herein: (i) the Company shall have no obligation to enter into, or make
any payments under, the Consulting Agreement; (ii) the Company shall have
no obligation to make, or to continue to make, the payments set forth in
paragraphs 2(a) or 2(b) above; and (iii) all outstanding and
unvested equity awards held by you as of the date of any such violation shall
be forfeited.


 


5.             Waiver of Future Employment.  You acknowledge that you forever waive any
interest in, or claim to, any future employment with the Company, its parents
or any of its subsidiaries, divisions or affiliates, and further agree that you
will not knowingly apply for, or otherwise seek or accept employment with, any
such entity at any time in the future.


 


6.             No Admission.  The Company’s offer to you of this Agreement
and the payments and benefits set forth herein are not intended to, and shall
not be construed as, any admission of liability or wrongdoing on the part of
the Company or any of the Company Releasees.


 


7.             Nondisparagement.  You agree that at all times hereafter,
you shall not make, or cause to be made, any public statement, observation or
opinion that (i) accuses or implies that the Company or any of the Company
Releasees engaged in any wrongful, unlawful or improper conduct, whether
relating to your employment with the Company (or the termination thereof), the
business or operations of the Company, or otherwise; or (ii) disparages,
impugns or in any way reflects adversely upon the business or reputation of the
Company or any of the other Company Releasees. 
Nothing in this paragraph 7 shall preclude you from providing truthful
testimony in response to a legal subpoena or as required by law.


 


8.             Consultation with Attorney/Voluntary Agreement.  You acknowledge that (i) the Company has
advised you of your right to consult with an attorney of your choosing prior to
signing this Agreement, (ii) you have carefully read and fully understand
all of the provisions of this Agreement, and (iii) you are entering into
this Agreement knowingly, freely and voluntarily in exchange for good and
valuable consideration.


 


9.             Consideration and Revocation Period.  You have twenty-one (21) days to consider
this Agreement, although you may elect to sign it sooner.  Once you have signed this Agreement, you
shall have seven (7) days from the date you sign it to revoke your consent
to the Release by delivering (by hand or overnight courier) written notice of
revocation to me at the Company,
at the address listed above.  In the
event you do not revoke your consent, the Release and this Agreement shall
become effective on the eighth (8th) day after the date you have
signed this Agreement (the “Effective Date”).  In the event that you revoke your consent,
the Release and this Agreement shall become null and void and shall not become
effective.


 


5





















 


10.           Assignment.  This Agreement is personal to you and may not
be assigned by you.  This Agreement is
binding on, and will inure to the benefit of, the Company and the other Company
Releasees.


 


11.           No Oral Modification; No Waivers.  This Agreement may not be changed orally, but
may be changed only in a writing signed by you and by a duly authorized
representative of the Company.  The failure
of you or the Company to enforce any of the terms, provisions or covenants of
this Agreement will not be construed as a waiver of the same or of the right of
such party to enforce the same.  Waiver
by you or the Company of any breach or default by the other party of any term
or provision of this Agreement will not operate as a waiver of any other breach
or default.


 


12.           Descriptive Headings.  The paragraph headings contained herein are
for reference purposes only and will not in any way affect the meaning or
interpretation of this Agreement.


 


13.           Enforceability.  It is the desire and intent of the parties
that the provisions of this Agreement shall be enforced to the fullest extent
permissible.  In the event that any one
or more of the provisions of this Agreement is held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder
hereof will not in any way be affected or impaired thereby and any such
provision or provisions will be enforced to the fullest extent permitted by
law.  Moreover, if any one or more of the
provisions contained in this Agreement is held to be excessively broad as to
duration, scope, activity or subject, such provisions shall be construed by
limiting and reducing them so as to be enforceable to the maximum extent
compatible with applicable law.


 


14.           Each Party the Drafter.  This Agreement, and the provisions contained
in it, shall not be construed or interpreted for, or against, any party to this
Agreement because that party drafted or caused that party’s legal
representatives to draft any of its provisions.


 


15.           Governing Law.  This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without reference to its choice of law rules. 
The parties hereby irrevocably consent to the jurisdiction of the State
and Federal courts located in New York, New York for purposes of resolving any
dispute under this Agreement and expressly waive any objections as to venue in
any such courts.


 


6





















 


16.           Entire Agreement.  This Agreement sets forth the entire
agreement and understanding between you and the Company and merges and
supersedes any and all prior agreements, representations, discussions, and
understandings of every kind and nature, written and oral, between you and the
Company concerning the subject matter hereof, including, but not limited to,
the Summary of Terms between you and the Company; provided, however,
that the Employment Agreement shall not be superseded until the Termination
Date (or such earlier date upon which the Employment Agreement terminates in
accordance with its terms).  You represent that, in executing
this Agreement, you have not relied upon any representation or statement made
by the Company or any other Company Releasees, other than those set forth
herein, with regard to the subject matter, basis or effect of this Agreement or
otherwise.  You and the Company agree to
negotiate in good faith should any amendment to this Agreement be required in
order to comply with Section 409A of the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder.


 


If the
foregoing sets forth our agreement as you understand it and consent to it,
please sign the enclosed copy of this Agreement and return it to me at the
Company.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  AXIS SPECIALTY U.S. SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dennis B. Reding

  	
   

  
	
   

  	
   

  	
  Name: Dennis B. Reding

  
	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  
	
  Agreed to and Accepted:

  	
   

  
	
   

  	
   

  
	
  /s/ Lorraine S. Mariano

  	
   

  	
   

  
	
  Lorraine S. Mariano

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  
					



 


7





















 


EXHIBIT D


 


OPTIONS


 


 


	
  AMOUNT

  	
   

  	
  GRANT DATE

  	
   

  	
  EXERCISE PRICE

  	
   

  	
  VESTED

  	
   

  	
  UNVESTED

  	
   

  
	
  20,000

  	
   

  	
   

  	
  April 1,
  2003

  	
   

  	
  $

  	
  16.25

  	
   

  	
  13,332

  	
   

  	
  6,668

  	
   

  
	
  25,000

  	
   

  	
   

  	
  January 2,
  2004

  	
   

  	
  $

  	
  29.62

  	
   

  	
  8,333

  	
   

  	
  16,667

  	
   

  
	
  25,000

  	
   

  	
   

  	
  January 13,
  2005

  	
   

  	
  $

  	
  28.02

  	
   

  	
  0

  	
   

  	
  25,000

  	
   

  



 


 


RESTRICTED
STOCK


 


 


	
  AMOUNT

  	
   

  	
  GRANT DATE

  	
   

  	
  VESTING

  	
   

  	
  VESTED

  	
   

  
	
  16,000

  	
   

  	
   

  	
  April 1,
  2003

  	
   

  	
  April 1,
  2006

  	
   

  	
  0

  	
   

  
	
  12,000

  	
   

  	
   

  	
  January 2,
  2004

  	
   

  	
  January 2,
  2007

  	
   

  	
  0

  	
   

  
	
  18,000

  	
   

  	
   

  	
  January 13,
  2005

  	
   

  	
  January 13,
  2008

  	
   

  	
  0

  	
   

  



 





















 


AXIS
SPECIALTY U.S. SERVICES, INC.


430 PARK
AVENUE, 15TH FLOOR


NEW YORK,
NEW YORK 10022


 


December 9, 2005


 


PERSONAL AND CONFIDENTIAL


 


Lorraine S. Mariano


3685 Paces Ferry Road N.W.


Atlanta, Georgia 30327


 


Dear Lorraine:


 


This will
confirm that an agreement (the “Agreement”), dated as of May 9,
2005 (the “Execution Date”), has been reached with you in connection
with the termination of your employment with AXIS Specialty U.S. Services, Inc.
(the “Company”) and that you and the Company have agreed to amend the
Agreement as of the date first written above. 
Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Agreement.


 


1.             Consulting Agreement  Paragraph 1(b) is hereby amended by
deleting Exhibit B annexed to the Agreement in its entirety and
substituting Exhibit B annexed hereto.


 


2.             Additional Release  Paragraph 1(b) is hereby amended by
deleting Exhibit C annexed to the Agreement in its entirety and
substituting Exhibit C annexed hereto.


 


3.             Equity Awards.  Paragraph 2(c) is hereby amended by
deleting such paragraph in its entirety and substituting the following
paragraph:


 


“With respect
to your outstanding equity awards set forth on Exhibit D, (i) such
option awards shall vest on June 30, 2006, you shall be entitled to
exercise such options within 90 days following the date on which such options
vest and any option not exercised within such 90 day period shall terminate
immediately and (ii) such restricted stock awards shall continue to vest
in accordance with their original vesting schedule and shall otherwise
remain subject to the terms and conditions of the agreement evidencing such
awards.”


 


4.             Assignment.  This Amendment is personal to you and may not
be assigned by you.  This Amendment is
binding on, and will inure to the benefit of, the Company and the other Company
Releasees.


 





















 


5.             No Oral Modification; No Waivers.  This Amendment may not be changed orally, but
may be changed only in a writing signed by you and by a duly authorized
representative of the Company.  The
failure of you or the Company to enforce any of the terms, provisions or
covenants of this Amendment will not be construed as a waiver of the same or of
the right of such party to enforce the same. 
Waiver by you or the Company of any breach or default by the other party
of any term or provision of this Amendment will not operate as a waiver of any
other breach or default.


 


6.             Descriptive Headings.  The paragraph headings contained herein are
for reference purposes only and will not in any way affect the meaning or
interpretation of this Amendment.


 


7.             Enforceability.  It is the desire and intent of the parties
that the provisions of this Amendment shall be enforced to the fullest extent
permissible.  In the event that any one
or more of the provisions of this Amendment is held to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remainder
hereof will not in any way be affected or impaired thereby and any such
provision or provisions will be enforced to the fullest extent permitted by
law.  Moreover, if any one or more of the
provisions contained in this Amendment is held to be excessively broad as to
duration, scope, activity or subject, such provisions shall be construed by
limiting and reducing them so as to be enforceable to the maximum extent
compatible with applicable law.


 


8.             Each Party the Drafter.  This Amendment, and the provisions contained
in it, shall not be construed or interpreted for, or against, any party to this
Amendment because that party drafted or caused that party’s legal
representatives to draft any of its provisions.


 


9.             Governing Law.  This Amendment shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York,
without reference to its choice of law rules. 
The parties hereby irrevocably consent to the jurisdiction of the State
and Federal courts located in New York, New York for purposes of resolving any
dispute under this Amendment and expressly waive any objections as to venue in
any such courts.


 


10.           Entire Agreement.  The Agreement as amended by this Amendment
sets forth the entire agreement and understanding between you and the Company
and merges and supersedes any and all prior agreements, representations,
discussions, and understandings of every kind and nature, written and oral,
between you and the Company concerning the subject matter hereof, including,
but not limited to, the Summary of Terms between you and the Company; provided,
however, that the Employment Agreement shall not be superseded until the
Termination Date (or such earlier date upon which the Employment Agreement
terminates in accordance with its terms).  You represent that, in executing
this Agreement, you have not relied upon any representation or statement made
by the Company or any other Company Releasees, other than those set forth
herein, with regard to the subject matter, basis or effect of this Amendment or
otherwise.


 


2





















 


If the
foregoing sets forth our agreement as you understand it and consent to it,
please sign the enclosed copy of this Amendment and return it to me at the
Company.


 


	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AXIS SPECIALTY U.S. SERVICES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Dennis B. Reding

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Dennis B. Reding

  
	
   

  	
   

  	
   

  	
  Title: Executive Vice President

  
	
   

  	
   

  	
   

  
	
  Agreed to and Accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Lorraine S. Mariano

  	
   

  	
   

  	
   

  
	
  Lorraine S. Mariano

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  
						



 


3





















 


EXHIBIT B


 


AXIS SPECIALTY U.S. SERVICES,
INC.


430 PARK AVENUE, 15TH FLOOR


NEW YORK, NEW YORK 10022


 


Lorraine S. Mariano


3685 Paces Ferry Road,
N.W.


Atlanta, Georgia  30327


 


Dear Lorraine:


 


We are delighted that you
have decided to act as an advisor for AXIS Specialty U.S. Services, Inc.,
a Delaware corporation (the “Company”) and wholly owned, indirect
subsidiary of AXIS Capital Holdings Limited, a Bermuda company (the “Parent”).
We thought it would be useful to lay out the terms and conditions of our
agreement in this letter agreement (this “Agreement”).  This Agreement is dated as of January 1,
2006.


 


1.             Engagement


 


The Company hereby agrees
to engage you as a human resources advisor to the Company. In this capacity,
you will assist the Chief Executive Officer and President of the Parent or any
other appropriate designee as may be directed by him in human resource matters.
You will be expected to devote such time as the Company reasonably deems
appropriate to the performance of your duties and responsibilities to the
Company, and shall faithfully and diligently endeavor to promote the business
and best interests of the Company and the Parent.  Nothing in this Section 1 shall preclude
you from performing services for persons or entities other than the Company to
the extent such services do not interfere with your obligations under this
Agreement.


 


2.             Compensation
and Benefits


 


(a)           During
your engagement hereunder with the Company, your total fee shall be $200,000
(the “Consulting Fee”) and shall be payable in six monthly installments
of $33,333 in accordance with the Company’s customary payroll practices.


 


(b)           In
connection with the execution of this Agreement, Parent agrees to grant to you
an award of restricted shares of the Common Stock (“Restricted Shares”)
of Parent pursuant to the 2003 Long-Term Equity Compensation Plan (the “Parent
Equity Plan”)
based on the 2005 performance of the Company and at least equal to your 2005
target.  The Restricted
Shares will vest on the third anniversary of the date of grant and as otherwise
set forth in the Parent Equity Plan and the award agreement.  All other terms and conditions shall be
provided in the Parent Equity Plan and the award agreement.


 


(c)           During
your engagement hereunder by the Company, you will not be entitled to
participate in any benefit plans or other fringe benefits made available to
employees of the


 





















 


Company, other than
medical and dental insurance as provided in the Separation Agreement between
you and the Company a copy of which is attached hereto (the “Separation
Agreement”).


 


(d)           During
your engagement hereunder by the Company, the Company will reimburse you for
all reasonable business expenses upon presentation of statements of such
expenses in accordance with the Company’s policies and procedures now in force
or as such policies and procedures may be modified.


 


3.             Term
of Engagement


 


(a)           The
engagement period shall commence on January 1, 2006 and shall terminate on
June 30, 2006. Notwithstanding the foregoing, your engagement hereunder
will be terminated upon the earliest to occur of the following events:


 


(i)            Death.  Your engagement hereunder shall automatically
terminate upon your death.


 


(ii)           Cause.  The Company may terminate your engagement
hereunder for Cause, which, for purposes of this Agreement, shall mean (A) the
willful engagement by you in misconduct that is demonstrably injurious to the
Company (monetarily or otherwise) or its reputation, (B) your material
breach of this Agreement or the Separation Agreement or (C) your
conviction of, or pleading guilty or nolo contendere to, a felony or a crime
involving moral turpitude.


 


(iii)         Without
Cause.  The Company may
terminate your engagement hereunder at any time without Cause.


 


(iv)          Voluntary
Resignation. 
You may voluntarily terminate your engagement hereunder at any time.


 


(v)           Additional
Release.  Your engagement
hereunder shall automatically termination in the event that the Additional
Release (as defined in the Separation Agreement) does not become effective in
accordance with its terms.


 


(b)           In
the event that your engagement hereunder by the Company shall terminate for any
reason, except as otherwise set forth in this Agreement, the Company’s sole
obligation under the Agreement shall be to pay to you any earned but unpaid
portion of the Consulting Fee through the date of termination and an amount
equal to such reasonable and necessary unreimbursed business expenses incurred
by you on behalf of Company on or prior to the date of termination.


 


(c)           In
the event that the Company terminates your engagement hereunder without Cause
in accordance with the provisions of Section 3(a)(iii) hereof, you
shall be entitled to continuation of your Consulting Fee until June 30,
2006; provided, however, that you comply with your obligations under
Sections 3(d), 4, 5, 6 and 7 hereof.


 


2





















 


(d)           Upon
termination of your engagement hereunder with the Company for any reason, you
agree (i) to resign from all directorships and other offices that you may
hold in connection with your prior employment with the Company (including any
directorships with subsidiaries or other affiliates of the Company) and (ii) to
execute a general release and waiver, waiving all claims you may have against
the Company, its affiliates (including Parent) and their respective successors,
assigns, employees, officers, directors, consultants, partners and
shareholders.


 


4.             Assignment
of Intellectual Property Rights


 


(a)           Assignment.  You hereby assign all of your rights, title
and interest to and in all Intellectual Property Rights (as defined below)
conceived, developed, invented, made by you or otherwise owned by you at any
time during your employment or engagement by the Company and directly or
indirectly relating to the Company’s business and you agree and acknowledge
that, on the date hereof, such rights to and in such Intellectual Property
Rights shall become the sole property of, and belong to, the Company.


 


(b)           Intellectual
Property Rights. 
For the purposes of this Agreement, the term “Intellectual Property
Right” shall mean all proprietary and other rights in and to: (i) trademarks,
service marks, brand names, certification marks, trade dress, assumed names,
trade names and other indications of origin; (ii) patents, inventors’
certificates and invention disclosures; (iii) trade secrets and other
confidential or non-public business information, including ideas, formulae,
compositions, inventions, discoveries and improvements, know-how, manufacturing
and production processes and techniques, and research and development
information (whether patentable or not); drawings, specifications, designs,
plans, proposals and technical data; and financial, marketing and business
data, pricing and cost information, business and marketing plans and customer
and supplier lists and information; (iv) writings and other works of authorship,
whether copyrightable or not, including computer programs, data bases and
documentation therefor, and all copyrights to any of the foregoing; (v) mask
works; (vi) rights, title and interest in know-how, technical information,
processes, practices and systems, whether or not protectable by patent,
copyright or trade secret law; (vii) moral rights; (viii) rights to
limit the use or disclosure of confidential information by any person; (ix) any
similar tangible or intangible intellectual property or proprietary rights,
information and technology; (x) registrations of, and applications to register,
any of the foregoing with any governmental agency or authority and any renewals
or extensions thereof, (xi) the goodwill associated with each of the foregoing
and (xii) any claims or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing; in each case in any
jurisdiction.


 


5.             Non-Disclosure


 


(a)           In
view of the fact that your work for the Company will bring you into close
contact with many confidential affairs of and the Company and its affiliates
not readily available to the public, as well as plans for future developments,
you agree during your engagement hereunder by the Company and thereafter:


 


(i)            to
keep secret and retain in the strictest confidence all proprietary or
confidential matters or trade secrets of the Company or any of its


 


3





















 


subsidiaries and affiliates (which
information will be deemed confidential notwithstanding any prior unauthorized
disclosures), including, but not limited to, data, know-how, formulae,
practices, processes, methodologies, designs, sketches, photographs, plans,
drawings, specifications, samples, reports, member or customer lists, price
lists, business strategies or arrangements, studies, findings, inventions,
ideas, software, source code, business plans and other technical, business or
financial information relating to the Company’s business, whether existing on
the date hereof or hereafter (such material collectively, “Restricted
Material”), and not to disclose such Restricted Material except with the
Company’s permission to such third parties as may be necessary in the
furtherance of the Company’s interests and in the discharge of your duties; and


 


(ii)           to
deliver promptly to the Company upon the termination of your engagement
hereunder or at any other time as the Company may so request, all documents
(and all copies thereof), in whatever form, containing Restricted Material, and
all property associated therewith, which you may then possess or have under
your control; provided, however, that Restricted Material shall not be
subject to the confidentiality restrictions of this Section 5 where you
can show that such information is, at the time of disclosure, generally known
to the public.


 


(b)           In
the event that you are requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena or similar
process) to disclose any Restricted Material, you agree to provide the Company
with prompt notice of such request(s) so that the Company may seek an
appropriate protective order or other appropriate remedy and/or waive your
compliance with the provisions of this Agreement. In the event that such
protective order or other remedy is not obtained, or that the Company grants a
waiver hereunder, you may furnish that portion (and only that portion) of the
Restricted Material which you are legally compelled to disclose and will
exercise your reasonable best efforts to obtain reliable assurance that
confidential treatment will be accorded any Restricted Material so furnished.


 


(c)           Nothing
in this Section 5 shall be construed as granting or implying any right to
you under any patent or unpatented intellectual property right of the Company,
or your right to use any invention covered thereby.


 


6.             Non-Solicitation


 


Except with prior written
permission of the Company, you shall not, directly or indirectly (individually
or on behalf of other persons), during your engagement hereunder by the Company
or any of its affiliates and for a period of six (6) months following the
termination of your engagement hereunder by the Company for any reason, hire,
offer to hire, entice away or in any manner persuade or attempt to persuade any
officer, employee or agent of the Parent or any of its affiliates (including
the Company and any subsidiary) or any then current or prospective customer,
client or broker of the Parent or any of its affiliates (including the Company
and any subsidiary), to discontinue his or her relationship with the Parent or
any of its affiliates


 


4





















 


(including the Company and
any subsidiary) or to otherwise do business with any competing business of
Parent or any of its affiliates (including the Company and any subsidiary).


 


7.             Non-Competition


 


Except with prior written
permission of the Company, you shall not, during your engagement with the
Company or any of its affiliates, and, for a period of six (6) months following
the termination of your engagement, directly or indirectly (individually or on
behalf of other persons): (a) enter the employ of, or render services to,
any person, firm or corporation engaged in the insurance or reinsurance
business or any other business in which the Company is, or has announced an
intention to become, engaged in at any time during your employment or
engagement with the Company and in each case within any State in the United
States in which Parent or any of its affiliates (including the Company and any
subsidiary) does business (hereinafter collectively referred to as the “Business”);
(b) engage in such Business on your own account; or (c) become
interested in any such Business, directly or indirectly, as an owner, partner,
shareholder, member, director, officer, principal, consultant or in any other
senior executive or managerial capacity; provided, however, that nothing
contained in this Section 7 shall be deemed to prohibit you from
acquiring, solely as a passive investment, no more than 5% of the total
outstanding securities of any publicly-held corporation.


 


8.             Enforcement


 


(a)           The
parties hereto hereby declare that it is impossible to measure in money the
damages that will accrue to the Company by reason of your failure to perform
any of your obligations under Sections 4, 5, 6 and 7. Accordingly, if the
Company institutes any action or proceeding to enforce the provisions hereof,
to the extent permitted by applicable law, you hereby waive the claim or
defense that the Company has an adequate remedy at law, and you shall not urge
in any such action or proceeding the defense that any such remedy exists at
law. The foregoing rights shall be in addition to any other rights and remedies
available to the Company under law or in equity.


 


(b)           If
any of the covenants contained in Sections 4, 5, 6 and 7 or any part thereof,
is construed to be invalid or unenforceable, the same shall not affect the
remainder of the covenant or covenants, which shall be given full effect,
without regard to the invalid portion(s). In addition, if any of the covenants
contained in Sections 4, 5, 6 and 7 hereof, or any part thereof, is held by any
person or entity with jurisdiction over the matter to be invalid or
unenforceable because of duration of such provision or the geographical area
covered thereby, the parties agree that such person or entity shall have the
power to reduce the duration and/or geographical area of such provision and, in
its reduced form, said provisions shall then be enforceable.


 


(c)           It
is understood and agreed that no failure or delay by the Company in exercising
any right, power or privilege contained in Sections 4, 5, 6 and 7 shall operate
as a waiver thereof, nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or
privilege contained in Sections 4, 5, 6 and 7.


 


5





















 


9.             Miscellaneous


 


(a)           It is agreed and understood
between the parties to this Agreement that the services performed by you
pursuant to this Agreement will be performed as an independent contractor and
not as an employee of the Company or its affiliates.


 


(b)           Any
notice or other communication required or permitted under this Agreement shall
be effective only if it is in writing and shall be deemed to be given when
delivered personally or three days after it is mailed by registered or
certified mail, postage prepaid, return receipt requested or one day after it
is sent by a reputable overnight courier service and, in each case, addressed
to the relevant party at the address provided for such party on the first page hereof,
or to such other address as any party hereto may designate by notice to the
other in accordance with the foregoing.


 


(c)           This
Agreement constitutes the entire agreement among you and the Company with
respect to your engagement hereunder by the Company, and supersedes and is in
full substitution for any and all prior understandings or agreements with
respect to your employment or engagement by the Company or its affiliates other
than the Separation Agreement, which remains in full force and effect.


 


(d)           This
Agreement may be amended only by an instrument in writing signed by the parties
hereto, and any provision hereof may be waived only by an instrument in writing
signed by the party against whom or which enforcement of such waiver is sought.


 


(e)           This
Agreement and all rights and obligations hereunder, including, without
limitation, matters of construction, validity and performance, shall be governed
by and construed and interpreted in accordance with the laws of New York
without regard to principles of conflict of laws.


 


(f)            This
Agreement shall inure for the benefit of and be an obligation of the Company’s
assigns and successors; provided, however, that you may not assign your
duties and obligations hereunder to any other party.


 


(g)           The
headings in this Agreement are inserted for convenience of reference only and
shall not be a part of or control or affect the meaning of any provision
hereof.


 


6





















 


If the terms of this
Agreement meet with your approval, please sign and return one copy to the
Company.


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  AXIS SPECIALTY U.S.
  SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted and Agreed

  	
   

  
	
  as of the date first set
  forth above:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Lorraine S. Mariano

  	
   

  
					



 


7





















 


EXHIBIT C


 


ADDITIONAL
RELEASE 


 


For good and valuable consideration, Lorraine
S. Mariano (“you”) and AXIS Specialty U.S. Services, Inc. (the “Company”)
hereby agree to the terms of this additional release (the “Additional Release”).


 


1.             You
voluntarily, knowingly and willingly on behalf of yourself, your heirs,
executors, administrators, successors and assigns, hereby irrevocably and
unconditionally release the Company, its parents, their subsidiaries, divisions
and affiliates, together with their respective owners, assigns, agents,
directors, partners, officers, employees, consultants, shareholders, attorneys
and representatives, and any of their predecessors and successors and each of
their estates, heirs and assigns (collectively, the “Company Releasees”) from
any and all charges, complaints, claims, liabilities, obligations, promises,
agreements, causes of action, rights, costs, losses, debts and expenses of any
nature whatsoever, known or unknown, which you or your heirs, executors,
administrators, successors or assigns ever had, now have or hereafter can, will
or may have (either directly, indirectly, derivatively or in any other
representative capacity) against the Company or any of the other Company
Releasees by reason of any matter, cause or thing whatsoever arising on or
before the date this Additional Release is executed by you.  This Additional Release includes, without
limitation, any rights or claims relating in any way to your employment
relationship with the Company or any of the Company Releasees, or the
termination thereof, arising under any federal, state and local labor,
employment, whistleblower and/or anti-discrimination laws including, without
limitation, the federal Age Discrimination in Employment Act, the Older Workers
Benefit Protection Act, the Employee Retirement Income Security Act, the
Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964, the
Family and Medical Leave Act, the Civil Rights Act of 1991, the Fair Labor
Standards Act, the Equal Pay Act, the Immigration and Reform Control Act, the
Uniform Services Employment and Re-Employment Act, the Rehabilitation Act of
1973, Executive Order 11246, the Sarbanes-Oxley Act of 2002, the New York State
and City Human Rights Laws, the Georgia Equal Employment for Persons with
Disabilities Code, the Code of Georgia, each as amended, or any other federal,
state or local or foreign law, regulation, ordinance or common law, or under
any policy, agreement, understanding or promise, written or oral, formal or
informal, between the Company or any of the Company Releasees and you,
including, without limitation, the Employment Agreement between you and the
Company dated April 1, 2004.


 


2.             You
acknowledge that (i) the Company has advised you of your right to consult
with an attorney of your choosing prior to signing this Additional Release, (ii) you
have carefully read and fully understand all of the provisions of this
Additional Release, and (iii) you are entering into this Additional
Release knowingly, freely and voluntarily in exchange for good and valuable
consideration.  You have twenty-one (21)
days to consider this Additional Release, although you may elect to sign it
sooner, provided  that you may not sign this Additional Release
prior to the Termination


 


8





















 


Date.  Once you have signed this
Additional Release, you shall have seven (7) days from the date you sign
it to revoke your consent by delivering (by hand or overnight courier) written
notice of revocation to Dennis B. Reding, Executive Vice President, at the
Company, at the address listed above.  In
the event you do not revoke your consent, this Additional Release shall become
effective on the eighth (8th) day after the date you have signed it
(the “Effective Date”).  In the event that you revoke your
consent, the Additional Release shall become null and void and shall not become
effective and you shall not receive the payments, benefits or awards
contemplated by paragraphs 2(a), 2(b), 2(c), or 2(e) of the letter
agreement as amended on December 9, 2005 to which this Additional Release is
attached.


 


3.             This
Additional Release may not be changed orally, but may be changed only in a
writing signed by you and by a duly authorized representative of the
Company.  The failure of you or the
Company to enforce any of the terms, provisions or covenants of this Additional
Release will not be construed as a waiver of the same or of the right of such
party to enforce the same.  Waiver by you
or the Company of any breach or default by the other party of any term or
provision of this Additional Release will not operate as a waiver of any other
breach or default.


 


4.             This
Additional Release shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without reference to its
choice of law rules.  You hereby
irrevocably consent to the jurisdiction of the State and Federal courts located
in New York, New York for purposes of resolving any dispute under this
Additional Release and expressly waive any objections as to venue in any such
courts.


 


 


	
  Dated:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Lorraine S.
  Mariano

  	
   

  



 


9