Document:

EX-10.1

SECOND AMENDED AND RESTATED

EXECUTIVE EMPLOYMENT AGREEMENT 

THIS SECOND AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT dated as of May 4, 2004,
between Wind River Insurance Company (Bermuda), Ltd., a Bermuda corporation with its principal
offices in Hamilton, Bermuda (the “Company”) and Seth D. Freudberg, an individual residing at 738
Cherry Circle, Wynnewood, PA 19096 (the “Executive”).

WHEREAS, the Executive has been employed previously as the President and Chief Executive
Officer of United National Insurance Company (“UNIC”) under the terms of the Amended and Restated
Executive Employment Agreement between UNIC and the Executive executed as of September 5, 2003 (the
“Prior Agreement”);

WHEREAS, pursuant to an Assignment and Assumption Agreement dated as of the date hereof (“the
Assignment and Assumption Agreement”), UNIC has assigned its rights, title and interest in the
Prior Agreement to the Company and the Company has assumed UNIC’s obligations thereunder; and

WHEREAS, the parties desire that the Executive be employed by the Company as President and
Chief Executive Officer and to amend and restate the Prior Agreement as provided for herein.

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the receipt of which is mutually acknowledged, the Company
and the Executive agree as follows:

1. TERM OF EMPLOYMENT; RENEWAL. The Company agrees to continue to employ the
Executive and the Executive agrees to continue his employment with the Company for the
period commencing on May 4, 2004 (the “Effective Date”) and ending on December 31, 2008 (such
initial period, as extended below, shall be referred to as the “Employment Term”). The term of
this Agreement will automatically renew at the expiration of the then current term for an
additional one-year period unless, at least ninety (90) days prior to the expiration date
of the then current term, either party shall give written notice of nonrenewal to the
other, in which event this Agreement shall terminate at the end of the term then in
effect. If the Company elects not to renew this Agreement at the expiration of the initial term
(the “Non-Renewal Date”), and if at such time (i) there is no other event that would otherwise
constitute “Cause” for the termination of the Executive’s employment hereunder, (ii) the Executive
continues to comply with all his post-termination obligations, and (iii) executes a general release
in form satisfactory to the Company, the Company shall continue to pay to the Executive his full
Annual Direct Salary from the Non-Renewal Date in equal monthly installments until the earlier of
(i) the Executive secures full time employment or (ii) six months from the Non-Renewal Date.
Following the Non-Renewal Date, the Executive shall notify the Company in writing upon his
commencement of any full time employment.

2. POSITION AND DUTIES. The Executive shall serve as the President and Chief Executive
Officer of the Company reporting to the Chief Executive Officer of United National Group, Ltd.
(“UNG”) and shall have responsibility for the general management and operation of the Company, and
shall have such other powers and duties as may from time to time be prescribed by the CEO of UNG,
provided that such duties are consistent with the Executive’s position as President and Chief
Executive Officer of the Company. At the request of the CEO of UNG, the Executive shall also
serve, without additional compensation, as an officer or director of any Affiliates of the Company
that are involved in the business of insurance, underwriting, reinsurance or other matters related
to the business operation of the Company. For purposes hereof, an “Affiliate” means any company
that is controlled by, under common control with, or that controls the Company. The Executive’s
services shall be performed at the Company’s principal offices located in Bermuda or any other
office which hereafter becomes the headquarters of the Company or such other offices as the Company
may designate, subject to business travel as necessary from time to time (including regular
business trips to the U.S., as directed by the Company).

3. ENGAGEMENT IN OTHER EMPLOYMENT. The Executive shall devote his full business time,
energies and talents to the business of the Company and such other Affiliates as the Company may
direct and shall comply with each of the Company’s corporate governance and ethics guidelines,
conflict of interests policies and code of conduct applicable to all Company employees or senior
executives as adopted from time-to-time or such other policies and guidelines as may be applicable
to and of the Affiliates. The Executive first shall obtain the consent of the Board of Directors
of the Company (the “Board”) in writing before engaging in any other business or commercial
activities, duties or pursuits. Notwithstanding the foregoing, nothing shall preclude the
Executive from (i) engaging in charitable activities and community affairs, and (ii) managing his
personal investments and affairs, provided such activities do not, in the reasonable judgment of
the Board, interfere with the proper performance of his duties and responsibilities hereunder.

4. COMPENSATION.

(a) ANNUAL DIRECT SALARY. During the term of this Agreement, as compensation for services
rendered to Company under this Agreement, the Executive shall be entitled to receive from the
Company an annual direct salary of not less than $415,000 per year commencing as of May 4, 2004
(the “Annual Direct Salary”). The Annual Direct Salary shall be payable monthly (or otherwise) in
accordance with the Company’s payroll practices, prorated for any partial employment period,
subject to applicable taxes and withholding. The Annual Direct Salary shall be reviewed by the
Board in January of each year this Agreement is in effect and may be adjusted in the discretion of
the Board after taking into account the prevailing market value of the position and the then
current pay increase practice of the Company. In no event shall the Annual Direct Salary be
decreased without the express written consent of the Executive.

(b) ANNUAL BONUS. During the term of this Agreement, the Executive may be eligible for annual
incentive awards under one or more programs adopted by the Board of Directors of UNG (“UNG Board”)
and established for each of the Company’s fiscal years. Award opportunities and other terms and
conditions of these awards, if any, will be determined by the UNG Board based on the achievement of
goals and objectives established for each of the Company’s fiscal years, and shall not be paid
until completion of the Company’s financial statements relating to the performance period at issue
and satisfaction of any other conditions adopted as part of such programs. Nothing herein shall
prohibit the Company from modifying or amending any such incentive awards plan from time to time,
or from terminating any such plan. The bonus program during the first fiscal year for which the
Executive is employed hereunder shall be determined by the Company subject to approval by the UNG
Board.

(c) EQUITY INCENTIVE AWARDS. During the Employment Term, the Executive may be eligible to
receive option awards in UNG as determined by the UNG Board in its sole discretion. In addition to
any exercise, vesting or other restrictions imposed on such option awards by the UNG Board in its
discretion, all such option awards shall be subject to the forfeiture provisions of Annex A
attached hereto.

5. FRINGE BENEFITS, VACATION TIME, EXPENSES, AND

PERQUISITES.

(a) The Executive shall be entitled to participate in or receive benefits under all corporate
employment benefit plans including but not limited to any pension plan, savings plan, medical or
health-and-accident plan or arrangement generally made available by the Company to its executives
and key management employees as a group, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans and arrangements.

(b) The Executive shall be entitled to four (4) weeks paid vacation in any calendar year
(prorated in any calendar year during which the Executive is employed hereunder for less than the
entire such year in accordance with the number of days in such calendar year during which he is so
employed). The Executive shall also be entitled to the following Bermuda holidays: New Years Day
- Jan. 1 , Good Friday, Bermuda Day – May 24, Queen’s Birthday – 2nd Mon. in June, Cup
Match – last Thur., Fri. in July, Labor Day —  1st Mon. in Sept., Remembrance Day – Nov.
11, Christmas – Dec. 25, and Boxing Day – Dec. 26. The Board may, in its sole discretion, elect to
grant the Executive’s requests for additional holidays recognized in the U.S., subject to such
compensation arrangements that the Board may in its sole discretion impose. The Executive may also
elect to forego observance of such Bermuda holidays and instead take U.S. holidays, provided that
in such case he provides the Board thirty days’ notice in advance of such U.S. holidays.

(c) During the term of his employment hereunder, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by him (in accordance with the policies
and procedures established by the Company from time to time) in performing services hereunder,
provided that the Executive properly accounts therefore in accordance with Company policy.

(d) During the term of his employment hereunder, the Company shall provide the Executive with
(i) a monthly housing allowance not to exceed $12,500 per month and (ii) a monthly island
transportation and travel allowance not to exceed $1,000. The Executive shall be responsible for
all taxes arising in connection with such reimbursements (except with respect to the Company’s
coverage of the Bermuda payroll tax associated with the housing allowance). The Company shall also
provide the Executive with a one-time allowance to cover furniture shipping costs and tariffs as
such expenses may arise out of the Executive’s relocation from the U.S. to Bermuda, with such
allowance not to exceed $5,500 (subject to any applicable taxes).

(e) So long as the Executive has fully complied with his duties and obligations under this
Agreement, the Company shall also provide for an airline ticket under the Executive’s name, to the
extent required by Bermuda law, to cover his repatriation in connection with any termination of his
employment by the Company without cause prior to the expiration of the Employment Term or following
his service through to the expiration of the Employment Term.

(f) Except as otherwise specifically provided herein, nothing paid to the Executive under any
benefit plan or arrangement shall be deemed to be in lieu of compensation to the Executive
hereunder.

6. PROTECTION OF COMPANY INFORMATION. During the period of his employment, or at any later
time following the termination of his employment for any reason, the Executive shall hold in a
fiduciary capacity for the benefit of the Company and its Affiliates, and shall not, without the
written consent of the Board, knowingly disclose to any person, other than an employee of the
Company or a person to whom disclosure is reasonably necessary or appropriate in connection with
the performance by the Executive of his duties as an executive of the Company, or use for any
purpose other than to perform his duties hereunder, any “Confidential Information” of the Company
or any of its Affiliates obtained by him while in the employ of the Company. The Confidential
Information protected by this provision shall include all computer software and files, policy
expirations, telephone lists, customer lists, prospect lists, marketing information, information
regarding managing general agents, pricing policies, contract forms, customer information,
copyrights and patents, the identity of Company and Affiliate employees, Company and Affiliate
books, records, files, financial information, business practices, policies and procedures,
information about all services and products of the Company and its Affiliates, names of users or
purchasers of the products or services of the Company or its Affiliates, methods of promotion and
sale and all information which constitutes trade secrets under the law of any state in which the
Company or any of its Affiliates does business. No information shall be treated as Confidential
Information if it is generally available public knowledge at the time of disclosure or use by the
Executive, provided that information shall not be deemed to be publicly available merely because it
is embraced by general disclosures or because individual features or combinations thereof are
publicly available. The Executive agrees that any breach of the restrictions set forth in this
Section will result in irreparable injury to the Company and/or its Affiliates for which there is
no adequate remedy at law and the Company and its Affiliates shall, in addition to any other
remedies available to them, be entitled to injunctive relief and specific performance in order to
enforce the provisions hereof. Notwithstanding the foregoing provisions, if the Executive is
required to disclose any such confidential or proprietary information pursuant to applicable law or
a subpoena or court order, the Executive shall promptly notify the Company in writing of any such
requirement so that the Company or the appropriate affiliate may seek an appropriate protective
order or other appropriate remedy or waive compliance with the provisions hereof. The Executive
shall reasonably cooperate with the Company to obtain such a protective order or other remedy. If
such order or other remedy is not obtained prior to the time the Executive is required to make the
disclosure, or the Company waives compliance with the provisions hereof, the Executive shall
disclose only that portion of the confidential or proprietary information which he is advised by
counsel that he is legally required to so disclose. All records, files, memoranda, reports,
customer lists, drawings, plans, documents and the like that the Executive uses, prepares or comes
into contact with during the course of the Executive’s employment shall remain the sole property of
the Company and/or its Affiliates, as applicable. The Executive shall execute and deliver the
Company’s standard “work for hire” agreement regarding ownership by the Company of all rights in
its confidential and business materials.

7. RESTRICTIVE COVENANTS.

(a) NONCOMPETITION AGREEMENT. The Executive acknowledges and agrees that the insurance
business and operations of the Company and its Affiliates are international in scope, and that the
Company and its Affiliates operate in multiple locations and business segments in the course of
conducting its business. In consideration of this Agreement and the equity interests being made
available to the Executive hereunder, the Executive covenants and agrees that during his employment
with the Company and its Affiliates, and for a period of eighteen (18) months following the
termination of such employment for any reason (whether termination occurs during, upon expiration
of, or following the original or the renewal term hereof), including without limitation as a result
of his discharge by the Company with or without Cause or the Executive’s voluntary resignation, the
Executive shall not directly or indirectly compete with the business of the Company or its
Affiliates by becoming a shareholder, officer, agent, employee, partner or director of any other
corporation, partnership or other entity, or otherwise render services to or assist or hold an
interest (except as less than a one percent (1%) shareholder of a publicly traded company), in any
“Competitive Business” (as defined below). “Competitive Business” shall mean any person or entity
(including any joint venture, partnership, firm, corporation, or limited liability company) that
engages in (1) the specialty property and casualty insurance and reinsurance business, including
excess and surplus lines, non-admitted insurance lines, program-style insurance lines and/or
reinsurance, (2) the insurance agency or brokerage business, (3) employs, contracts or consults
with any managing general agent or producer of the Company and (4) any other material business of
the Company or any of its Affiliates as of the date of termination of the Executive’s employment.
In the event that this paragraph 7 shall be determined by any court of competent jurisdiction to be
unenforceable in part by reason of its being too great a period of time or covering too great a
geographical area, it shall be in full force and in effect as to that period of time or
geographical area determined to be reasonable by the court. Notwithstanding anything to the
contrary contained herein (A) other than in the case of a termination of the Executive’s employment
for Cause hereunder, upon termination of the Executive’s employment by the Company without Cause or
as a result of his disability, the Executive may elect in writing to have the Company acquire his
then outstanding common stock and options in the Company at the lower of cost or fair market value
(as determined by the Board of the Company) and in connection therewith execute a release, in form
acceptable to the Company, which releases the Company and its Affiliates (including FPC and its
affiliates) from all obligations to make payments under Section 9 of this Agreement, and upon
compliance by the Executive with the foregoing obligations, the Executive shall no longer be
subject to the restrictions set forth in subclauses (1) and (2) of this Section 7(a), and (B) in
the event of termination by the Company of the Executive’s employment due to a disability, the
Executive shall no longer be subject to the restrictions in (1) and (2) of this Section 7(a) (but
will no longer qualify for payments pursuant to Section 9(a)).

(b) RETURN OF MATERIALS. Upon termination of employment with the Company, the Executive shall
promptly deliver to the Company all correspondence, manuals, letters, notes, notebooks, computer
disks, software, reports and any other document or tangible items containing or constituting
Confidential Information about the business of the Company and/or its Affiliates.

(c) NONSOLICITATION OF EMPLOYEES AND CUSTOMERS. Should the Executive’s employment with the
Company or any Affiliates be terminated for any reason (whether such termination occurs during,
upon expiration of, or following the original or the renewal term hereof), including without
limitation as a result of his discharge by the Company with or without Cause or the Executive’s
voluntary resignation, for a period of eighteen (18) months following such termination the
Executive shall not: (i) contact, recruit, employ, entice, induce or solicit, directly or
indirectly, any employee, officer, director, agent, consultant or independent contractor employed
by or performing services for the Company or any of its Affiliates to leave the employ of or
terminate services to the Company or such Affiliate, including without limitation working with the
Executive, with the entity with which the Executive has affiliated (as an employee, consultant,
officer, director, stockholder or otherwise), or with any other entity; (ii) seek, either in his
individual capacity or on behalf of any other entity, whether directly or indirectly to solicit,
communicate with or contact or advise, or transact or otherwise engage in any insurance related
business with (x) any party who is or was a customer of the Company or any of its Affiliates during
the Executive’s employment by the Company or at any time during the said eighteen (18) month
period, or (y) any party who was identified as a prospect of the Company or any of its Affiliates
during the Executive’s employment by the Company; or (iii) engage in or participate in any effort
or act to induce any customer (as defined in subsection 7(c)(ii)) of the Company or any of its
Affiliates to take any action which might be disadvantageous to the Company or its Affiliates. The
Executive agrees that any breach of the restrictions set forth in Sections 6 and 7 will result in
irreparable injury to the Company for which it shall have no adequate remedy in law and the Company
shall, in addition to any other remedy available to it and in lieu of Section 15 hereof, be
entitled to injunctive relief and specific performance in order to enforce the provisions hereof.
In addition to its other remedies, the Company shall be entitled to reimbursement from the
Executive and/or the Executive’s employer of costs incurred in securing a qualified replacement as
a result of any breach by the Executive of this Section. For purposes of this Agreement,
“customer” shall include, without limitation, any policyholder, managing general agent or reinsurer
with whom the Company or its Affiliates has transacted business.

(d) In the event the Executive breaches any of his covenants in this Section 7, the Company
and its Affiliates shall be released from their obligation to make payments under Section 9 of this
Agreement and (to the extent permitted by applicable law) to provide benefits or make payments
under all employee benefit plans in which the Executive participates, and the Company shall be
entitled to reimbursement from the Executive of severance payments made to the Executive by the
Company following termination of employment with the Company. In addition, in the event of a
violation by the Executive of his covenants in this Section 7, he shall be subject to the
forfeiture provisions of Annex A with respect to his equity holdings in the Company.

(e) The Executive acknowledges and agrees that the terms of this Section 7: (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 the Executive; and
(iv) are not injurious to the public. The Executive further acknowledges and agrees that (x) the
Executive’s breach of the provisions of this Section 7 will cause the Company irreparable harm,
which cannot be adequately compensated by money damages, and (y) if the Company elects to prevent
the Executive from breaching such provisions by obtaining an injunction against the Executive,
there is a reasonable probability of the Company’s eventual success on the merits. The Executive
consents and agrees that if the Executive commits any such breach or threatens to comment any
breach, the Company shall 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.

8. TERMINATION.

(a) The Executive’s employment hereunder shall terminate upon his death, retirement, or the
expiration of this Agreement. Upon the Executive’s death, any sums then due him shall be paid to
the executor, administrator or other personal representative of the Executive’s estate.

(b) If the Executive becomes disabled (as certified by a licensed physician selected by the
Company) and 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, the Company shall have the option to
terminate this Agreement by giving written notice of termination to the Executive. Such
termination shall be without prejudice to any right the Executive has under the disability
insurance program maintained by the Company.

(c) The Company may terminate the Executive’s employment hereunder for Cause. For the purposes
of this agreement, the Company shall have “Cause” to terminate the Executive’s employment hereunder
upon (i) the Executive substantially failing to perform his duties hereunder after notice from the
Company and failure to cure such violation 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 or Affiliate policies, including without limitation the Company’s (or Affiliate’s)
corporate governance and ethics guidelines, conflicts of interests policies and code of conduct
applicable to all Company (or Affiliate) employees or senior executives, (ii) the engaging by the
Executive in any malfeasance, fraud, dishonesty or gross misconduct adverse to the interests of the
Company or its Affiliates, (iii) the material violation by the Executive of any of the provisions
of Sections 3, 6 or 7 hereof or other provisions of this Agreement after notice from Company and a
failure to cure such violation within 10 days of said notice (including a “Forfeiture Event” as
provided for in Annex A hereto), (iv) a breach by the Executive of any representation or warranty
contained herein (including a “Forfeiture Event” as provided for in Annex A hereto), (v) the
Board’s determination that the Executive has exhibited incompetence or gross negligence in the
performance of his duties hereunder, (vi) receipt of a final written directive or order of any
governmental body or entity having jurisdiction over the Company requiring termination or removal
of the Executive as President and Chief Executive Officer of the Company, or (vii) the Executive
being charged with a felony or other crime involving moral turpitude.

(d) The Company may choose to terminate the Executive’s employment at any time without Cause
or reason.

9. PAYMENTS UPON TERMINATION.

(a) If the Executive’s employment shall be terminated because of death, disability, or for
Cause, the Company shall pay the Executive (or his executor, administrator or other personal
representative, as applicable) his full Annual Direct Salary through the date of termination of
employment at the rate in effect at the time of termination and the Company shall have no further
obligations to the Executive under this Agreement (and the Executive shall not be entitled to
payment of any unpaid bonus or incentive award); provided that in the event of a
termination by the Company because of disability and other than in the case of employment in any
Competitive Business the Company shall pay to the Executive, as full and complete liquidated
damages hereunder, an amount equal to the Executive’s then monthly Annual Direct Salary multiplied
by six (6) months, with such amount payable in equal monthly installments and provided further that
the foregoing amounts shall be reduced by any disability payments for which the Executive may
otherwise be entitled. No payments or benefits shall be provided hereunder in connection with the
Executive’s disability (i) unless and until the Company has first received a signed general release
from the Executive (or the Executive’s guardian or legal representative) in a form acceptable to
the Company releasing the Company and Affiliates and any other parties identified by the Company
and Affiliates therein, and (ii) to the extent that the Executive has breached any of his
post-termination obligations hereunder.

(b) If the Executive’s employment is terminated by the Company without Cause then the Company
shall pay to the Executive, as full and complete liquidated damages hereunder, an amount equal to
the Executive’s then monthly Annual Direct Salary multiplied by twenty-four (24) months, with such
amount payable in equal monthly installments; provided that the amount and term of such
payments is subject to adjustment upon the Executive’s acceptance of an equity compensation package
to be determined. The Company shall also maintain in full force and effect, for the continued
benefit of the Executive for the period in which the Executive is receiving the foregoing payments,
any medical or health-and-accident plan or arrangement of the Company in which the Executive is a
participant at the time of such termination of employment; provided that the Executive shall remain
responsible for continuing to pay his share of the costs of such coverage; provided further that
the Company shall not be under any duty to maintain such coverage if the Executive becomes eligible
for coverage under any other employer’s insurance and the Executive shall give the Company prompt
notice of when such eligibility occurs. The Company shall also reimburse the Executive for the
periodic rent arising under the lease of the Executive’s Bermuda residence (the “Lease”), effective
as of the month following the date on which the Executive actually vacates such residence; provided
that: (i) the Company’s payment obligations with respect to the Lease shall not exceed the monthly
cap referenced in Section 5(d)(i) and in any event shall not exceed three months’ rent in the
aggregate, shall be reduced by any applicable sublease payments, and shall, in any case, terminate
upon any termination or modification of the Lease or the last of the three monthly payments; and
(ii) the Lease has provisions acceptable to the Company that would permit subleasing for the
remaining term of the Lease. The Executive agrees to use his best efforts in securing a lease that
is acceptable in form to the Company and to assist the Company should it elect to take an
assignment of the lease. No payments or benefits shall be provided hereunder (i) unless and until
the Company has first received a signed general release from the Executive in a form acceptable to
the Company releasing the Company and Affiliates and any other parties identified by the Company
and Affiliates therein, and (ii) to the extent that the Executive has breached any of his
post-termination obligations hereunder.

10. ORIGINAL REPRESENTATIONS AND WARRANTIES. In addition to any other representation and
warranties contained herein, the Executive represented and warranted as of the effective date of
the Prior Agreement that the representations and warranties made by the Executive in the
Acquisition Documents (as defined below) do not contain any untrue statements of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading and such representations and warranties shall
continue to survive notwithstanding the termination of the Prior Agreement. The term “Acquisition
Documents” shall mean the Investment Agreement, dated as of May 1, 2003 among U.N. Holdings LLC,
Wind River Investment Corporation and Those Trusts Listed on Schedule A (the “Investment
Agreement”), the Stockholders Agreement, dated as of May 1, 2003 among Wind River Investment
Corporation and The Stockholders Listed on the Signature Pages (the “Shareholders Agreement”), and
all attachments, exhibits and other documents appended thereto (including the “Disclosure Letter”
as defined in the Investment Agreement), as amended from time to time.

11. NOTICE. For the purposes of this Agreement, notices and all other communications provided
for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered
or mailed by United States certified mail, return receipt requested, postage prepaid, addressed as
follows:

	 	 	 	 	 
	If to the Executive:
	 	Seth D. Freudberg

	 
	 	738 Cherry Circle
	 
	 	Wynnewood, PA 19096

	If to the Company:
	 	Wind River Insurance Company

	 
	 	Victoria Hall

	 
	 	11 Victoria Street
	 
	 	PO Box HM 1826

	 
	 	Hamilton, Bermuda

	 
	 	Attn:  General Counsel

	With a Copy To:
	 	Fox Paine & Company, LLC

	 
	 	950 Tower Lane, Suite 1150
	 
	 	Foster City, CA  94404

	 
	 	Attn:  Troy Thacker

or to such other address as any party may have furnished to the others in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.

12. SUCCESSORS. This Agreement shall be binding upon the Executive, his heirs, executors or
administrator, and the Company, and any successor to or assigns of the Company. This Agreement is
not assignable by the Executive. This Agreement is assignable by the Company to a successor to or
purchaser of the Company’s business. The Executive consents to the assignment made in the
Assignment and Assumption Agreement.

13. ENFORCEMENT OF SEPARATE PROVISIONS. Should provisions of this Agreement be ruled
unenforceable for any reasons, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect.

14. AMENDMENT. This Agreement may be amended or canceled only by mutual agreement of the
parties in writing without consent of any other person and, so long as the Executive lives, no
person other than the parties hereto, shall have any rights under or interest in this Agreement or
the subject matter hereof.

15. ARBITRATION. In the event that any disagreement or dispute whatsoever shall arise between
the Executive and the Company or its Affiliates concerning this Agreement, such disagreement or
dispute shall be submitted to the Judicial Arbitration and Mediation Services, Inc (“JAMS”) for
resolution in a confidential private arbitration 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. Any such arbitration proceeding
shall take place in Philadelphia, Pennsylvania before a single arbitrator (rather than a panel of
arbitrators). The parties agree that the arbitrator shall have no authority to award any punitive
or exemplary damages or “Additional Damages” (as defined below) and (a) waive, to the full extent
permitted by law, any right to recover such damages in such arbitration and (b) the Executive
irrevocably waives any right to recover any payments or damages whatsoever from the Company in the
event of his termination without Cause (“Additional Damages”) other than those payments provided
for in Section 9(b) hereof. Each party shall each bear their respective costs (including
attorney’s fees, and there shall be no award of attorney’s fees) and shall split the fee of the
arbitrator. Judgment upon the final award rendered by such arbitrator, after giving effect to the
JAMS internal appeal process, may be entered in any court having jurisdiction thereof. If JAMS is
not in business or is no longer providing arbitration services, then the American Arbitration
Association shall be substituted for JAMS for the purposes of the foregoing provisions. Each party
agrees that it shall maintain absolute confidentiality in respect to any dispute between them.

16. LAW GOVERNING. This Agreement shall be governed by and construed in accordance with the
laws of Bermuda without reference to principles of conflicts of laws.

17. ENTIRE AGREEMENT. This Agreement supersedes any and all prior agreements, either oral or
in writing, between the parties with respect to the employment of the Executive by the Company,
including the Prior Agreement, and this Agreement contains all the covenants and agreements between
the parties with respect to the Executive’s employment.

18. ACKNOWLEDGEMENT. The Executive acknowledges that he has carefully read and fully
understands this Agreement and that the Company has provided him sufficient time to discuss such
Agreement with an attorney.

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[signature page to follow][Amended and Restated Executive Employment Agreement Signature

Page]

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

	 	 	 
	ATTEST:

	 	Wind River Insurance Company (Bermuda), Ltd.
	 
	 	 
	/s/ Karla Keen

	 	By: /s/ Michael Tait
	 

	 	 
	 
	 	 
	WITNESS:

	 	Seth D. Freudberg

2

/s/ Janice Mills By: /s/ Seth D. FreudbergAnnex A

Option and Equity Forfeiture

Forfeiture of Options and Restricted, Common and Preferred Stock and Gains Realized upon
Prior Option Exercises or Sale of Stock. Unless otherwise determined by the UNG Board, the
Options granted under this Employment Agreement, together with any future option grants made to the
Executive or options on the Class A Common Shares of UNG, and any restricted stock and common or
preferred stock, if any, held by the Executive, shall be subject to the following additional
forfeiture conditions to which the Executive, by accepting such Options or equity interests, hereby
agrees. In the event of (i) the Executive’s breach or failure to comply with any of the terms or
conditions of Section 6 or Section 7 of this Employment Agreement or any breach of any of the
representations and warranties set forth therein (whether or not employed by the Company at such
breach or failure to comply) (a “Forfeiture Event”), and (ii) if the Executive is employed by the
Company at the time of a Forfeiture Event, his termination of employment by the Company, all of the
following will result:

	 	(i)	 	The unexercised portion of the Options (both unvested and vested, if any) will
immediately be forfeited and canceled without payment upon the occurrence of the
Forfeiture Event;

	 	(ii)	 	All equity, including restricted stock, common and/or preferred stock, if any,
held by the Executive will, upon the occurrence of the Forfeiture Event, immediately be
repurchased by UNG or its designee at the lower of fair market value (as determined by
the UNG Board) or the Executive’s original purchase price (in each case reduced to
reflect any outstanding liabilities of the Executive to UNG or its Affiliates), with
payment taking the form of a five year note from UNG or its designee, accruing interest
at the lowest then applicable rate mandated by Federal law, with the principal and
interest due on the fifth anniversary of the date of purchase (or such later date as
may be necessary to permit UNG or its designee to comply with any applicable borrowing
covenants affecting its payment obligations.) The Executive promptly shall take all
appropriate and necessary action to facilitate the buy back of such equity, including
the prompt delivery to UNG (or its designee) of all stock certificates or other
documents that UNG may request; and

	 	(iii)	 	The Executive will be obligated to repay to UNG (or its designee), in cash,
within five (5) business days after demand is made therefore by UNG (or its designee),
the total amount of Award Gain (as defined herein) realized by the Executive (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
Executive was employed by the Company or a subsidiary or affiliate, or (B) the date
that is six (6) months prior to the date that Executive’s employment by the Company or
a subsidiary or affiliate terminated, if the Forfeiture Event occurred after the
Executive ceased to be so employed, or (II) upon any sale, transfer or other
disposition of the Class A Common Shares of UNG. For purposes of this Annex A, the
term “Award Gain” shall mean (i) in respect of a given Options exercise, the product of
(X) the Fair Market Value per share of stock at the date of such exercise (without
regard to any subsequent change in the market price of such share of stock) minus the
exercise price times (Y) the number of shares as to which the Options were exercised at
that date, and (ii), in respect of any sale of stock, the value of any cash or the Fair
Market Value of stock or property paid or payable to the Executive less any cash or the
Fair Market Value of any stock or property (other than stock or options which would
have itself been forfeitable hereunder and excluding any payment of tax withholding)
paid by the Executive to UNG (or its designee) as a condition or in connection with the
acquisition of such stock or amount otherwise included in subclause (i) above.

3EX-10.2

AMENDED AND RESTATED

EXECUTIVE EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT, dated this 5th day of May, 2004, is
between United National Insurance Company, a Pennsylvania corporation with its principal offices in
Bala Cynwyd, PA (the “Company”) and William F. Schmidt, an individual residing at 1420 Lexington
Drive, Maple Glen, PA 19002 (the “Executive”).

WHEREAS, the Executive has been employed previously as Senior Vice President and Chief
Underwriting Officer of the Company under the terms of an employment agreement, executed on
September 5, 2003 (the “Prior Agreement”); and

WHEREAS, Executive was promoted to the position of President and Chief Executive Officer of
the Company, effective as of May 2004; and

WHEREAS, the parties desire to enter into this Agreement to set forth the terms and conditions
of Executive’s employment as President and Chief Executive Officer of the Company;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the receipt of which is mutually acknowledged, the Company
and the Executive agree as follows:

1. TERM OF EMPLOYMENT; RENEWAL. The Company agrees to employ the Executive and
the Executive accepts employment with the Company for the period commencing as of May 4, 2004
(the “Effective Date”) and ending on December 31, 2008 (such initial period, as extended below,
shall be referred to as the “Employment Term”). The term of this Agreement will automatically
renew at the expiration of the then current term for an additional one-year period
unless, at least ninety (90) days prior to the expiration date of the then current term,
either party shall give written notice of non-renewal to the other, in which
event this Agreement shall terminate at the end of the term then in effect. If the Company
elects not to renew this Agreement at the expiration of the initial period (the “Non-Renewal
Date”), and if at such time (i) there is no other event that would otherwise constitute “Cause” for
the termination of the Executive’s employment hereunder, (ii) the Executive continues to comply
with all his post-termination obligations, and (iii) executes a general release in form
satisfactory to the Company, the Company shall continue to pay to the Executive his full Annual
Direct Salary from the Non-Renewal Date in equal monthly installments until the earlier of (i) the
Executive secures full time employment or (ii) six months from the Non-Renewal Date. Following the
Non-Renewal Date, the Executive shall notify the Company in writing upon his commencement of any
full-time employment.

2. POSITION AND DUTIES. The Executive shall serve as the President and Chief Executive
Officer of the Company, reporting to the Board of Directors of the Company (the “Board”), or to
such other person that the Board may designate with responsibility for the consolidated operations
of the group of which the Company is an affiliate. The Executive shall be responsible for the
general oversight and management of the Company, including overall business strategy, all operating
units, operating plans and financial performance. The Executive shall have authority, subject to
Board review, to set the reporting relationships of all employees of the Company (other than
Executive) and shall have such other authority and duties, as may, from time to time, be specified
by the Board; provided that such authority and duties are consistent with the foregoing and with
the Executive’s position as President and Chief Executive Officer of the Company. At the request
of the Board, the Executive shall also serve, without additional compensation, as an officer or
director of any Affiliates of the Company that are involved in the business of insurance,
underwriting, reinsurance or other matters related to the business operation of the Company. For
purposes hereof, an “Affiliate” means any company that is controlled by, under common control with,
or that controls the Company.

3. ENGAGEMENT IN OTHER EMPLOYMENT. The Executive shall devote his business time, energies and
talents to the business of the Company and shall comply with each of the Company’s corporate
governance and ethics guidelines, conflict of interests policies and code of conduct applicable to
all Company employees or senior executives as adopted by the Board from time-to-time. The
Executive first shall obtain the consent of the Board in writing before engaging in any other
business or commercial activities, duties or pursuits. Notwithstanding the foregoing, nothing
shall preclude the Executive from (i) engaging in charitable activities and community affairs, (ii)
managing his personal investments and affairs, and (iii) serving in a capacity as a certified
arbitrator in disputes related to reinsurance or insurance during the Executive’s personal time,
provided such activities do not, in the reasonable judgment of the Board, interfere with the proper
performance of his duties and responsibilities hereunder.

4. COMPENSATION.

(a) ANNUAL DIRECT SALARY. During the term of this Agreement, as compensation for services
rendered to Company under this Agreement, the Executive shall be entitled to receive from the
Company an annual direct salary of not less than $350,000 per year commencing May 4, 2004 (the
“Annual Direct Salary”). Executive’s Annual Direct Salary shall be payable in substantially equal
biweekly installments, prorated for any partial employment period. The Annual Direct Salary shall
be reviewed by the Board in January of each year this Agreement is in effect and may be adjusted in
the discretion of the Board after taking into account the prevailing market value of the position
and the then current pay increase practice of the Company. In no event shall the Annual Direct
Salary be decreased without the express written consent of the Executive.

(b) ANNUAL BONUS. During the term of this Agreement, Executive may be eligible for annual
incentive awards under one or more programs adopted by the Board and established for each of the
Company’s fiscal years. Award opportunities and other terms and conditions of these awards, if
any, will be determined by the Board based on the achievement of goals and objectives established
for each of the Company’s fiscal years, and shall not be paid until completion of the Company’s
financial statements relating to the performance period at issue and satisfaction of any other
conditions adopted as part of such programs. Nothing herein shall prohibit the Company from
modifying or amending any such incentive awards plan from time to time, or from terminating any
such plan.

(c) EQUITY INCENTIVE AWARDS. During the Employment Term, the Executive may be eligible to
receive option awards in United National Group, Ltd. (“UNGL”) as determined by the Board of the
Company in its sole discretion. In addition to any exercise, vesting or other restrictions imposed
on such option awards by the Board in its discretion, all such option awards shall be subject to
the forfeiture provisions of Annex A attached hereto.

5. FRINGE BENEFITS, VACATION TIME, EXPENSES, AND

PERQUISITES.

(a) EMPLOYEE BENEFIT PLANS. The Executive shall be entitled to participate in or receive
benefits under all corporate employment benefit plans, including, but not limited to, any pension
plan, savings plan, medical or health-and-accident plan or arrangement generally made available by
the Company to its executives and key management employees as a group, subject to and on a basis
consistent with the terms, conditions and overall administration of such plans and arrangements.

(b) The Executive shall be entitled to the number of paid vacation days in each calendar year
determined by the Company from time to time for its senior executive officers, but not less than
four (4) weeks in any calendar year (prorated in any calendar year during which the Executive is
employed hereunder for less than the entire such year in accordance with the number of days in such
calendar year during which he is so employed). The Executive shall also be entitled to all paid
holidays given by the Company to its senior executive officers.

(c) During the term of his employment hereunder, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by him (in accordance with the policies
and procedures established by the Company from time to time) in performing services hereunder,
provided that the Executive properly accounts, therefore, in accordance with Company policy.

(d) Except as otherwise specifically provided herein, nothing paid to the Executive under any
benefit plan or arrangement shall be deemed to be in lieu of compensation to the Executive
hereunder.

6. PROTECTION OF COMPANY INFORMATION. During the period of his employment, or at any later
time following the termination of his employment for any reason, the Executive shall hold in a
fiduciary capacity for the benefit of the Company and its affiliates, and shall not, without the
written consent of the Board, knowingly disclose to any person, other than an employee of the
Company or a person to whom disclosure is reasonably necessary or appropriate in connection with
the performance by the Executive of his duties as an executive of the Company, or use for any
purpose other than to perform his duties hereunder, any “Confidential Information” of the Company
or any of its Affiliates obtained by him while in the employ of the Company. The Confidential
Information protected by this provision shall include all computer software and files, policy
expirations, telephone lists, customer lists, prospect lists, marketing information, information
regarding managing general agents, pricing policies, contract forms, customer information,
copyrights and patents, the identity of Company and Affiliate employees, Company and Affiliate
books, records, files, financial information, business practices, policies and procedures,
information about all services and products of the Company and its Affiliates, names of users or
purchasers of the products or services of the Company or its affiliates, methods of promotion and
sale and all information which constitutes trade secrets under the law of any state in which the
Company or any of its Affiliates does business. No information shall be treated as Confidential
Information if it is generally available public knowledge at the time of disclosure or use by
Executive, provided that information shall not be deemed to be publicly available merely because it
is embraced by general disclosures or because individual features or combinations thereof are
publicly available. The Executive agrees that any breach of the restrictions set forth in this
Section will result in irreparable injury to the Company and/or its Affiliates for which there is
no adequate remedy at law and the Company and its Affiliates shall, in addition to any other
remedies available to them, be entitled to injunctive relief and specific performance in order to
enforce the provisions hereof. Notwithstanding the foregoing provisions, if the Executive is
required to disclose any such confidential or proprietary information pursuant to applicable law or
a subpoena or court order, the Executive shall promptly notify the Company, in writing, of any such
requirement so that the Company or the appropriate affiliate may seek an appropriate protective
order or other appropriate remedy or waive compliance with the provisions hereof. The Executive
shall reasonably cooperate with the Company to obtain such a protective order or other remedy. If
such order or other remedy is not obtained prior to the time the Executive is required to make the
disclosure, or the Company waives compliance with the provisions hereof, the Executive shall
disclose only that portion of the confidential or proprietary information which he is advised by
counsel that he is legally required to so disclose. All records, files, memoranda, reports,
customer lists, drawings, plans, documents and the like that the Executive uses, prepares or comes
into contact with during the course of the Executive’s employment shall remain the sole property of
the Company and/or its affiliates, as applicable. The Executive shall execute and deliver the
Company’s standard “work for hire” agreement regarding ownership by the Company of all rights in
its confidential and business materials.

7. RESTRICTIVE COVENANTS.

(a) NON-COMPETITION AGREEMENT. The Executive acknowledges and agrees that the insurance
business and operations of the Company are national in scope, and that the Company operates in
multiple locations and business segments in the course of conducting its business. In
consideration of this Agreement, the Executive 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 (but in the case of termination for Cause pursuant to Section 8(c)(i), only after a
determination by the Board of such substantial failure to perform), the Executive shall not (i)
engage, whether as owner, manager, operator or otherwise, directly or indirectly, in any property
and/or casualty insurance company (or holding company which controls such company or and affiliate
of such property and/or casualty insurance company in such business) that is based in the United
States or does a substantial amount of its business in the United States and that writes more than
15% of its written premium by issuing commercial insurance policies for businesses through a
network of wholesale or managing general agents on a binding authority basis (or any reinsurance
business providing services to the foregoing); provided however that the restrictions herein shall
not prohibit or prevent the Executive from acting as an owner, manager, operator or employee of any
wholesale general agent, (ii) use any information obtained in the course of the Executive’s
employment by the Company for the purpose of notifying individuals of the Executive’s willingness
to provide services after such termination in competition with the Company or in breach of this
Agreement, or (iii) otherwise solicit for competitive purposes any person who is, or at any time
during the term of the Executive’s employment by the Company was, a customer of the Company;
provided that the Executive shall not be subject to the above restrictions if the Company fails to
pay severance benefits due to the Executive, if any, pursuant to Section 9(b). Ownership of less
than 5% of the securities of any publicly traded company will not violate this Section 7(a). In
the event that this paragraph shall be determined by any court of competent jurisdiction to be
unenforceable in part by reason of its being too great a period of time or covering too great a
geographical area, it shall be in full force and in effect as to that period of time or
geographical area determined to be reasonable by the court.

(b) RETURN OF MATERIALS. Upon termination of employment with the Company, the Executive shall
promptly deliver to the Company all correspondence, manuals, letters, notes, notebooks, computer
disks, software, reports and any other document or tangible items containing or constituting
Confidential Information about the business of the Company and/or its Affiliates.

(c) NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS. Should the Executive’s employment with the
Company be terminated for any reason (whether such termination occurs during, upon expiration of,
or following the original or the renewal term hereof), including, without limitation, as a result
of his discharge by the Company with or without Cause or Executive’s voluntary resignation, for a
period of eighteen (18) months following such termination the Executive shall not: (i) contact,
recruit, employ, entice, induce or solicit, directly or indirectly, any employee, officer,
director, agent, consultant or independent contractor employed by or performing services for the
Company or any of its Affiliates to leave the employ of or terminate services to the Company or
such Affiliate, including, without limitation, working with the Executive, with the entity with
which the Executive has affiliated (as an employee, consultant, officer, director, stockholder or
otherwise), or with any other entity; (ii) seek, either in his individual capacity or on behalf of
any other entity, whether directly or indirectly to solicit, communicate with or contact or advise,
or transact or otherwise engage in any insurance related business with (x) any party who is or was
a customer of the Company or any of its Affiliates during Executive’s employment by the Company or
at any time during the said eighteen (18) month period, or (y) any party who was identified as a
prospect of the Company or any of its Affiliates during Executive’s employment by the Company; or
(iii) engage in or participate in any effort or act to induce any customer (as defined in
subsection 7(c)(ii)) of the Company or any of its Affiliates to take any action which might be
disadvantageous to the Company or its Affiliates. The Executive agrees that any breach of the
restrictions set forth in Sections 6 and 7 will result in irreparable injury to the Company for
which it shall have no adequate remedy in law and the Company shall, in addition to any other
remedy available to it and in lieu of Section 15 hereof, be entitled to injunctive relief and
specific performance in order to enforce the provisions hereof. In addition to its other remedies,
the Company shall be entitled to reimbursement from the Executive and/or the Executive’s employer
of costs incurred in securing a qualified replacement as a result of any breach by the Executive of
this Section. For purposes of this Agreement, “customer” shall include, without limitation, any
policyholder, managing general agent or re-insurer with whom the Company or its affiliates has
transacted business.

(d) In the event Executive breaches any of his covenants in this Section 7, the Company and
its Affiliates shall be released from their obligation to make payments under Section 9 of this
Agreement and (to the extent permitted by applicable law) to provide benefits or make payments
under all employee benefit plans in which Executive participates, and the Company shall be entitled
to reimbursement from the Executive of severance payments made to the Executive by the Company
following termination of employment with the Company. In addition, in the event of a violation by
the Executive of his covenants in this Section 7, he shall be subject to the forfeiture provisions
of Annex A with respect to his equity holdings in the Company.

(e) The Executive acknowledges and agrees that the terms of this Section 7: (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 the
Executive; and (iv) are not injurious to the public. The Executive further acknowledges and agrees
that (x) the Executive’s breach of the provisions of Section 7 will cause the Company irreparable
harm, which cannot be adequately compensated by money damages, and (y) if the Company elects to
prevent the Executive from breaching such provisions by obtaining an injunction against the
Executive, there is a reasonable probability of the Company’s eventual success on the merits. The
Executive consents and agrees that if the Executive commits any such breach or threatens to commit
any breach, the Company shall 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.

8. TERMINATION.

(a) The Executive’s employment hereunder shall terminate upon his death, retirement, or the
expiration of this Agreement. Upon the Executive’s death, any sums then due him shall be paid to
the executor, administrator or other personal representative of the Executive’s estate.

(b) If the Executive becomes disabled (as certified by a licensed physician selected by the
Company) and 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, the Company shall have the option to
terminate this Agreement by giving written notice of termination to the Executive. Such
termination shall be without prejudice to any right the Executive has under the disability
insurance program maintained by the Company.

(c) The Company may terminate the Executive’s employment hereunder for Cause. For the
purposes of this agreement, the Company shall have “Cause” to terminate the Executive’s employment
hereunder upon (i) the Executive substantially failing to perform his duties hereunder after notice
from the Company and failure to cure such violation 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, (ii) the engaging by the Executive in any malfeasance,
fraud, dishonesty or gross misconduct adverse to the interests of the Company or its affiliates,
(iii) the material violation by the Executive of any of the provisions of Sections 3, 6 or 7 hereof
or other provisions of this Agreement after notice from Company and a failure to cure such
violation within 10 days of said notice (including a “Forfeiture Event” as provided for in Annex A
hereto), (iv) a breach by the Executive of any representation or warranty contained herein
(including a “Forfeiture Event” as provided for in Annex A hereto), (v) the Board’s determination
that the Executive has exhibited incompetence or gross negligence in the performance of his duties
hereunder, (vi) receipt of a final written directive or order of any governmental body or entity
having jurisdiction over the Company requiring termination or removal of the Executive as President
and Chief Executive Officer of the Company, or (vii) the Executive being charged with a felony or
other crime involving moral turpitude.

(d) The Company may choose to terminate the Executive’s employment at any time without Cause
or reason.

9. PAYMENTS UPON TERMINATION.

(a) If the Executive’s employment shall be terminated because of death, disability, or for
Cause, the Company shall pay the Executive (or his executor, administrator or other personal
representative, as applicable) his full Annual Direct Salary through the date of termination of
employment at the rate in effect at the time of termination and the Company shall have no further
obligations to the Executive under this Agreement (and the Executive shall not be entitled to
payment of any unpaid bonus or incentive award); provided that in the event of a termination by the
Company because of disability and other than in the case of employment in any Competitive Business
the Company shall pay to the Executive, as full and complete liquidated damages hereunder, an
amount equal to the Executive’s then monthly Annual Direct Salary multiplied by six (6) months,
with such amount payable in equal monthly installments and provided further that the foregoing
amounts shall be reduced by any disability payments for which the Executive may otherwise be
entitled. No payments or benefits shall be provided hereunder in connection with the Executive’s
disability (i) unless and until the Company has first received a signed general release from the
Executive (or the Executive’s guardian or legal representative) in a form acceptable to the Company
releasing the Company and Affiliates and any other parties identified by the Company and Affiliates
therein, and (ii) to the extent that the Executive has breached any of his post-termination
obligations hereunder.

	 	(b)	 	(i) If the Executive’s employment is terminated by the Company
without Cause; or

	 	(ii)	 	If the Executive terminates his employment at any
time following: (I) a notice from the Company that its principal
executive offices are being relocated more than 90 miles from their
current location or that the Executive’s principal place of employment
is transferred to an office location more than 90 miles from his then
current place of employment (unless in either case the effect of such
relocation results in the Executive’s principal place of employment
being less than forty (40) miles from his principal residence), and (II)
the failure of the Company to offer the Executive a reasonable
relocation package to cover direct out-of-pocket losses (if any) on the
sale of the Executive’s primary residence, and temporary living expenses
and moving costs,

then the Company shall pay to the Executive, as full and complete liquidated damages hereunder, an
amount equal to the Executive’s then monthly Annual Direct Salary multiplied by eighteen (18)
months, with such amount payable in equal monthly installments; provided that the amount and term
of such payments is subject to adjustment upon the Executive’s acceptance of an equity compensation
package to be determined. The Company shall also maintain in full force and effect, for the
continued benefit of the Executive for eighteen (18) months, any medical or health-and-accident
plan or arrangement of the Company in which the Executive is a participant at the time of such
termination of employment; provided that the Executive shall remain responsible for continuing to
pay his share of the costs of such coverage; provided further that the Company shall not be under
any duty to maintain such coverage if the Executive becomes eligible for coverage under any other
employer’s insurance and the Executive shall give the Company prompt notice of when such
eligibility occurs. No payments or benefits shall be provided hereunder (i) unless and until the
Company has first received a signed general release from the Executive in a form acceptable to the
Company releasing the Company and Affiliates and any other parties identified by the Company and
Affiliates therein, and (ii) to the extent that the Executive has breached any of his
post-termination obligations hereunder.

10. NOTICE. For the purposes of this Agreement, notices and all other communications provided
for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered
or mailed by United States certified mail, return receipt requested, postage prepaid, addressed as
follows:

	 	 	 	 	 
	If to the Executive:
	 	William F. Schmidt

	 
	 	1420 Lexington Drive
	 
	 	Maple Glen, PA  19002

	If to the Company:
	 	United National Insurance Company

	 
	 	Three Bala Plaza East, Suite 300

	 
	 	Bala Cynwyd, PA  19004

	 
	 	Attn:  General Counsel

	With copy to:
	 	Fox Paine & Company, LLC

	 
	 	950 Tower Lane, Suite 1150
	 
	 	Foster City, CA  94404

	 
	 	Attn:  Troy Thacker

or to such other address as any party may have furnished to the others in writing in accordance
herewith, except that notices of change of address shall be effective only upon receipt.

11. SUCCESSORS. This Agreement shall be binding upon the Executive, his heirs, executors or
administrator, and the Company, and any successor to or assigns of the Company. This Agreement is
not assignable by Executive. This Agreement is assignable by the Company to a successor to or
purchaser of the Company’s business.

12. ENFORCEMENT OF SEPARATE PROVISIONS. Should provisions of this Agreement be ruled
unenforceable for any reasons, the remaining provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect.

13. AMENDMENT. This Agreement may be amended or canceled only by mutual agreement of the
parties in writing without consent of any other person and, so long as the Executive lives, no
person other than the parties hereto, shall have any rights under or interest in this Agreement or
the subject matter hereof.

14. ARBITRATION. In the event that any disagreement or dispute whatsoever shall arise between
the parities concerning this Agreement, such disagreement or dispute shall be submitted to the
Judicial Arbitration and Mediation Services, Inc (“JAMS”) for resolution in a confidential private
arbitration 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. Any such arbitration proceeding shall take place in
Philadelphia, Pennsylvania before a single arbitrator (rather than a panel of arbitrators). The
parties 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 such
arbitration. Each party shall each bear their respective costs (including attorneys’ fees, and
there shall be no award of attorney’s fees) and shall split the fee of the arbitrator. Judgment
upon the final award rendered by such arbitrator, after giving effect to the JAMS internal appeal
process, may be entered in any court having jurisdiction thereof. If JAMS is not in business or is
no longer providing arbitration services, then the American Arbitration Association shall be
substituted for JAMS for the purposes of the foregoing provisions. Each party agrees that it shall
maintain absolute confidentiality in respect to any dispute between them.

15. LAW GOVERNING. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Pennsylvania.

16. ENTIRE AGREEMENT. This Agreement supersedes any and all prior agreements, either oral or
in writing, between the parties with respect to the employment of the Executive by the Company,
including the Prior Agreement, and this Agreement contains all the covenants and agreements between
the parties with respect to the Executive’s employment.

17. ACKNOWLEDGEMENT. Executive acknowledges that he has carefully read and fully understands
this Agreement and that the Company has provided him sufficient time to discuss such Agreement with
an attorney.

1

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

	 	 	 
	ATTEST:

	 	United National Insurance Company
	 
	 	 
	/s/ Lynne Gerber-Saionz

	 	By: /s/ Richard S. March
	 

	 	 
	 
	 	 
	WITNESS:

	 	William F. Schmidt
	 
	 	 
	/s/ Melissa Acker Reichner

	 	By: /s/ William F. Schmidt
	 

	 	 

2

Annex A

Option and Equity Forfeiture

Forfeiture of Options and Restricted, Common and Preferred Stock and Gains Realized upon
Prior Option Exercises or Sale of Stock. Unless otherwise determined by the Board of Directors
of the Company, the options granted under the Prior Agreement, together with any future option
grants made to the Executive on shares of UNGL, and any restricted stock and common or preferred
stock of UNGL, if any, held by the Executive and granted to Executive by the Company as
compensation for services performed or to be performed, shall be subject to the following
additional forfeiture conditions to which the Executive, by accepting and/or having accepted such
options or equity interests, hereby agrees. In the event of (i) the Executive’s breach or failure
to comply with any of the terms or conditions of Section 6 or Section 7 of this Employment
Agreement or any breach of any of the representations and warranties set forth therein (whether or
not employed by the Company at such breach or failure to comply) (a “Forfeiture Event”), and (ii)
if the Executive is employed by the Company at the time of a Forfeiture Event, his termination of
employment by the Company, all of the following will result:

	 	(i)	 	The unexercised portion of the options (both
unvested and vested, if any) will immediately be forfeited and canceled
without payment upon the occurrence of the Forfeiture Event;

	 	(ii)	 	All equity, including restricted stock, common
and/or preferred stock, if any, held by the Executive will, upon the
occurrence of the Forfeiture Event, immediately be repurchased by the
Company or its designee at the lower of fair market value (as determined
by the Board of the Company) or the Executive’s original purchase price
(in each case reduced to reflect any outstanding liabilities of the
Executive to the Company or its affiliates), with payment taking the form
of a five year note from the Company or its designee, accruing interest
at the lowest then applicable rate mandated by Federal law, with the
principal and interest due on the fifth 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). The Executive promptly shall take all
appropriate and necessary action to facilitate the buy back of such
equity, including the prompt delivery to the Company (or its designee) of
all stock certificates or other documents that the Company may request;
and

	 	(iii)	 	The Executive will be obligated to repay to the
Company (or its designee), in cash, within five (5) business days after
demand is made, therefore, by the Company (or its designee), the total
amount of Award Gain (as defined herein) realized by the Executive (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 Executive was employed by the Company or a
subsidiary or affiliate, or (B) the date that is six (6) months prior to
the date that Executive’s employment by the Company or a subsidiary or
affiliate terminated, if the Forfeiture Event occurred after the
Executive ceased to be so employed, or (II) upon any sale, transfer or
other disposition of the Class A Common Shares of Vigilant. For purposes
of this Annex A, the term “Award Gain” shall mean (i) in respect of a
given Options exercise, the product of (X) the Fair Market Value per
share of stock at the date of such exercise (without regard to any
subsequent change in the market price of such share of stock) minus the
exercise price times (Y) the number of shares as to which the Options
were exercised at that date, and (ii) in respect of any sale of stock,
the value of any cash or the Fair Market Value of stock or property paid
or payable to the Executive less any cash or the Fair Market Value of any
stock or property (other than stock or options which would have itself
been forfeitable hereunder and excluding any payment of tax withholding)
paid by the Executive to the Company (or its designee) as a condition or
in connection with the acquisition of such stock or amount otherwise
included in subclause (i) above.

3

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