Document:

Exhibit 10.1

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (this “Agreement”), is dated as of February 17,
2010 and is entered into between Endurance Specialty Holdings Ltd. (the “Company”), and David S.
Cash (the “Executive”).

WHEREAS, the Company and the Executive entered into an Employment Agreement, dated as of
September 28, 2007, in order to embody the terms of the Executive’s continued employment;

WHEREAS, the Company and the Executive entered into an amendment and restatement of such
Employment Agreement, dated as of September  , 2009 (as amended and restated, the “Original
Employment Agreement”); and

WHEREAS, the Company and the Executive desire to amend and restate the Original Employment
Agreement and the Executive desires to enter into this Agreement in order to revise the terms and
provisions of the Original Employment Agreement.

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

ARTICLE I.

Definitions

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

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

1.3 “Cause” shall mean:

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

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

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

 

 

 

(d) any willful and material violation of any statutory or common law duty of loyalty
to the Company or any of its subsidiaries or affiliates.

For the purposes of determining Cause, no act or failure to act on the Executive’s
part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in
good faith and without reasonable belief that the Executive’s act, or failure to act, was
in the best interest of the Company.

1.4 “Change in Control” shall mean:

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

(b) individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of such Board within a 24
month period; provided, that any individual who becomes a director of the Company
subsequent to the date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by the vote of at least a majority of the directors then
comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and
provided, further, that any

 

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individual who was initially elected as a director of the Company as a result of an
actual or threatened solicitation by a Person other than the Board for the purpose of
opposing a solicitation by any other Person with respect to the election or removal of
directors, or any other actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board shall not be deemed a member of the Incumbent
Board;

(c) the consummation of a reorganization, amalgamation, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the Company (a
“Corporate Transaction”); excluding, however, a Corporate Transaction
pursuant to which (i) all or substantially all of the individuals or entities who are the
beneficial owners, respectively, of the Outstanding Ordinary Shares and the Outstanding
Voting Securities immediately prior to such Corporate Transaction will beneficially own,
directly or indirectly, more than 55% of, respectively, the outstanding shares of common
stock, and the combined voting power of the outstanding securities entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting
from such Corporate Transaction (including, without limitation, a corporation which as a
result of such transaction owns the Company or all or substantially all of the Company’s
assets either directly or indirectly) in substantially the same proportions relative to
each other as their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Ordinary Shares and the Outstanding Voting Securities, as the case may be, (ii)
no Person (other than: the Company; any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company; the corporation
resulting from such Corporate Transaction; and any Person which beneficially owned,
immediately prior to such Corporate Transaction, directly or indirectly, 50% or more of the
Outstanding Ordinary Shares or the Outstanding Voting Securities, as the case may be) will
beneficially own, directly or indirectly, 50% or more of, respectively, the outstanding
 shares of common stock of the corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding securities of such corporation entitled to vote
generally in the election of directors and (iii) individuals who were members of the
Incumbent Board will constitute at least a majority of the members of the board of
directors of the corporation resulting from such Corporate Transaction; or

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

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

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

 

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

1.8 “Date of Separation from Service” shall mean the following:

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

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

(c) if the Executive’s employment is terminated for Disability, 15 calendar days after
the Notice of Separation from Service is given (provided that the Executive shall not have
returned to the full-time performance of the Executive’s duties during such 15 calendar day
period);

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

(e) if the Executive’s employment is terminated by the Company by delivery of a notice
of non-renewal of this Agreement pursuant to Section 3.1 with respect to a Renewal Date
occurring within a Change in Control Period, such Renewal Date; and

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

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

1.10 “Good Reason” shall mean,

(a) During a Change in Control Period:

 

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(i) a material diminution in (A) the Executive’s Base Salary, (B) the
Executive’s authority, duties or responsibilities, including a
requirement that the Executive report to a corporate officer or employee
instead of reporting directly to the Board or (C) the budget over which the
Executive retains authority;

(ii) a material change in the geographic location at which the Executive must
perform his services on behalf of the Company; or

(iii) any other action or inaction that constitutes a material breach by the
Company of this Agreement.

(b) At any time other than during a Change in Control Period:

(i) a material diminution in the Executive’s Base Salary,

(ii) the Executive is required to report to a corporate officer or employee
instead of reporting directly to the Board;

(b) a material change in the geographic location at which the Executive must
perform his services on behalf of the Company; or

(c) any other action or inaction that constitutes a material breach by the
Company of this Agreement.

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

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

1.13 “Non-Competition Period” shall mean period from the Date of Separation from
Service until the one year anniversary of the Date of Separation from Service; provided,
however, in the event (a) the Executive terminates his employment other than during a
Change in Control Period, (b) the Date of Separation from Service is within the 180 calendar days
following the first day the Executive ceases to report to the Board and (c) the Company does not
deliver to the Executive written notice within 10 calendar days of the date of delivery by the
Executive of Notice of Separation from Service, which written notice shall (i) request the
Executive comply with Section 5.2(b) of this Agreement during the period from the Date of
Separation from Service until the one year

 

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anniversary of the Date of Separation from Service and (ii) agree to provide the Executive
with the compensation set forth in Sections 6.4(c)(iv), 6.4(c)(v) and 6.4(c)(vi) in addition to the
compensation and benefits the Executive is entitled to receive under Section 6.4(a), then the
Non-Competition Period shall expire on the later to occur of (x) the Date of Separation from
Service or (y) the tenth calendar day after delivery by the Executive of his Notice of Separation
from Service.

1.14 “Notice of Separation from Service” shall mean a notice that shall indicate the
specific separation from service provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for severance of the
Executive’s service with the Company under the provision so indicated.

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

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

1.17 “Term” shall mean the term of employment of the Executive with the Company as its
Chief Executive Officer, which shall commence as of March 1, 2010 and continue until the earlier of
(a) March 1, 2011 or (b) the Executive’s Date of Separation from Service, and shall be subject to
successive one year renewals in accordance with Section 3.1.

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

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

 

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ARTICLE II.

Employment, Duties and Responsibilities

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

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

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

ARTICLE III.

Term

3.1 Term. The employment of the Executive under this Agreement shall be for the Term.
The Term shall be extended for successive one-year periods as of each March 1st (each, a “Renewal
Date”) unless, with respect to any such Renewal Date, either party hereto gives the other party at
least 90 days prior written notice of its election not to so extend the Term.

ARTICLE IV.

Compensation and Expenses

4.1 Salary, Bonuses, Incentive Awards and Benefits. As compensation and consideration
for the performance by the Executive of his obligations under this Agreement, the Executive shall
be entitled, during the Term, to the following:

(a) Base Salary. During the Term, the Company shall pay to the Executive a
base salary of $750,000 per annum, subject to increase from time to time as determined by
the Board (“Base Salary”). The Executive’s Base Salary shall be payable in accordance with
the Company’s normal payroll procedures
and shall not during the Term be reduced below the annual rate payable to the
Executive on the date of this Agreement.

 

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(b) Annual Incentive Compensation. The Executive shall be eligible each
calendar year for incentive compensation payable in cash (“Annual Incentive Compensation”),
the amount of which shall be between the Threshold Annual Incentive Compensation Percentage
and the Maximum Annual Incentive Compensation Percentage of the Executive’s Base Salary as
of the immediately preceding December 31st and shall be determined by the Board.
The Annual Incentive Compensation shall be based upon the performance of the Company, the
Executive’s business unit and the Executive, determined in accordance with performance
criteria established by the Board (following consultation with the Executive) at the
commencement of each calendar year. The performance criteria for the determination of the
Company portion of the Executive’s Annual Incentive Compensation for the 2010 calendar year
are as set forth on Exhibit A attached hereto. The Annual Incentive Compensation payable
to the Executive upon the Company attaining the target Company and individual performance
agreed by the Executive and the Board at the commencement of each calendar year shall be
the Target Annual Incentive Compensation Percentage of the Executive’s Base Salary as of
the immediately preceding December 31st. The Annual Incentive Compensation
shall be paid to the Executive at the same time as annual incentive compensation is paid to
other employees of the Company in accordance with the Company’s normal payroll procedures
and shall be conditioned upon the Executive’s continued employment with the Company through
and including the scheduled date of payment of annual incentive compensation by the Company
to its employees generally.

(c) Equity Incentive Awards. The Executive shall also be eligible each
calendar year during the Term for incentive compensation in the form of equity incentive
awards (the “Equity Incentive Awards”), the amount of which shall be between the Threshold
Long Term Incentive Compensation Percentage and the Maximum Long-Term Incentive
Compensation Percentage of the Executive’s Base Salary as of the immediately preceding
December 31st and shall be determined by the Board. The Equity Incentive Awards
shall be based upon the performance of the Company, the Executive’s business unit and the
Executive, determined in accordance with performance criteria established by the Board
(following consultation with the Executive)at the commencement of each calendar year. The
performance criteria for the determination of the Company portion of the Executive’s Equity
Incentive Award for the 2010 calendar year are as set forth on Exhibit A attached hereto.
The Equity Incentive Award deliverable to the Executive upon the Company attaining the
target Company and individual performance agreed by the Executive and the Board at the
commencement of each calendar year shall be the Target Long-Term Incentive Compensation
Percentage of the Executive’s Base Salary as of the immediately preceding December
31st. The Equity Incentive Awards shall be delivered to the Executive at the
same time as equity incentive awards are delivered to other employees of the Company in
accordance with the Company’s normal procedures and shall be conditioned upon the
Executive’s continued employment with the

 

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Company through and including the scheduled date of delivery of equity incentive
awards by the Company to its employees generally. The Equity Incentive Awards shall be in
a form determined by the Board, consistent with equity incentive awards to employees of the
Company generally and shall be issued in accordance with the terms of the equity incentive
plans of the Company, as amended through the date hereof and hereafter from time to time
(the “Plans”). The Executive shall enter into separate award agreements with respect to
such Equity Incentive Awards and his rights with respect to such Equity Incentive Awards
shall be governed by the Plans and such award agreements.

(d) Housing Expense Reimbursement. The Company shall pay to the Executive a
housing allowance equal to $120,000 per 12 month period, which housing allowance shall be
prorated if the Executive’s employment with the Company terminates prior to the scheduled
expiration of the Term.

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

(f) Vacation. The Executive shall be entitled to reasonable paid vacation
periods, in accordance with Company policy, to be taken in the Executive’s discretion, in a
manner consistent with the Executive’s obligations to the Company under this Agreement.

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

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

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

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

 

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

ARTICLE V.

Exclusivity, Etc.

5.1 Exclusivity. During the Term, the Executive shall perform faithfully and loyally
and to the best of the Executive’s abilities the duties assigned to the Executive hereunder and
shall devote the Executive’s full business time, attention and effort to the affairs of the Company
and its subsidiaries and affiliates and shall use the Executive’s reasonable best efforts to
promote the interests of the Company and its subsidiaries and affiliates. Notwithstanding the
foregoing, the Executive may engage in charitable, civic or community activities, provided that
such memberships and activities do not interfere with the Executive’s duties hereunder or violate
any of the Executives obligations under this Agreement.

5.2 Non-Competition; Non-Solicitation.

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

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

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

 

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

5.3 Confidential Information.

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

(b) Exceptions. The Executive’s obligation under this Section 5.3 shall not
apply to any information which (i) is disclosed or used during the Term by the Executive as
required or appropriate in connection with his duties as an officer of the Company or a
subsidiary or affiliate thereof, (ii) is disclosed as required by a court of law, by any
governmental agency having supervisory authority over the business of the Company or any of
its divisions, subsidiaries or affiliates or by any administrative or legislative body,
including a committee thereof) with apparent jurisdiction to order the Executive to
divulge, disclose or make accessible such information, (iii) is disclosed to the
Executive’s spouse, attorney and/or his personal tax and financial advisors as reasonably
necessary or appropriate to advance the Executive’s tax, financial and other personal
planning (iv) is known publicly; (v) is in the public domain or hereafter enters the public
domain without the fault of the Executive; (vi) is known to the Executive prior to his
receipt of such information from the Company or any of its divisions, subsidiaries or
affiliates, as evidenced by written records of the Executive or (vii) is hereafter
disclosed to the Executive by a third party not under an obligation of confidence to the
Company or any of its divisions, subsidiaries or affiliates.

(c) Executive Obligations. The Executive agrees that he shall, immediately
after he gains knowledge of any required disclosure of Confidential Information pursuant to
clause (ii) of subsection (b) above, give the Company written notice promptly upon
obtaining knowledge of the required disclosure of Confidential Information and, in any
event, prior to such required disclosure of Confidential Information, and use commercially
reasonable efforts to cooperate with the Company (at the Company’s sole expense) in
obtaining an adequate protective order for such Confidential Information. The Executive
further agrees to properly advise any recipient of Confidential Information pursuant to
clause (iii) of subsection (b) above of the obligations of the Executive hereunder, to
obtain the agreement of such recipient to be bound by the terms of this Section 5.3 as if a
signatory to this Agreement and to be responsible for any breach by any such recipient of
the terms of this Section 5.3. The Executive further agrees not to remove from the
premises of the Company, or as applicable, the premises of any of its divisions,
subsidiaries or affiliates, except as an employee of the Company in pursuit of the business
of the Company, its divisions, subsidiaries or affiliates, or except as specifically
permitted in writing by the Board, any

 

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document or other object containing or reflecting any Confidential Information. On or
before the Date of Separation from Service, the Executive shall forthwith deliver to the
Company all such Confidential Information, including without limitation all lists of
customers, correspondence, accounts, records and any other documents or property made or
held by the Executive or under the Executive’s control in relation to the business or
affairs of the Company or its subsidiaries or affiliates, and no copy of any such
Confidential Information shall be retained by the Executive.

5.4 Inventions. The Executive hereby assigns to the Company the Executive’s entire
right, title and interest in and to all discoveries and improvements, patentable or otherwise,
trade secrets, proprietary ideas, trademarks, trade names, Internet domain names, writings, and
copyrightable works that are conceived by the Executive or developed or acquired by the Executive
during the Term in connection with the Executive’s employment by the Company, the Executive’s
duties to the Company and the business of the Company or any of its subsidiaries or affiliates
(“Developments”); provided, that the foregoing assignment shall not apply to writings and
copyrightable works of a general nature about the Executive’s experience at the Company or about
the insurance industry that are created by the Executive outside of the Executive’s duties and
outside of normal working hours, subject in all cases to Section 5.3. The Executive agrees to
disclose fully all such Developments to the Company upon its request, which disclosure shall be
made in writing promptly following any such request. The Executive shall, upon the Company’s
request, execute, acknowledge and deliver to the Company all instruments and do all other acts
which are necessary or desirable to enable the Company or any of its subsidiaries to file and
prosecute applications for, and to acquire, maintain and enforce, all patents, trademarks and
copyrights in all countries.

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

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

 

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period, scope or area and that the court or arbitrator shall be allowed to revise the
restrictions contained herein to cover the maximum period, scope and area permitted by law
provided, however, that the determination of such court or arbitrator shall not affect the
enforceability of this Article V in any other jurisdiction.. This Agreement shall not authorize a
court or arbitrator to increase or broaden any of the restrictions in this Article V.

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

ARTICLE VI.

Separation from Service

6.1 Involuntary Separation from Service

(a) Separation from Service for Cause. The Company shall have the right to
sever the Executive’s service with the Company at any time for Cause by delivery of a
Notice of Separation from Service.

(b) Death. In the event the Executive dies during the Term, the Executive’s
service with the Company shall automatically be severed, such separation from service to be
effective on the date of the Executive’s death.

(c) Disability. In the event that the Executive suffers a Disability, the
Company shall have the right to sever the Executive’s service with the Company by delivery
of a Notice of Separation from Service.

(d) Separation from Service without Cause. The Company may at any time sever
the Executive’s service with the Company by delivery of a Notice of Separation from Service
for any reason other than Cause or the Executive’s death or Disability. In the event the
Company elects not to renew this Agreement pursuant to Section 3.1 hereof, the Executive’s
service with the Company shall be severed on such Renewal Date and the notice of
non-renewal of this Agreement delivered by the Company to the Executive pursuant to Section
3.1 shall constitute delivery of a Notice of Separation from Service without Cause.

 

13

 

6.2 Executive Separation from Service.

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

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

6.3 Notice of Separation from Service. Any purported separation of the Executive’s
service with the Company (other than separation from service pursuant to Section 6.1(b) or the
second sentence of Section 6.1(d) hereof) shall be communicated by written Notice of Separation
from Service to the other party hereto delivered in accordance with Section 7.3 hereof.

6.4 Effect of Separation from Service. 

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

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

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

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

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

 

14

 

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

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

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

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

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

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

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

 

15

 

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

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

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

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

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

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

 

16

 

(iv) The continuation of the Executive’s Base Salary, paid in accordance with
the Company’s payroll policy, from the Date of Separation from Service to the
earlier of (x) the twelve month anniversary of the Date of Separation from Service
or (y) February 28th of the calendar year following the Date of
Separation from Service;

(v) A cash sum equal to the difference (if any) between 12 months of the
Executive’s Base Salary and the amounts previously paid to the executive pursuant
to clause (iv), payable on the February 28th of the calendar year
following the Date of Separation from Service;

(vi) A cash sum (payable within 15 business days of the Date of Separation
from Service) equal to the product of the following:

(A) the greater of (I) the unvested Equity Incentive Awards lapsing
immediately following the Date of Separation from Service which, absent
such Date of Separation from Service, would otherwise vest during the 12
month period immediately following the Date of Separation from Service and
(II) 25% of the Equity Incentive Awards lapsing immediately following the
Date of Separation from Service, multiplied by

(B) either (x) the per share closing price on the New York Stock
Exchange for the Company’s ordinary shares on the Date of Separation from
Service for Equity Incentive Awards with no exercise price or (y) the
difference between (1) the per share closing price on the New York Stock
Exchange for the Company’s ordinary shares on the Date of Separation from
Service and (2) the applicable per share exercise price for Equity
Incentive Awards with an exercise price.

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

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

 

17

 

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

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

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

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

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

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

 

18

 

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

(iv) A cash sum equal to (A) two times the Executive’s annual Base Salary as
of the Date of Separation from Service plus (B) two times the average Annual
Incentive Compensation cash payments (including any Annual Incentive Compensation
awards of zero) made by the Company to the Executive in respect of the three most
recent completed calendar years, payable within 15 business days of the Date of
Separation from Service;

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

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

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

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

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

 

19

 

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

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

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

6.8 Section 280G Treatment.

(a) In the event that any payment or benefit received or to be received by the
Executive (including any payment or benefit received in connection with a Change in Control
or the severance of the Executive’s service with the Company, whether pursuant to the terms
of this Agreement or any other plan, arrangement or agreement) (all such payments and
benefits being hereinafter referred to as the “Total Payments”) would be subject (in whole
or part), to any excise tax imposed under Section 4999 of the Code (the “Excise Tax”),
then, after taking into account any reduction in the Total Payments provided by reason of
Section 280G of the Code in such other plan, arrangement or agreement, the cash payments
under Section 6.4 shall first be reduced, and the non-cash payments under Section 6.4 shall
thereafter be reduced, to the extent necessary so that no portion of the Total Payments is
subject to the Excise Tax.

 

20

 

(b) For purposes of determining whether and the extent to which the Total Payments
will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or
enjoyment of which the Executive shall have waived at such time and in such manner as not
to constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken
into account, (ii) no portion of the
Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax
Counsel”) reasonably acceptable to the Executive and selected by the accounting firm (the
“Auditor”) which was, immediately prior to the Change in Control, the Company’s independent
auditor, does not constitute a “parachute payment” within the meaning of Section 280G(b)(2)
of the Code (including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating
the Excise Tax, no portion of such Total Payments shall be taken into account which, in the
opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered,
within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the Base Amount
allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or
any deferred payment or benefit included in the Total Payments shall be determined by the
Auditor in accordance with the principles of Sections 280G(d)(3)
and (4) of the Code.

6.9 Equity Incentive Awards. The Executive’s rights with respect to his Equity
Incentive Awards upon any separation from service with the Company shall be governed exclusively by
the terms and conditions of the Plans and any award agreements executed by the Executive in
connection with such Equity Incentive Awards.

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

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

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

 

21

 

ARTICLE VII.

Miscellaneous

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

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

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

If to the Company, to:

Endurance Specialty Holdings Ltd.

Wellesley House

90 Pitts Bay Road

Pembroke HM 08, Bermuda

Attention: General Counsel

Facsimile: (441) 278-0401

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

7.4 Entire Agreement: This Agreement contains the entire agreement of the parties
hereto with respect to the terms and conditions of the Executive’s employment and supersedes any
and all prior agreements and understandings, whether written or oral,
between the parties hereto with respect to compensation due for services rendered hereunder,
including but not limited to the Original Employment Agreement.

 

22

 

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

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

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

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

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

7.10 Attorneys’ Fees. Each party to this Agreement will bear its own expenses in
connection with any dispute or legal proceeding between the parties arising out of the subject
matter of this Agreement, including any proceeding to enforce any right or provision under this
Agreement.

 

23

 

7.11 Compliance with Section 409A. This Agreement is intended to comply with Section
409A of the Code and shall be construed and interpreted in accordance with such intent. If as of
the Date of Separation from Service the Executive is a “specified employee,” as defined in Section
409A of Code, to the extent required by Section 409A of the Code, the benefits specified in Section
6.4 shall not commence until the later of (a) the commencement date otherwise set forth in Section
6.4 or (b) a date which is six months after the Date of Separation from Service. Furthermore, if
the Executive is affected by the six (6) month delay in payment imposed by Section 409A of the Code
and this Section 7.11, the aggregate amount of the first six months of any installment payments
under Section 6.4 shall be paid at the beginning of the seventh month following the Date of
Separation from Service and monthly installment payments shall continue thereafter as specified in
Section 6.4. To the extent required to avoid an accelerated or additional tax under Section 409A
of the Code, amounts reimbursable to the Executive under this Agreement shall be paid to the
Executive as provided in this Agreement but in any event on or before the last day of the year
following the year in which the expense was incurred and the amount of expenses eligible for
reimbursement (and in-kind benefits provided to the Executive) during any one year may not effect
amounts reimbursable or provided in any subsequent year. Further, to the extent required to avoid
an accelerated or additional tax under Section 409A of the Code, any tax reimbursement payment
shall be made as provided in this Agreement but in no event later than the end of the taxable year
next following the year in which the Executive remits the related taxes.

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

7.13 Severability. Other than Article V, to which Section 5.7 shall apply, whenever
possible, each provision of this Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect the validity, legality or
enforceability of any other provision of this Agreement or the validity, legality or enforceability
of such provision in any other jurisdiction, but this Agreement shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been
contained herein.

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

7.15 Subsidiaries, etc.

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

 

24

 

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

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

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

	 	 	 	 	 
	 	ENDURANCE SPECIALTY HOLDINGS LTD.

 	 
	 	By:  	/s/
Kenneth J. LeStrange	 
	 	 	Name:  	Kenneth J. LeStrange	 
	 	 	Title:  	Chairman, President and Chief Executive
Officer	 
	 
	 	 	 
	 	/s/ David S. Cash
 	 
	 	David S. Cash 	 

 

25Exhibit 10.2

Exhibit 10.2

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (this “Agreement”), is dated as of February 17,
2010 and is entered into between Endurance Specialty Holdings Ltd. (the “Company”), and William M.
Jewett (the “Executive”).

WHEREAS, the Company and the Executive entered into an Employment Agreement, dated as of
November 12, 2009 (the “Original Employment Agreement”), in order to embody the terms of the
Executive’s continued employment; and

WHEREAS, the Company and the Executive desire to amend and restate the Original Employment
Agreement and the Executive desires to enter into this Agreement in order to revise the terms and
provisions of the Original Employment Agreement.

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

ARTICLE I.

Definitions

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

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

1.3 “Cause” shall mean:

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

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

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

(d) any material violation of any statutory or common law duty of loyalty to the
Company or any of its subsidiaries or affiliates.

 

 

 

1.4 “Change in Control” shall mean:

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

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

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

 

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

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

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

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

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

1.8 “Date of Separation from Service” shall mean the following:

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

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

(c) if the Executive’s employment is terminated for Disability, 15 calendar days after
the Notice of Separation from Service is given (provided that the Executive shall not have
returned to the full-time performance of the Executive’s duties during such 15 calendar day
period);

 

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

(e) if the Executive’s employment is terminated by the Company by delivery of a notice
of non-renewal of this Agreement pursuant to Section 3.1 with respect to a Renewal Date
occurring within a Change in Control Period, such Renewal Date; and

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

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

1.10 “Good Reason” shall mean:

(a) a material diminution in (i) the Executive’s Base Salary, (ii) the Executive’s
authority, duties or responsibilities, (iii) the authority, duties or responsibilities of
the Executive’s Direct Supervisor or (iv) the budget over which the Executive retains
authority;

(b) a material change in the geographic location at which the Executive must perform
his services on behalf of the Company; or

(c) any other action or inaction that constitutes a material breach by the Company of
this Agreement.

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

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

 

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Maximum Long-Term Compensation Percentage to be lower than the sum of the Maximum Annual Incentive Compensation Percentage plus the Maximum Long-Term Compensation Percentage
set forth in Exhibit A.

1.13 “Non-Competition Period” shall mean period from the Date of Separation from
Service until the six month anniversary of the Date of Separation from Service; provided,
however, in the event (a) the Executive terminates his employment other than during a
Change in Control Period, (b) the Date of Separation from Service is within the 180 calendar days
following the first day the Executive ceases to report to either the Chairman or Chief Executive
Officer of the Company and (c) the Company does not deliver to the Executive written notice within
10 calendar days of the date of delivery by the Executive of Notice of Separation from Service,
which written notice shall (i) request the Executive comply with Section 5.2(b) of this Agreement
during the period from the Date of Separation from Service until the 6 month anniversary of the
Date of Separation from Service and (ii) agree to provide the Executive with the compensation set
forth in Sections 6.4(c)(iv), 6.4(c)(v) and 6.4(c)(vi) in addition to the compensation and benefits
the Executive is entitled to receive under Section 6.4(a), then the Non-Competition Period shall
expire on the later to occur of (x) the Date of Separation from Service or (y) the tenth calendar
day after delivery by the Executive of his Notice of Separation from Service.

1.14 “Notice of Separation from Service” shall mean a notice that shall indicate the
specific separation from service provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for severance of the
Executive’s service with the Company under the provision so indicated.

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

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

1.17 “Term” shall mean the term of employment of the Executive with the Company, as
its President, which shall commence as of March 1, 2010 and continue until the earlier of (a)
November 12, 2010 or (b) the Executive’s Date of Separation from Service, and shall be subject to
successive one year renewals in accordance with Section 3.1.

 

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

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

ARTICLE II.

Employment, Duties and Responsibilities

2.1 Employment. During the Term, the Company agrees to employ the Executive and the
Executive hereby agrees to be employed as the President and, subject to election of the Executive
by the shareholders of the Company, a member of the Board of the Company, upon the terms and
subject to the conditions contained in this Agreement.

2.2 Duties and Responsibilities. The Executive shall have such duties and
responsibilities during the Term as specified by the Board and the Chief Executive Officer, to whom
the Executive directly reports and who supervises the Executive’s work on a regular basis (the
“Direct Supervisor”). These duties and responsibilities may be modified from time to time in a
manner consistent with the Executive’s position. The Executive agrees to serve as a director
and/or officer of any subsidiary of the Company at a level commensurate with his position as may be
reasonably requested by the Board or the Executive’s Direct Supervisor.

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

ARTICLE III.

Term

3.1 Term. The employment of the Executive under this Agreement shall be for the Term.
The Term shall be extended for successive one-year periods as of each November 12th (each, a
“Renewal Date”) unless, with respect to any such Renewal Date, either party hereto gives the other
party at least 90 days prior written notice of its election not to so extend the Term.

 

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ARTICLE IV.

Compensation and Expenses

4.1 Salary, Bonuses, Incentive Awards and Benefits. As compensation and consideration
for the performance by the Executive of his obligations under this Agreement, the Executive shall
be entitled, during the Term, to the following:

(a) Base Salary. During the Term, the Company shall pay to the Executive a
base salary of $650,000 per annum, subject to increase from time to time as determined by
the Board, upon recommendation of the Direct Supervisor, or if such Direct Supervisor is not
an officer of the Company, an officer of the Company (“Base Salary”). The Executive’s Base
Salary shall be payable in accordance with the Company’s normal payroll procedures and shall
not during the Term be reduced below the annual rate payable to the Executive on the date of
this Agreement.

(b) Annual Incentive Compensation. The Executive shall be eligible each
calendar year for incentive compensation payable in cash (“Annual Incentive Compensation”),
the amount of which shall be between the Threshold Annual Incentive Compensation Percentage
and the Maximum Annual Incentive Compensation Percentage of the Executive’s Base Salary as
of the immediately preceding December 31st and shall be determined by the Board,
upon recommendation of the Direct Supervisor, or if such Direct Supervisor is not an officer
of the Company, an officer of the Company. The Annual Incentive Compensation shall be based
upon the performance of the Company, the Executive’s business unit and the Executive,
determined in accordance with performance criteria established by the Board and the Direct
Supervisor at the commencement of each calendar year. The performance criteria for the
determination of the Company portion of the Executive’s Annual Incentive Compensation for
the 2010 calendar year are as set forth on Exhibit A attached hereto. The Annual Incentive
Compensation payable to the Executive upon the Company attaining the target Company and
individual performance established by the Board and the Direct Supervisor at the
commencement of each calendar year shall be the Target Annual Incentive Compensation
Percentage of the Executive’s Base Salary as of the immediately preceding December
31st. The Annual Incentive Compensation shall be paid to the Executive at the
same time as annual incentive compensation is paid to other employees of the Company in
accordance with the Company’s normal payroll procedures and shall be conditioned upon the
Executive’s continued employment with the Company through and including the scheduled date
of payment of annual incentive compensation by the Company to its employees generally.

(c) Equity Incentive Awards. The Executive shall also be eligible each
calendar year during the Term for incentive compensation in the form of equity incentive
awards (the “Equity Incentive Awards”), the amount of which shall be between the Threshold
Long Term Incentive Compensation Percentage and the Maximum Long-Term Incentive Compensation
Percentage of the Executive’s Base Salary as of the immediately preceding December
31st and shall be determined by the Board, upon recommendation of the Direct
Supervisor, or if such Direct Supervisor is not an officer of the Company, an officer of the
Company. The Equity Incentive Awards shall be based upon the

 

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performance of the Company, the Executive’s business unit and the Executive, determined
in accordance with performance criteria established by the Board and the Direct Supervisor
at the commencement of each calendar year. The performance criteria for the determination
of the Company portion of the Executive’s Equity Incentive Award for the 2010 calendar year
are as set forth on Exhibit A attached hereto. The Equity Incentive Award deliverable to
the Executive upon the Company attaining the target Company and individual performance
established by the Board and the Direct Supervisor at the commencement of each calendar year
shall be the Target Long-Term Incentive Compensation Percentage of the Executive’s Base
Salary as of the immediately preceding December 31st. The Equity Incentive
Awards shall be delivered to the Executive at the same time as equity incentive awards are
delivered to other employees of the Company in accordance with the Company’s normal
procedures and shall be conditioned upon the Executive’s continued employment with the
Company through and including the scheduled date of delivery of equity incentive awards by
the Company to its employees generally. The Equity Incentive Awards shall be in a form
determined by the Board, consistent with equity incentive awards to employees of the Company
generally and shall be issued in accordance with the terms of the equity incentive plans of
the Company, as amended through the date hereof and hereafter from time to time (the
“Plans”). The Executive shall enter into separate award agreements with respect to such
Equity Incentive Awards and his rights with respect to such Equity Incentive Awards shall be
governed by the Plans and such award agreements.

(d) Housing Expense Reimbursement. The Company shall reimburse the Executive
for expenses relating to the rental and maintenance of the Executive’s residence in Bermuda
which are properly and reasonably incurred by the Executive during the Term and are
reimbursable under the Company’s housing expense reimbursement policy, as amended from time
to time. Prior to such payment the Executive shall provide to the Company any written
substantiation for such expenses requested by the Company. The maximum amount of rental and
maintenance expenses the Company shall reimburse the Executive pursuant to this Section
4.1(d) shall be $120,000 per 12 month period, which maximum amount shall be prorated if the
Executive’s employment with the Company terminates prior to the scheduled expiration of the
Term.

(e) Travel Reimbursement. The Company shall reimburse the Executive for travel
expenses relating to the Executive’s commutation to and from Bermuda which are properly and
reasonably incurred by the Executive during the Term and are reimbursable under the
Company’s commutation expense reimbursement policy, as amended from time to time. Prior to
such payment the Executive shall provide to the Company any written substantiation for such
expenses requested by the Company.

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

 

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(g) Tax Preparation Expense Reimbursement. The Company shall reimburse the
Executive for the reasonable cost of the preparation of the Executive’s home country federal
and state income tax returns by KPMG, or an alternate tax preparation service provider
elected by the Executive and approved by the Company, for those calendar years falling
entirely within the Term; provided that the maximum amount of tax preparation expense
reimbursable by the Company pursuant to this sentence shall be $3,600 per annum. Prior to
such payment the Executive shall provide to the Company any written substantiation for such
expenses requested by the Company.

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

(j) Vacation. The Executive shall be entitled to reasonable paid vacation
periods, in accordance with Company policy, to be taken in the Executive’s discretion, in a
manner consistent with the Executive’s obligations to the Company under this Agreement, and
subject, with respect to timing, to the reasonable approval of the Executive’s Direct
Supervisor.

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

(l) Life Insurance. The Company shall maintain for the benefit of the
Executive an accidental death and dismemberment insurance policy having a benefit upon the
Executive’s death of at least $1,000,000. Any such accidental death and dismemberment
insurance policy purchased on behalf of the Executive pursuant to this Agreement shall be in
addition to any accidental death and dismemberment insurance policy provided to employees of
the Company generally.

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

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

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

 

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

ARTICLE V.

Exclusivity, Etc.

5.1 Exclusivity. During the Term, the Executive shall perform faithfully and loyally
and to the best of the Executive’s abilities the duties assigned to the Executive hereunder and
shall devote the Executive’s full business time, attention and effort to the affairs of the Company
and its subsidiaries and affiliates and shall use the Executive’s reasonable best efforts to
promote the interests of the Company and its subsidiaries and affiliates. Notwithstanding the
foregoing, the Executive may engage in charitable, civic or community activities, provided that
such memberships and activities do not interfere with the Executive’s duties hereunder or violate
any of the Executives obligations under this Agreement.

5.2 Non-Competition; Non-Solicitation.

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

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

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

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

 

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5.3 Confidential Information.

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

(b) Exceptions. The Executive’s obligation under this Section 5.3 shall not
apply to any information which (i) is disclosed or used during the Term by the Executive as
required or appropriate in connection with his duties as an officer of the Company or a
subsidiary or affiliate thereof, (ii) is disclosed as required by a court of law, by any
governmental agency having supervisory authority over the business of the Company or any of
its divisions, subsidiaries or affiliates or by any administrative or legislative body,
including a committee thereof) with apparent jurisdiction to order the Executive to divulge,
disclose or make accessible such information, (iii) is disclosed to the Executive’s spouse,
attorney and/or his personal tax and financial advisors as reasonably necessary or
appropriate to advance the Executive’s tax, financial and other personal planning (iv) is
known publicly; (v) is in the public domain or hereafter enters the public domain without
the fault of the Executive; (vi) is known to the Executive prior to his receipt of such
information from the Company or any of its divisions, subsidiaries or affiliates, as
evidenced by written records of the Executive or (vii) is hereafter disclosed to the
Executive by a third party not under an obligation of confidence to the Company or any of
its divisions, subsidiaries or affiliates.

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

 

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5.4 Inventions. The Executive hereby assigns to the Company the Executive’s entire
right, title and interest in and to all discoveries and improvements, patentable or otherwise,
trade secrets, proprietary ideas, trademarks, trade names, Internet domain names, writings, and
copyrightable works that are conceived by the Executive or developed or acquired by the Executive
during the Term in connection with the Executive’s employment by the Company, the Executive’s
duties to the Company and the business of the Company or any of its subsidiaries or affiliates
(“Developments”); provided, that the foregoing assignment shall not apply to writings and
copyrightable works of a general nature about the Executive’s experience at the Company or about
the insurance industry that are created by the Executive outside of the Executive’s duties and
outside of normal working hours, subject in all cases to Section 5.3. The Executive agrees to
disclose fully all such Developments to the Company upon its request, which disclosure shall be
made in writing promptly following any such request. The Executive shall, upon the Company’s
request, execute, acknowledge and deliver to the Company all instruments and do all other acts
which are necessary or desirable to enable the Company or any of its subsidiaries to file and
prosecute applications for, and to acquire, maintain and enforce, all patents, trademarks and
copyrights in all countries.

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

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

 

12

 

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

ARTICLE VI.

Separation from Service

6.1 Involuntary Separation from Service

(a) Separation from Service for Cause. The Company shall have the right to
sever the Executive’s service with the Company at any time for Cause by delivery of a Notice
of Separation from Service.

(b) Death. In the event the Executive dies during the Term, the Executive’s
service with the Company shall automatically be severed, such separation from service to be
effective on the date of the Executive’s death.

(c) Disability. In the event that the Executive suffers a Disability, the
Company shall have the right to sever the Executive’s service with the Company by delivery
of a Notice of Separation from Service.

(d) Separation from Service without Cause. The Company may at any time sever
the Executive’s service with the Company by delivery of a Notice of Separation from Service
for any reason other than Cause or the Executive’s death or Disability. In the event the
Company elects not to renew this Agreement pursuant to Section 3.1 hereof on a Renewal Date
falling within a Change in Control Period, the Executive’s service with the Company shall be
deemed severed on such Renewal Date and the notice of non-renewal of this Agreement
delivered by the Company to the Executive pursuant to Section 3.1 shall constitute delivery
of a Notice of Separation from Service without Cause.

6.2 Executive Separation from Service.

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

(b) Separation from Service with Good Reason. The Executive may terminate his
employment for Good Reason only (i) within the Change in Control Period and (ii) by delivery
of Notice of Separation from Service to the Company within 30 calendar days of the Executive
first becoming aware of the circumstances giving rise to the Executive’s right to terminate
his employment for Good Reason.

 

13

 

6.3 Notice of Separation from Service. Any purported separation of the Executive’s
service with the Company (other than separation from service pursuant to Section 6.1(b) or the
second sentence of Section 6.1(d) hereof) shall be communicated by written Notice of Separation
from Service to the other party hereto delivered in accordance with Section 7.3 hereof.

6.4 Effect of Separation from Service. 

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

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

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

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

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

(v) Any proper and reasonable expense reimbursement relating to the relocation
of the Executive’s residence from Bermuda, in the event the Executive and the
Executive’s family relocate their permanent residence from Bermuda during the 6
months immediately following the Date of Separation from Service, which relocation
expense reimbursement shall be made in a manner agreeable to the Company and the
Executive and subject to receipt by the Company of satisfactory written
substantiation for such relocation expenses, which reimbursement shall be payable
within 15 business days after the submission to the Company of satisfactory written
substantiation for such relocation expenses; provided, that the Executive
shall not be entitled to reimbursement of expenses related to the relocation of the
Executive’s residence from Bermuda and shall be required to refund promptly to the
Company any expenses previously reimbursed by the Company pursuant to this Section
6.4(a)(v) in the event that the Executive violates the non-competition restriction set forth in Section 5.2(b) during the
6 months immediately following the Date of Termination;

 

14

 

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

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

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

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

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

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

 

15

 

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

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

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

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

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

(ix) Any other benefits available to employees of the Company generally,
through and including the Date of Separation from Service, payable or deliverable in
accordance with the terms and conditions applicable to such benefits, including but
not limited to the proceeds of any supplemental accidental death and dismemberment policy purchased for the benefit of the Executive
pursuant to Section 4.1(l).

 

16

 

(c) Separation from Service by the Company without Cause. In the event of any
severance of the Executive’s service with the Company during the Term by the Company without
Cause, other than during a Change in Control Period, the Company shall pay to or provide the
Executive with the following compensation and benefits:

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

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

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

(iv) The continuation of the Executive’s Base Salary, paid in accordance with
the Company’s payroll policy, from the Date of Separation from Service to the
earlier of (x) the twelve month anniversary of the Date of Separation from Service
or (y) February 28th of the calendar year following the Date of
Separation from Service;

(v) A cash sum equal to the difference (if any) between 12 months of the
Executive’s Base Salary and the amounts previously paid to the executive pursuant to
clause (iv), payable on the February 28th of the calendar year following
the Date of Separation from Service;

 

17

 

(vi) A cash sum (payable within 15 business days of the Date of Separation from
Service) equal to the product of the following:

(A) the greater of (I) the unvested Equity Incentive Awards lapsing
immediately following the Date of Separation from Service which, absent such
Date of Separation from Service, would otherwise vest during the 12 month
period immediately following the Date of Separation from Service and (II)
25% of the Equity Incentive Awards lapsing immediately following the Date of
Separation from Service, multiplied by

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

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

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

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

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

 

18

 

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

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

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

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

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

(ii) Any earned but unpaid Annual Incentive Compensation for the last completed
calendar year during the Term, which Annual Incentive Compensation shall be
determined (A) in accordance with the Company’s annual incentive plan, (B) utilizing
the Threshold Annual Incentive Compensation Percentage, Maximum Annual Incentive
Compensation Percentage, Target Annual Incentive Compensation Percentage and
performance criteria previously established by the Board and the Executive’s Direct
Supervisor for such completed calendar year in accordance with Section 4.1(b) and
(C) by the Board and the Executive’s Direct Supervisor (1) without the exercise by
the Board or the Executive’s Direct Supervisor of any discretionary adjustment to
such Annual Incentive

 

19

 

Compensation and (2) with the Board and the Executive’s Direct Supervisor
ascribing to any individual evaluation of the Executive the same result as occurs
based upon the Company’s performance under its annual incentive plan, and which
Annual Incentive Compensation shall be payable within 15 business days of the Date
of Separation from Service;

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

(iv) The continuation of the Executive’s Base Salary, paid in accordance with
the Company’s payroll policy, from the Date of Separation from Service to the
earlier of (x) the twelve month anniversary of the Date of Separation from Service
or (y) February 28th of the calendar year following the Date of
Separation from Service;

(v) A cash sum equal to the difference (if any) between 12 months of the
Executive’s Base Salary and the amounts previously paid to the executive pursuant to
clause (iv), payable on the February 28th of the calendar year following
the Date of Separation from Service;

(vi) A cash sum equal to the average of the three most recent Annual Incentive
Compensation cash payments (including any Annual Incentive Compensation awards of
zero) made by the Company to the Executive, payable within 15 business days of the
six month anniversary of the Date of Separation from Service;

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

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

 

20

 

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

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

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

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

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

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

 

21

 

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

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

6.8 Section 280G Treatment.

(a) In the event that any payment or benefit received or to be received by the
Executive (including any payment or benefit received in connection with a Change in Control
or the severance of the Executive’s service with the Company, whether pursuant to the terms
of this Agreement or any other plan, arrangement or agreement) (all such payments and
benefits being hereinafter referred to as the “Total Payments”) would be subject (in whole
or part), to any excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then,
after taking into account any reduction in the Total Payments provided by reason of Section
280G of the Code in such other plan, arrangement or agreement, the cash payments under
Section 6.4 shall first be reduced, and the non-cash payments under Section 6.4 shall
thereafter be reduced, only to the extent necessary to assure that the Executive receives
the greater of (i) the amount of such payments under Section 6.4 that would result in no
portion of the Total Payments being subject to the Excise Tax or (ii) the full amount of
such payments under Section 6.4, after deducting from such payments the effect of the
payment by the Executive of the Excise Tax on the Total Payments.

(b) For purposes of determining whether and the extent to which the Total Payments will
be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment
of which the Executive shall have waived at such time and in such manner as not to
constitute a “payment” within the meaning of Section 280G(b) of the Code shall be taken into
account, (ii) no portion of the Total Payments shall be taken into account which, in the
opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected
by the accounting firm (the “Auditor”) which was, immediately prior to the Change in
Control, the Company’s independent auditor, does not constitute a “parachute payment” within
the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A)
of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be
taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation
for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in
excess of the Base Amount allocable to such reasonable compensation, and (iii) the value of
any non-cash benefit or any deferred payment or benefit included in the Total Payments shall
be determined by the Auditor in accordance with the principles of Sections 280G(d)(3) and
(4) of the Code.

 

22

 

6.9 Equity Incentive Awards. The Executive’s rights with respect to his Equity
Incentive Awards upon any separation from service with the Company shall be governed exclusively by
the terms and conditions of the Plans and any award agreements executed by the Executive in
connection with such Equity Incentive Awards.

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

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

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

ARTICLE VII.

Miscellaneous

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

7.2 Benefit of Agreement; Assignment; Beneficiary. This Agreement shall inure to the
benefit of and be binding upon the Company and its successors and assigns, including, without
limitation, any corporation or person which may acquire all or substantially all of the Company’s

 

23

 

assets or business, or with or into which the Company may be consolidated or merged. This
Agreement shall also inure to the benefit of, and be enforceable by, the Executive and his personal
or legal representatives, executors, administrators, successors, heirs, distributes, devisees and
legatees. The Company shall require any successor (whether direct or indirect, by operation of
law, purchase, merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it if no such
succession had taken place.

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

If to the Company, to:

Endurance Specialty Holdings Ltd.

Wellesley House

90 Pitts Bay Road

Pembroke HM 08, Bermuda

Attention: General Counsel

Facsimile: (441) 278-0401

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

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

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

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

7.7 Arbitration. Except as otherwise set forth in Section 5.6 hereof, any dispute or
controversy between the Company and the Executive, whether arising out of or relating to this
Agreement, the breach of this Agreement, or otherwise, shall be settled by arbitration in Hamilton,
Bermuda administered in accordance with the Arbitration Act 1986, and judgment on the award
rendered by the arbitrator may be entered in any court having jurisdiction thereof. The

 

24

 

arbitrator shall have the authority to award any remedy or relief that a court of competent
jurisdiction could order or grant, including, without limitation, the issuance of an injunction.
However, either party may, without inconsistency with this arbitration provision, apply to any
court having jurisdiction over such dispute or controversy and seek interim provisional, injunctive
or other equitable relief until the arbitration award is rendered or the controversy is otherwise
resolved. Except as necessary in court proceedings to enforce this arbitration provision or an
award rendered hereunder, or to obtain interim relief, neither a party nor an arbitrator may
disclose the existence, content or results of any arbitration hereunder without the prior written
consent of the Company and the Executive. The Executive shall have no right to enforce any of his
rights hereunder by seeking or obtaining injunctive or other equitable relief and acknowledges that
damages are an adequate remedy for any breach by the Company of this Agreement.

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

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

7.10 Attorneys’ Fees. Each party to this Agreement will bear its own expenses in
connection with any dispute or legal proceeding between the parties arising out of the subject
matter of this Agreement, including any proceeding to enforce any right or provision under this
Agreement.

7.11 Compliance with Section 409A. This Agreement is intended to comply with Section
409A of the Code and shall be construed and interpreted in accordance with such intent. If as of
the Date of Separation from Service the Executive is a “specified employee,” as defined in Section
409A of Code, to the extent required by Section 409A of the Code, the benefits specified in Section
6.4 shall not commence until the later of (a) the commencement date otherwise set forth in Section
6.4 or (b) a date which is six months after the Date of Separation from Service. Furthermore, if
the Executive is affected by the six (6) month delay in payment imposed by Section 409A of the Code
and this Section 7.11, the aggregate amount of the first six months of any installment payments
under Section 6.4 shall be paid at the beginning of the seventh month following the Date of
Separation from Service and monthly installment payments shall continue thereafter as specified in
Section 6.4. To the extent that the delivery of any cash or benefits to the Executive under this
Agreement, or the payment, settlement or deferral thereof, is otherwise subject to Section 409A of
the Code, such cash or benefits shall be paid, settled or deferred in a manner that will comply
with Section 409A of the Code, including regulations or other guidance issued with respect thereto,
except as otherwise agreed in writing by the Company and the Executive.

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

 

25

 

7.13 Severability. Other than Article V, to which Section 5.7 shall apply, whenever
possible, each provision of this Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect the validity, legality or
enforceability of any other provision of this Agreement or the validity, legality or enforceability
of such provision in any other jurisdiction, but this Agreement shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been
contained herein.

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

7.15 Subsidiaries, etc.

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

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

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

 

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

	 	 	 	 	 
	 	ENDURANCE SPECIALTY HOLDINGS LTD.

 	 
	 	By:  	/s/ Kenneth J. LeStrange
 	 
	 	 	Name:  	Kenneth J. LeStrange	 
	 	 	Title:  	Chairman, President and Chief Executive Officer	 
	 
	 	 	 
	 	/s/ William M. Jewett
 	 
	 	William M. Jewett 	 
	 	 	 
	 

 

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