Document:

Exhibit
10.1

 

AXIS
SPECIALTY LIMITED

Overbay, 106 Pitts Bay Road

Pembroke, HM 08

 

February 17, 2006

 

PERSONAL AND
CONFIDENTIAL

 

Carol S. Rivers

AXIS Specialty Limited

106 Pitts Bay Road

Pembroke HM 08 Bermuda

 

Dear Carol:

 

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

 

1.             Termination of Employment. We have agreed
that your employment with the Company as General Counsel shall terminate
effective February 28, 2006 (the “Termination Date”). You hereby confirm
that effective February 28, 2006, you shall no longer hold any officer or
director positions with the Company or any of its parents, subsidiaries or
affiliates, or any other offices or positions that you hold in connection with
your employment with the Company, and you agree to execute such documents and
take such actions as may be necessary or desirable to effectuate the foregoing.
During the period from the Execution Date to the Termination Date, the
Employment Agreement between you and the Company dated August 1, 2003 (the “Employment
Agreement”) shall continue in full force and effect. Without limiting the
generality of the foregoing, the Employment Agreement shall govern any
termination of your employment which occurs prior to the Termination Date. Upon
the Termination Date, the Employment Agreement shall terminate other than with
respect to provisions identified in Section 4(a) below. A copy of the
Employment Agreement is annexed hereto as Exhibit A.

 

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

 

(a)           The
Company agrees to pay you the equivalent of twelve (12) months of your current
annual base salary of $341,250 to be payable in a lump sum on the Termination Date.

 

(b)           You
will receive a cash payment of $204,750.00 on the Termination Date in lieu of a
cash bonus for the 2005 plan year under the 2004 Annual Incentive Plan.

 

(c)           You
shall receive with respect to the Company’s fiscal year 2005, 24,000 shares of
Restricted Stock under AXIS Capital Holdings Limited 2003 Long Term Equity Plan
in accordance with the terms of the Plan and based upon the performance of the
Company

 

 

(the “2005
LTEP Award”). The 2005 LTEP Award shall be awarded at the time the Company
makes such awards to similarly situated employees.

 

(d)           With
respect to your outstanding equity awards set forth on Exhibit B and the 2005
LTEP award, such awards shall vest on the Termination Date and you shall be
entitled to exercise any options within 90 days following the Termination Date
after which such time any unexercised options shall terminate.

 

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

 

(f)            The
Company agrees to provide you with twelve (12) months of group health insurance
coverage (i.e., medical and dental coverage) at the Company’s expense, under a
Bermuda health and welfare plan substantially similar to the plan offered to employees
of the Company based in Bermuda. Should you repatriate to the United States
within six (6) months of your Termination Date, however, the Company will
provide you with the benefits set forth in Section 3(g) of your Employment
Agreement.

 

(g)           In
lieu of repatriation benefits as stated in paragraph 2(k) of the Employment
Agreement, the Company will pay you $25,000 in a lump sum on the Termination
Date.

 

(h)           The
Company agrees to make contributions for the 2005 Plan Year to both the AXIS 401(k)
Savings Plan, and the AXIS Specialty US Services, Inc. Supplemental Retirement
Plan (the “Supplemental Retirement Plan”). The parties understand and agree
that payments made from the Supplemental Retirement Plan may be “deferred
compensation” for purposes of Section 409A of the United States Internal
Revenue Code (the “Code”) and distributions from the Supplemental Retirement
Plan made upon or in respect to your termination of employment hereunder shall
not be made prior to the first day of the seventh month after your Termination
Date to the extent necessary to comply with Section 409A(2)(B)(i) of the Code. The
Company shall promptly pay any such deferred compensation amounts, without
interest, at the conclusion of the applicable six month period.

 

(i)            The
payments, benefits and awards contemplated by paragraphs 2(a), 2(b), 2(c),
2(d), 2(f), 2(g) and 2(h) above shall be made provided that this Agreement
becomes effective (as provided for in paragraph 9 below). Notwithstanding the
foregoing, the Company shall have no obligation to provide you with the
payments, benefits or awards contemplated by paragraphs 2(a), 2(b), 2(c), 2(d),
2(f), 2(g) or 2(h) above in the event your employment is terminated by the
Company for Cause as determined by the Board of Directors of AXIS Capital
Holdings Limited (“Parent”) pursuant to paragraph 3(a)(iii) of the
Employment Agreement prior to the Termination Date.

 

(j)            You
acknowledge that the payments,
benefits and awards referred to in this Agreement are in lieu of and in full
satisfaction of any amounts that might otherwise be payable or due to you under
any contract, plan, policy or practice, past or present, of the Company or any
of the other Company Releasees (as defined below), including, without

 

2

 

limitation,
the Employment Agreement, the AXIS Capital Holdings 2003 Long-Term Equity
Compensation Plan, and the AXIS Capital Holdings Limited 2004 Annual Incentive
Plan. Notwithstanding the foregoing,
nothing in this Agreement shall impair or preclude your entitlement to any
vested benefits you may have as of the Termination Date under the AXIS 401(k)
Savings Plan and the Supplemental Retirement Plan.

 

3.             Release.

 

(a)           In
consideration of the Company’s obligations set forth in this Agreement,
including but not limited to the payments and benefits described in paragraph 2
above, you voluntarily, knowingly and willingly on behalf of yourself, your
heirs, executors, administrators, successors and assigns, hereby irrevocably
and unconditionally release the Company, its parents, their subsidiaries,
divisions and affiliates, together with their respective owners, assigns,
agents, directors, partners, officers, employees, consultants, shareholders,
attorneys and representatives, and any of their predecessors and successors and
each of their estates, heirs and assigns (collectively, the “Company Releasees”)
from any and all charges, complaints, claims, liabilities, obligations,
promises, agreements, causes of action, rights, costs, losses, debts and
expenses of any nature whatsoever, known or unknown, which you or your
heirs, executors, administrators, successors or assigns ever had, now have or
hereafter can, will or may have (either directly, indirectly, derivatively or
in any other representative capacity) against the Company or any of the other
Company Releasees by reason of any matter, cause or thing whatsoever arising on
or before the date this Agreement is executed by you (the “Release”). This
Release includes, without limitation, any rights or claims relating in any way
to your employment relationship with the Company or any of the Company
Releasees, or the termination thereof, arising under Bermuda law, including,
the Bermuda Employment Act 2000, and under the Human Rights Act of 1981, the
Commission for Unity and Racial Equality Act 1994, as each Act may be amended,
the U.S. Civil Rights Act of 1964 (“Title VII”) as amended, the Age
Discrimination in Employment Act, as amended by the Older Workers’ Benefit
Protection Act, or under any law of Bermuda or the U.S., or any policy,
agreement, understanding or promise, written or oral, formal or informal,
between the Company or any of the Company Releasees and you, including, without
limitation, the Employment Agreement.

 

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

 

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

 

3

 

(d)           In
consideration of your obligations set forth in this Agreement, including but
not limited to the release described in paragraph 3(a) above, the Company
voluntarily, knowingly and willingly on its behalf and on behalf of its
parents, their subsidiaries, divisions and affiliates, together with their
respective owners, assigns, agents, directors, partners, officers, employees,
consultants, shareholders, attorneys and representatives, and any of their
predecessors and successors and each of their estates, heirs and assigns,
hereby irrevocably and unconditionally release you and your heirs, executors,
administrators, successors and assigns (collectively, the “Executive
Releasees”) from any and all charges, complaints, claims, liabilities,
obligations, promises, agreements, causes of action, rights, costs, losses,
debts and expenses of any nature whatsoever, known or unknown, which the
Company or any of the Company Releasees ever had, now have or hereafter can,
will or may have (either directly, indirectly, derivatively or in any other
representative capacity) against you or any of the other Executive Releasees by
reason of any matter, cause or thing whatsoever arising on or before the date
this Agreement is executed by the Company (the “Company Release”). This
Company Release includes, without limitation, any rights or claims relating in
any way to your employment relationship with the Company or any of the Company
Releasees, or the termination thereof, arising under any law of Bermuda or the
U.S., or any policy, agreement, understanding or promise, written or oral,
formal or informal, between the Company or any of the Company Releasees and
you, including, without limitation, the Employment Agreement.

 

4.             Covenants.

 

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

 

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

 

(c)          On the Effective Date, the Company
will notify the Bermuda Department of Immigration that the Company has no
objection to you seeking employment in Bermuda and the Company shall provide a
copy of such notice to you. The notice shall be in the form annexed hereto as
Exhibit C. Should you accept other employment, you agree not to begin such
employment prior to April 15, 2006.

 

(d)         You shall be indemnified and secured
harmless by Parent and the Company to the extent required by statute and the Bye-Laws
of the Company as amended from time to time.

 

5.             Waiver of Future Employment. You acknowledge
that you forever waive any interest in, or claim to, any future employment with
the Company, its parents or any

 

4

 

of its
subsidiaries, divisions or affiliates, and further agree that you will not
knowingly apply for, or otherwise seek or accept employment with, any such
entity at any time in the future.

 

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

 

7.             Nondisparagement.

 

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

 

(b)           The
Company agrees that at all times hereafter, neither it, Parent or any of it’s
Parent’s Executive Officers shall make, or cause to be made, any public
statement, observation or opinion that (i) accuses or implies that you engaged
in any wrongful, unlawful or improper conduct, whether relating to your
employment with the Company (or the termination thereof), or otherwise; or (ii)
disparages, impugns or in any way reflects adversely upon your reputation. Nothing
in this paragraph 7(b) shall preclude the Company, Parent or any of their
Executive Officers from providing truthful testimony in response to a legal
subpoena or as required by law.

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

16.           Compliance with Code Section 409A. The
parties understand and agree that certain payments contemplated by this
Agreement may be “deferred compensation” for purposes of Section 409A of the Code.
No deferred compensation payable hereunder shall be subject to acceleration or
to any change in the specified time or method of payment, except as otherwise
provided under this Agreement and consistent with Section 409A of the Code. Any
reimbursement of expenses contemplated hereunder shall be completed no later
than December 31, 2008. In no event shall the Company have any liability
or obligation with respect to taxes for which you may become liable as a result
of the application of Section 409A of the Code.

 

17.           Entire Agreement. This Agreement sets
forth the entire agreement and understanding between you and the Company and
merges and supersedes any and all prior agreements, representations,
discussions, and understandings of every kind and nature, written and oral,
between you and the Company concerning the subject matter hereof, including,
but not limited to, the Summary of Terms between you and the Company; provided,
however, that the

 

6

 

Employment
Agreement shall not be superseded until the Termination Date (except with
respect to those sections of the Employment Agreement which remain in full
force and effect). You represent that, in executing this Agreement, you have
not relied upon any representation or statement made by the Company or any
other Company Releasees, other than those set forth herein, with regard to the
subject matter, basis or effect of this Agreement or otherwise.

 

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

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  AXIS SPECIALTY LIMITED

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael A. Butt

  	
   

  
	
   

  	
   

  	
  Name: Michael A. Butt

  
	
   

  	
   

  	
  Title: Chairman of the Board

  
	
  Agreed to and Accepted:

  
	
   

  
	
   

  
	
  /s/ Carol S. Rivers

  	
   

  
	
  Carol S. Rivers

  
	
  Dated:
  02/17/06

  
					

 

7

 

EXHIBIT B

 

OPTIONS

 

	
  AMOUNT

  	
   

  	
  GRANT DATE

  	
   

  	
  EXERCISE PRICE

  	
   

  	
  VESTED

  	
   

  	
  UNVESTED

  	
   

  
	
  20,000

  	
   

  	
  August 1, 2003

  	
   

  	
  $

  	
  25.50

  	
   

  	
  13,332

  	
   

  	
  6,668

  	
   

  
	
  25,000

  	
   

  	
  January 13, 2005

  	
   

  	
  $

  	
  28.02

  	
   

  	
  0

  	
   

  	
  25,000

  	
   

  

 

RESTRICTED STOCK

 

	
  AMOUNT

  	
   

  	
  GRANT DATE

  	
   

  	
  VESTING

  	
   

  	
  VESTED

  	
   

  
	
  5,000

  	
   

  	
  January 2, 2004

  	
   

  	
  January 2, 2007

  	
   

  	
  0

  	
   

  
	
  18,000

  	
   

  	
  January 13, 2005

  	
   

  	
  January 13, 2008

  	
   

  	
  0

  	
   

  

 

 

EXHIBIT C

 

February        , 2006

 

 

Dr. Martin Brewer

Chief Immigration Officer

Ministry of Labour & Home Affairs

Government Administration Building

30 Parliament Street, Hamilton HM 12

 

Dear Dr. Brewer:

 

Ref:  Carol S. Rivers - File #
00128253

 

This letter serves to confirm that Axis Specialty Limited has no
objection to employee Carol S. Rivers
seeking other employment in Bermuda.

 

Employee Carol S. Rivers is employed in the capacity of General Counsel
and has been with Axis since August 1, 2003.

 

If you need further information, please feel free to contact the
undersigned.

 

Sincerely,

 

 

Jane Bermingham

HR Consultant at Axis SpecialtyExhibit
10.2

 

AXIS
CAPITAL HOLDINGS LIMITED

LONG-TERM
EQUITY COMPENSATION PLAN

 

Nonqualified
Stock Option Agreement

 

You (the “Optionee”) have been granted an option (the “Option”)
to purchase ordinary shares, par value $0.0125 per share (“Share”), of AXIS
Capital Holdings Limited, a Bermuda company (the “Company”), pursuant to the AXIS
Capital Holdings Limited 2003 Long-Term Equity Compensation Plan (the “Plan”). The
date of grant of the Option (the “Grant Date”), the number of Shares subject to
the Option (the “Option Shares”), the exercise price of the Option (the “Grant
Price”) and the expiration date of the Option (the “Expiration Date”) are set
forth in your stock option account maintained on the Smith Barney Benefit
Access website or such other website as may be designated by the Committee (“Benefit
Access”).

 

By your acceptance of the grant of the Option on Benefit
Access, you agree that the Option is granted under and governed by the terms
and conditions of the Plan and this Stock Option Agreement (the “Agreement”).

 

This Agreement amends and supercedes in its entirety
the nonqualified stock option agreements with respect to options granted to the
Optionee on August 1, 2003 and January 13, 2005. This Agreement is effective on
February 28, 2006.

 

SECTION
1.         GRANT OF OPTION.

 

(a)  Option. On the terms and
conditions set forth in this Agreement, the Company grants to the Optionee on
the Grant Date the Option to purchase at the Grant Price the Option Shares. The
Option is intended to be a Nonqualified Stock Option.

 

(b)  Plan and Defined Terms. The
Option is granted pursuant to the Plan, a copy of which the Optionee
acknowledges having received. The terms and provisions of the Plan are
incorporated into this Agreement by this reference. All capitalized terms that
are used in this Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Plan.

 

SECTION
2.         RIGHT TO EXERCISE.

 

The Optionee may exercise all or part of the Option at
any time before its expiration to the extent that the Option is vested. The Option
vests in three equal installments on the first, second and third anniversary of
the Grant Date: provided, that all installments shall vest, if earlier, on Februrary
28, 2006. In addition, the Option shall become 100% vested upon 

 

1

 

Optionee’s death
or permanent Disability and upon a Change of Control. The exercise procedures
set forth in Section 6.6 of the Plan shall govern the exercise of the Option.

 

SECTION
3.         ISSUANCE OF SHARES.

 

Subject to Section 5, after the Option has been
exercised and payment for the full amount of the Exercise Price has been
received, the Shares as to which the Option has been exercised will be issued
to the Optionee.

 

SECTION
4.         TERM AND EXPIRATION.

 

(a)  Basic
Term. Subject to earlier termination pursuant to the terms
hereof, the Option shall expire on the Expiration Date, which date is 10 years
after the Grant Date.

 

(b)  Expiration.
The Option shall expire immediately upon the earliest of the
following occasions:

 

(i)         The Expiration Date as set forth in subsection
4(a); or

 

(ii)        May 31, 2006.

 

(c)  Personal
Representative. If the Optionee dies before the expiration of
the Option, all or part of this Option may be exercised prior to expiration by
the personal representative of the Optionee or by any person who has acquired
the Option directly from the Optionee by will, bequest or inheritance, but only
to the extent that the Option was vested at the time of death.

 

(d)  Leaves
of Absence. For any purpose under this Agreement, employment
shall be deemed to continue while the Optionee is on a bona fide leave of
absence, if such leave was approved by the Company in writing and if continued
crediting of employment for such purpose is expressly required by the terms of
such leave or by applicable law (as determined by the Company).

 

SECTION
5.         LEGALITY OF INITIAL ISSUANCE.

 

No Shares shall be issued upon the exercise of this
Option unless and until the Company has determined that:

 

(a)  The
delivery of such Shares would not violate the provisions of any applicable law,
rule or regulation or the Company’s Bye-Laws; and

 

(b)  All
applicable tax withholding obligations have been satisfied (or arrangements to
satisfy such obligations have been made).

 

2

 

SECTION
6.         RESTRICTIONS ON TRANSFER.

 

(a)  Transfer
Restrictions. Regardless of whether the offering and sale of
Shares under the Plan have been registered under the U.S. Securities Act of
1933, as amended (the “Securities Act”) or otherwise, the Company, in its sole
discretion, may impose restrictions upon the sale, pledge or other transfer of
such Shares (including the placement of appropriate legends on stock
certificates or the imposition of stop-transfer instructions) if, in the
judgment of the Company, such restrictions are necessary or desirable in order
to achieve compliance with the Company’s Bye-Laws, the Securities Act, the U.S.
Securities Exchange Act of 1934, as amended, the securities laws of any country
or state or any other applicable law, rule or regulation.

 

(b)  Legends. All certificates
evidencing Shares purchased under this Agreement shall bear such restrictive
legends as are required or deemed advisable by the Company under the provisions
of any applicable law, rule or regulation. If, in the opinion of the Company
and its counsel, any legend placed on a stock certificate representing Shares
sold under this Agreement is no longer required, the holder of such certificate
shall be entitled to exchange such certificate for a certificate representing
the same number of Shares but without such legend.

 

SECTION
7.         MISCELLANEOUS PROVISIONS.

 

(a)  Rights
as a Shareholder. Neither the Optionee nor the Optionee’s
representative shall have any rights as a shareholder with respect to any
Shares subject to the Option until the Option has been exercised and Shares
have been issued to the Optionee or representative, as the case may be.

 

(b)  Bye-Laws. All Shares
acquired pursuant to the Option shall be subject to any applicable restrictions
contained in the Company’s Bye-Laws.

 

(c)   No
Retention Rights. Nothing in this Agreement or in the Plan
shall confer upon the Optionee any right to continue employment for any period
of specific duration or interfere with or otherwise restrict in any way the
rights of the Company or any Affiliate employing or retaining the Optionee or
of the Optionee, which rights are hereby expressly reserved by each, to
terminate his or her employment at any time and for any reason, with or without
Cause.

 

(d)  Notice.
Any notice required by the terms of this Agreement shall be
given in writing and shall be deemed effective upon delivery by hand, upon
delivery by reputable express courier or, if the recipient is located in the
United States, upon deposit with the United States Postal Service, by
registered or certified mail, with postage and fees prepaid. Notice shall be
addressed to the Company at its principal executive office and to the Optionee
at the address that he or she most recently provided in writing to the Company.

 

3

 

(e)  Choice
of Law. This Agreement shall be governed by, and construed in
accordance with, the laws of Bermuda.

 

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

 

(g)  Modification
or Amendment. This Agreement may only be modified or amended
by written agreement executed by the parties hereto; provided, that the
adjustments permitted pursuant to Section 4.2 of the Plan may be made without
such written agreement.

 

(h)  Severability.
In the event any provision of this Agreement shall be held
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of this Agreement, and this Agreement shall be
construed and enforced as if such illegal or invalid provision had not been
included.

 

4

 

AXIS CAPITAL
HOLDINGS LIMITED

LONG-TERM
EQUITY COMPENSATION PLAN

 

Restricted
Stock Agreement

 

You (the “Participant”) have been granted a restricted
stock award (the “Award”) of ordinary shares, par value $0.0125 per share
(“Share”), of AXIS Capital Holdings Limited, a Bermuda company (the “Company”),
pursuant to the AXIS Capital Holdings Limited 2003 Long-Term Equity
Compensation Plan (the “Plan”). The date of grant of the Award (the “Award
Date”) and the number of Shares subject to the Award (the “Award Shares”) are
as set forth in your restricted stock account maintained on the Smith Barney
Benefit Access website or such other website as may be designated by the
Committee (“Benefit Access”).

 

By your acceptance of the grant of the Award on
Benefit Access, you agree that the Award is granted under and governed by the
terms and conditions of the Plan and this Restricted Stock Agreement (the
“Agreement”).

 

1.             GRANT OF RESTRICTED STOCK.

 

(a)          Award.
On the terms and conditions set forth in this Agreement, the
Company hereby grants to the Participant on the Award Date the Award Shares.

 

(b)          Plan and Defined Terms.    The Award is granted pursuant to the Plan, a
copy of which the Participant acknowledges having received. The terms and
provisions of the Plan are incorporated into this Agreement by this reference.
All capitalized terms that are used in this Agreement and not otherwise defined
herein shall have the meanings ascribed to them in the Plan.

 

2.             ISSUANCE OF SHARES.

 

Subject
to Section 4, the Shares subject to the Award will be issued to the Participant
and generally shall have the rights and privileges of a shareholder of the
Company as to such Shares.

 

3.             PERIOD OF RESTRICTION.

 

The Shares subject to the Award shall be restricted
during the period (the “Period of Restriction”) commencing on the Award Date
and expiring on the first to occur of:

 

(a)                                  February
28, 2006;

 

(b)                                  The
Participant’s death or permanent Disability; or

 

 

(c)                                  A
Change in Control.

 

4.             RESTRICTIONS,
VOTING RIGHTS AND DIVIDENDS.

 

(a)           Restrictions. During the Period of Restriction, the
following restrictions shall apply: (i) the Shares subject to the Award may not
be sold, transferred, pledged, assigned or otherwise alienated or hypothecated
and (ii) the stock certificates, if any, representing the Shares subject to the
Award shall be deposited with the Company or as the Committee may otherwise
direct and the Participant shall not be entitled to delivery of a stock
certificate.

 

(b)           Voting Rights. Participant
shall be entitled to exercise full voting rights with respect to the Shares
during the Period of Restriction.

 

(c)           Dividends. Dividends
may be paid to Participant with respect to the Shares during the Period of
Restriction as determined from time to time by the Committee. Any Dividends
paid with respect to the Shares during the Period of Restriction will be held
by the Company, or a depository appointed by the Committee, for the
Participant’s account, and interest may be paid on the amount of cash dividends
held at a rate and subject to such terms as may be determined by the Committee.
All cash or share dividends so held, and any interest so paid, shall initially
be subject to forfeiture as set forth in subsection 4(a) but shall become
non-forfeitable and payable at upon the expiration or termination of the Period
of Restriction.

 

(d)           Leaves of Absence.              For any purpose
under this Agreement, employment shall be deemed to continue while the
Participant is on a bona fide leave of absence, if such leave was approved by
the Company in writing and if continued crediting of employment for such
purpose is expressly required by the terms of such leave or by applicable law
(as determined by the Company).

 

5.             RESTRICTIONS ON TRANSFER.

 

(a)           Transfer Restrictions. Regardless
of whether the offering and sale of Shares under the Plan have been registered
under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or
otherwise, the Company, in its sole discretion, may impose restrictions upon
the sale, pledge or other transfer of such Shares (including the placement of
appropriate legends on stock certificates or the imposition of stop-transfer
instructions) if, in the judgment of the Company, such restrictions are
necessary or desirable in order to achieve compliance with the Company’s
Bye-Laws, the Securities Act, the U.S. Securities Exchange Act of 1934, as
amended, the securities laws of any country or state or any other applicable
law, rule or regulation.

 

(b)           Legends. All certificates evidencing Shares issued
under this Agreement shall bear such restrictive legends as are required or
deemed advisable by the Company under the provisions of any applicable law,
rule or regulation. If, in the opinion of the Company and its counsel, any
legend placed on a stock certificate representing Shares issued under this
Agreement is no longer required, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing the same
number of Shares but without such legend.

 

2

 

6.             MISCELLANEOUS PROVISIONS.

 

(a)           Bye-Laws. All Shares acquired pursuant to this
Agreement shall be subject to any applicable restrictions contained in the
Company’s Bye-Laws.

 

(b)           No Retention Rights. Nothing
in this Agreement or in the Plan shall confer upon the Participant any right to
continue employment for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Company or any Affiliate
employing or retaining the Participant or of the Participant, which rights are
hereby expressly reserved by each, to terminate his or her employment at any
time and for any reason, with or without Cause.

 

(c)           Notice. Any notice
required by the terms of this Agreement shall be given in writing and shall be
deemed effective upon delivery by hand, upon delivery by reputable express
courier or, if the recipient is located in the United States, upon deposit with
the United States Postal Service, by registered or certified mail, with postage
and fees prepaid. Notice shall be addressed to the Company at its principal
executive office and to the Participant at the address that he or she most
recently provided in writing to the Company.

 

(d)           Choice of Law. This
Agreement shall be governed by, and construed in accordance with, the laws of
Bermuda.

 

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

 

(f)            Modification or Amendment. This
Agreement may only be modified or amended by written agreement executed by the
parties hereto; provided, that the adjustments permitted pursuant to Section
4.2 of the Plan may be made without such written agreement.

 

(g)           Severability. In
the event any provision of this Agreement shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining
provisions of this Agreement, and this Agreement shall be construed and
enforced as if such illegal or invalid provision had not been included.

 

3

 

Axis Capital Holdings Limited

 

LONG-TERM
EQUITY COMPENSATION PLAN

 

Restricted
Stock Agreement

 

You (the “Participant”) have been granted a restricted
stock award (the “Award”) of ordinary shares, par value $0.0125 per share
(“Share”), of AXIS Capital Holdings Limited, a Bermuda company (the “Company”),
pursuant to the AXIS Capital Holdings Limited 2003 Long-Term Equity
Compensation Plan (the “Plan”). The date of grant of the Award (the “Award
Date”) and the number of Shares subject to the Award (the “Award Shares”) are
as set forth in your restricted stock account maintained on the Smith Barney
Benefit Access website or such other website as may be designated by the
Committee (“Benefit Access”).

 

By your acceptance of the grant of the Award on
Benefit Access, you agree that the Award is granted under and governed by the
terms and conditions of the Plan and this Restricted Stock Agreement (the
“Agreement”).

 

This Agreement amends and supercedes in its entirety
the restricted stock agreements with respect to restricted stock awarded to the
Participant on January 2, 2004 and January 13, 2005. This Agreement is
effective on February 28, 2006.

 

1.             GRANT
OF RESTRICTED STOCK.

 

(a)           Award.
On the terms and conditions set forth in this Agreement, the
Company hereby grants to the Participant on the Award Date the Award Shares.

 

(b)           Plan and Defined Terms.   The Award is granted pursuant to the Plan, a
copy of which the Participant acknowledges having received. The terms and
provisions of the Plan are incorporated into this Agreement by this reference.
All capitalized terms that are used in this Agreement and not otherwise defined
herein shall have the meanings ascribed to them in the Plan.

 

2.             ISSUANCE
OF SHARES.

 

Subject
to Section 4, the Shares subject to the Award will be issued to the Participant
and generally shall have the rights and privileges of a shareholder of the
Company as to such Shares.

 

3.             PERIOD OF RESTRICTION.

 

The Shares subject to the Award shall be restricted
during the period (the “Period of Restriction”) commencing on the Award Date
and expiring on the first to occur of:

 

 

(a)                                  February
28, 2006;

 

(b)                                  The
Participant’s death or permanent Disability; or

 

(c)                                  A
Change in Control.

 

4.             RESTRICTIONS,
VOTING RIGHTS AND DIVIDENDS.

 

(a)           Restrictions. During the Period of Restriction, the
following restrictions shall apply: (i) the Shares subject to the Award may not
be sold, transferred, pledged, assigned or otherwise alienated or hypothecated
and (ii) the stock certificates, if any, representing the Shares subject to the
Award shall be deposited with the Company or as the Committee may otherwise
direct and the Participant shall not be entitled to delivery of a stock
certificate.

 

(b)           Voting Rights. Participant
shall be entitled to exercise full voting rights with respect to the Shares
during the Period of Restriction.

 

(c)           Dividends. Dividends
may be paid to Participant with respect to the Shares during the Period of
Restriction as determined from time to time by the Committee. Any Dividends
paid with respect to the Shares during the Period of Restriction will be held
by the Company, or a depository appointed by the Committee, for the
Participant’s account, and interest may be paid on the amount of cash dividends
held at a rate and subject to such terms as may be determined by the Committee.
All cash or share dividends so held, and any interest so paid, shall initially
be subject to forfeiture as set forth in subsection 4(a) but shall become
non-forfeitable and payable at upon the expiration or termination of the Period
of Restriction.

 

(d)           Leaves of Absence. For
any purpose under this Agreement, employment shall be deemed to continue while
the Participant is on a bona fide leave of absence, if such leave was approved
by the Company in writing and if continued crediting of employment for such
purpose is expressly required by the terms of such leave or by applicable law
(as determined by the Company).

 

5.             RESTRICTIONS
ON TRANSFER.

 

(a)           Transfer Restrictions. Regardless
of whether the offering and sale of Shares under the Plan have been registered
under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or
otherwise, the Company, in its sole discretion, may impose restrictions upon
the sale, pledge or other transfer of such Shares (including the placement of
appropriate legends on stock certificates or the imposition of stop-transfer
instructions) if, in the judgment of the Company, such restrictions are
necessary or desirable in order to achieve compliance with the Company’s
Bye-Laws, the Securities Act, the U.S. Securities Exchange Act of 1934, as
amended, the securities laws of any country or state or any other applicable
law, rule or regulation.

 

(b)           Legends. All certificates evidencing Shares issued
under this Agreement shall bear such restrictive legends as are required or
deemed advisable by the Company under the provisions of any applicable law,
rule or regulation. If, in the opinion of the Company and its

 

2

 

counsel, any legend
placed on a stock certificate representing Shares issued under this Agreement
is no longer required, the holder of such certificate shall be entitled to
exchange such certificate for a certificate representing the same number of
Shares but without such legend.

 

6.             MISCELLANEOUS
PROVISIONS.

 

(a)           Bye-Laws. All Shares acquired pursuant to this
Agreement shall be subject to any applicable restrictions contained in the
Company’s Bye-Laws.

 

(b)           No Retention Rights. Nothing
in this Agreement or in the Plan shall confer upon the Participant any right to
continue employment for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Company or any Affiliate
employing or retaining the Participant or of the Participant, which rights are
hereby expressly reserved by each, to terminate his or her employment at any
time and for any reason, with or without Cause.

 

(c)           Notice. Any notice
required by the terms of this Agreement shall be given in writing and shall be
deemed effective upon delivery by hand, upon delivery by reputable express
courier or, if the recipient is located in the United States, upon deposit with
the United States Postal Service, by registered or certified mail, with postage
and fees prepaid. Notice shall be addressed to the Company at its principal
executive office and to the Participant at the address that he or she most
recently provided in writing to the Company.

 

(d)           Choice of Law. This
Agreement shall be governed by, and construed in accordance with, the laws of
Bermuda.

 

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

 

(f)            Modification or Amendment. This
Agreement may only be modified or amended by written agreement executed by the
parties hereto; provided, that the adjustments permitted pursuant to Section
4.2 of the Plan may be made without such written agreement.

 

(g)           Severability. In
the event any provision of this Agreement shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining
provisions of this Agreement, and this Agreement shall be construed and
enforced as if such illegal or invalid provision had not been included.

 

3

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