Document:

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                                                                    EXHIBIT 10.1

                   AMENDED AND RESTATED SHAREHOLDERS AGREEMENT

         This Amended and Restated Shareholders Agreement is made as of January
30, 2003 (this "Agreement"), by and among Endurance Specialty Holdings Ltd., a
company incorporated under the laws of Bermuda (the "Company"), Endurance
Specialty Insurance Ltd., a company incorporated under the laws of Bermuda
("Endurance"), and each of the Shareholders and Warrant Holders listed on
Schedule A.

                                    RECITALS

         WHEREAS, the Company, Endurance, the Shareholders and the Warrant
Holders entered into that certain Shareholders Agreement, dated as of July 22,
2002 (the "Original Shareholders Agreement"); and

         WHEREAS, under Section 18 of the Original Shareholders Agreement,
certain Sections of the Original Shareholders Agreement would automatically
continue in full force and effect following a Qualified Public Offering,
notwithstanding the provisions in such Section 18 stating that the Original
Shareholders Agreement would terminate upon a Qualified Public Offering but that
certain Sections thereof would survive such termination; and

         WHEREAS, the parties hereto intend to amend and restate the Original
Shareholders Agreement to give effect to the requirements of Section 18 thereof
and make such other changes to the Original Shareholders Agreement as are in the
parties' mutual interest in connection with an initial public offering of the
Company's Shares; and

         WHEREAS, this amendment and restatement of the Original Shareholders
Agreement shall be effective immediately prior to the closing of an initial
public offering of the Company's Shares (the "Effective Date"), except Section
4.1 hereof, which shall be effective immediately upon the adoption by the
Shareholders of the Company's Amended and Restated Bye-laws.

         NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:

                                   AGREEMENT

         1.       DEFINITIONS AND INTERPRETATION.

                  1.1      In this Agreement (including the Schedules), unless
the context otherwise requires, the following terms shall have the respective
meanings specified or referred to in this Section 1.1:

         "Affiliate" means, with respect to any Person, a Person that directly
or indirectly controls, is controlled by or is under common control with such
Person. For the purpose of this definition, the term "control" means the power
to direct the management of an entity, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlled" and "controlling" have meanings correlative to the foregoing.

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         "Agreement" has the meaning set forth in the first paragraph of this
Agreement.

         "Appointed Arbitrator" has the meaning set forth in Section 15.2.

         "Arbitration Demand Notice" has the meaning set forth in Section 15.2.

         "Board" means the Board of Directors of the Company.

         "Business Day" means any day except a Saturday, Sunday or other day on
which banks in any of Hamilton, Bermuda, or New York, New York, United States
are authorized or obligated by law or executive order to close.

         "Bye-Laws" means the bye-laws of the Company as they may be amended
from time to time.

         "Capital Z" means, collectively, Capital Z Financial Services Fund II,
L.P., a Bermuda limited partnership, and Capital Z Financial Services Private
Fund II, L.P., a Bermuda limited partnership, and their respective successors,
together with any Permitted Transferee to which Shares held by any of them shall
have been transferred, directly or indirectly.

         "Chairman" has the meaning set forth in Section 15.2.

         "Class A Shares" means Class A shares, par value $1.00 per share, of
the Company, which (i) shall have all of the rights of, and shall be treated
identically in all respects with, Ordinary Shares (including with respect to
dividends and other distributions, whether of cash or other property (including
securities), stock splits, subdivisions and combinations, reorganizations,
reclassifications, amalgamations, mergers, consolidations, liquidations,
distributions or the like or the granting of Share Purchase Rights), except that
they shall carry no voting rights other than such voting rights as may be
required from time to time by the Companies Acts, the Bye-Laws or this
Agreement, and (ii) shall be convertible on a one-for-one basis into Ordinary
Shares on the terms and subject to the conditions set forth in Bye-Laws 7 and 8.

         "Code" means the United States Internal Revenue Code of 1986 or any
United States federal statute then in effect that has replaced such statute, and
a reference to a particular section thereof shall be deemed to include a
reference to the comparable section, if any, of any such replacement United
States federal statute.

         "Combined" means, collectively, Combined Specialty Corporation, a
Delaware corporation, Combined Insurance Company of America, an Illinois
corporation, Combined Specialty Insurance Company, an Illinois corporation,
Resource Life Insurance Company, an Illinois corporation, London General
Insurance Company Limited, a United Kingdom company, Sterling Life Insurance
Company, an Illinois corporation, and Combined Life Assurance Company of Europe
Limited, an Irish company, and their respective successors, together with any
Permitted Transferee to which Shares held by any of them shall have been
transferred, directly or indirectly.

                                       -2-

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         "Commission" means the United States Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act or the
Exchange Act.

         "Companies Acts" means every Bermuda statute from time to time in force
concerning companies insofar as the same applies to the Company.

         "Company" has the meaning set forth in the first paragraph of this
Agreement.

         "Convertible Securities" means (i) with respect to the Company,
evidences of indebtedness, shares (including the Class A Shares (notwithstanding
any limitations on conversion thereof)) or other securities that are convertible
into or exchangeable for, with or without payment of additional consideration in
cash or property, Ordinary Shares, either immediately or upon the occurrence of
a specified date or a specified event, and (ii) with respect to a subsidiary of
the Company, evidences of indebtedness, capital shares or other securities that
are convertible into or exchangeable for, with or without payment of additional
consideration in cash or property, ordinary shares of such subsidiary, either
immediately or upon the occurrence of a specified date or a specified event.

         "Designating Shareholders" has the meaning set forth in Section 4.1(c).

         "Endurance" has the meaning set forth in the first paragraph to this
Agreement.

         "Endurance Board" means the Board of Directors of Endurance.

         "Endurance Bye-Laws" means the bye-laws of Endurance as they may be
amended from time to time.

         "Exchange Act" means the United States Securities Exchange Act of 1934.

         "Fully Diluted Basis" means assuming the exercise, conversion or
exchange of all Share Purchase Rights, other than unvested Options, at the time
outstanding.

         "Nominee" means any Shareholder that, on the date of this Agreement,
held all of its Shares as a nominee.

         "Observer" means a person not serving as a director of the Company or
Endurance who shall (i) have the right to receive due notice of and to attend
and participate in (but not vote at) all meetings of the Board, all meetings of
the Endurance Board and all meetings of committees of the Board or the Endurance
Board other than their respective Nominating and Corporate Governance
Committees, (ii) have the right to receive copies of all documents and other
information furnished to directors of the Company or Endurance or to members of
committees of the Board or the Endurance Board other than their respective
Nominating and Corporate Governance Committees, (iii) have the same rights as
any director of the Company to review the books and records of the Company and
to make inquiries of and meet with its officers and employees, (iv) have the
same rights as any director of Endurance to review the books and records of
Endurance and to make inquires of and meet with its officers and employees, (v)
have the same rights that a director of the Company or Endurance has pursuant to
Bye-Law 102 of the Bye-Laws or Bye-Law 84 of the Endurance Bye-Laws, as the case
may be, mutatis mutandis to

                                       -3-

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appoint and remove a person to act as an Observer in the alternative to himself
or herself and (vi) be entitled to be indemnified by the Company or Endurance
pursuant to Bye-Laws 147 through 153 of the Bye-Laws or Bye-Laws 128 through 134
of the Endurance Bye-Laws, as the case may be, to the same extent mutatis
mutandis as if he or she were a director of the Company or Endurance, as the
case may be.

         "Options" means options to purchase Shares, including options to
purchase Shares that may be granted to certain directors, officers and employees
of the Company.

         "Ordinary Shares" means ordinary shares, $1.00 par value, of the
Company.

         "Original Shareholders Agreement" has the meaning set forth in the
first Recital above.

         "Party" means the Company, Endurance or any Shareholder or Warrant
Holder that is a party to this Agreement, as the case may be.

         "Permitted Transferee" means, in the case of any Shareholder, (i) any
Affiliate of such Shareholder, (ii) any general or limited partner or member of
such Shareholder and any corporation, partnership or other entity that is an
Affiliate of such general or limited partner or member, (iii) any managing
director, general partner, director, limited partner, member, officer or
employee of any Shareholder, any Affiliate of such Shareholder or any Affiliate
of any general or limited partner or member of such Shareholder, or any spouse,
lineal descendant, sibling, parent, heir, beneficiary under a will or similar
instrument, executor, administrator, testamentary trustee, legatee or
beneficiary of any of the foregoing Persons described in this clause (iii) or
(iv) any trust the beneficiaries of which, or any corporation, limited liability
company or partnership the stockholders, members or general or limited partners
of which, include only such Shareholder or any Persons described in clauses (ii)
or (iii), their spouses or their lineal descendants. For purposes of this
definition of Permitted Transferee only, Aon Corporation and its subsidiaries
shall be treated as Affiliates of Combined.

         "Perry" means, collectively, Perry European Fund, L.P., Perry European
Fund, Ltd., Perry Partners International, Inc. and Perry Partners, L.P., and
their respective successors, together with any Permitted Transferee to which
Shares held by any of them shall have been transferred, directly or indirectly.

         "Person" means an individual, partnership, corporation, limited
liability company, joint venture, joint stock company, trust, unincorporated
organization, government (or an agency or political subdivision thereof) or
other entity.

         "Person Related to a Property Casualty Insurer" means a Person that
controls or is controlled by a Property Casualty Insurer or is controlled by the
same Person that controls such Property Casualty Insurer. For purposes of this
definition, "control" means (i) in the case of a corporation, direct or indirect
ownership of more than fifty percent (50%) of the voting power of all classes of
shares in the share capital of such corporation or more than fifty percent (50%)
of the value of the shares in the share capital of such corporation, or (ii) in
the case of a partnership, estate, trust or other legal entity, direct or
indirect ownership of more than fifty percent (50%) (by value) of the beneficial
interests in such partnership, estate or trust.

                                       -4-

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         "Property Casualty Insurer" means an insurer or reinsurer licensed to
write property or casualty insurance or reinsurance.

         "Qualified Public Offering" means an underwritten offering of Shares
pursuant to a registration statement that is declared effective under the
Securities Act with an aggregate offering price of at least $100 million.

         "Register" means the Register of shareholders of the Company.

         "Securities Act" means the United States Securities Act of 1933.

         "Senior Officer" means a corporate officer having the rank of vice
president or above.

         "Shareholder" means (a) any Shareholder (as such term is defined in the
Bye-Laws) of the Company who is listed on Exhibit A hereto, and (b) any Warrant
Holder, if and to the extent that such Warrant Holder's Warrant is exercisable
or, upon the closing of a sale of Shares would become exercisable who is listed
on Exhibit A hereto.

         "Share Purchase Rights" means (i) with respect to the Company, any
options, warrants or other securities or rights to subscribe to or exercisable
for the purchase of Shares or Convertible Securities, whether or not immediately
exercisable, and (ii) with respect to a subsidiary of the Company, any options,
warrants or other securities or rights to subscribe to or exercisable for the
purchase of capital shares of such subsidiary or Convertible Securities, whether
or not immediately exercisable.

         "Shares" means any shares in the share capital of the Company.

         "Sponsor" means any of Combined and Capital Z.

         "THL" means, collectively, Thomas H. Lee (Alternative) Fund V, L.P.,
Thomas H. Lee (Alternative) Parallel Fund V, L.P., Thomas H. Lee (Alternative)
Cayman Fund V, L.P., Putnam Investments Holdings, LLC, Putnam Investments
Employees' Securities Company I LLC, Putnam Investments Employees' Securities
Company II LLC, Thomas H Lee Investors Limited Partnership and State Street Bank
and Trust Company, not personally, but solely as Trustee under the 1997 Thomas
H. Lee Nominee Trust, and their respective successors, together with any
Permitted Transferee to which Shares held by any of them shall have been
transferred, directly or indirectly.

         "TPG" means TPG Endurance Partners (Cayman), L.P. and its successors,
together with any Permitted Transferee to which Shares held by it shall have
been transferred, directly or indirectly.

         "Transfer" or "Transferred," when used with respect to Shares, includes
granting security interests in Shares, pledging Shares, or otherwise
transferring or disposing of any interest in Shares.

         "Tribunal" has the meaning set forth in Section 15.1.

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         "United States" means the United States of America and dependent
territories or any part thereof.

         "Warrant" means a warrant dated as of July 22, 2002, granting to the
holder thereof the right to purchase Ordinary Shares and/or Class A Shares from
the Company on the terms and subject to the conditions set forth therein.

         "Warrant Holder" means any holder of a Warrant who is listed on
         Exhibit A hereto.

                  1.2      In this Agreement, unless the context clearly
indicates otherwise:

                  (a)      words used in the singular include the plural and
words in the plural include the singular;

                  (b)      reference to any Person includes such Person's
successors and assigns, but only if such successors and assigns are permitted by
this Agreement;

                  (c)      reference to any gender includes the other gender;

                  (d)      the word "including" (and with correlative meaning
"include") means "including but not limited to" or "including without
limitation";

                  (e)      reference to any Section or Schedule means such
Section of, or such Schedule to, this Agreement, as the case may be, and
reference in any Section or definition to any clause means such clause of such
Section or definition;

                  (f)      the words "herein," "hereunder," "hereof," "hereto"
and words of similar import shall be deemed references to this Agreement as a
whole and not to any particular Section or other provision hereof;

                  (g)      reference to any agreement, instrument or other
document means such agreement, instrument or other document as amended,
supplemented and modified from time to time to the extent permitted by the
provisions thereof and by this Agreement;

                  (h)      reference to any law (including statutes and
ordinances) means such law (including all rules and regulations promulgated
thereunder) as amended, modified, codified or reenacted, in whole or in part,
and in effect at the time of determining compliance or applicability;

                  (i)      relative to the determination of any period of time,
"from" means "from and including," "to" means "to but excluding" and "through"
means "through and including";

                  (j)      in the event of any conflict between the provisions
of the body of this Agreement and the Schedules hereto, the provisions of the
body of this Agreement shall control;

                  (k)      all references to "dollars" or "$" shall mean United
States Dollars unless otherwise specifically indicated; and

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                  (l)      the headings of Sections contained in this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be a part of or to affect the meaning or interpretation of this Agreement.

                  1.3      This Agreement was negotiated by the Parties with the
benefit of legal representation, and no rule of construction or interpretation
otherwise requiring this Agreement to be construed or interpreted against any
Party shall apply to any construction or interpretation hereof. Subject to
Section 12, this Agreement shall be interpreted and construed to the maximum
extent possible so as to uphold the enforceability of each of the terms and
provisions hereof, it being understood and acknowledged that this Agreement was
entered into by the Parties after substantial negotiations and with full
awareness by the Parties of the terms and provisions hereof and the consequences
thereof.

         2.       EFFECTIVE DATE. The Agreement shall be effective on the
Effective Date, except Section 4.1 hereof, which shall be effective immediately
upon the adoption by the Shareholders of the Company's Amended and Restated
Bye-laws.

         3.       TRANSFER OF SHARES OR WARRANTS. If during the term of this
Agreement any Shareholder or Warrant Holder who is a Party wishes to Transfer
any of its Shares or Warrants, respectively, to another Person (a "Transferee")
who is not a Party, other than pursuant to an effective registration statement
or as permitted by Rule 144 under the Securities Act, such Shareholder or
Warrant Holder shall, as a condition of Transfer of the Shares or Warrants, as
the case may be, require the Transferee to execute and deliver an agreement in
form and substance reasonably satisfactory to the Company agreeing to be bound
by all of the provisions hereof.

         4.       BOARD OF DIRECTORS AND BOARD COMMITTEES.

                  4.1      The Shareholders agree that the composition and
operation of the Board and committees of the Board shall be as follows during
the term of this Agreement:

                  (a)      The Board shall maintain a Nominating and Corporate
Governance Committee that shall at all times be composed of five (5) directors,
one of whom shall be selected by each of Combined, THL and TPG from among the
directors then in office. The Board shall also maintain an Underwriting
Committee that shall at all times be composed of three (3) directors, one of
whom shall be selected by each of THL and TPG from among the directors then in
office. The Board shall also maintain an Audit Committee and a Compensation
Committee. Each committee of the Board other than the Nominating and Corporate
Governance Committee and the Underwriting Committee, shall at all times include
at least one member selected by each of Combined, THL, TPG and Capital Z, in
each case from among the directors then in office, provided, however, that a
majority of the members of each committee shall be persons who are not selected
by any Sponsor.

                  (b)      The Board shall at all times consist of twelve (12)
directors, divided into three (3) classes of four (4) directors each, with the
term of office of one class expiring each year. Class I, Class II and Class III
directors shall hold office for terms expiring, respectively, at the conclusion
of the first, second and third annual general meetings of shareholders that are
held after this Section 4.1 becomes effective in accordance with Section 2
hereof.

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                  (c)      Each of the Shareholders set forth on Schedule B (the
"Designating Shareholders") shall be entitled, with respect to each class of
director that is set forth opposite that Designating Shareholder's name on
Schedule B, to designate, by written notice to the Company, a candidate whom the
Nominating and Corporate Governance Committee shall be required to nominate for
election as a director at any general meeting of Shareholders at which directors
of that class are to be elected.

                  (d)      At any general meeting of shareholders at which Class
I directors are to be elected, the Nominating and Corporate Governance Committee
shall nominate the Chairman and Chief Executive Officer of the Company to serve
as a Class I director.

                  (e)      The Nominating and Corporate Governance Committee
shall not nominate any other candidate in competition with a candidate
designated pursuant to Section 4.1(c) or (d).

                  (f)      In the event of the death, resignation, removal or
incapacity of any director who was originally designated pursuant to this
Section 4.1 (or who became a director by defeating in a contested election a
candidate designated pursuant to this Section 4.1), the Board shall elect or
appoint a successor director to fill the vacancy; provided, however, that the
procedure that was originally followed in Section 4.1(c) or (d), as the case may
be, in connection with the designation of (i) the director whose death,
resignation, removal or incapacity created the vacancy or (ii) the candidate who
was defeated in such contested election, as the case may be, shall be followed
mutatis mutandis to designate the candidate whom the Nominating and Corporate
Governance Committee shall be required to propose to the Board for its
consideration when filling the vacancy.

                  (g)      During any period when any Designating Shareholder is
a Shareholder but has no person designated pursuant to this Section 4.1 serving
as a member of the Board, such Designating Shareholder shall be entitled, by
written notice to the Company and Endurance, to designate an Observer and to
remove the Observer designated by such Shareholder.

                  (h)      The Parties recognize that the Shareholders may not
have the requisite voting power to fulfill their obligations under this Section
4.1 in the event that any future public offering of Shares reduces their
collective voting power below the levels necessary to give effect to the
provisions of this Section 4.1. If the Shareholders' collective voting power is
reduced below the level necessary for them to implement the requirements of this
Section 4.1, no Party hereto shall have a claim for breach as a result of the
failure to fulfill any obligations under this Section 4.1.

                  4.2      The Shareholders shall not vote to remove any
director other than for cause. For purposes hereof, "cause" shall mean such
director's (a) willful and continued failure substantially to perform his duties
with the Company, (b) willful misconduct that is injurious, monetarily or
otherwise, to the Company or any of its subsidiaries, (c) conviction for, or
guilty plea to, a felony or a crime involving moral turpitude, (d) abuse of
illegal drugs or other controlled substances or habitual intoxication, (e)
appointment or election inconsistent with the procedures set forth in Section
4.1, (f) failure to act so as to cause, to the extent permitted by Bermuda law,
the Company to be operated as described in Section 4.1 or (g) material breach of
Section 4 of this Agreement by the Designating Shareholder who designated such
director. The

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<PAGE>

Shareholders shall take all action, through direct or indirect means (including
through any director designated by a Shareholder) necessary, including by
calling any special general meeting of Shareholders and the exercise of their
voting rights, so as to cause, to the extent permitted by Bermuda law, the
Company to be operated, or to cure any failure of the Company to be operated, as
described in Section 4.1, including removing any director for cause where
necessary or appropriate to accomplish these ends.

                  4.3      Notwithstanding the provisions of Section 4.1, the
right of a Designating Shareholder to designate persons to be nominated as
directors, members of Board committees or Observers pursuant to Section 4.1
shall be exercisable only during such periods when such Shareholder owns, on a
Fully Diluted Basis, a number of Shares equal to at least twenty-five percent
(25%) of the number of Shares that such Shareholder owned, on a Fully Diluted
Basis, on the date of this Agreement; provided, however, that for purposes of
this Section 4.3, a Designating Shareholder and any of its Affiliates who are
also Shareholders shall be treated collectively as one Shareholder.

         5.       CERTIFICATIONS REQUIRED FOR VOTING.

                  5.1      Each Shareholder will make certifications,
disclosures, statements or affidavits to the Company with respect to its
respective direct and indirect share ownership and status as a Property Casualty
Insurer or Person Related to a Property Casualty Insurer.

                  5.2      In preparing such certifications, disclosures,
statements or affidavits, each Shareholder will exercise due care and conduct a
reasonable investigation before submitting them to the Company.

                  5.3      In the event that a Qualified Public Offering shall
have occurred, the Board shall have the right, by a vote of sixty-six and
two-thirds percent (66-2/3%) of the directors then in office, to waive or amend
the certification requirements imposed upon Shareholders by this Section 5.

         6.       NON-SOLICITATION.

                  6.1      Each Shareholder (other than a Nominee) agrees that
following the date of this Agreement and until the date which is five (5) years
after the date of the Original Shareholders Agreement (or, if earlier, the
termination of this Agreement), without obtaining the prior written consent of
the Company, neither it nor any of its majority-owned subsidiaries will solicit
for employment any Senior Officer of the Company or any of its majority-owned
subsidiaries so long as such individual is a Senior Officer of the Company or
any of its majority-owned subsidiaries at the time of such solicitation;
provided, however, that general solicitations of employment not specifically
directed toward individual employees shall not be prohibited by this Section
6.1.

                  6.2      The Company agrees that following the date of this
Agreement and until the date which is five (5) years after the date of this
Agreement (or, if earlier, the termination of this Agreement), without obtaining
the prior written consent of the applicable Shareholder, neither it nor any of
its majority-owned subsidiaries will solicit for employment any Senior Officer
of any Shareholder (other than a Nominee) or any of such Shareholder's
majority-owned

                                       -9-

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subsidiaries so long as such individual is a Senior Officer of such Shareholder
or any of its majority-owned subsidiaries at the time of such solicitation;
provided, however, that general solicitations of employment not specifically
directed toward individual employees shall not be prohibited by this Section
6.2.

         7.       AFFILIATE TRANSACTIONS. The Company and its subsidiaries shall
not engage in any transaction with a Sponsor or Affiliate of a Sponsor unless
such transaction is (i) entered into on arm's length terms and (ii) approved by
a majority of directors of the Company, excluding any directors of the Company
who are directors, officers or employees of such Sponsor or any of its
Affiliates; provided, however, that approval pursuant to the foregoing clause
(ii) shall not be required with respect to any insurance or reinsurance
brokerage transaction between the Company (or any of its subsidiaries) and any
Sponsor (or Affiliate of a Sponsor) so long as such transaction is made in the
ordinary course of business.

         8.       TERM. Each of the provisions of this Agreement (other than
Sections 9 to 17 (and any applicable definitions)) shall terminate upon the
first to occur of (a) an agreement to terminate this Agreement executed by the
Company and by Shareholders and/or Warrant Holders who own, on a Fully Diluted
Basis, at least seventy-five percent (75%) of the aggregate number of Shares
owned, on a Fully Diluted Basis, by all Shareholders and Warrant Holders who are
Parties at the time, or (b) the liquidation or dissolution of the Company;
provided, however, that the provisions of Sections 9 to 17 (and any applicable
definitions) shall survive any termination pursuant this Section 8.

         9.       AMENDMENTS AND WAIVERS. Except as otherwise provided herein,
the provisions of this Agreement may be amended or waived only upon the prior
written consent of (a) the Company and (b) Shareholders and/or Warrant Holders
who own, on a Fully Diluted Basis, at least sixty-six and two-thirds percent
(66-2/3%) of the aggregate number of Shares owned, on a Fully Diluted Basis, by
all Shareholders and Warrant Holders who are Parties at the time; provided, that
no such amendment or waiver can be effected without the prior written consent of
all Shareholders and Warrant Holders who are Parties at the time if such
amendment or waiver would (i) rescind, alter, amend or waive any provision of
this Section 9, (ii) provide a benefit to consenting Shareholders and/or Warrant
Holders not shared on a proportionate basis with all Shareholders and/or Warrant
Holders or (iii) operate to the detriment of the Shareholders and/or Warrant
Holders that do not consent thereto relative to the Shareholders and/or Warrant
Holders that consent.

         10.      NOTICES. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given (a) when
delivered personally, (b) if transmitted by facsimile, when confirmation of
transmission is received, (c) if sent by registered or certified mail, postage
prepaid, return receipt requested, on the third Business Day after mailing or
(d) if sent by reputable overnight courier service, when received; and shall be
addressed as follows:

                                      -10-

<PAGE>

To the Company:                          with a copy to:

Endurance Specialty Holdings Ltd.        Endurance Specialty Holdings Ltd.
Cedar House                              Crown House
41 Cedar Avenue                          4 Par-la-Ville Road
Hamilton HM 12, Bermuda                  Hamilton HM 08, Bermuda
Attention:  The Secretary                Attention:  Chief Executive
Facsimile:  (441) 292-8666                           Officer/President
                                         Facsimile:  (441) 278-0401

                                         And

                                         Skadden, Arps Slate, Meagher & Flom LLP
                                         4 Times Square
                                         New York, NY 10036
                                         Attention:  Robert J. Sullivan, Esq.
                                         Facsimile:  (212) 735-2000

To Endurance:                            with a copy to:

Endurance Specialty Insurance Ltd.       Endurance Specialty Insurance Ltd.
Cedar House                              Crown House
41 Cedar Avenue                          4 Par-la-Ville Road
Hamilton HM 12, Bermuda                  Hamilton HM 08, Bermuda
Attention:  The Secretary                Attention:  Chief Executive
Facsimile:  (441) 292-8666                           Officer/President
                                         Facsimile:  (441) 278-0401

                                         And

                                         Skadden, Arps Slate, Meagher & Flom LLP
                                         4 Times Square
                                         New York, NY 10036
                                         Attention:  Robert J. Sullivan, Esq.
                                         Facsimile:  (212) 735-2000

To the Shareholders:

at their respective addresses set forth
on Schedule A attached hereto, or such other
address as the Shareholder shall have furnished to
the Company in writing.

To the Warrant Holders:

at their respective addresses set forth
in Section 7.10(a) of the applicable Warrants, or
such other address as the Warrant Holder shall

                                      -11-

<PAGE>

have furnished to the Company in writing.

         11.      ENTIRE AGREEMENT. This Agreement (including the Schedules)
constitutes the entire agreement and understanding among the Parties and their
respective Affiliates with respect to the subject matter contained herein or
therein, and supersede all prior agreements, negotiations, discussions,
understandings, term sheets, offering memorandums or letters of intent between
or among any of the Parties with respect to such subject matter. Each Party
agrees that the Original Shareholders Agreement is hereby terminated and of no
further force or effect.

         12.      SEVERABILITY. Wherever possible, each provision hereof shall
be interpreted in such manner as to be effective and valid under applicable law,
but in case any one or more of the provisions contained herein shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, such
provision shall be ineffective to the extent, but only to the extent, of such
invalidity, illegality or unenforceability without invalidating the remainder of
such invalid, illegal or unenforceable provision or provisions or any other
provisions hereof, unless such a construction would be unreasonable.

         13.      ASSIGNMENT; SUCCESSORS AND ASSIGNS. Neither this Agreement nor
any of the rights and obligations of any Party hereunder may be assigned,
delegated or otherwise transferred by such Party without the prior written
consent of the Company. No such assignment, delegation or other transfer shall
relieve the assignor of any of its obligations or liabilities hereunder. This
Agreement shall be binding upon and shall inure to the benefit of the Parties
and their respective successors and permitted assigns.

         14.      NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement,
express or implied, is intended or shall be construed to confer upon any third
Person, other than the Parties and their respective successors and assigns
permitted by Section 13, any right, remedy or claim under or by reason of this
Agreement.

         15.      ARBITRATION.

                  15.1     Except as otherwise expressly set forth herein, each
Party agrees that all disputes arising out of, related to or in connection with
this Agreement or any of the transactions contemplated hereby, including any
question regarding this Agreement's formation, existence, validity or
termination, and whether arising during or after the period of the Agreement,
shall be referred to, and finally resolved by, arbitration in the manner set out
herein. Each Party hereby irrevocably waives any right to trial in any court
that otherwise would have jurisdiction over any dispute set forth in the
foregoing sentence. The place of the arbitration proceedings shall be Bermuda
and the arbitration tribunal (the "Tribunal") shall apply the laws of Bermuda as
the proper law of this Agreement.

                  15.2     In the event that any Party shall deliver a written
demand for arbitration (the "Arbitration Demand Notice") to another Party with
respect to any such dispute, such Parties shall attempt in good faith to agree
upon one arbitrator to resolve such dispute. If, within thirty days of delivery
of the Arbitration Demand Notice, such Parties are unable to agree upon a single
arbitrator, each such Party shall, within ten days, appoint an arbitrator. The
arbitrators so appointed (the "Appointed Arbitrators") shall promptly (and in
any event within ten days)

                                      -12-

<PAGE>

appoint a third arbitrator to the Tribunal (the "Chairman"). If the Appointed
Arbitrators are unable to agree upon the Chairman within such ten-day period,
the Appointed Arbitrators may apply to the Appointer (as defined below) for the
appointment of the Chairman. The Appointer shall be the President of the
Chartered Institute of Arbitrators Bermuda Branch.

                  15.3     Unless the Parties to an arbitration proceeding
otherwise agree, each arbitrator shall be impartial and either (i) an attorney
with at least ten years admission to the bar with specialist knowledge of the
insurance and reinsurance industry or (ii) an insurance and reinsurance industry
professional with at least ten years relevant work experience. Any objection to
the qualifications of any arbitrator, if any, must be made within ten days of
notice of the nomination or appointment of such arbitrator.

                  15.4     The Tribunal shall decide by majority. If no majority
can be reached, the verdict of the Chairman shall prevail. The Tribunal shall
have power to fix all procedural rules for the holding of the arbitration,
including discretionary power to make orders as to matters such as pleadings,
discovery, examination of witnesses and any other matter whatsoever relating to
the conduct of the arbitration, and may receive and act on such evidence as it
shall in its sole discretion deem proper. All costs and expenses of the
arbitration shall be at the discretion of the Tribunal, which may direct to and
by whom and in what manner such costs and expenses shall be paid. The award of
the Tribunal shall be in writing, shall state reasons for the award and shall be
final and binding upon the parties to such arbitration. Judgment on the award
may be entered by any court having jurisdiction thereof or having jurisdiction
over the parties thereto or their assets.

                  15.5     Solely for the purposes of Sections 15.2, in the
event of a dispute primarily between the Company and more than one other Party
(rather than among such other Parties), all Parties other than the Company shall
collectively constitute one "Party" and not several Parties.

         16.      GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the substantive laws of Bermuda, without regard to
its conflicts of laws doctrine.

         17.      EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument, and shall become
binding when one or more counterparts have been signed by and delivered to each
of the Parties.

         18.      RELATIONSHIP TO BYE-LAWS.

                  18.1     If there is any conflict between the provisions of
this Agreement and the Bye-Laws or the Endurance Bye-Laws, the provisions of
this Agreement shall prevail, except to the extent that they or any of them are
inconsistent with the requirements of the Companies Acts or Bermuda law
generally.

                  18.2     On receipt of a written request from any Party, the
Company, the Board and the Shareholders shall take all necessary steps to amend
any provision of the Bye-Laws or the Endurance Bye-Laws that is inconsistent
with this Agreement, to the extent practicable and consistent with the Companies
Act and Bermuda law generally, in order to effectuate the terms

                                      -13-

<PAGE>

and intentions of this Agreement.

                            [SIGNATURE PAGE FOLLOWS]

                                      -14-

<PAGE>

         IN WITNESS WHEREOF, the Parties have caused this Amended and Restated
Shareholders Agreement to be executed the day and year first above written.

                                  ENDURANCE SPECIALTY
                                  HOLDINGS LTD.

                                  By: /s/ Kenneth J. LeStrange
                                      ____________________________
                                      Name:  Kenneth J. LeStrange
                                      Title: Chief Executive Officer

                                  ENDURANCE SPECIALTY
                                  INSURANCE LTD.

                                  By: /s/ Kenneth J. LeStrange
                                      ____________________________
                                      Name:  Kenneth J. LeStrange
                                      Title: Chief Executive Officer

                                  SHAREHOLDERS
                                  AND WARRANT HOLDERS

                                  By:  /s/ Kenneth J. LeStrange
                                       ____________________________
                                      Name:  Kenneth J. LeStrange
                                      Title: Attorney-in-Fact on behalf of the
                                             Persons listed on Schedule A hereto

                                 SIGNATURE PAGE
                                     TO THE
                             SHAREHOLDERS AGREEMENT

<PAGE>

                                   SCHEDULE A

--------------------------------------------------------------------------------

             NAMES AND ADDRESSES OF SHAREHOLDERS AND WARRANT HOLDERS

--------------------------------------------------------------------------------

Aon Pension Plan
c/o Aon Corporation
200 East Randolph Street
Chicago, IL 60601
Attention:  Jerome Hanner

--------------------------------------------------------------------------------

Capital Z Financial Services Fund II, L.P.
54 Thompson Street
New York, NY 10012
Attention: David Spuria

--------------------------------------------------------------------------------

Capital Z Financial Services Private Fund II, L.P.
54 Thompson Street
New York, NY 10012
Attention: David Spuria

--------------------------------------------------------------------------------

Capital Z Investments, LLC
54 Thompson Street
New York, NY 10012
Attention:  David Spuria

--------------------------------------------------------------------------------

CCG Associates-Al, LLC
One Embarcadero Center
33rd Floor
San Francisco, CA 94111
Attention:  Sue Breedlove sbreedlove@goldengatecap.com

--------------------------------------------------------------------------------

CCG Associates-QP, LLC
One Embarcadero Center
33rd Floor
San Francisco, CA 94111
Attention:  Sue Breedlove sbreedlove@goldengatecap.com

--------------------------------------------------------------------------------

CCG GP Fund, LLC
One Embarcadero Center
33rd Floor
San Francisco, CA 94111
Attention:  Sue Breedlove sbreedlove@goldengatecap.com

--------------------------------------------------------------------------------

                                       A-1

<PAGE>

--------------------------------------------------------------------------------

             NAMES AND ADDRESSES OF SHAREHOLDERS AND WARRANT HOLDERS

--------------------------------------------------------------------------------

CCG Investment Fund-Al, LP
One Embarcadero Center
33rd Floor
San Francisco, CA 94111
Attention:  Sue Breedlove sbreedlove@goldengatecap.com

--------------------------------------------------------------------------------

CCG Investments BVI, LP
One Embarcadero Center
33rd Floor
San Francisco, CA 94111
Attention:  Sue Breedlove
sbreedlove@goldengatecap.com

--------------------------------------------------------------------------------

Combined Insurance Company of America
200 East Randolph Street
Chicago, Illinois 60601
Attention:  Jerome Hanner

--------------------------------------------------------------------------------

Combined Life Assurance Company of Europe Limited
Merrion House
Merrion Road
Dublin 4, Ireland

--------------------------------------------------------------------------------

Combined Specialty Insurance Company
200 East Randolph Street
Chicago, Illinois 60601
Attention:  Jerome Hanner

--------------------------------------------------------------------------------

DeFelice, Anthony
8 Orchard Land
Lebanon, New Jersey 08833

--------------------------------------------------------------------------------

DLJ Growth Capital Overseas Partners, C.V.
c/o DLJ Growth Capital Inc.
11 Madison Avenue
16th Floor
New York, New York 10010

--------------------------------------------------------------------------------

Dunn, Noel
c/o Aon Corporation
200 East Randolph Street
Chicago, IL 60601

--------------------------------------------------------------------------------

                                       -2-

<PAGE>

--------------------------------------------------------------------------------

             NAMES AND ADDRESSES OF SHAREHOLDERS AND WARRANT HOLDERS

--------------------------------------------------------------------------------

First Plaza Group Trust
c/o General Motors Asset Management
767 Fifth Avenue
New York, NY 10153

--------------------------------------------------------------------------------

Fred L. Turner Trust
1570 Woodvale
Deerfield, IL 60015
(T) 847/945-1706

--------------------------------------------------------------------------------

GCP Plan Investors L.P.
11 Madison Avenue
16th Floor
New, NY 10010

--------------------------------------------------------------------------------

GM Capital Partners I, L.P.
c/o General Motors Asset Management
767 Fifth Avenue
New York, NY 10153

--------------------------------------------------------------------------------

Jannotta, Edgar D.
c/o William Blair & Company, L.L.C.
222 West Adams Street
34th Floor
Chicago, IL 60606

--------------------------------------------------------------------------------

Kiphart, Richard
c/o William Blair & Company, L.L.C.
222 West Adams Street
34th Floor
Chicago, IL 60606

--------------------------------------------------------------------------------

Knight, Lester B.
c/o RoundTable Healthcare Partners
272 East Deerpath Road, Suite 350
Lake Forest, IL 60045

--------------------------------------------------------------------------------

LeStrange, Kenneth J.
c/o Endurance Specialty Insurance Ltd.
kenneth_lestrange@aon.com
Ken.LeStrange@EnduranceBermuda.com

--------------------------------------------------------------------------------

                                       -3-

<PAGE>

--------------------------------------------------------------------------------

             NAMES AND ADDRESSES OF SHAREHOLDERS AND WARRANT HOLDERS

--------------------------------------------------------------------------------

London General Insurance Company Limited
Combined House                                       200 East Randolph Street
15 Wheatfield Way                                    Chicago, IL 60601
Kingston-Upon-Thames
Surrey KT1 2PQ
United Kingdom

--------------------------------------------------------------------------------

LY-Endurance, LLC
c/o Lightyear Capital
51 West 52nd Street
23rd Floor
New York, NY 10019
Attention: William J. Takeuchi
wtakeuchi@lycap.com

--------------------------------------------------------------------------------

McKenna, Andrew J.
Chairman
Schwarz
8338 Austin Avenue
Morton Grove, IL 60053

--------------------------------------------------------------------------------

Metro Center Investment Pte Ltd.
255 Shoreline Drive
Suite 600
Redwood City, CA 94065
Attention: Brett Fisher (Director)
brettfisher@gic.com.sg

--------------------------------------------------------------------------------

MLL Investments LLC
2115 Linwood Avenue
Suite 110
Fort Lee, NJ 07024
Attention: William Mack

--------------------------------------------------------------------------------

Perkins, Donald S.
969 Hill Road
Winnetka, IL 60093

--------------------------------------------------------------------------------

Perry European Fund, L.P.
599 Lexington Avenue
New York, NY 10022

--------------------------------------------------------------------------------

                                      -4-

<PAGE>

--------------------------------------------------------------------------------

             NAMES AND ADDRESSES OF SHAREHOLDERS AND WARRANT HOLDERS

--------------------------------------------------------------------------------

Perry European Fund, Ltd.
c/o CITCO Fund Services
Corporate Center
West Bay Road
P.O. Box 31106 SMB
Grand Cayman, Cayman Islands

--------------------------------------------------------------------------------

Perry Partners International, Inc.
c/o CITCO Fund Services
Corporate Center
West Bay Road
P.O. Box 31106 SMB
Grand Cayman, Cayman Islands

--------------------------------------------------------------------------------

Perry Partners, L.P.
599 Lexington Avenue
New York, NY 10022

--------------------------------------------------------------------------------

Putnam Investments Employees' Securities Company I LLC
One Post Office Square
Boston, MA 02109

--------------------------------------------------------------------------------

Putnam Investments Employees' Securities Company II LLC
One Post Office Square
Boston, MA 02109

--------------------------------------------------------------------------------

Putnam Investments Holdings, LLC
One Post Office Square
Boston, MA 02109

--------------------------------------------------------------------------------

Ravin, Richard
815 Croftridge Land
Highland Park, IL 60035

--------------------------------------------------------------------------------

Reservoir Capital Master Fund, L.P.
650 Madison Avenue
26th Floor
New York, NY 10022
Attention: Josh Paulson
jpaulson@reservoircap.com

--------------------------------------------------------------------------------

                                       -5-

<PAGE>

--------------------------------------------------------------------------------

             NAMES AND ADDRESSES OF SHAREHOLDERS AND WARRANT HOLDERS

--------------------------------------------------------------------------------

Reservoir Capital Partners, L.P.
650 Madison Avenue
26th Floor
New York, NY 10022
Attention: Josh Paulson
jpaulson@reservoircap.com

--------------------------------------------------------------------------------

Resource Life Insurance Company
200 East Randolph Street
Chicago, Illinois 60601
Attention:  Jerome Hanner

--------------------------------------------------------------------------------

Richard C. Notebaert 1998 Trust
c/o Richard C. Notebaert
Tellabs, Inc.
One Tellabs Center
1415 W. Diehl Road
Naperville, IL 60563

--------------------------------------------------------------------------------

Ryan, Patrick G. Jr.
c/o Ryan Enterprises Group, LLC
200 East Randolph Street
19th Floor
Chicago, IL 60601

--------------------------------------------------------------------------------

Ryan, Robert J.W.
c/o Ryan Enterprises Group, LLC
200 East Randolph Street
19th Floor
Chicago, IL 60601

--------------------------------------------------------------------------------

Schultz, Paul T.
c/o Aon Corporation
200 East Randolph Street
Chicago, IL 60601

--------------------------------------------------------------------------------

Services Financiers CDPQ Inc.
1981 McGill College Avenue, 3rd Floor
Montreal, Quebec H3A 3C7
Canada

--------------------------------------------------------------------------------

                                       -6-

<PAGE>

--------------------------------------------------------------------------------

             NAMES AND ADDRESSES OF SHAREHOLDERS AND WARRANT HOLDERS

--------------------------------------------------------------------------------

Shirley W. Ryan Living Trust, dated July 10, 2001
c/o Ryan Enterprises Group, LLC
150 North Michigan Avenue
Suite 2100
Chicago, IL 60601

--------------------------------------------------------------------------------

SIRRAH Associates Limited Partnership
c/o J. Ira Harris
P.O. Box 50401
Henderson, Nevada 89016

--------------------------------------------------------------------------------

State Street Bank and Trust Company, not personally, but solely as Trustee under
the 1997
Thomas H. Lee Nominee Trust
75 State Street
Boston, MA 02109

--------------------------------------------------------------------------------

Sterling Life Insurance Company
200 East Randolph Street
Chicago, Illinois 60601
Attention:  Jerome Hanner

--------------------------------------------------------------------------------

Teachers Insurance & Annuities Association of America
730 3rd Avenue
New York, NY 10017
Attention: Shelly Zoler
szoler@tiaa-cref.org

--------------------------------------------------------------------------------

The Corbett M.W. Ryan Living Trust dated July 13, 2001
c/o Ryan Enterprises Group, LLC
200 East Randolph Street
19th Floor
Chicago, IL 60601

--------------------------------------------------------------------------------

Thomas H. Lee (Alternative) Cayman Fund V, L.P.
Walkers
Walkers House
Mary Street
P.O. Box 256GT
George Town, Grand Cayman
Cayman Islands

--------------------------------------------------------------------------------

                                       -7-

<PAGE>
--------------------------------------------------------------------------------

             NAMES AND ADDRESSES OF SHAREHOLDERS AND WARRANT HOLDERS

--------------------------------------------------------------------------------

Thomas H. Lee (Alternative) Fund V, L.P.
Walkers
Walkers House
Mary Street
P.O. Box 256GT
George Town, Grand Cayman
Cayman Islands

--------------------------------------------------------------------------------

Thomas H. Lee (Alternative) Parallel Fund V, L.P.
Walkers
Walkers House
Mary Street
P.O. Box 256GT
George Town, Grand Cayman
Cayman Islands

--------------------------------------------------------------------------------

Thomas H. Lee Investors Limited Partnership
75 State Street
Boston, MA 02109

--------------------------------------------------------------------------------

TPG Dutch Parallel III, C.V.
301 Commerce Street
Suite 3300
Fort Worth, TX 76102

--------------------------------------------------------------------------------

TPG Endurance Investments (Cayman), L.P.
301 Commerce Street
Suite 3300
Fort Worth, TX 76102

--------------------------------------------------------------------------------

TPG Endurance Partners (Cayman), L.P.
301 Commerce Street
Suite 3300
Fort Worth, TX 76102

--------------------------------------------------------------------------------

                                       -8-

<PAGE>

                      SCHEDULE B - DESIGNATING SHAREHOLDERS

<TABLE>
<CAPTION>
                                               CLASS OF DIRECTOR
        NAME OF                        FOR WHICH DESIGNATING SHAREHOLDER
DESIGNATING SHAREHOLDER                IS ENTITLED TO DESIGNATE A NOMINEE
-----------------------                ----------------------------------
<S>                                    <C>
       Combined*                                       I
         THL*                                          I
         TPG*                                          I

  GM Capital Partners I, L.P.                         II
Metro Center Investment Pte Ltd                       II
       LY Endurance, LLC                              II

      Capital Z*                                      III
       Combined*                                      III
        Perry*                                        III
</TABLE>

 *As defined in Section 1.1 of this Agreement.<PAGE>
                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT AGREEMENT ("Agreement") is made as of February 27, 2003
(the "Effective Date"), by and between Kenneth J. LeStrange (the "Executive")
and Endurance Specialty Holdings Ltd., a Bermuda company (the "Company").

      WHEREAS, during the course of Executive's employment with the Company, the
Executive has performed outstanding services for the Company;

      WHEREAS, it is deemed by the Company to be in the best interests of the
Company to assure continuation of Executive's employment;

      WHEREAS, the Company and the Executive have determined to enter into this
Agreement pursuant to which the Company will continue to employ the Executive on
the terms and conditions set forth herein; and

      WHEREAS, this Agreement replaces that certain Employment Agreement, dated
as of December 14, 2001, between the Company and the Executive (the "Original
Agreement").

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:

      1. Defined Terms. The definitions of capitalized terms used in this
Agreement (if not provided where a capitalized term initially appears) are
provided in the last Section hereof.

      2. Employment. The Company hereby agrees to continue to employ the
Executive, and the Executive hereby accepts such continued employment, on the
terms and conditions hereinafter set forth.

      3. Term.

      (a) Duration of Term. Unless earlier terminated as provided in Section
3(b) hereof, the Executive's employment with the Company under this Agreement
shall commence at the Effective Date and shall end on December 14, 2006 (the
"Term").

      (b) Termination of Employment during the Term. Nothing in this Section 3
shall limit the right of the Company or the Executive to terminate the
Executive's employment under this Agreement during the Term hereof on the terms
and conditions set forth in Section 7 hereof.

      4. Position and Duties. Except as otherwise provided in this Section 4, on
and after the Effective Date, the Executive shall serve as Chairman, President
and Chief Executive Officer of the Company and shall have such additional duties
and responsibilities as may be assigned to the Executive by the Board and
commensurate with
<PAGE>
his position of Chairman (if applicable), President and Chief Executive Officer.
The Executive shall report exclusively to the Board. The Executive agrees to
devote substantially all the Executive's full working time, attention and
energies during normal business hours to the performance of the Executive's
duties for the Company; provided that the Executive may engage in charitable,
civic or community activities, serve on corporate boards or committees, manage
personal investments, and deliver lectures and fulfill speaking engagements, but
only if, and to the extent that, such activities do not interfere with the
Executive's duties hereunder or violate the terms of any of the covenants
contained in Section 12 hereof. Notwithstanding anything to the contrary
contained herein, the Company may in its sole discretion determine that it is
not permissible (under applicable law or under the rules or regulations
promulgated by any securities exchange on which the Company's Ordinary Shares
are then listed) to have a Chairman of the Board who is also an executive
officer of the Company, in which case it may, without giving rise to an event
constituting Good Reason pursuant to Section 7(e)(i) hereof, elect to have the
Executive serve as President and Chief Executive Officer of the Company and
remove the Executive from the position of Chairman of the Board.

      5. Place of Performance. The principal place of employment and office of
the Executive shall be in Bermuda, or such other location as may be agreed to in
writing by the Executive.

      6. Compensation and Related Matters.

      (a) Base Salary. During the Employment Period the Company shall pay the
Executive an annual base salary no less than US $900,000 per annum ("Base
Salary"). Base Salary shall be payable in accordance with the Company's
executive payroll policy.

      (b) Annual Bonus. The Executive shall be provided, in the sole discretion
of the Board, an opportunity for an annual bonus with respect to each fiscal
year which ends within the Employment Period (the "Annual Bonus"). The Executive
will be eligible to receive a pro rata annual bonus for any fiscal year ending
after December 14, 2006 if he performs services under this Agreement through
such date and during such fiscal year. The amount of the Annual Bonus which is
earned and becomes payable shall be determined by the Committee and shall not
exceed 150% of Base Salary.

      (c) Housing Allowance. The Company shall pay the Executive's reasonable
expenses relating to the maintenance of the Executive's primary residence in
Bermuda during the Employment Period. Prior to such payment the Executive shall
provide to the Company any substantiation for such expenses requested by the
Company. Notwithstanding the foregoing, the maximum annual amount the Company
shall pay pursuant to this Section 6(c) shall be US $200,000, which maximum
amount shall be prorated for any partial year worked by the Executive during the
Employment Period.

                                       2
<PAGE>
      (d) Private Air Travel. During the Employment Period, the Company in
accordance with the Company's policies shall provide the Executive in connection
with business travel with at least 400 hours of usage of a Learjet 60 or
comparable private aircraft. If a private aircraft is not available for any one
or more of the Executive's business travels, in lieu thereof the Company shall
reimburse the Executive for his cost of first class travel on a commercial
airline. In connection therewith, the Executive shall be entitled to
participate, at the Company's expense, in an air travel club selected by the
Executive.

      (e) 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
allowance specified in Section 6(c) hereof or the private air travel specified
in Section 6(d) hereof, the Company shall reimburse the Executive for all such
tax liability incurred and all United States federal and state ordinary income
tax, employment and payroll tax liability incurred as a result of the tax
gross-up payments specified pursuant to this Section 6(e), so that the Executive
is in the same after-tax basis as if all such payments had not been subject to
such taxes.

      (f) Country Club Membership. The Company shall reimburse the Executive for
the dues and reasonable business-related expenses (not including initiation
fees) in connection with the Executive's membership during the Employment Period
in a country club mutually agreed to by the Executive and the Company.

      (g) Other Benefits. During the Employment Period, the Executive shall be
entitled to participate in (i) the Company's medical and dental plans, (ii) a
pension arrangement in accordance with Bermuda law at a level of participation
that is no less than the level at which the Company's other senior executive
officers are entitled to participate and (iii) any other employee benefit and
compensation plans (including insurance benefits) made generally available to
executives of the Company (such benefits set forth in items (i), (ii) and (iii)
hereof being hereinafter referred to as the "Employee Benefits"). The Executive
shall be entitled to five weeks of paid vacation. The Executive also shall be
entitled to take time off for illness in accordance with the Company's policy
for executives and to receive all other fringe benefits and perquisites as are
from time to time made generally available to executives of the Company.

      (h) Expense Reimbursement. During the Employment Period, the Company shall
reimburse the Executive, in accordance with the Company's policies and
procedures, for all proper and reasonable expenses incurred by the Executive in
the performance of the Executive's duties hereunder.

      (i) Ordinary Share Purchase. On a date mutually agreeable to the Company
and the Executive prior to December 14, 2003, provided that the Executive is
employed by the Company on such date, the Company shall offer to the Executive
the right to purchase from the Company 50,000 Ordinary Shares (the "Purchased
Shares"), at a price per share of US $20 for an aggregate purchase price of US
$1,000,000. The Executive shall purchase such shares within thirty days of the
date of such offer. The Executive in his discretion may use all or a portion of
any Annual Bonus payable to the

                                       3
<PAGE>
Executive pursuant to Section 6(b) of this Agreement to pay the aggregate
purchase price for the Ordinary Shares purchased pursuant to this Section 6(i).
The Purchased Shares shall be subject to adjustment or substitution as to the
number, price or kind of Ordinary Shares or as otherwise agreed upon by the
parties (i) in the event of changes in the outstanding Ordinary Shares or in the
capital structure of the Company, by reason of share dividends, share splits,
recapitalizations, reorganizations, amalgamations, mergers, consolidations,
combinations, exchanges, liquidations, spinoffs or other relevant changes in
capitalization, or any distributions to holders of Ordinary Shares other than a
regular cash dividend or (ii) in the event of any change in applicable laws or
any change in circumstances which results in or would result in any substantial
dilution or enlargement of the rights of the Executive with respect to the
Purchased Shares or which otherwise warrants equitable adjustment because it
interferes with the intended operation of this Section 6(i). The Ordinary Shares
purchased pursuant to this Section 6(i) shall not be subject to forfeiture to
the Company.

      (j) Share Forfeiture. The Executive shall forfeit to the Company the
20,000 Ordinary Shares subject to forfeiture restrictions purchased by the
Executive pursuant to Section 4(a) of the Original Agreement in the event that,
prior to December 14, 2006, either (i) the Company terminates the Executive's
employment with the Company for Cause pursuant to Section 7(c) of this Agreement
or (ii) the Executive voluntarily terminates his employment with the Company
during the Employment Period pursuant to Section 7(e)(ii) of this Agreement.
Such forfeiture shall be effective as of the Date of Termination in connection
with any such event, and the Executive shall not be entitled to receive any
consideration from the Company in connection with the Executive's forfeiture of
the Ordinary Shares pursuant to this Section 6(j).

      (k) Stock Options. The Option shall remain subject to the terms and
conditions contained in the Original Agreement and in the Non-Qualified Stock
Option Agreement, dated December 17, 2002, between the Executive and the
Company, except (i) that the Option shall be deemed to have become vested with
respect to 20% of the Ordinary Shares on January 1, 2003 (the "Initial Vesting
Date") and shall become vested with respect to an additional 20% of the Ordinary
Shares on each of December 14, 2003, December 14, 2004, December 14, 2005 and
December 14, 2006 (each, a "Vesting Date") and (ii) as otherwise provided in
this Agreement. In addition, in the event of a Change in Control, the Option
shall become fully vested and exercisable and, subject to Section 17(b) of the
Company's Amended and Restated 2002 Stock Option Plan (the "Option Plan"), shall
remain exercisable through December 14, 2006, at which time the Option shall
terminate.

      7. Termination. The Executive's employment hereunder may be terminated,
and the Employment Period hereunder shall be ended, as follows:

      (a) Death. The Executive's employment shall terminate upon the Executive's
death. Upon such a termination, this Agreement shall automatically terminate and
all rights of the Executive and his heirs, executors and administrators to
compensation and other benefits under this Agreement shall cease immediately,
except that the Executive's heirs, executors or administrators, as the case may
be, shall become

                                       4
<PAGE>
entitled to the payments and benefits provided in Section 8(a) hereof in
accordance with the terms of such Section.

      (b) Disability. The Company may terminate the Executive's employment
hereunder for Disability. Upon such a termination, the Executive shall become
entitled to the payments and benefits provided in Section 8(a) hereof in
accordance with the terms of such Section.

      (c) Cause. The Company may terminate the Executive's employment hereunder
for Cause. Upon such a termination, the Executive shall become entitled to the
payments and benefits provided in Section 8(b) hereof in accordance with the
terms of such Section.

      (d) Without Cause. The Company may terminate the Executive's employment
hereunder without Cause. Upon such a termination, the Executive shall become
entitled to the payments and benefits provided in Section 8(c) hereof in
accordance with the terms of such Section.

      (e) Termination by the Executive.

            (i) The Executive may terminate the Executive's employment hereunder
      for Good Reason. Upon a Good Reason termination, the Executive shall
      become entitled to the payments and benefits provided in Section 8(c)
      hereof in accordance with the terms of such Section.

            (ii) The Executive may terminate the Executive's employment
      hereunder without Good Reason, upon giving notice of thirty (30) days to
      the Company. In the event of such a termination, the Executive shall
      comply with any reasonable request of the Company to assist in providing
      for an orderly transition of authority, but such assistance shall not
      delay the Executive's termination of employment longer than sixty (60)
      days beyond the submission by the Executive of a Notice of Termination.
      Upon such a termination, the Executive shall become entitled to the
      payments and benefits provided in Section 8(b) hereof in accordance with
      the terms of such Section.

      (f) Notice of Termination. Any purported termination of the Executive's
employment (other than termination pursuant to Section 7(a) hereof) shall be
communicated by written Notice of Termination to the other party hereto in
accordance with Section 16 hereof. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated. Further, a Notice of
Termination for Cause based on clause (ii) or (iii) of the definition of Cause
herein is required to include a copy of a resolution duly adopted by the
affirmative vote of not less than two-thirds (2/3) of the entire membership of
the Board at a meeting of the Board which was called and held for the purpose of
considering such termination (after reasonable notice to the Executive and an
opportunity for the

                                       5
<PAGE>
Executive, together with the Executive's counsel, to be heard before the Board)
finding that, in the good faith opinion of the Board, the Executive was guilty
of conduct set forth in clause (ii) or (iii) of the definition of Cause herein,
and specifying the particulars thereof in detail.

      (g) Date of Termination. For purposes of this Agreement, "Date of
Termination" shall mean the following: (i) if the Executive's employment is
terminated by the Executive's death, the date of the Executive's death; (ii) if
the Executive's employment is terminated for Disability pursuant to Section 7(b)
hereof, thirty (30) days after the Notice of Termination is given (provided that
the Executive shall not have returned to the full-time performance of the
Executive's duties during such thirty (30) day period); (iii) if the Executive's
employment is terminated for Cause pursuant to Section 7(c) hereof, the date
specified in the Notice of Termination; (iv) if the Executive's employment is
terminated by the Executive without Good Reason pursuant to Section 7(e)(ii)
hereof, the date determined in accordance with said Section; and (v) if the
Executive's employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a termination by the Company,
shall not be less than thirty (30) days and, in the case of a termination by the
Executive, shall not be less than fifteen (15) days nor more than sixty (60)
days, respectively, from the date such Notice of Termination is given).

      (h) Dispute Concerning Termination. If within fifteen (15) days after any
Notice of Termination is given, or, if later, prior to the Date of Termination
(as determined without regard to this Section 7(h)), the party receiving such
Notice of Termination notifies the other party that a dispute exists concerning
the termination, the Date of Termination shall be extended until the earlier to
occur of (i) the date on which the Term ends or (ii) the date on which the
dispute is finally resolved, either by mutual written agreement of the parties
or by the final judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice of
dispute given by the Executive only if such notice is given in good faith and
the Executive pursues the resolution of such dispute with reasonable diligence.

      8. Compensation Upon Termination of Employment.

      (a) Termination for Death or Disability. Upon termination of the
Executive's employment due to the Executive's death or Disability, the Company
shall have no additional obligations to the Executive under this Agreement
except to the extent provided in Section 14 hereof (and, to the extent
applicable, Sections 9 and 10 hereof) and except for the following, which shall
be provided to the Executive, or his beneficiaries, as applicable:

            (i) accrued Base Salary through and including the Date of
         Termination ("Accrued Base Salary");

                                       6
<PAGE>
            (ii) payment, in accordance with the Company's executive payroll
         policy, for each year during the period commencing on the Date of
         Termination and ending on December 14, 2006, of an amount equal to the
         Base Salary, which amount shall be prorated for any partial year during
         such period of payment;

            (iii) the vesting of the Option, to the extent not vested as of the
         Date of Termination, with respect to an additional number of Ordinary
         Shares equal to the product of (x) and (y), where (x) is equal to
         218,818 and (y) is equal to (I) if the Date of Termination is prior to
         December 14, 2003, a fraction, the numerator of which is the number of
         days elapsed from the Initial Vesting Date through the Date of
         Termination and the denominator of which is 348 or (II) if the Date of
         Termination on or following December 14, 2003, a fraction, the
         numerator of which is the number of days elapsed from the most recent
         Vesting Date through the Date of Termination and the denominator of
         which is 365, and, in each case, the ability to exercise the Option, to
         the extent vested as of the Date of Termination (including any portion
         that becomes vested as a result of the operation of this Section
         8(a)(iii)), for a period of eighteen months following such date, and,
         to the extent not exercised by the Executive during such period, the
         termination of the Option in its entirety;

            (iv) the continuation until December 14, 2006 of the Employee
         Benefits to which the Executive was entitled on the Date of
         Termination, subject to such changes thereto as are generally
         applicable to the executives of the Company from time to time; and

            (v) (x) reimbursement for any expenses which are incurred by the
         Executive prior to the Date of Termination, but for which the Executive
         has not yet been reimbursed by the Company ("Unreimbursed Expenses"),
         (y) a cash payment equal to the amount of any earned but unpaid bonus
         and (z) any vacation that has been accrued in accordance with the terms
         of Section 6(g) hereof ("Accrued Vacation").

      (b) Termination by the Company with Cause or by the Executive without Good
Reason. If the Executive's employment hereunder is terminated by the Company
with Cause or by the Executive without Good Reason, then the Option, whether or
not then exercisable, shall terminate, and all obligations of the Company
hereunder shall cease, except that the Executive shall be entitled to (i)
Accrued Base Salary, (ii) Unreimbursed Expenses, (iii) Accrued Vacation and (iv)
the Employee Benefits to which the Executive was entitled as of the Date of
Termination in accordance with the terms of the plans and programs of the
Company under which such Employee Benefits are provided. The Company shall have
no additional obligations to the Executive under this Agreement except to the
extent provided in this Section 8(b) and Section 14 hereof (and, to the extent
applicable, Sections 9 and 10 hereof).

      (c) Termination by the Company without Cause or by the Executive with Good
Reason. If the Executive's employment hereunder is terminated by

                                       7
<PAGE>
the Company without Cause (other than by reason of death or Disability) or by
the Executive with Good Reason, then:

            (i) the Company shall pay the Executive's Base Salary to the
         Executive through the Date of Termination at the rate in effect
         immediately prior to the Date of Termination, together with all
         compensation and benefits to which the Executive was entitled through
         the Date of Termination under the terms of the Company's compensation
         and benefit plans, programs or arrangements as in effect immediately
         prior to the Date of Termination;

            (ii) the Company shall pay to the Executive a lump sum amount, in
         cash, equal to the amount of any Annual Bonus which has been allocated
         or awarded (but not yet paid) to the Executive for a completed fiscal
         year preceding the Date of Termination under any Annual Bonus plan;

            (iii) in lieu of any severance benefit otherwise payable to the
         Executive, the Company shall continue to pay the Executive his Base
         Salary as in effect immediately prior to the Date of Termination, in
         accordance with the Company's executive payroll policy, through the
         earlier to occur of (x) the second anniversary of the Date of
         Termination or (y) December 14, 2006 (the earlier to occur of (x) or
         (y), the "Severance Period"); provided, however, that (I) in the event
         the Date of Termination follows a Change in Control, the payments
         requirement to be made to the Executive under this Section 8(c)(iii)
         shall be made in one lump sum as soon as practicable following the Date
         of Termination and (II) in the event of a Change in Control during the
         Severance Period, any amounts to which the Executive is entitled under
         this Section 8(c)(iii) which remain unpaid as of the date of such
         Change in Control shall be paid to the Executive in one lump sum as
         soon as practicable following the date of such Change in Control;

            (iv) during the Severance Period, the Company shall arrange to
         provide the Executive and his eligible dependents Employee Benefits
         similar to those provided to the Executive and his eligible dependents
         immediately prior to the Date of Termination; provided, however, that,
         benefits otherwise receivable pursuant to this Section 8(c)(iv) shall
         be reduced to the extent benefits of the same type are received by or
         made available to Executive during the Severance Period (and any such
         benefits received by or made available to the Executive shall be
         reported to the Company by the Executive);

            (v) the Option shall continue to vest during the Severance Period,
         and the vested portion shall thereafter remain exercisable for a period
         of one month, at which time any portion of the Option which has not
         been exercised by the Executive shall terminate; and

            (vi) (x) Unreimbursed Expenses and (y) Accrued Vacation.

            (vii) the Company shall have no additional obligations to the
         Executive under this Agreement except to the extent provided in Section
         14

                                       8
<PAGE>
         hereof (and, to the extent applicable, Sections 9 and 10 hereof)
         (the payments and benefits provided to the Executive pursuant to this
         Section 8(c) being referred to herein as the "Severance Payments").

            (d) General. Amounts which are vested benefits or which the
         Executive is otherwise entitled to receive under any plan, policy,
         practice or program of or any contract or agreement with the Company or
         its subsidiaries at or subsequent to the Date of Termination shall be
         payable in accordance with such plan, policy, practice or program or
         contract or agreement except as explicitly modified by this Agreement.

      9. 280G Treatment.

              (a) Notwithstanding any other provisions of this Agreement, 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 termination of the Executive's employment, whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement) (all
such payments and benefits, including the Severance Payments, 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 Severance Payments shall first be reduced, and the noncash Severance
Payments shall thereafter be reduced, to the extent necessary so that no portion
of the Total Payments is subject to the Excise Tax but only if (i) the net
amount of such Total Payments, as so reduced (and after subtracting the net
amount of federal, state and local income taxes on such reduced Total Payments
and after taking into account the phase out of itemized deductions and personal
exemptions attributable to such reduced Total Payments) is greater than or equal
to (ii) the net amount of such Total Payments without such reduction (but after
subtracting the net amount of federal, state and local income taxes on such
Total Payments and the amount of Excise Tax to which the Executive would be
subject in respect of such unreduced Total Payments and after taking into
account the phase out of itemized deductions and personal exemptions
attributable to such unreduced Total Payments); provided, however, that the
Executive may elect to have the noncash Severance Payments reduced (or
eliminated) prior to any reduction of the cash Severance 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

                                       9
<PAGE>
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

              (c) At the time that payments are made under this Agreement,
the Company shall provide the Executive with a written statement setting forth
the manner in which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other advice the
Company has received from Tax Counsel, the Auditor or other advisors or
consultants (and any such opinions or advice which are in writing shall be
attached to the statement). If the Executive objects to the Company's
calculations, the Company shall pay to the Executive such portion of the
Severance Payments (up to 100% thereof) as the Executive determines is necessary
to result in the proper application of subsection (a) of this Section 9.

      10. Legal and Arbitration Fees and Expenses. The Company also shall pay to
the Executive all reasonable legal fees and expenses incurred by the Executive
in (a) disputing in good faith any issue hereunder relating to the termination
of the Executive's employment, in seeking in good faith to obtain or enforce any
benefit or right provided by this Agreement or in connection with any tax audit
or proceeding to the extent attributable to the application of section 4999 of
the Code to any payment or benefit provided hereunder and (b) in connection with
the preparation of this Agreement. Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require. Notwithstanding the foregoing, no such fees and expenses
shall be paid pursuant to subsection 10(a) hereof, unless the Executive prevails
on at least one of the issues he raises or are raised by the Company.

     11. No Mitigation; Limited Offset. The Company agrees that, if the
Executive's employment with the Company terminates during the Term, then, except
as may be required by applicable law, the Executive is not required to seek
other employment or to attempt in any way to reduce any amounts payable to the
Executive by the Company pursuant to Section 8 hereof. However, such amounts
shall be reduced by the amount of salary, bonus or other compensation which the
Executive earns from a subsequent employer that relates to the period for which
the amount is payable to the Executive hereunder. The Executive shall promptly
notify the Company of his acceptance of employment with another employer
following his termination of employment.

12.      Protection of Ideas, Noncompetition and Nonsolicitation.

              (a) Protection of Ideas. Both during the Employment Period and
thereafter, Executive shall assist the Company or its nominees, at any time, in
the

                                       10
<PAGE>
protection of the Company's worldwide right, title, and interest in and to
information, ideas, concepts, improvements, discoveries, and inventions, and its
copyrighted works with respect to such items that were within his direct or
indirect control, by assisting in any reasonable requests to cooperate in
litigation and by the execution of all formal assignment documents requested by
Company or its nominees and the execution of all lawful oaths and applications
for applications for patents and registration of copyright in Bermuda, the
United States and other countries.

              (b) Noncompetition. The Company shall disclose to the Executive,
or place the Executive in a position to have access to or to develop, trade
secrets or confidential information of the Company or its affiliates; and/or
shall entrust the Executive with business opportunities of the Company or its
affiliates; and/or shall place the Executive in a position to develop business
good will on behalf of the Company or its affiliates. As part of the
consideration for the compensation and benefits to be paid to the Executive
hereunder, to protect the trade secrets and confidential information of the
Company or its subsidiaries or affiliates that have been and will in the future
be disclosed or entrusted to the Executive, the business good will of the
Company or its subsidiaries or affiliates that has been and will in the future
be developed in the Executive, or the business opportunities that have been and
will in the future be disclosed or entrusted to the Executive by the Company or
its subsidiaries or affiliates; and as an additional incentive for the Company
to enter into this Agreement, the Executive agrees to the non-competition
obligations hereunder. While the Executive continues to be an employee of the
Company and (i) in the event of a Severance Termination, during the Severance
Period, or (ii) in the event of any other termination of the Executive's
employment, for the one year period beginning on the Date of Termination, 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 or 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
subsidiaries is then conducting such business (other than the ownership of less
than 5% of a publicly-traded entity or 1% of a private entity).

              (c) Nonsolicitation. While the Executive continues to be an
employee of the Company and (i) in the event of a Severance Termination, during
the Severance Period, or (ii) in the event of any other termination of the
Executive's employment, for the one year period beginning on the Date of
Termination, the Executive shall not, except as permitted by the Company upon
its prior written consent, (x) in any manner, directly or indirectly, induce or
attempt to induce any employee of the Company or any of its subsidiaries to
terminate or abandon his or her employment for any purpose whatsoever or (y) in
connection with any Business call on, service, solicit or otherwise do business
with any customer of the Company or any of its subsidiaries. This shall not
apply to the Executive's recruitment of his personal administrative assistant or
to general solicitations to the public.

              (d) Enforcement. The Company shall have the right and remedy to
have the provisions of this Section 12 specifically enforced, including by

                                       11
<PAGE>
temporary and/or permanent injunction, it being acknowledged and agreed that any
such violation may cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company. Any termination of
the Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 12.

              (e) In the event that any provision of this Section 12 is not
performed by the Executive in accordance with its terms or is otherwise breached
by the Executive, the Company immediately shall cease providing the Executive
with the payments and benefits set forth in Section 8(c) of this Agreement and
the Executive's right to any such payments and benefits immediately shall be
forfeited.

     13. Independence and Severability of Section 12 Provisions. Each of the
rights and remedies enumerated in Section 12 hereof shall be independent of the
others and shall be severally enforceable and all of such rights and remedies
shall be in addition to, and not in lieu of, any other rights and remedies
available to the Company under law or in equity. If any of the covenants
contained in Section 12 hereof or if any of the rights or remedies enumerated in
Section 12 hereof, or any part of any of them, is hereafter construed to be
invalid or unenforceable, the same shall not affect the remainder of the
covenant or covenants or rights or remedies which shall be given full effect
without regard to the invalid portions. If any of the covenants contained in
Section 12 is held to be unenforceable because of the duration of such provision
or the area covered thereby, the parties agree that the court making such
determination shall have the authority to reduce the duration and/or area of
such provision, and in its reduced form said provision shall then be
enforceable.

     14. Indemnification. The Company shall indemnify the Executive to the full
extent authorized by law and the Charter and Bye-Laws of the Company, as
applicable, for all expenses, costs, liabilities and legal fees which the
Executive may incur in the discharge of the Executive's duties hereunder. The
Executive shall be insured under the Company's directors' and officers'
liability insurance policy as in effect from time to time. Any termination of
the Executive's employment or of this Agreement shall have no effect on the
continuing operation of this Section 14.

     15. Successors; Binding Agreement.

         (a) In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by 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
and may not otherwise assign this Agreement. Failure of the Company to obtain
such assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle the Executive to
compensation from the Company in the same amount and on the same terms as the
Executive would be entitled to hereunder if the Executive were to terminate the
Executive's employment for Good Reason, except that, for purposes of
implementing

                                       12
<PAGE>
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.

         (b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive shall
die while any amount would still be payable to the Executive hereunder (other
than amounts which, by their terms, terminate upon the death of the Executive)
if the Executive had continued to live, each such amount, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
the executors, personal representatives or administrators of the Executive's
estate.

     16. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to the
Executive, to the address inserted below the Executive's signature on the final
page hereof and, if to the Company, to the address set forth below, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:

                        To the Company:

                        Endurance Specialty Holdings Ltd.
                        48 Par-La-Ville Road
                        Suite 784
                        Hamilton HM 11, Bermuda
                        Attention: General Counsel
                        Facsimile: (441) 278-0401

     17. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of any lack of compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement supersedes any other
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof which have been made by either party,
including, without limitation, any employment memorandum, memorandum of
understanding, or severance agreement. Captions and Section headings in this
Agreement are provided merely for convenience and shall not affect the
interpretation of any of the provisions herein. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
Bermuda. All references to sections of the Exchange Act or the Code shall be
deemed also to refer to any successor provisions to such sections. Any payments
provided for hereunder shall be paid net of any applicable withholding required
under federal, state or local law and any additional

                                       13
<PAGE>
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under this Agreement which by their nature may require either
partial or total performance after the expiration of the Term (including,
without limitation, those under Sections 8 and 9 hereof) shall survive such
expiration.

     18. Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

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

     20. Settlement of Disputes; Arbitration.

         (a) Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Bermuda in accordance
with the Bermuda Law then in effect. Judgment may be entered on the arbitrator's
award in any court having jurisdiction. Notwithstanding any provision of this
Agreement to the contrary, the Executive shall be entitled to seek specific
performance of the Executive's right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in connection
with this Agreement.

         (b) Notwithstanding any provision of this Agreement to the contrary, in
the event of a breach or threatened breach by the Executive of any of the
covenants set forth in Section 12 hereof, the Company shall be entitled to seek
equitable relief, including an injunction, in any court of proper jurisdiction
to maintain the status quo pending the resolution of the dispute by binding
arbitration as provided above. With respect to any such action, the Executive
and the Company hereby irrevocably submit to the non-exclusive jurisdiction of
the Supreme Court of Bermuda, and agree that process in any such action shall be
valid and effective for all purposes if served upon the respective party in
accordance with the notice provisions of Section 16 hereof.

     21. Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated below:

         (a) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.

         (b) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.

         (c) "Board" shall mean the Board of Directors of the Company.

         (d) "Business" shall mean any property or casualty coverages
underwritten by the Company or any of its subsidiaries as an insurer or
reinsurer during the Employment Period or the one-year period immediately
preceding the commencement of the Employment Period.

                                       14
<PAGE>
         (e) "Cause" for termination by the Company of the Executive's
employment shall mean (i) conviction of the Executive (including a plea of nolo
contendere) for the commission of a felony, (ii) the willful failure of the
Executive to substantially perform the Executive's duties with the Company
(other than any such failure resulting from the Executive's incapacity due to
physical or mental illness or any such actual or anticipated failure after the
issuance of a Notice of Termination for Good Reason by the Executive pursuant to
Section 7(f) hereof) after a written demand for substantial performance is
delivered to the Executive by the Board, which demand specifically identifies
the manner in which the Board believes that the Executive has not substantially
performed the Executive's duties, or (iii) the engaging by the Executive in
willful gross misconduct in the course of performing his duties, which results
in demonstrable and material economic harm to the Company and its subsidiaries.
For purposes of clauses (ii) and (iii) of this definition, 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.

         (f) A "Change in Control" shall have the meaning ascribed to such term
in the Option Plan, as it may be amended from time to time; provided, that any
amendment adverse to the Executive shall not be binding upon him under this
Agreement without his written consent. Notwithstanding the foregoing, a "Change
in Control" shall not be deemed to have occurred by virtue of an initial public
offering of the Ordinary Shares.

         (g) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.

         (h) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment, if, (i) as a result of the Executive's
incapacity due to physical or mental illness, fails to perform the essential
functions of the Executive's position required of the Executive hereunder for a
continuous period of 120 days or any 360 days during the Employment Period Term,
and (ii) the Company shall have given the Executive a Notice of Termination for
Disability.

         (i) "Employment Period" shall mean the period (which in no event shall
extend beyond the expiration of the Term and may end earlier pursuant to Section
3(b) hereof) during which Executive has an obligation to render services
hereunder, as described in Section 4 hereof.

         (j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.

         (k) "Excise Tax" shall mean any excise tax imposed under section 4999
of the Code.

         (l) "Good Reason" for termination by the Executive of the Executive's
employment shall mean a breach by the Company of any material provision

                                       15
<PAGE>
of this Agreement which breach remains uncured for a period of 30 days following
the Company's receipt of notice of such breach by the Executive. The Executive's
right to terminate the Executive's employment for Good Reason shall not be
affected by the Executive's incapacity due to physical or mental illness.

         (m) "Option" shall mean the stock option granted to the Executive
pursuant to Section 3(d) of the Original Agreement.

         (n) "Ordinary Share" shall mean an ordinary share of the Company, par
value $1.00 per share.

         (o) "Severance Termination" shall mean a termination of the Executive's
employment described in Section 8(c) hereof.

                                       16
<PAGE>
                                               Endurance Specialty Holdings Ltd.

                                               By:   /s/ Anthony J. DiNovi
                                                  ------------------------------
                                                  Name:  Anthony J. DiNovi
                                                  Title:  Director

                                                     /s/ Kenneth J. LeStrange
                                                  ------------------------------
                                                         Kenneth J. LeStrange

                                       17

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