Document:

EX-10.1

Exhibit 10.1

Conformed Copy

EMPLOYMENT AGREEMENT

AGREEMENT, made and entered into as of March 14, 2008 by and between, XL Capital Ltd, a Cayman
Islands corporation (the “Company”), and Michael S. McGavick (the “Executive”).

WHEREAS, the Company and the Executive each desire that the Executive become employed by the
Company and that the terms and conditions of such employment be memorialized by a written
agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein and for
other good and valuable consideration, the Company, the Guarantors (as hereinafter defined) and the
Executive (the “Parties”) agree as follows:

1. EMPLOYMENT.

The Company hereby employs the Executive, and the Executive hereby accepts employment with the
Company, for the term of this Agreement as set forth in Section 2, below, in the position and with
duties and responsibilities set forth in Section 3, below, and upon such other terms and conditions
as are hereinafter stated.

2. TERM OF EMPLOYMENT.

The stated term of employment under this Agreement shall commence on the later of May 1, 2008
or the date the work permit referred to in Section 3(c) below is obtained (such later date is
referred to herein as the “Start Date”) and shall continue through the close of business on the
first anniversary of the Start Date, subject to earlier termination as provided in Section 8,
below, and extension as provided in the next succeeding sentence. On the first anniversary of the
Start Date and on each anniversary thereafter, the stated term of employment shall be automatically
extended for an additional one year unless the Company gives notice in writing to the Executive or
the Executive gives notice in writing to the Company at least six months prior to such anniversary
that the term is not to be so extended.

3. POSITIONS, DUTIES AND RESPONSIBILITIES.

(a) GENERAL. The Executive shall be employed as Chief Executive Officer of the Company. In
such position, the Executive shall have the duties, responsibilities and authority normally
associated with the office, position and titles of such an officer of an insurance, reinsurance and
financial services company, or holding company, whose shares are publicly traded in the United
States. In carrying out his duties and responsibilities, the Executive shall report to the Board
of Directors of the Company. During the term of this Agreement, the Executive shall devote his
full business time to the business and affairs of the Company, and shall use his best efforts,
skills and abilities to promote the Company’s interests.

(b) PERFORMANCE OF SERVICES. The Executive’s services under this Agreement, which are global
in nature, shall be performed at the Company’s headquarters in Bermuda or at such other location or
locations reasonably requested by the Company; provided, however, that such services will
be performed outside the United States and in accordance with the guidelines established by the
Company from time to time for the location of the performance of services on behalf of the Company
and its subsidiaries. The Executive acknowledges that the Company may require the Executive to
travel to the extent such travel is reasonably necessary to perform the services hereunder and that
such travel may be extensive. To the extent reasonably requested by the Company, the Executive
shall allocate greater business time to a location other than his principal business location, and
if reasonably requested by the Company, the Executive shall relocate to such other locations. Any
such relocation will not be considered to be a breach of this Agreement.

(c) WORK PERMITS. The employment of the Executive by the Company shall be contingent upon the
issuance to the Executive of a suitable (for the purposes of the Executive’s contemplated
employment by the Company) work permit by the Bermuda government authorities and any other permits
required by any Bermuda government authority. Both the Company and the Executive shall use their
respective best efforts to obtain, maintain and renew said permit(s) so as to allow the Executive
to be employed under the terms hereof. The Company shall be responsible for permit fees. If at
any time said permit(s), having been obtained, expire and are not renewed or cease to be valid and
such renewal or validation is necessary in order for the Executive to be employed by the Company as
contemplated by this Agreement and the non-renewal or invalidation is beyond the control of both
the Company and the Executive, employment under this Agreement shall terminate immediately upon the
expiration of said permit(s) or upon said permit(s) ceasing to be valid unless the Executive can
discharge his duties and responsibilities effectively from another location not requiring said
permit(s) that is reasonably acceptable to the Executive and non-prejudicial to the interests of
the Company. In the event of such termination, the provisions of Section 8(d) shall apply to such
termination of the Executive’s employment (or, if within (i) the one-year period prior to the date
of a Change in Control, as hereinafter defined, provided the conditions set forth in the last
paragraph of Section 8(d)(iii) are satisfied, or (ii) the Post-Change Period, as hereinafter
defined, such termination shall, in the case of clauses (i) or (ii), be considered a termination by
the employee for “Good Reason”) provided that non-renewal of said permit(s) or invalidation thereof
are not a direct result of any material action or omission of the Executive that would reasonably
cause such permit(s) not to be renewed or validated.

4. BASE SALARY.

The Executive shall be paid a Base Salary by the Company equal to US $1 million per annum,
payable in accordance with the Company’s regular pay practices. Such Base Salary shall be subject
to annual review in accordance with the Company’s practices for executives as in effect from time
to time and may be increased at the discretion of the Compensation Committee of the Board of
Directors of the Company (the “Compensation Committee”).

5. BONUSES.

In addition to the Base Salary provided for in Section 4, above, the Executive shall be
eligible for an annual cash bonus under the Company’s Annual Incentive Compensation Plan as in
effect from time to time, with a target annual bonus opportunity equal to 200% of his Base Salary.
The Executive may be awarded such annual bonuses thereunder as may be approved by the Compensation
Committee based on corporate, individual and business unit performance measures, as appropriate,
established or approved from time to time, by the Compensation Committee. Any annual bonus shall
be paid in cash in a lump sum after the end of the calendar year for which the annual bonus is paid
and no later than March 15 following such calendar year, unless deferred at the Executive’s option
in accordance with the provisions of any applicable deferred compensation plan of the Company or it
subsidiaries in effect from time to time. The Executive’s target annual bonus for calendar year
2008 will be prorated by multiplying the target annual bonus by a fraction, the numerator of which
is the number of days from the Start Date until December 31, 2008 and the denominator of which is
365; provided, however that the Executive’s minimum annual bonus for calendar year 2008
shall be 50% of the Executive’s Base Salary earned for calendar year 2008. Except as provided in
the immediately preceding sentence for calendar year 2008, nothing in this Section 5 shall confer
upon the Executive any right to a minimum annual bonus.

6. EMPLOYEE BENEFIT PROGRAMS; START DATE GRANTS/BONUS.

(a) During the term of the Executive’s employment under this Agreement, the Executive shall be
entitled to participate in all employee benefit programs of the Company as are in effect from time
to time and in which similarly situated senior executives of the Company are eligible to
participate.

(b) On the last day of the week that includes the Start Date, the Company shall grant to the
Executive (i) options to purchase 125,000 ordinary shares of the Company and (ii) 32,000
performance restricted ordinary shares of the Company. The stock options will have an exercise
price per share equal to the closing price per ordinary Company share on the New York Stock
Exchange on the date of grant, and they will be scheduled to vest in three equal annual
installments beginning on the first anniversary of the date of grant. The performance restricted
ordinary shares will be scheduled to vest in four equal annual installments beginning on the first
anniversary of the date of grant, provided the applicable 10% return on equity targets set forth in
the applicable award agreement are met. The stock options and performance restricted ordinary
shares will be subject to the other terms set forth in a stock option agreement and in a
performance restricted ordinary share agreement, which shall each be in the forms utilized for
similar awards to other senior executive officers of the Company.

(c) The Company shall pay to the Executive US $1,500,000 as a one time bonus on the Start
Date. If the Executive’s employment terminates within two (2) years after the Start Date for any
reason other than by the Executive for Good Reason or by the Company not for Cause (including
pursuant to Section 8(d)(iv)), or due to the Executive’s death or disability (as determined under
the Company’s long-term disability plan), then the Executive shall repay to the Company, no later
than ten (10) business days after such termination of employment, an amount equal to the amount by
which the Start Date bonus exceeds the actual transition expenditures of the Executive as agreed by
XL and the Executive.

7. EXPENSE REIMBURSEMENT AND FRINGE BENEFITS. During the term of the Executive’s employment
under this Agreement, the Executive shall be entitled to participate in the Company’s travel and
entertainment expense reimbursement programs and its executive fringe benefit plans and
arrangements, all in accordance with the terms and conditions of such programs, plans and
arrangements as in effect from time to time as applied to the Company’s similarly situated
executives. The Company shall pay directly, or reimburse the Executive for, reasonable moving
expenses incurred by him in relocating the Executive and his immediate family to Bermuda, in
accordance with the moving expense reimbursement policy of the Company for senior executives.

8. TERMINATION OF EMPLOYMENT.

(a) TERMINATION DUE TO DEATH. In the event the Executive dies during the term of employment
hereunder, the Executive’s spouse, if the spouse survives the Executive, (or, if the Executive’s
spouse does not survive him, the estate or other legal representative of the Executive) shall be
entitled to receive the Base Salary as provided in Section 4, above, at the rate in effect at the
time of Executive’s death, to be paid in accordance with the Company’s regular payroll practices
(as in effect at the time of death) through the end of the sixth month after the month in which the
Executive dies. In addition to the above, the estate or other legal representative of the
Executive shall be entitled to:

(i) any annual bonus awarded in accordance with the Company’s bonus program but not yet
paid under Section 5, above, to be paid at the time such bonus would otherwise be due under
Section 5 above, and reimbursement of business expenses incurred prior to death in
accordance with Section 7 above,

(ii) within 45 days after the date of death (with the actual date of payment within
such 45 day period to be determined by the Company), a pro rata bonus for the year of death
in an amount determined by the Compensation Committee, but in no event less than a pro rata
portion of the Executive’s average annual bonus for the immediately preceding three years
(or the period of the Executive’s employment with the Company, if less),

(iii) the rights under any options to purchase equity securities of the Company or
other rights with respect to equity securities of the Company, including any restricted
stock or other securities, held by the Executive determined in accordance with the terms
thereof,

(iv) for a period of six months following the Executive’s death, continued medical
benefit plan coverage (including dental and vision benefits if provided under the applicable
plans) for the Executive’s dependents, if any, under the Company’s medical benefit plans
upon substantially the same terms and conditions (including cost of coverage to the
dependents) as is then in existence for other executives during the coverage period;
provided, that, if the Executive’s dependents cannot continue to participate in the Company
plans providing such benefits, the Company shall otherwise provide such benefits on
substantially the same after-tax basis as if continued participation had been permitted (and
any payment made by the Company in respect of any taxes imposed with respect to such
benefits shall be paid to the Executive’s dependents, or to the applicable taxing authority
on their behalf, no later than the due date of such taxes), and

(v) the vested accrued benefits, if any, under the employee benefit programs of the
Company, as provided in Section 6, above, determined in accordance with the applicable terms
and provisions of such programs.

(b) TERMINATION DUE TO DISABILITY. In the event the Executive’s employment hereunder is
terminated due to his disability, as determined under the Company’s long-term disability plan, the
Executive shall be entitled to:

(i) a cash lump sum payment made, subject to Section 25 below, 60 days after the date
of termination in an amount equal to the Base Salary as provided in Section 4, above, that
would have been paid to the Executive had he remained employed through the end of the sixth
month after the month in which the Executive’s employment terminates due to disability,

(ii) any annual bonus awarded in accordance with the Company’s bonus program but not
yet paid under Section 5, to be paid, subject to Section 25 below, at the time such bonus
would otherwise be due under Section 5 above, and reimbursement of business expenses
incurred prior to termination of employment in accordance with Section 7 above,

(iii) subject to Section 25 below, 60 days after the date of termination, a pro rata
bonus for the year of termination in an amount determined by the Compensation Committee, but
in no event less than a pro rata portion of the Executive’s average annual bonus for the
immediately preceding three years (or the period of the Executive’s employment with the
Company, if less),

(iv) the rights under any options to purchase equity securities of the Company or other
rights with respect to equity securities of the Company, including any restricted stock or
other securities, held by the Executive, determined in accordance with the terms thereof,

(v) for a period of six months following the termination of the Executive’s employment,
continued medical benefit plan coverage (including dental and vision benefits if provided
under the applicable plans) for the Executive (and the Executive’s dependents, if any) under
the Company’s medical benefit plans upon substantially the same terms and conditions
(including cost of coverage to the Executive) as is then in existence for other executives
during the coverage period; provided, that, if the Executive cannot continue to
participate in the Company plans providing such benefits, the Company shall otherwise
provide such benefits on substantially the same after-tax basis as if continued
participation had been permitted (and any payment made by the Company in respect of any
taxes imposed with respect to such benefits shall be paid to the Executive, or to the
applicable taxing authority on his behalf, no later than the due date of such taxes);
provided further, however, that, in the event the Executive becomes reemployed with
another employer and becomes eligible to receive medical benefits from such employer, the
medical benefits described herein shall immediately cease, and

(vi) the vested accrued benefits, if any, under the employee benefit programs of the
Company, as provided in Section 6 above, determined in accordance with the applicable terms
and provisions of such programs.

(c) TERMINATION FOR CAUSE.

(i) The employment of the Executive under this Agreement may be terminated by the
Company for Cause, such termination to be effective upon the Company giving the Executive
written notice of termination in accordance with the provisions of this Agreement. For this
purpose, “Cause” shall mean:

(A) conviction of the Executive of a felony involving moral turpitude, dishonesty or
laws to which the Company or its Affiliates are subject in connection with the conduct of
its or their business;

(B) the Executive, in carrying out his duties for the Company under this Agreement, has
been guilty of (1) willful misconduct or (2) substantial and continual refusal by the
Executive to perform the duties assigned to the Executive pursuant to the terms hereof;
provided, however, that any act or failure to act by the Executive shall not
constitute Cause for purposes of this Section 8(c)(i)(B) if such act or failure to act was
committed, or omitted, by the Executive in good faith and in a manner he reasonably believed
to be in the overall best interests of the Company, as the case may be. The determination
of whether the Executive acted in good faith and that he reasonably believed his action to
be in the Company’s overall best interest, as the case may be, will be in the reasonable
judgment of the General Counsel of the Company or, if the General Counsel shall have an
actual or potential conflict of interest, the Compensation Committee; or

(C) the Executive’s continued willful refusal to obey any lawful policy or requirement
duly adopted by the Board of Directors of the Company and the continuance of such refusal
after receipt of written notice.

(ii) In the event of a termination for Cause under Section 8(c)(i), above, the
Executive shall be entitled only to:

(A) Base Salary as provided in Section 4, above, at the rate in effect at the time of
his termination of employment for Cause, through the date on which termination for Cause
occurs, to be paid in accordance with the Company’s regular payroll practices,

(B) the rights under any options to purchase equity securities of the Company or other
rights with respect to equity securities of the Company, including any restricted stock or
other securities, held by the Executive, determined in accordance with the terms thereof,
and

(C) the vested accrued benefits, if any, under employee benefit programs of the
Company, as provided in Section 6, above, and reimbursement of properly incurred
unreimbursed business expenses under the business expense reimbursement program as described
in Section 7, above, determined in accordance with the applicable terms and provisions of
such employee benefit and expense reimbursement programs; provided that the Executive shall
not be entitled to any such benefits unless the terms and provisions of such programs
expressly state that the Executive shall be entitled thereto in the event his employment is
terminated for Cause (as defined in this Agreement or otherwise).

(d) TERMINATION WITHOUT CAUSE.

(i) Anything in this Agreement to the contrary notwithstanding, the Executive’s
employment may be terminated by the Company without Cause as provided in this Section 8(d).
A termination due to death or disability, as described in Section 8(a) or (b), above, or a
termination for Cause, as described in Section 8(c), above, shall not be deemed a
termination without Cause under this Section 8(d). For the avoidance of doubt, if a notice
of non-renewal of this Agreement pursuant to Section 2 is issued by the Company, the
termination of the Executive’s employment at the end of the term shall be considered a
termination by the Company without Cause hereunder.

(ii) In the event the Executive’s employment is terminated by the Company without Cause
(x) prior to a Change in Control (other than as provided in the last paragraph of Section
8(d)(iii), in which case the provisions of Section 8(d)(iii) shall apply in lieu of this
Section 8(d)(ii)) or (y) following the Post-Change Period (as hereinafter defined), the
Executive shall be entitled to:

(A) Base Salary as provided in Section 4, above, at the rate in effect at the time of
his termination of employment without Cause, through the date on which termination without
Cause occurs, to be paid in accordance with the Company’s regular payroll practices,

(B) provided the Executive executes, on or before the date that is fifty (50) days
following the date of his termination of employment, a general release of claims against the
Company and its Affiliates (as defined below) in form and substance satisfactory to the
Company and does not revoke such release prior to the end of the seven day statutory
revocation period, a cash lump sum payment made, subject to Section 25 below, sixty (60)
days after termination of employment equal to (x) two times the Executive’s annual Base
Salary, at the annual rate in effect in accordance with Section 4, above, immediately prior
to such termination and (y) one times the higher of the targeted annual bonus for the year
of such termination, if any, or the average of the Executive’s annual bonus payable by the
Company for the three years immediately preceding the year of termination (or such shorter
period during which the Executive has been employed by the Company),

(C) any annual bonus awarded in accordance with the Company’s bonus program but not yet
paid under Section 5, above, to be paid, subject to Section 25 below, at the time such bonus
would otherwise be due under Section 5 above, and reimbursement of business expenses
incurred prior to termination of employment in accordance with Section 7 above,

(D) the rights under any options to purchase equity securities of the Company or other
rights with respect to equity securities of the Company, including any restricted stock or
other securities, held by the Executive, determined in accordance with the terms thereof,

(E) for a period of twenty-four months following the termination of the Executive’s
employment, continued medical benefit plan coverage (including dental and vision benefits if
provided under the applicable plans) for the Executive (and the Executive’s dependents, if
any) under the Company’s medical benefit plans upon substantially the same terms and
conditions (including cost of coverage to the Executive) as is then in existence for other
executives during the coverage period; provided, that, if the Executive cannot
continue to participate in the Company plans providing such benefits, the Company shall
otherwise provide such benefits on substantially the same after-tax basis as if continued
participation had been permitted (and any payment made by the Company in respect of any
taxes imposed with respect to such benefits shall be paid to the Executive, or to the
applicable taxing authority on his behalf, no later than the due date of such taxes);
provided, however, with respect to the participation by the Executive in the medical
insurance plan hereunder, the following conditions shall be met: (i) the amount eligible
for reimbursement or payment under any such plan in one calendar year may not affect the
amount eligible for reimbursement or payment under such plan in any other calendar year
(except that the plan may impose a limit on the amount that may be reimbursed or paid if
such limit is imposed on all participants), and (ii) any reimbursement must be made on or
before the last day of the calendar year following the calendar year in which the expense
was incurred; provided, further, however, that, in the event the Executive becomes
reemployed with another employer and becomes eligible to receive medical benefits from such
employer, the medical benefits described herein shall immediately cease, and

(F) the vested accrued benefits, if any, under the employee benefit programs of the
Company, as provided in Section 6 above, determined in accordance with the applicable terms
and provisions of such programs.

(iii) In the event the Executive’s employment is terminated by (x) the Company without
Cause within the twenty-four month period following a Change in Control (as defined in
Exhibit A hereto) (the “Post-Change Period”) or (y) the Executive terminates his employment
for “Good Reason” (as defined in Exhibit B hereto) during the Post-Change Period, the
Executive shall be entitled to the following, paid in the case of amounts set forth in (B),
(C) and (D) below, subject to Section 25 below, 60 days after termination of employment:

(A) Base Salary as provided in Section 4, above, at the rate in effect at the time of
his termination of employment, through the date on which termination occurs, to be paid in
accordance with the Company’s regular payroll practices,

(B) a cash lump sum payment equal to two times the Executive’s annual Base Salary, at
the rate in effect in accordance with Section 4, above, or immediately prior to such
termination or Change in Control, whichever is greater,

(C) a cash lump sum payment equal to two times the average annual bonus awarded to the
Executive by the Company in the three years prior to the year in which the Change in Control
occurs (or shorter period during which the Executive had been employed by the Company);
provided such bonuses shall be at least equal to the targeted annual bonus, if any, for the
year of such termination,

(D) an amount equal to (i) the higher of (x) the bonus actually awarded to the
Executive by the Company for the year immediately preceding the year in which the Change in
Control occurs or (y) the targeted amount of bonus, if any, that would have been awarded to
the Executive in respect of the year in which the termination of employment occurs,
multiplied by (ii) a fraction, the numerator of which is the number of months or fraction
thereof in which the Executive was employed by the Company in the year of termination of
employment, and the denominator of which is 12,

(E) options to purchase equity securities of the Company or other rights with respect
to equity securities of the Company held by the Executive shall immediately vest in full and
shall continue to be exercisable for three years from the date of termination of employment,
notwithstanding the Executive’s termination of employment, or the original full term of the
option or other right, if shorter,

(F) for a period of twenty-four months following the termination of the Executive’s
employment, continued medical benefit plan coverage (including dental and vision benefits if
provided under the applicable plans) for the Executive (and the Executive’s dependents, if
any) under the Company’s medical benefit plans upon substantially the same terms and
conditions (including cost of coverage to the Executive) as is then in existence for other
executives during the coverage period; provided, that, if the Executive cannot
continue to participate in the Company plans providing such benefits, the Company shall
otherwise provide such benefits on substantially the same after-tax basis as if continued
participation had been permitted (and any payment made by the Company in respect of any
taxes imposed with respect to such benefits shall be paid to the Executive, or to the
applicable taxing authority on his behalf, no later than the due date of such taxes);
provided, however, with respect to the participation by the Executive in the medical
insurance plan hereunder, the following conditions shall be met: (i) the amount eligible
for reimbursement or payment under any such plan in one calendar year may not affect the
amount eligible for reimbursement or payment under such plan in any other calendar year
(except that the plan may impose a limit on the amount that may be reimbursed or paid if
such limit is imposed on all participants), and (ii) any reimbursement must be made on or
before the last day of the calendar year following the calendar year in which the expense
was incurred; provided further, however, that, in the event the Executive becomes
reemployed with another employer and becomes eligible to receive medical benefits from such
employer, the medical benefits described herein shall immediately cease, and

(G) full and immediate vesting under the Company’s retirement plans as of the date of
termination, to the extent permitted by applicable law; provided, however, that if
such full and immediate vesting cannot be provided under a “qualified employer plan” (within
the meaning of Treas. Reg. Section 1.409A-1(a)(2)) under applicable law, then the present
value of economically equivalent benefits, determined using reasonable assumptions and on an
after-tax basis to the Executive, shall be paid in a cash lump sum to the Executive, subject
to Section 25 below, 60 days after termination of employment.

Anything in this Agreement to the contrary notwithstanding, the Executive shall be entitled to
the benefits described in (A)-(G) above, if the Executive’s employment with the Company is
terminated by the Company (other than for Cause) within one year prior to the date on which a “409A
Change in Control” (as defined below) occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has taken steps reasonably calculated or
intended to effect the 409A Change in Control or (ii) otherwise arose in connection with or
anticipation of the 409A Change in Control; provided, however, that in such event, amounts
in excess of those otherwise payable to the Executive under Section 8(d)(ii) above will be payable
hereunder only following the 409A Change in Control (and, subject to Section 25 below,10 days
thereafter). For purposes hereof, a “409A Change in Control” means a “change in control event” (as
defined in Treas. Reg. Section 1.409A-3(i)(5)) with respect to the Company that also constitutes a
Change in Control.

(iv) If, in situations where Section 8(d)(iii) does not apply, at any time during the term of
the Executive’s employment hereunder and without the Executive’s written consent, duties are
assigned to the Executive that are materially inconsistent with his position as described in
Section 3 above, or the Company does not cure any material breach by it of any provision of
Sections 4 through 7 of this Agreement within 30 calendar days following written notice of same by
the Executive (which written notice must be given within 30 calendar days after such breach), the
Executive shall have the right to terminate his employment within 30 calendar days of the Company’s
failure to rescind such assignment in accordance with the proviso below or of such failure to cure
a breach, as the case may be, and such termination shall be deemed a termination by the Company
without Cause under Section 8(d)(ii), above, provided, in the case of assignment of duties
that are materially inconsistent with those set forth in Section 3 above, the Executive shall have
given the Company written notice of such assignment within 30 calendar days of such assignment and
shall not, within 30 calendar days thereafter, have had the assignment of inconsistent duties
rescinded.

(e) VOLUNTARY TERMINATION BY THE EXECUTIVE. The Executive may voluntarily terminate his
employment prior to the expiration of the term of this Agreement upon at least three months’ prior
written notice to the Company. Such termination shall constitute a voluntary termination and,
except as provided in Section 8(d)(iii) or Section 8(d)(iv), above, in such event the Executive
shall be limited to the same rights and benefits as applicable to a termination by the Company for
Cause as provided in Section 8(c), above. A voluntary termination in accordance with this Section
8(e) shall not be deemed a breach of this Agreement. A termination of the Executive’s employment
due to disability or death as described in Section 8(b) or 8(a), above, a termination by the
Executive which the Executive is entitled to treat as a termination by the Company pursuant to
Section 8(d), above, or a termination by the Executive under Section 8(d)(iv), above, shall not be
deemed a voluntary termination within the meaning of this Section 8(e).

9. EXCISE TAX PAYMENTS.

(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be
determined that (i) any payment or distribution made, or benefit provided (including, without
limitation, the acceleration of any payment, distribution or benefit or accelerated vesting or
exercisability of any award) by the Company, any acquirer or any party related to the Company or
the acquirer to or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but determined without regard
to any additional payments required under this Section 9) (a “Payment”) would be subject to the
excise tax imposed by Section 4999 of the United States Internal Revenue Code of 1986, as amended
(the “Code”) (or any successor provision or similar excise tax), or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), (ii) the
aggregate amount of the Executive’s Parachute Payments (as defined in Section 280G(b)(2)(A) of the
Code) is less than 3.25 times the Executive’s Base Amount (as defined in Section 280G(b)(3)(A) of
the Code), and (iii) no such Payment would be subject to the Excise Tax if the payments set forth
in Section 8(d)(iii)(B) and (C) hereof were each reduced by up to 20 percent, then the payments set
forth in Section 8(d)(iii)(B) and (C) will each be reduced to the smallest extent possible (and in
no event by more than 20 percent in the aggregate) such that no Payment is subject to the Excise
Tax.

(b) Anything in this Agreement to the contrary notwithstanding, in the event it shall be
determined that (i) the aggregate amount of the Executive’s Parachute Payments equals or exceeds
3.25 times the Executive’s Base Amount, (ii) the aggregate amount of the Executive’s Parachute
Payments is less than 3.25 times the Base Amount but one or more Payments would be subject to the
Excise Tax even if the payments set forth in Section 8(d)(iii)(B) and (C) hereof were each reduced
by 20 percent, or (iii) notwithstanding a reduction in payments pursuant to Section 9(a) above, an
Excise Tax is payable by the Executive on one or more Payments, then, in any such case, Payments
shall not be reduced and the Executive shall be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including
any income or Excise Tax) imposed upon the Gross-Up Payment and any interest or penalties imposed
with respect to such taxes, the Executive retains from the Gross-Up Payment an amount equal to the
Excise Tax imposed upon the Payments.

(c) Subject to the provisions of Section 9(d), all determinations required to be made under
this Section 9, including determination of whether a Gross-Up Payment is required and of the amount
of any such Gross-Up Payment, shall be made by a nationally recognized public accounting firm
selected by the Company (the “Accounting Firm”) which shall provide detailed supporting
calculations both to the Company and the Executive within l5 business days of the date of
termination of the Executive’s employment, if applicable, or such earlier time as is reasonably
requested. The initial Gross-Up Payment, if any, as determined pursuant to this Section 9(c),
shall be paid to the Executive within five business days of the receipt of the Accounting Firm’s
determination. If the Accounting Firm determines that no Excise Tax is payable by the Executive,
it shall furnish the Executive with a written opinion that he has substantial authority not to
report any Excise Tax on his Federal income tax return. Any determination by the Accounting Firm
meeting the requirements of this Section 9(c) shall be binding upon the Company and the Executive,
subject only to payments pursuant to the following sentence based on a determination that
additional Gross-Up Payments should have been made, consistent with the calculations required to be
made hereunder (the amount of such additional payments are referred to herein as the “Gross-Up
Underpayment”). In the event that the Company exhausts its remedies pursuant to Section 9(d) and
the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall
determine the amount of the Gross-Up Underpayment that has occurred and any such Gross-Up
Underpayment shall be promptly paid by the Company to or for the benefit of the Executive. The
fees and disbursements of the Accounting Firm shall be paid by the Company.

(d) The Executive shall notify the Company in writing of any claim by the United States
Internal Revenue Service that, if successful, would require the payment by the Executive of any
Excise Tax and, therefore, the payment by the Company of a Gross-Up Payment. Such notification
shall be given as soon as practicable but not later than 30 business days after the Executive
receives written notice of such claim and shall apprise the Company of the nature of such claim and
the date on which such claim is requested to be paid. The Executive shall not pay such claim prior
to the expiration of the 30-day period following the date on which he gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to the expiration of such
period that it desires, in good faith, to contest such claim (which notice shall set forth the
bases for such contest) and that it will bear the costs and provide the indemnification as required
by this sentence, the Executive shall, in good faith:

(i) give the Company any information reasonably requested by the Company relating to
such claim,

(ii) take such action in connection with contesting such claim as the Company shall, in
good faith, reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney selected by the
Company and reasonably acceptable to the Executive,

(iii) cooperate with the Company in good faith in order effectively to contest such
claim, and

(iv) permit the Company to participate, in good faith, in any proceedings relating to
such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis to the Executive, for any
Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a
result of such representation and payment of all costs and expenses.

Without limitation on the foregoing provisions of this Section 9(d), the Company shall,
exercising good faith, control all proceedings taken in connection with such contest and, at its
sole option (but in good faith), may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of such claim and may,
at its sole option (but in good faith), either direct the Executive to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the Executive on an interest-free
basis and shall indemnify and hold the Executive harmless, on an after-tax basis to the Executive,
from any Excise Tax or income tax, including interest or penalties with respect thereto, imposed
with respect to such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations
relating to the payment of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the
Company’s control of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.
If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section
9(d), the Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of Section 9(d)) promptly
pay to the Company, as the case may be, the amount of such refund (together with any interest paid
or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(d), a determination is made that the Executive
shall not be entitled to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the expiration of 30
days after such determination, then any obligation of the Executive to repay such advance shall be
forgiven and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up
Payment required to be paid.

Notwithstanding any provision herein to the contrary, the Executive’s failure to strictly
comply with the notice provisions set forth in this Section 9, so long as such failure does not
prevent the Company from contesting an excise tax claim, shall not adversely affect the Executive’s
rights under this Section 9. Any amount advanced shall be deemed a nonrefundable payment to the
extent a refundable advance would be a violation of the Sarbanes-Oxley Act. Anything in this
Agreement to the contrary notwithstanding, except as otherwise provided in Treas. Reg. Section
1.409A-3(i)(1)(v), in no event shall any payment by the Company pursuant to this Section 9 be made
later than the end of the Executive’s taxable year next following the Executive’s taxable year in
which he remits the related taxes.

10. NO MITIGATION; NO OFFSET.

In the event of any termination of employment under Section 8, above, the Executive shall be
under no obligation to mitigate damages or seek other employment, and, except as expressly set
forth herein, there shall be no offset against amounts due the Executive under this Agreement on
account of any remuneration attributable to any subsequent employment that he may obtain.

11. NONCOMPETITION AND NONSOLICITATION.

The Executive represents and warrants that, to the best of his knowledge, he is not using the
confidential or proprietary information of any other person in violation of any agreement or rights
of others known to him. The Executive agrees that the products of the Company and its Affiliates
shall constitute the exclusive property of the Company and its Affiliates.

For the avoidance of doubt, all trademarks, policy language or forms, products or services
(including products and services under development), trade names, trade secrets, service marks,
designs, computer programs and software, utility models, copyrights, know-how and confidential
information, applications for registration of any of the foregoing and the right to apply for them
in any part of the world (whether any of the foregoing shall be registered or unregistered) created
or discovered or participated in by the Executive during the course of his employment (whether or
not pursuant to the terms of this Agreement) or under the instructions of the Company or its
Affiliates are and shall be the absolute property of the Company and its Affiliates, as
appropriate. Without limiting the foregoing, the Executive hereby assigns to the Company any and
all of the Executive’s right, title and interest, if any, pertaining to the insurance and
reinsurance (including, without limitation, finite insurance and reinsurance), risk assumption,
risk management, brokerage, financial and other products or services developed or improved upon by
the Executive (including, without limitation, any related “know-how”) while employed by the Company
or its Affiliates, including any patent, trademark, trade name, copyright, ownership or other right
that may pertain thereto.

Since Executive has obtained and is likely to obtain in the course of Executive’s employment
with the Company and its Affiliates knowledge of trade names, trade secrets, know-how, products and
services (including products and services under development), techniques, methods, lists, computer
programs and software and other confidential information relating to the Company and its
Affiliates, and their employees, clients, business or business opportunities, Executive hereby
undertakes that:

(i) Executive will not (either alone or jointly with or on behalf of others and whether
directly or indirectly) encourage, entice, solicit or endeavor to encourage, entice or
solicit away from employment with the Company or its Affiliates, or hire or cause to be
hired, any officer or employee of the Company or its Affiliates (or any individual who was
within the prior twelve months an officer or employee of the Company or its Affiliates), or
encourage, entice, solicit or endeavor to encourage, entice or solicit any individual to
violate the terms of any employment agreement or arrangement between such individual and the
Company or any of its Affiliates;

(ii) Executive will not (either alone or jointly with or on behalf of others and
whether directly or indirectly) interfere with or disrupt or seek to interfere with or
disrupt (A) the relationships between the Company and its Affiliates, on the one hand, and
any customer or client of the Company and its Affiliates, on the other hand, (including any
insured or reinsured party) who during the period of twenty-four months immediately
preceding such termination shall have been such a customer or client, or (B) the supply to
the Company and its Affiliates of any services by any supplier or agent or broker who during
the period of twenty-four months immediately preceding such termination shall have supplied
services to any such person, nor will Executive interfere or seek to interfere with the
terms on which such supply or agency or brokering services during such period as aforesaid
have been made or provided; and

(iii) Executive will not (either alone or jointly with or on behalf of others and
whether directly or indirectly) whether as an employee, consultant, partner, principal,
agent, distributor, representative or stockholder (except solely as a less than one percent
stockholder of a publicly traded company), engage in any activities in Bermuda, the United
States or greater London if such activities are competitive with the businesses that (i) are
then being conducted by the Company or its Affiliates and (ii) during the period of the
Executive’s employment were either being conducted by the Company or its Affiliates or
actively being developed by the Company or its Affiliates.

The provisions of the immediately preceding sentence shall continue as long as the Executive
is employed by the Company or its Affiliates and such provisions shall continue in effect after
such employment is terminated for any reason until the first anniversary of such termination,
provided that if such employment is terminated by the Company under Section 8(d)(iii) or by the
Executive under Section 8(d)(iii), the provisions of clauses (ii) and (iii) shall automatically
terminate upon such termination of employment, unless the Company elects, in writing, upon such
termination to continue the provisions of clauses (ii) and (iii) in effect through the six-month
anniversary of such termination of employment in which case the Company shall be obligated to pay
the Executive, in addition to any of the Executive’s rights under Section 8(d)(iii), a lump sum
payment equal to the sum of (x) six months of his Base Salary and (y) one half of the Executive’s
average annual bonus payable by the Company or its subsidiaries for the three years (or shorter
period of employment by any of such entities) immediately preceding the year of termination, and
such lump sum payment shall, subject to Section 25 below, be made 60 days following his “separation
from service” (within the meaning Treas. Reg. Section 1.409A-1(h)) with the Company.

For purposes of this Agreement, an “Affiliate” of the Company includes any person, directly or
indirectly, through one or more intermediaries, controlling, controlled by, or under common control
with the Company, and such term shall specifically include, without limitation, the Company’s
majority-owned subsidiaries.

The limitations on the Executive set forth in this Section shall also apply to any agent or
other representative acting on behalf of Executive.

While the restrictions aforesaid are considered by both parties to be reasonable in all the
circumstances it is recognized that restrictions of the nature in question may fail for reasons
unforeseen and accordingly it is hereby declared and agreed that if any of such restrictions or the
geographic or other scope thereof shall be adjudged to be void as going beyond what is reasonable
in the circumstances for the protection of the interests of the Company and its Affiliates but
would be valid if part of the wording thereof were deleted and/or the periods (if any) thereof
reduced and/or geographic or other area dealt with thereby reduced in scope then said restrictions
shall apply with such modifications as may be necessary to make them valid and effective.

Nothing contained in this Section 11 shall limit in any manner any additional obligations to
which Executive may be bound pursuant to any other agreement or any applicable law, rule or
regulation and Section 11 shall apply, subject to its terms, after employment has terminated for
any reason.

12. CONFIDENTIAL INFORMATION.

The Executive covenants that he shall not, without the prior written consent of the Company,
use for the Executive’s own benefit or the benefit of any other person or entity other than the
Company and its Affiliates or disclose to any person, other than an employee of the Company or
other person to whom disclosure is necessary to the performance by the Executive of his duties in
the employ of the Company, any confidential, proprietary, secret, or privileged information about
the Company or its Affiliates or their business or operations, including, but not limited to,
information concerning trade secrets, know-how, software, data processing systems, policy language
and forms, inventions, designs, processes, formulae, notations, improvements, financial
information, business plans, prospects, referral sources, lists of suppliers and customers, legal
advice and other information with respect to the affairs, business, clients, customers, agents or
other business relationships of the Company or its Affiliates. Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret, confidential proprietary or privileged
information or data relating to the Company or any of its Affiliates or predecessor companies, and
their respective businesses, which shall have been obtained by Executive during his employment,
unless and until such information has become known to the public generally (other than as a result
of unauthorized disclosure by the Executive) or unless he is required to disclose such information
by a court or by a governmental body with apparent authority to require such disclosure. The
foregoing covenant by the Executive shall be without limitation as to time and geographic
application and this Section 12 shall apply in accordance with its terms after employment has
terminated for any reason. The Executive acknowledges and agrees that he shall have no authority
to waive any attorney-client or other privilege without the express prior written consent of the
Compensation Committee as evidenced by the signature of the Company’s General Counsel.

13. WITHHOLDING.

Anything in this Agreement to the contrary notwithstanding, all payments required to be made
by the Company hereunder to the Executive shall be subject to withholding of such amounts relating
to taxes as the Company may reasonably determine should be withheld pursuant to any applicable law
or regulation. In lieu of withholding such amounts, in whole or in part, the Company may, in its
sole discretion, accept other provision for payment of taxes as required by law, provided it is
satisfied that all requirements of law affecting its responsibilities to withhold such taxes have
been satisfied.

14. GUARANTY AND AFFILIATE SERVICES.

(a) LIABILITY. Each of XL Insurance Ltd and XL Re Ltd (together, the “Guarantors”) hereby
agrees to be jointly and severally liable together with the Company, for the performance of all
obligations and duties, and the payment of all amounts, due to the Executive under this Agreement.

(b) RESPONSIBILITY. All of the other terms and provisions of this Agreement relating to the
Executive’s employment by the Company shall likewise apply mutatis mutandis to the Executive’s
employment by any of its Affiliates, it being understood that if the Executive’s employment with
the Company is terminated, his employment with its Affiliates shall also be terminated and the
Executive shall be required to resign immediately from all directorships and other positions held
by the Executive in the Company and its Affiliates or in any other entities in respect of which the
Executive was acting as a representative or designee of the Company or its Affiliates in connection
with his employment.

15. ENTIRE AGREEMENT.

This Agreement, together with the Exhibits, contains the entire agreement between the Parties
concerning the subject matter hereof and supersedes all prior agreements, understandings,
discussions, negotiations and undertakings, whether written or oral, between the Company and the
Executive with respect thereto.

16. ASSIGNABILITY; BINDING NATURE.

This Agreement shall be binding upon and inure to the benefit of the Parties and their
respective successors, heirs and assigns. No rights or obligations of the Executive under this
Agreement may be assigned or transferred by the Executive other than his right to compensation and
benefits hereunder, which may be transferred by will or operation of law subject to the limitations
of this Agreement. No rights or obligations of the Company under this Agreement may be assigned or
transferred by the Company except that such rights or obligations may be assigned or transferred
pursuant to a merger or consolidation or amalgamation or scheme of arrangement in which the Company
is not the continuing entity, or the sale or liquidation of all or substantially all of the assets
of the Company, provided that the assignee or transferee is the successor to all or substantially
all of the assets of the Company and such assignee or transferee assumes by operation of law or in
writing duly executed by the assignee or transferee all of the liabilities, obligations and duties
of the Company, as contained in this Agreement, either contractually or as a matter of law.

17. INDEMNIFICATION.

The Executive shall be provided indemnification by the Company to the maximum extent permitted
by applicable law and its charter documents against expenses incurred and damages paid or payable
by the Executive with respect to claims based on actions or failures to act by the Executive in his
capacity as an officer, director or employee of the Company or its Affiliates or in any other
capacity, including any fiduciary capacity, in which the Executive served at the request of the
Company or an Affiliate. In addition, he shall be covered by a directors’ and officers’ liability
policy with coverage for all directors and officers of the Company in an amount equal to at least
US $75,000,000. Such directors’ and officers’ liability insurance shall be maintained in effect
for a period of six years following termination of the Executive’s employment for any reason other
than pursuant to Section 8(c) or Section 8(e) hereof.

18. SETTLEMENT OF DISPUTES.

(a) Any dispute between the Parties arising from or relating to the terms of this Agreement or
the Executive’s employment with the Company or its Affiliates shall, except as provided in Section
18(b) or Section 18(c), be resolved by binding arbitration held in New York City in accordance with
the rules of the American Arbitration Association.

(b) Executive acknowledges that the Company and its Affiliates will suffer irreparable injury,
not readily susceptible of valuation in monetary damages, if Executive breaches his obligations
under Section 11 or 12. Accordingly, Executive agrees that the Company and its Affiliates will be
entitled, in addition to any other available remedies, to obtain injunctive relief against any
breach or prospective breach by Executive of his obligations under Section 11 or 12 in any Federal
or state court sitting in the City and State of New York or court sitting in Bermuda or the United
Kingdom, or, at the Company’s or any Affiliate’s election, in any other jurisdiction in which
Executive maintains his residence or his principal place of business. Executive hereby submits to
the non-exclusive jurisdiction of all those courts for the purposes of any actions or proceedings
instituted by the Company or its Affiliates to obtain such injunctive relief, and Executive agrees
that process in any or all of those actions or proceedings may be served by registered mail or
delivery, addressed to the last address of Executive known to the Company or its Affiliates, or in
any other manner authorized by law. Executive further agrees that, in addition to any other
remedies available to the Company or its Affiliates by operation of law or otherwise, because of
any breach by Executive of his obligations under Section 11 or 12 he will forfeit any and all bonus
and rights to any payments to which he might otherwise then be entitled by virtue hereof and such
payments may be suspended so long as any good faith dispute with respect thereto is continuing;
provided, however, that payments, benefits and other rights and privileges
of the Executive under this Agreement following termination of the Executive’s employment during a
Post-Change Period shall not be forfeited, suspended, offset, diminished or otherwise altered in
any way on account of any breach or prospective breach of Section 11, Section 12 or any other
provision of this Agreement alleged by the Company.

(c) Notwithstanding any other provision of this Agreement, the Executive may elect to resolve
any dispute involving a breach or alleged breach of this Agreement following termination of the
Executive’s employment during a Post-Change Period in any Federal or State court sitting in the
City and State of New York or court sitting in Bermuda or the United Kingdom. The Company and the
Guarantors hereby submit to the non-exclusive jurisdiction of all those courts for the purposes of
any such actions or proceedings instituted by the Executive, and the Company and the Guarantors
agree that process in any or all of such actions or proceedings may be served by registered mail or
delivery, addressed to the Company as set forth in Section 20, or in any other manner authorized by
law. The Company and the Guarantors shall pay all costs associated with any court proceeding under
this Section 18(c) without regard to the outcome of such proceeding, including all legal fees and
expenses of the Executive, who shall be reimbursed for all such costs within ten (10) days
following written demand therefor by the Executive (which written demand shall be made no later
than six (6) months following the end of the calendar year in which such costs were incurred).

(d) Each Party shall bear its own costs incurred in connection with any proceeding under
Sections 18(a) or 18(b) hereof, including all legal fees and expenses: provided,
however, that the Company shall bear all such costs of the Executive (to the extent such costs
are reasonable) if the Executive substantially prevails in the proceeding. Following the final
determination of the dispute in which the Executive has substantially prevailed, the Company shall
reimburse all such reasonable costs within ten (10) days following written demand therefor
(supported by documentation of such costs) by the Executive, and the Executive shall make such
written demand within sixty (60) days following the final determination of the dispute;
provided, however, that such payment shall be made no later than on or prior to the end of
the calendar year following the calendar year in which the cost is incurred. Notwithstanding the
foregoing, in the event a final determination of the dispute has not been made by December 20 of
the year following the calendar year in which the cost is incurred, the Company shall, within ten
(10) days after such December 20, reimburse such reasonable costs (supported by documentation of
such costs) incurred in the prior taxable year; provided, however, that the Executive shall
return such amounts to the Company within ten (10) business days following the final determination
if the Executive did not substantially prevail in the dispute.

(e) The amount of any expenses eligible for payment under this Section 18 during a calendar
year will not affect the amount of any expenses eligible for payment under this Section 18 in any
other taxable year.

19. AMENDMENT OR WAIVER.

No provision in this Agreement may be amended unless such amendment is agreed to in writing,
signed by the Executive and by a duly authorized officer of the Company and the Guarantors. No
waiver by any Party of any breach by the other Party of any condition or provision of this
Agreement to be performed by such other Party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or any prior or subsequent time. Except as set forth in Section
8(d)(iv) or Exhibit B, any waiver must be in writing and signed by the Executive or a duly
authorized officer of the Company and the Guarantors, as the case may be.

20. NOTICES.

Any notice required or permitted to be given under this Agreement shall be in writing and
shall be deemed to have been given when delivered personally or sent by courier, or by certified or
registered mail, postage prepaid, return receipt requested, duly addressed to the Party concerned
at the address indicated below or to such changed address as such Party may subsequently by similar
process give notice of:

If to the Company:

XL Capital Ltd

One Bermudiana Road

Hamilton HM11, Bermuda

Att’n: General Counsel

If to the Executive:

To the last address delivered to

the Company by the Executive in

the manner set forth herein.

21. SEVERABILITY.

In the event that any provision or portion of this Agreement shall be determined to be invalid
or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement
shall be unaffected thereby and shall remain in full force and effect to the fullest extent
permitted by law.

22. SURVIVORSHIP.

The respective rights and obligations of the Parties shall survive any termination of this
Agreement to the extent necessary to the intended preservation of such rights and obligations.

23. REFERENCE.

In the event of the Executive’s death or a judicial determination of his incompetence,
reference in this Agreement to the Executive shall be deemed, where appropriate, to refer to his
estate or other legal representative.

24. GOVERNING LAW.

This Agreement shall be governed by and construed and interpreted in accordance with the laws
of the State of New York without reference to the principles of conflict of laws.

25. SECTION 409A.

(a) It is intended that this Agreement will comply with Section 409A of the Code (and any
regulations and guidelines issued thereunder) to the extent the Agreement is subject thereto, and
the Agreement shall be interpreted on a basis consistent with such intent. If an amendment of the
Agreement is necessary in order for it to comply with Section 409A, the parties hereto will
negotiate in good faith to amend the Agreement in a manner that preserves the original intent of
the parties to the extent reasonably possible. No action or failure to act, pursuant to this
Section 25 shall subject the Company to any claim, liability, or expense, and the Company shall not
have any obligation to indemnify or otherwise protect the Executive from the obligation to pay any
taxes pursuant to Section 409A of the Code.

(b) Notwithstanding any provision to the contrary in this Agreement, if the Executive is
deemed on the date of his “separation from service” (within the meaning of Treas. Reg.
Section 1.409A-1(h)) to be a “specified employee” (within the meaning of Treas. Reg.
Section 1.409A-1(i)), then with regard to any payment that is required to be delayed pursuant to
Section 409A(a)(2)(B) of the Code, such payment shall not be made prior to the earlier of (i) the
expiration of the six (6)-month period measured from the date of his “separation from service,” or
(ii) the date of his death (the “Delay Period”). Upon the expiration of the Delay Period, all
payments delayed pursuant to this Section 25 (whether they would have otherwise been payable in a
single sum or in installments in the absence of such delay) shall be paid to the Executive in a
lump sum, and any remaining payments due under this Agreement shall be paid in accordance with the
normal payment dates specified for them herein. In no case will compliance with this Section by
the Company constitute a breach of the Company’s or the Guarantors’ obligations under this
Agreement. Notwithstanding any provision of this Agreement to the contrary, for purposes of
Sections 8(b) and 8(d) above, the Executive will be deemed to have terminated his employment on the
date of his “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1(h)) with
the Company. With respect to any reimbursement or in-kind benefit arrangements of the Company
provided for herein that constitute deferred compensation for purposes of Section 409A of the Code,
the following conditions shall be applicable: (i) the amount eligible for reimbursement, or in-kind
benefits provided, under any such arrangement in one calendar year may not affect the amount
eligible for reimbursement, or in-kind benefits to be provided, under such arrangement in any other
calendar year (except that the health and dental plans may impose a limit on the amount that may be
reimbursed or paid if such limit is imposed on all participants), (ii) any reimbursement must be
made on or before the last day of the calendar year following the calendar year in which the
expense was incurred, and (iii) the right to reimbursement or in-kind benefits is not subject to
liquidation or exchange for another benefit.

26. EXECUTIVE REPRESENTATIONS.

The Executive hereby represents and warrants to the Company that (a) the execution, delivery
and performance of this Agreement by the Executive does not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order, judgment or decree to
which the Executive is a party or by which he is bound, and (b) except as disclosed to the Company
by the Executive, the Executive is not a party to or bound by any employment agreement, transition
services agreement, noncompetition agreement, nonsolicitation agreement or confidentiality
agreement with any other person or entity.

27. HEADINGS.

The heading of the sections contained in this Agreement are for convenience only and shall not
be deemed to control or affect the meaning or construction of any provision of this Agreement.

28. COUNTERPARTS.

This Agreement may be executed simultaneously in two or more counterparts, any one of which
need not contain the signatures of more than one party, but all of which counterparts taken
together will constitute one and the same agreement.

1

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

XL CAPITAL LTD

By: /s/ Kirstin R.
Gould     

	 	 	Kirstin R. Gould

MICHAEL S. McGAVICK

/s/ Michael S.
McGavick     

	 	 	GUARANTORS:

XL INSURANCE LTD

By: /s/ Kirstin R.
Gould     

	 	 	Kirstin R. Gould

XL RE LTD

By: /s/ Kirstin R.
Gould     

	 	 	Kirstin R. Gould

2

EXHIBIT A

CHANGE IN CONTROL

A “Change in Control” shall be deemed to have occurred:

(i) any person (which, for all purposes hereof, shall include, without limitation, an
individual, sole proprietorship, partnership, unincorporated association, unincorporated
syndicate, unincorporated organization, trust, body corporate and a trustee, executor,
administrator or other legal representative) (a “Person”) or any group, as defined in
Sections 13(d) or 14(d) of the United States Securities Exchange Act of 1934 (other than a
group of which the Executive is a member or which has been organized by the Executive),
becomes the beneficial owner, directly or indirectly, of securities of the Company
representing, or acquires the right to control or direct, or to acquire through the
conversion of securities or the exercise of warrants or other rights to acquire securities,
30% or more of either (I) the outstanding Ordinary Shares of the Company, (II) the
outstanding securities of the Company having a right to vote in the election of directors,
or (III) the combined voting power of the outstanding securities of the Company having a
right to vote in the election of directors; or

(ii) if there shall be elected or appointed to the Board of Directors of the Company
(the “Board”) any director or directors whose appointment or election by the Board or
nomination for election by the Company’s shareholders was not approved by a vote of at least
a majority of the directors then still in office who were either directors on the date of
execution of this Agreement or whose election or appointment or nomination for election was
previously so approved; or

(iii) upon consummation of a reorganization, scheme of arrangement, merger,
consolidation, combination, amalgamation, corporate restructuring, liquidation, winding up,
exchange of securities, or similar transaction (each, an “Event”), in each case, in respect
of which the beneficial owners of the outstanding Company Ordinary Shares immediately prior
to such Event do not, following such Event, beneficially own, directly or indirectly, more
than 60% of each of the outstanding equity share capital, and the combined voting power of
the then outstanding voting securities entitled to vote in the election of the directors, of
the Company and any resulting entity, in substantially the same proportions as their
ownership, immediately prior to such Event, of the Ordinary Shares and voting power of the
Company; or

(iv) if there occurs an Event involving the Company as a result of which 25% of more of
the members of the Board of the Company are not persons who were members of the Board
immediately prior to the earlier of (x) the Event, (y) execution of an agreement, the
consummation of which would result in the Event, or (z) announcement by the Company of an
intention to effect the Event; or

(v) if the Board adopts a resolution to the effect that, for purposes of this
Agreement, a Change in Control has occurred.

3

EXHIBIT B

GOOD REASON

For purposes of this Agreement, “Good Reason” shall mean any of the following, unless done
with the prior express written consent of the Executive:

(i) (A) The assignment to Executive of duties inconsistent with Executive’s position
(including duties, responsibilities, status, titles or offices as set forth in Section 3
hereof); or (B) any elimination, diminution or reduction of Executive’s duties or
responsibilities except in connection with the termination of Executive’s employment for
Cause, disability or as a result of Executive’s death or by Executive other than for Good
Reason; and for purposes for this clause (i), the determination of whether there has been a
reduction of duties or responsibilities or an assignment of duties inconsistent with the
Executive’s position shall take into account the Executive’s duties, responsibilities and
position with the ultimate parent of the parent/subsidiary group as a whole which includes
the Company;

(ii) The (A) reduction in Executive’s Base Salary from the level in effect immediately
prior to the Change in Control, or (B) payment of an annual bonus in an amount less than the
lesser of (x) the most recent annual bonus paid prior to the Change in Control or (y) the
greater of (I) the most recent target bonus, if any, established prior to the Change in
Control or (II) the annual average bonus paid for the preceding three complete years prior
to the Change in Control (or such lesser number of complete years as the Executive shall
have been employed by the Company);

(iii) The failure by the Company or the Guarantors to obtain the specific written
assumption of this Agreement by any successor or assign of the Company or the Guarantors or
any person acquiring substantially all of the Company’s or the Guarantors’ assets;

(iv) Any breach by the Company or the Guarantors of any provision of this Agreement or
any agreements entered into pursuant thereto that remains uncured for 20 calendar days
following written notice of same by the Executive;

(v) Notwithstanding the provisions of Section 3(b) of this Agreement, requiring the
Executive to be based at any office or location that is greater than 35 miles from the
office or location at which the Executive was principally located immediately prior to the
Change in Control;

(vi) During the Post-Change Period, (A) the failure to continue in effect any
compensation or incentive plan in which Executive participates immediately prior to the time
of the Change in Control unless an equitable arrangement (embodied in an ongoing substitute
or alternative plan providing Executive with at least the same aggregate economic
opportunity on an after-tax basis available to the Executive immediately prior to the Change
in Control) has been made with respect to such plan in connection with the Change in
Control, or the failure to continue Executive’s participation therein on substantially the
same basis both in terms of the amount of benefits provided and the level of his
participation relative to other participants, as existed at the time of the Change in
Control; or (B) the failure to continue to provide Executive with benefits and coverage at
least as favorable in the aggregate as those enjoyed by him under the Company’s pension,
life insurance, medical, health and accident, disability, deferred compensation or savings
plans in which he was participating at the time of the Change in Control; or

(vii) The failure by the Company to pay within 7 calendar days of the due date any
amounts due under any benefit or compensation plan, including any deferred compensation
plan.

Notwithstanding any provision in this Agreement to the contrary, the Executive must give written
notice of his intention to terminate his employment for Good Reason within sixty (60) days after
the act or omission which constitutes Good Reason, and any failure to give such written notice
within such period will result in a waiver by the Executive of his right to terminate for Good
Reason as a result of such act or omission.

4EX-10.1

FIFTH AMENDED AND RESTATED LOAN AGREEMENT

Wachovia Bank, National Association

225 Water Street

Jacksonville, Florida 32202

(Hereinafter referred to as the “Bank”)

HOME DIAGNOSTICS, INC., a Delaware corporation

2400 NW 55th Court

Fort Lauderdale, Florida 32202

(Hereinafter referred to as “Borrower”)

This Fifth Amended and Restated Loan Agreement (“Agreement”) is entered into March 20, 2008, by and
between Bank and Borrower.

This Agreement applies to the loan (the “Loan”) evidenced by that certain Fifth Amended and
Restated Revolving Promissory Note dated of even date herewith (as the same my be amended,
modified, restated or replaced from time to time, the “Note”) and all Loan Documents. The terms
“Loan Documents” and “Obligations,” as used in this Agreement, are defined in the Note.

Relying upon the covenants, agreements, representations and warranties contained in this Agreement,
Bank is willing to extend credit to Borrower upon the terms and subject to the conditions set forth
herein, and Bank and Borrower agree as follows:

LINE OF CREDIT. The purpose of the Loan is to provide for the general corporate purposes of
Borrower. To the extent the making of Advances (as defined in the Note) is not governed by a sweep
agreement with the Bank, Bank may require a signed written request for an Advance in form
satisfactory to Bank, in which event such request shall be delivered to Bank no later than 12:00
noon (local time in Fort Lauderdale, Florida) on the date of the requested Advance, and shall
specify the date (which shall be a Business Day) and the amount of the proposed Advance and provide
such other information as Bank may require. Bank’s acceptance of such a request shall be indicated
by its making the Advance requested. Such an Advance shall be made available to Borrower in
immediately available funds at Bank’s address as set forth on the front of this document. In no
event shall Bank be obligated to make any Advances under the Loan after April 30, 2009 (as same may
be renewed or extended by Bank in writing, the “Termination Date”).

Bank shall have no obligation to make an Advance under this Section if a Default has occurred or if
any event or condition exists, which but for the giving of notice or the passage of time, or both,
would constitute a Default under any Loan Document.

REPRESENTATIONS. Borrower represents that from the date of this Agreement and until final
payment in full of the Obligations: Accurate Information. All information now and hereafter
furnished to Bank is and will be true, correct and complete in all material respects. Any such
information relating to Borrower’s financial condition will accurately reflect Borrower’s financial
condition as of the date(s) thereof, (including all contingent liabilities of every type), and
Borrower further represents that its financial condition has not changed materially or adversely
since the date(s) of such documents. Authorization; Non-Contravention. The execution, delivery
and performance by Borrower and any guarantor, as applicable, of this Agreement and other Loan
Documents to which it is a party are within its power, have been duly authorized as may be required
and, if necessary, by making appropriate filings with any governmental agency or unit and are the
legal, binding, valid and enforceable obligations of Borrower and any guarantors; and do not (i)
contravene, or constitute (with or without the giving of notice or lapse of time or both) a
violation of any provision of applicable law, a violation of the organizational documents of
Borrower or any guarantor, or a default under any agreement, judgment, injunction, order, decree or
other instrument binding upon or affecting Borrower or any guarantor, (ii) result in the creation
or imposition of any lien (other than the lien(s) created by the Loan Documents) on any of
Borrower’s or any guarantor’s assets, or (iii) give cause for the acceleration of any obligations
of Borrower or any guarantor to any other creditor. Asset Ownership. Borrower has good and
marketable title to all of the properties and assets reflected on the balance sheets and financial
statements supplied Bank by Borrower, and all such properties and assets are free and clear of
mortgages, security deeds, pledges, liens, charges, and all other encumbrances, except Permitted
Liens and except as otherwise disclosed to Bank by Borrower in writing and approved by Bank.
“Permitted Liens” means (a) liens for taxes and other statutory liens, landlord’s liens and similar
liens arising out of operation of law so long as the obligations secured thereby are not past due
or are being contested and the proceedings contesting such obligations have the effect of
preventing the forfeiture or sale of the property subject to such lien, and (b) liens described on
Exhibit A hereto, provided, however, that no debt not now secured by such liens shall become
secured by such liens hereafter and such liens shall not encumber any other assets. To Borrower’s
knowledge, no default has occurred under any Permitted Liens and no claims or interests adverse to
Borrower’s present rights in its properties and assets have arisen. Discharge of Liens and Taxes.
Borrower has duly filed, paid and/or discharged all taxes or other claims that may become a lien on
any of its property or assets, except to the extent that such items are being appropriately
contested in good faith and an adequate reserve for the payment thereof is being maintained.
Sufficiency of Capital. Borrower is not, and after consummation of this Agreement and after giving
effect to all indebtedness incurred and liens created by Borrower in connection with the Note and
any other Loan Documents, will not be, insolvent within the meaning of 11 U.S.C. § 101, as in
effect from time to time. Compliance with Laws. Borrower and any subsidiary and affiliate of
Borrower and any guarantor are in compliance in all material respects with all federal, state and
local laws, rules and regulations applicable to its properties, operations, business, and finances,
including, without limitation, any federal or state laws relating to liquor (including 18 U.S.C. §
3617, et seq.) or narcotics (including 21 U.S.C. § 801, et seq.) and/or any commercial crimes; all
applicable federal, state and local laws and regulations intended to protect the environment; and
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), if applicable. None of
Borrower, or any subsidiary or affiliate of Borrower or any guarantor is a Sanctioned Person or has
any of its assets in a Sanctioned Country or does business in or with, or derives any of its
operating income from investments in or transactions with, Sanctioned Persons or Sanctioned
Countries in violation of economic sanctions administered by OFAC. The proceeds from the Loan will
not be used to fund any operations in, finance any investments or activities in, or make any
payments to, a Sanctioned Person or a Sanctioned Country. “OFAC” means the U.S. Department of the
Treasury’s Office of Foreign Assets Control. “Sanctioned Country” means a country subject to a
sanctions program identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/enforcement/ofac/sanctions/, or as otherwise published from time to
time. “Sanctioned Person” means (i) a person named on the list of Specially Designated Nationals
or Blocked Persons maintained by OFAC available at
http://www.treas.gov/offices/enforcement/ofac/sdn/, or as otherwise published from time to time, or
(ii) (A) an agency of the government of a Sanctioned Country, (B) an organization controlled by a
Sanctioned Country, or (C) a person resident in a Sanctioned Country to the extent subject to a
sanctions program administered by OFAC. Organization and Authority. Borrower is a corporation,
duly created, validly existing and in good standing under the laws of the State of Delaware, and
has all powers, governmental licenses, authorizations, consents and approvals required to operate
its business as now conducted. Borrower is duly qualified, licensed and in good standing in each
jurisdiction where qualification or licensing is required by the nature of its business or the
character and location of its property, business or customers, and in which the failure to so
qualify or be licensed, as the case may be, in the aggregate, could have a material adverse effect
on the business, financial position, results of operations, properties or prospects of Borrower. 
No Litigation. There are no pending suits, claims or demands against Borrower or any guarantor
that have not been disclosed to Bank by Borrower in writing, and approved by Bank. To the best of
Borrower’s knowledge, there are no threatened suits, claims or demands against Borrower or any
guarantor that have not been disclosed to Bank by Borrower in writing, and approved by Bank.  
ERISA. Each employee pension benefit plan, as defined in ERISA, maintained by Borrower meets, as
of the date hereof, the minimum funding standards of ERISA and all applicable regulations thereto
and requirements thereof, and of the Internal Revenue Code of 1986, as amended. No “Prohibited
Transaction” or “Reportable Event” (as both terms are defined by ERISA) has occurred with respect
to any such plan. Indemnity. Borrower will indemnify Bank and its affiliates from and against any
losses, liabilities, claims, damages, penalties or fines imposed upon, asserted or assessed against
or incurred by Bank arising out of the inaccuracy or breach of any of the representations contained
in this Agreement or any other Loan Documents.

AFFIRMATIVE COVENANTS.  Borrower agrees that from the date hereof and until final payment in full
of the Obligations, unless Bank shall otherwise consent in writing, Borrower will:  Access to Books
and Records. Allow Bank, or its agents, during normal business hours, access to the books, records
and such other documents of Borrower as Bank shall reasonably require, and allow Bank, at
Borrower’s expense, to inspect, audit and examine the same and to make extracts therefrom and to
make copies thereof. Business Continuity. Conduct its business in substantially the same manner
and locations as such business is now and has previously been conducted. Certificate of Full
Compliance From Accountant. Deliver to Bank, with the annual financial statements required herein,
a certification by Borrower’s independent certified public accountant that Borrower is in full
compliance with the Loan Documents. Compliance with Other Agreements. Comply with all terms and
conditions contained in this Agreement, and any other Loan Documents, and swap agreements, if
applicable, as defined in the 11 U.S.C. § 101, as in effect from time to time. Estoppel
Certificate. Furnish, within 15 days after request by Bank, a written statement duly acknowledged
of the amount due under the Loan and whether offsets or defenses exist against the Obligations.
Insurance. Maintain adequate insurance coverage with respect to its properties and business
against loss or damage of the kinds and in the amounts customarily insured against by companies of
established reputation engaged in the same or similar businesses including, without limitation,
commercial general liability insurance, workers compensation insurance, and business interruption
insurance; all acquired in such amounts and from such companies as Bank may reasonably require.
Maintain Properties. Maintain, preserve and keep its property in good repair, working order and
condition, making all replacements, additions and improvements thereto necessary for the proper
conduct of its business, unless prohibited by the Loan Documents. Non-Default Certificate From
Borrower. Deliver to Bank, with the Financial Statements required below, a certificate signed by
Borrower, by a principal financial officer of Borrower warranting that no “Default” as specified in
the Loan Documents nor any event which, upon the giving of notice or lapse of time or both, would
constitute such a Default, has occurred and demonstrating Borrower’s compliance with the financial
covenants contained herein. Notice of Default and Other Notices. (a) Notice of Default. Furnish
to Bank immediately upon becoming aware of the existence of any condition or event which
constitutes a Default (as defined in the Loan Documents) or any event which, upon the giving of
notice or lapse of time or both, may become a Default, written notice specifying the nature and
period of existence thereof and the action which Borrower is taking or proposes to take with
respect thereto. (b) Other Notices. Promptly notify Bank in writing of (i) any material adverse
change in its financial condition or its business; (ii) any default under any material agreement,
contract or other instrument to which it is a party or by which any of its properties are bound, or
any acceleration of the maturity of any indebtedness owing by Borrower; (iii) any material adverse
claim against or affecting Borrower or any part of its properties; (iv) the commencement of, and
any material determination in, any material litigation with any third party or any material
proceeding before any governmental agency or unit affecting Borrower; and (v) at least 30 days
prior thereto, any change in Borrower’s name or address as shown above, and/or any change in
Borrower’s structure. Other Financial Information. Deliver promptly such other information
regarding the operation, business affairs, and financial condition of Borrower which Bank may
reasonably request. Payment of Debts. Pay and discharge when due, and before subject to penalty
or further charge, and otherwise satisfy before maturity or delinquency, all obligations, debts,
taxes, and liabilities of whatever nature or amount, except those which Borrower in good faith
disputes. Reports and Proxies. Deliver to Bank, promptly, a copy of all financial statements,
reports, notices, and proxy statements, sent by Borrower to stockholders, and all regular or
periodic reports required to be filed by Borrower with any governmental agency or authority.

NEGATIVE COVENANTS.  Borrower agrees that from the date hereof and until final payment in full of
the Obligations, unless Bank shall otherwise consent in writing, Borrower will not:   Change in
Fiscal Year. Change its fiscal year. Change of Ownership. Issue, sell or otherwise dispose of
any of its equity interests or other securities, or rights, warrants or options to purchase or
acquire any such equity interests or securities that effectively changes control of Borrower or
otherwise participate in any change in the ownership of its equity interests that effectively
changes control of Borrower, without the prior written consent of Bank. Encumbrances. Create,
assume, or permit to exist any mortgage, security deed, deed of trust, pledge, lien, charge or
other encumbrance on any of its assets, whether now owned or hereafter acquired, other than
Permitted Liens. Guarantees. Guarantee or otherwise become responsible for obligations of any
other person or persons, other than the endorsement of checks and drafts for collection in the
ordinary course of business.  Cross Default. Default in payment or performance of any obligation
under any other loans, contracts or agreements of Borrower, any Subsidiary or Affiliate of Borrower
(“Affiliate” shall have the meaning as defined in 11 U.S.C. § 101, as in effect from time to time,
except that the term “Borrower” shall be substituted for the term “Debtor” therein; “Subsidiary”
shall mean any corporation of which more than 50% of the issued and outstanding voting stock is
owned directly or indirectly by Borrower), any general partner of or the holder(s) of the majority
ownership interests of Borrower with Bank or its affiliates. Default on Other Contracts or
Obligations. Default on any material contract with or obligation when due to a third party or
default in the performance of any obligation to a third party incurred for money borrowed.
Government Intervention. Permit the assertion or making of any seizure, vesting or intervention by
or under authority of any governmental entity, as a result of which the management of Borrower or
any guarantor is displaced of its authority in the conduct of its respective business or such
business is curtailed or materially impaired. Judgment Entered. Permit the entry of any monetary
judgment or the assessment against, the filing of any tax lien against, or the issuance of any writ
of garnishment or attachment against any property of or debts due. Prepayment of Other Debt.
Retire any long-term debt entered into prior to the date of this Agreement at a date in advance of
its legal obligation to do so.  Retire or Repurchase Capital Stock. Retire or otherwise acquire
any of its capital stock, other than pursuant to employee compensation plans; provided that
Borrower may spend up to $5,500,000 in any calendar year to repurchase its own common stock.

ANNUAL FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 90 days after the close of
each fiscal year, audited financial statements reflecting its operations during such fiscal year,
including, without limitation, a balance sheet, profit and loss statement and statement of cash
flows, with supporting schedules and in reasonable detail, prepared in conformity with generally
accepted accounting principles, applied on a basis consistent with that of the preceding year. All
such statements shall be examined by an independent certified public accountant acceptable to Bank.
The opinion of such independent certified public accountant shall not be acceptable to Bank if
qualified due to any limitations in scope imposed by Borrower or any other person or entity. Any
other qualification of the opinion by the accountant shall render the acceptability of the
financial statements subject to Bank’s approval.

PERIODIC FINANCIAL STATEMENTS. Borrower shall deliver to Bank, within 45 days after the close of
each of the first three fiscal quarters in each fiscal year, quarterly financial statements
reflecting its operations during such fiscal quarter, including, without limitation, a balance
sheet, profit and loss statement and statement of cash flows, with supporting schedules; all on a
consolidated basis with respect to Borrower and its subsidiaries and holding company, as
applicable, and in reasonable detail, prepared in conformity with generally accepted accounting
principles (excluding footnotes and subject to year-end adjustments), applied on a basis consistent
with that of the preceding year (except as otherwise noted).

FINANCIAL COVENANTS.  Borrower agrees to the following provisions from the date hereof until final
payment in full of the Obligations, unless Bank shall otherwise consent in writing, using the
financial information for Borrower, its subsidiaries, affiliates and its holding or parent company,
as applicable: Total Liabilities to Tangible Net Worth Ratio.  Borrower shall, at all times,
maintain a ratio of Total Liabilities to Tangible Net Worth of not more than 1.00 to 1.00. This
covenant shall be tested annually. “Total Liabilities” shall mean all liabilities of Borrower,
including capitalized leases and all reserves for deferred taxes, debt fully subordinated to Bank
on terms and conditions acceptable to Bank, and other deferred sums appearing on the liabilities
side of a balance sheet and all obligations as lessee under off-balance sheet synthetic leases of
Borrower, all in accordance with generally accepted accounting principles applied on a consistent
basis. “Tangible Net Worth” shall mean Total Assets minus Total Liabilities. For purposes of this
computation, the aggregate amount of any intangible assets of Borrower including, without
limitation, goodwill, franchises, licenses, patents, trademarks, trade names, copyrights, service
marks, and brand names, shall be subtracted from total assets. “Total Assets” shall mean all assets
appearing on the Borrower’s balance sheet, less the aggregate amount of any intangible assets of
Borrower including, without limitation, goodwill, franchises, licenses, patents, trademarks, trade
names, copyrights, service marks, and brand names. Deposit Relationship.  Borrower shall maintain
its primary depository account and cash management account with Bank.  

UNUSED FEE. Commencing on April 15, 2008, and continuing on each July 15, October 15, and January
15 thereafter, Borrower shall pay to Bank a fee for each day the Loan is outstanding equal to the
product of (i) the Unused Fee Determinant pursuant to the Funded Debt to EBITDA Ratio as set forth
below, multiplied by (ii) the difference between (A) the amount available under the Note and (B)
the aggregate amount of all Advances outstanding under the Note on such day, payable quarterly in
arrears.

	 	 	 
	Funded Debt/EBITDA

	 	Unused Fee Determinant
	 

	 	 
	(as of the end of the most

recently completed fiscal quarter)

	 	

	greater than 2.25 to 1.00

	 	27.5 basis points
	greater than 1.50 to 1.00 but

less than or equal to 2.25 to 1.00

	 	

25 basis points
	greater than 0.75 to 1.00 but

less than or equal to 1.50 to 1.00

	 	

20 basis points
	less than or equal to 0.75 to 1.00

	 	17.5 basis points

The Unused Fee for each quarter shall be calculated on a quarterly basis, at the time Bank receives
the previous quarter’s financial statements from Borrower and shall be calculated, based on such
quarterly financial statements, for the succeeding quarter.

FIFTH AMENDED AND RESTATED LOAN AGREEMENT. This Agreement amends and restates in its entirety that
certain Fourth Amended and Restated Loan Agreement dated as of December 18, 2006 (the “Original
Loan Agreement”) by and between Borrower and Bank. Should there be any conflict between the terms
of the Original Loan Agreement and this Agreement, the terms of this Agreement shall control.

CONDITIONS PRECEDENT. The obligations of Bank to make the loan and any advances pursuant to this
Agreement are subject to the following conditions precedent:  Additional Documents. Receipt by
Bank of such additional supporting documents as Bank or its counsel may reasonably request.

IN WITNESS WHEREOF, Borrower and Bank, on the day and year first written above, have caused this
Agreement to be executed under seal.

HOME DIAGNOSTICS, INC., a Delaware corporation

By:      

Gregg Johnson, Vice President

WACHOVIA BANK, NATIONAL ASSOCIATION

By:     

Name:      

Title:      

1

EXHIBIT A

PERMITTED LIENS

The following shall be additional Permitted Liens:

1. Deposits made in the ordinary course of business in connection with workers’ compensation,
unemployment insurance, social security and similar laws.

2. Attachment, judgment and other similar non-tax liens arising in connection with court
proceedings but only if and for so long as (a) the execution or enforcement of such liens is and
continues to be effectively stayed and bonded on appeal, (b) the validity and/or amount of the
claims secured thereby are being actively contested in good faith by appropriate legal proceedings
and (c) such liens do not, in the aggregate, materially detract from the value of the assets of the
person whose assets are subject to such lien or materially impair the use thereof in the operation
of such person’s business.

3. Liens securing debt incurred solely for the purpose of financing the acquisition of equipment,
provided that such lien does not secure more than the purchase price of such equipment and does not
encumber property other than the purchased property.

4. Purchase money security interests and capitalized leases on fixed asset purchases (not to exceed
$250,000.00 in the aggregate).

5. Liens imposed for taxes, assessments or charges of any governmental authority for nonpayment of
taxes, assessments or charges being actively contested in accordance with law (provided that Bank
may require reasonable bonding or other assurances, such as reserving.)

6. Statutory liens of landlords and of carriers, warehousemen, mechanics and materialmen.

	7.	 	The following other supplier and bank agreements are secured by specific liens on the assets
identified:

International Commercial Bank of China (ASC’s Line of Credit secured by time deposit in the
amount of approximately $22,000.00 subject to foreign currency valuation)

CPI Technologies (Supplier Agreement/Machine on HDI’s premises but title and risk of loss is
held by CPI) – Cartoning Machine

US Postage Meter (Rental Agreement) – Postage Meter

2

FIFTH AMENDED AND RESTATED

REVOLVING PROMISSORY NOTE

[DEMAND]

[INCREASE]

$10,000,000.00 March 20, 2008

Home Diagnostics, Inc., a Delaware corporation

2400 NW 55th Court

Fort Lauderdale, Florida 33301

(Hereinafter referred to as “Borrower”)

Wachovia Bank, National Association

225 Water Street

Jacksonville, Florida 32202

(Hereinafter referred to as “Bank”)

Borrower promises to pay to the order of Bank, in lawful money of the United States of America, at
its office indicated above or wherever else Bank may specify, the sum of Ten Million and No/100
Dollars ($10,000,000.00) or such sum as may be advanced and outstanding from time to time, with
interest on the unpaid principal balance at the rate and on the terms provided in this Fifth
Amended and Restated Revolving Promissory Note (including all renewals, extensions or modifications
hereof, this “Note”).

LOAN AGREEMENT. This Note is subject to the provisions of that certain Fifth Amended and Restated
Loan Agreement between Bank and Borrower dated of even date herewith (as the same shall be amended
or modified from time to time, the “Loan Agreement”).

LINE OF CREDIT. Borrower may borrow, repay and reborrow, and, upon the request of Borrower, Bank
shall advance and readvance under this Note from time to time until the maturity hereof (each an
“Advance” and together the “Advances”), so long as the total principal balance outstanding under
this Note at any one time does not exceed the principal amount stated on the face of this Note,
subject to the limitations described in any loan agreement to which this Note is subject. Bank’s
obligation to make Advances under this Note shall terminate (i) if a Default (as defined in the
other Loan Documents) under any Loan Document occurs, (ii) on Bank’s demand or (iii) in any event,
on April 30, 2009, unless extended or renewed by Bank in writing. As of the date of each proposed
Advance, Borrower shall be deemed to represent that each representation made in the Loan Documents
is true as of such date.

USE OF PROCEEDS. Borrower shall use the proceeds of the loan evidenced by this Note for general
corporate purposes.

INTEREST RATE. Interest shall accrue on the unpaid principal balance of this Note from the date
hereof at the LIBOR Market Index Rate as that rate may change from day to day in accordance with
changes in the LIBOR Market Index Rate plus the Applicable Margin (as set forth below), as that
rate may change from day to day in accordance with changes in the LIBOR Market Index Rate (the
“Interest Rate”). “LIBOR Market Index Rate”, for any day, means the rate for 1 month U.S. dollar
deposits as reported on Telerate page 3750 as of 11:00 a.m., London time, on such day, or if such
day is not a London business day, then the immediately preceding London business day (or if not so
reported, then as determined by Bank from another recognized source or interbank quotation).

For this Note, the “Applicable Margin” will be implemented and computed quarterly based on the
Funded Debt to EBITDA Ratio of the Borrower. The initial Interest Rate shall be based on the LIBOR
Market Index Rate plus an Applicable Margin of 50 basis points. Commencing on April 15, 2008, the
Interest Rate shall be adjusted quarterly upon receipt of Borrower’s periodic financial statements,
based on the ratio of Funded Debt to EBITDA (“Funded Debt/EBITDA”) as follows:

	 	 	 
	Funded Debt/EBITDA

	 	Applicable Margin
	 

	 	 
	greater than 2.25 to 1.00

	 	162.5 basis points
	greater than 1.50 to 1.00 but

less than or equal to 2.25 to 1.00

	 	125 basis points

	greater than 0.75 to 1.00 but

less than or equal to 1.50 to 1.00

	 	87.5 basis points

	less than or equal to 0.75 to 1.00

	 	50 basis points

For purposes hereof, “Funded Debt to EBITDA” shall mean the sum of all Funded Debt as of the end of
the most recent fiscal quarter divided by the sum of earnings before interest, taxes, depreciation
and amortization for the 12-month period ended as of the end of the most recent fiscal quarter.
“Funded Debt” shall mean, as applied to any person or entity, the sum of all indebtedness for
borrowed money, (including, without limitation, capital lease obligations and unreimbursed drawings
under letters of credit), or any other monetary obligation evidenced by a note, bond, debenture or
other agreement or similar instrument of that person or entity, excluding any debt subordinated to
Bank. “EBITDA” shall mean earnings before interest expense, income taxes, and depreciation and
amortization, except that for this purpose earnings shall not include the affect of any non-cash
stock-based compensation expense.

DEFAULT RATE. In addition to all other rights contained in this Note, if a default in the payment
of Obligations occurs, all outstanding Obligations, other than Obligations under any swap
agreements (as defined in 11 U.S.C. § 101) between Borrower and Bank or its affiliates, shall bear
interest at the Interest Rate plus 3% (“Default Rate”). The Default Rate shall also apply from
acceleration until the Obligations or any judgment thereon is paid in full.

INTEREST AND FEE(S) COMPUTATION (ACTUAL/360). Interest and fees, if any, shall be computed on the
basis of a 360-day year for the actual number of days in the applicable period (“Actual/360
Computation”). The Actual/360 Computation determines the annual effective interest yield by taking
the stated (nominal) rate for a year’s period and then dividing said rate by 360 to determine the
daily periodic rate to be applied for each day in the applicable period. Application of the
Actual/360 Computation produces an annualized effective rate exceeding the nominal rate.

PREPAYMENT ALLOWED. This Note may be prepaid in whole or in part at any time. Any prepayment
shall include accrued interest and all other sums then due under any of the Loan Documents (as
defined below). No partial prepayment shall affect Borrower’s obligation to make any payment of
principal or interest due under this Note on the date specified below in the Repayment Terms
paragraph of this Note until this Note has been paid in full.

REPAYMENT TERMS. This Note shall be due and payable in consecutive monthly payments of accrued
interest only, commencing on April 15, 2008, and continuing on the 15th day of each month
thereafter until fully paid. In any event, this Note shall be due and payable in full, including
all principal and accrued interest, on the earlier of (i) the Bank’s demand, or (ii) April 30,
2009, unless renewed or extended by Bank in writing on terms satisfactory to Bank in its sole
discretion.

DEMAND NOTE. This is a demand Note and all Obligations hereunder shall become immediately due and
payable upon demand. In addition, the Obligations hereunder shall automatically become immediately
due and payable if Borrower or any guarantor or endorser of this Note commences or has commenced
against it a bankruptcy or insolvency proceeding.

APPLICATION OF PAYMENTS. Monies received by Bank from any source for application toward payment of
the Obligations shall be applied to accrued interest and then to principal. Upon the occurrence of
a default in the payment of the Obligations or a Default (as defined in the other Loan Documents)
under any other Loan Document, monies may be applied to the Obligations in any manner or order
deemed appropriate by Bank.

If any payment received by Bank under this Note or other Loan Documents is rescinded, avoided or
for any reason returned by Bank because of any adverse claim or threatened action, the returned
payment shall remain payable as an obligation of all persons liable under this Note or other Loan
Documents as though such payment had not been made.

DEFINITIONS. Loan Documents. The term “Loan Documents”, as used in this Note and the other Loan
Documents, refers to all documents executed in connection with or related to the loan evidenced by
this Note and any prior notes which evidence all or any portion of the loan evidenced by this Note,
and any letters of credit issued pursuant to any loan agreement to which this Note is subject, any
applications for such letters of credit and any other documents executed in connection therewith or
related thereto, and may include, without limitation, the Loan Agreement, this Note, security
agreements, security instruments, financing statements, any renewals or modifications, whenever any
of the foregoing are executed, but does not include swap agreements (as defined in 11 U.S.C. §
101). Obligations. The term “Obligations”, as used in this Note and the other Loan Documents,
refers to any and all indebtedness and other obligations under this Note, all other obligations
under any other Loan Document(s), and all obligations under any swap agreements (as defined in 11
U.S.C. § 101) between Borrower and Bank, or its affiliates, whenever executed. Certain Other
Terms. All terms that are used but not otherwise defined in any of the Loan Documents shall have
the definitions provided in the Uniform Commercial Code.

LATE CHARGE. If any payments are not timely made, Borrower shall also pay to Bank a late charge
equal to 5% of each payment past due for 10 or more days.

Acceptance by Bank of any late payment without an accompanying late charge shall not be deemed a
waiver of Bank’s right to collect such late charge or to collect a late charge for any subsequent
late payment received.

ATTORNEYS’ FEES AND OTHER COLLECTION COSTS. Borrower shall pay all of Bank’s reasonable expenses
incurred to enforce or collect any of the Obligations including, without limitation, reasonable
arbitration, paralegals’, attorneys’ and experts’ fees and expenses, whether incurred without the
commencement of a suit, in any trial, arbitration, or administrative proceeding, or in any
appellate or bankruptcy proceeding.

USURY. If at any time the effective interest rate under this Note would, but for this paragraph,
exceed the maximum lawful rate, the effective interest rate under this Note shall be the maximum
lawful rate, and any amount received by Bank in excess of such rate shall be applied to principal
and then to fees and expenses, or, if no such amounts are owing, returned to Borrower.

GRACE PERIOD/CURE PERIOD. Grace Period. The failure of timely payment of the Obligations shall
not be a Default until 5 days after such payment is due. Cure Period. Except as provided below,
any Default, other than non-payment, may be cured within 10 days after written notice thereof is
mailed to Borrower by Bank. Borrower’s right to cure shall be applicable only to curable defaults
and shall not apply, without limitation, to Defaults based upon False Warranty or Cessation;
Bankruptcy. Bank shall not exercise its remedies to collect the Obligations except as Bank
reasonably deems necessary to protect its interest in collateral securing the Obligations during a
cure period.

DEFAULT. If any of the following occurs, a default (“Default”) under this Note shall exist:
Nonpayment; Nonperformance. The failure of timely payment or performance of the Obligations or
Default under this Note or any other Loan Documents. False Warranty. A warranty or representation
made or deemed made in the Loan Documents or furnished Bank in connection with the loan evidenced
by this Note proves materially false, or if of a continuing nature, becomes materially false.
Cross Default. Any default in payment or performance of any obligation under any other loans,
contracts or agreements of Borrower, any Subsidiary or Affiliate of Borrower, with Bank or its
affiliates (“Affiliate” shall have the meaning as defined in 11 U.S.C. § 101, except that the term
“Borrower” shall be substituted for the term “Debtor” therein; “Subsidiary” shall mean any business
in which Borrower holds, directly or indirectly, a controlling interest). Cessation; Bankruptcy.
The dissolution of, termination of existence of, loss of good standing status by, appointment of a
receiver for, assignment for the benefit of creditors of, or commencement of any bankruptcy or
insolvency proceeding by or against Borrower, its Subsidiaries or Affiliates, if any, or any party
to the Loan Documents. Material Capital Structure or Business Alteration. Without prior written
consent of Bank, (i) a material alteration in the kind or type of Borrower’s business or that of
Borrower’s Subsidiaries or Affiliates, if any; (ii) the sale of substantially all of the business
or assets of Borrower, any of Borrower’s Subsidiaries or Affiliates or any guarantor, or a material
portion (10% or more) of such business or assets if such a sale is outside the ordinary course of
business of Borrower, or any of Borrower’s Subsidiaries or Affiliates or any guarantor, or more
than 50% of the outstanding stock or voting power of or in any such entity in a single transaction
or a series of transactions; (iii) the acquisition of substantially all of the business or assets
or more than 50% of the outstanding stock or voting power of any other entity (individually and
collectively, an “Acquisition”); provided, however, that so long as Borrower is not in Default,
Borrower may undertake an Acquisition without the prior written consent of Bank so long as such
Acquisition does not create a Default hereunder on a pro-forma basis after giving effect to such
Acquisition; or (iv) should any Borrower or any of Borrower’s Subsidiaries or Affiliates or any
guarantor merge or consolidate, unless the Borrower is the survivor of such merger or consolidation
or the parent of the survivor. Material Adverse Change. Bank determines in good faith, in its
sole discretion, there shall have occurred any event, condition or circumstance or sets of events,
conditions or circumstances or any change(s) occurs which is material and adverse to (A) the value
of the Collateral, (B) the EBITDA projected over an extended period of time of Borrower and its
Subsidiaries, taken as a whole, (C) the liabilities of Borrower and its Subsidiaries, taken as a
whole, or (D) the validity or enforceability of the Loan Documents.

REMEDIES UPON DEFAULT. If a Default occurs under this Note or any Loan Documents, Bank may at any
time thereafter, take the following actions:  Bank Lien. Foreclose its security interest or lien
against Borrower’s accounts without notice. Acceleration Upon Default. Accelerate the maturity of
this Note and, at Bank’s option, any or all other Obligations, other than Obligations under any
swap agreements (as defined in 11 U.S.C. § 101) between Borrower and Bank, or its affiliates, which
shall be governed by the default and termination provisions of said swap agreements; whereupon this
Note and the accelerated Obligations shall be immediately due and payable; provided, however, if
the Default is based upon a bankruptcy or insolvency proceeding commenced by or against Borrower or
any guarantor or endorser of this Note, all Obligations (other than Obligations under any swap
agreement as referenced above) shall automatically and immediately be due and payable. Cumulative.
Exercise any rights and remedies as provided under the Note and other Loan Documents, or as
provided by law or equity.

FINANCIAL AND OTHER INFORMATION. Borrower shall deliver to Bank such information as required by
the Loan Agreement. Such information shall be true, complete, and accurate.

WAIVERS AND AMENDMENTS. No waivers, amendments or modifications of this Note and other Loan
Documents shall be valid unless in writing and signed by an officer of Bank. No waiver by Bank of
any Default (as defined in the other Loan Documents) shall operate as a waiver of any other Default
or the same Default on a future occasion. Neither the failure nor any delay on the part of Bank in
exercising any right, power, or remedy under this Note and other Loan Documents shall operate as a
waiver thereof, nor shall a single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or remedy.

Each Borrower or any person liable under this Note waives presentment, protest, notice of dishonor,
notice of intention to accelerate maturity, notice of acceleration of maturity, notice of sale and
all other notices of any kind. Further, each agrees that Bank may extend, modify or renew this
Note or make a novation of the loan evidenced by this Note for any period, and grant any releases,
compromises or indulgences with respect to any collateral securing this Note, or with respect to
any other Borrower or any other person liable under this Note or other Loan Documents, all without
notice to or consent of each Borrower or each person who may be liable under this Note or any other
Loan Document and without affecting the liability of Borrower or any person who may be liable under
this Note or any other Loan Document.

MISCELLANEOUS PROVISIONS. Assignment. This Note and the other Loan Documents shall inure to the
benefit of and be binding upon the parties and their respective heirs, legal representatives,
successors and assigns. Bank’s interests in and rights under this Note and the other Loan
Documents are freely assignable, in whole or in part, by Bank. In addition, nothing in this Note
or any of the other Loan Documents shall prohibit Bank from pledging or assigning this Note or any
of the other Loan Documents or any interest therein to any Federal Reserve Bank. Borrower shall
not assign its rights and interest hereunder without the prior written consent of Bank, and any
attempt by Borrower to assign without Bank’s prior written consent is null and void. Any
assignment shall not release Borrower from the Obligations. Applicable Law; Conflict Between
Documents. This Note and, unless otherwise provided in any other Loan Document, the other Loan
Documents shall be governed by and construed under the laws of the state named in Bank’s address on
the first page hereof without regard to that state’s conflict of laws principles. If the terms of
this Note should conflict with the terms of any loan agreement or any commitment letter that
survives closing, the terms of this Note shall control. Borrower’s Accounts. Except as prohibited
by law, Borrower grants Bank a security interest in all of Borrower’s accounts with Bank and any of
its affiliates. Jurisdiction. Borrower irrevocably agrees to non-exclusive personal jurisdiction
in the state named in Bank’s address on the first page hereof. Severability. If any provision of
this Note or of the other Loan Documents shall be prohibited or invalid under applicable law, such
provision shall be ineffective but only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this Note or other such
document. Notices. Any notices to Borrower shall be sufficiently given, if in writing and mailed
or delivered to the Borrower’s address shown above or such other address as provided hereunder, and
to Bank, if in writing and mailed or delivered to Wachovia Bank, National Association, Mail Code
VA7391, P. O. Box 13327, Roanoke, VA 24040 or Wachovia Bank, National Association, Mail Code
VA7391, 10 South Jefferson Street, Roanoke, VA 24011 or such other address as Bank may specify in
writing from time to time. Notices to Bank must include the mail code. In the event that Borrower
changes Borrower’s address at any time prior to the date the Obligations are paid in full, Borrower
agrees to promptly give written notice of said change of address by registered or certified mail,
return receipt requested, all charges prepaid. Plural; Captions. All references in the Loan
Documents to Borrower, guarantor, person, document or other nouns of reference mean both the
singular and plural form, as the case may be, and the term “person” shall mean any individual,
person or entity. The captions contained in the Loan Documents are inserted for convenience only
and shall not affect the meaning or interpretation of the Loan Documents. Advances. Bank may, in
its sole discretion, make other advances which shall be deemed to be advances under this Note, even
though the stated principal amount of this Note may be exceeded as a result thereof. Posting of
Payments. All payments received during normal banking hours after 2:00 p.m. local time at the
office of Bank first shown above shall be deemed received at the opening of the next banking day.
Joint and Several Obligations. Each person who signs this Note as a Borrower (as defined herein)
is jointly and severally obligated. Fees and Taxes. Borrower shall promptly pay all documentary,
intangible recordation and/or similar taxes on this transaction whether assessed at closing or
arising from time to time. LIMITATION ON LIABILITY; WAIVER OF PUNITIVE DAMAGES. EACH OF THE
PARTIES HERETO, INCLUDING BANK BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR
ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM THAT MAY ARISE OUT OF OR
BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT
BETWEEN OR AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY
PARTY HAVE A REMEDY OF, OR BE LIABLE TO THE OTHER FOR, (1) INDIRECT, SPECIAL OR CONSEQUENTIAL
DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY
RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN THE FUTURE IN
CONNECTION WITH ANY SUCH PROCEEDING, CLAIM OR CONTROVERSY, WHETHER THE SAME IS RESOLVED BY
ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE. Patriot Act Notice. To help fight the funding of
terrorism and money laundering activities, Federal law requires all financial institutions to
obtain, verify, and record information that identifies each person who opens an account. For
purposes of this section, account shall be understood to include loan accounts.

FIFTH AMENDED AND RESTATED REVOLVING PROMISSORY NOTE. This Fifth Amended and Restated Revolving
Promissory Note amends, replaces, increases and supersedes in its entirety that certain Fourth
Amended and Restated Revolving Promissory dated as of December 18, 2006 in the original principal
amount of $7,000,000.00, executed by Borrower and made payable to the order of Bank (the “Original
Note”). The current outstanding principal balance of the Original Note is $0.00. It is the
intention of Borrower and the Bank that while this Note amends, replaces, renews and supersedes the
Original Note in its entirety, it is not in payment of or satisfaction of the Original Note, but is
rather the substitute of one evidence of debt for another without any intent to extinguish the old.
Should there be any conflict between any of the terms of the Original Note or this Note, the terms
of this Note shall control. The Original Note is attached hereto and shall only be negotiated with
this Note.

WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF BORROWER BY EXECUTION
HEREOF AND BANK BY ACCEPTANCE HEREOF, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT
EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR
IN CONNECTION WITH THIS NOTE, THE LOAN DOCUMENTS OR ANY AGREEMENT CONTEMPLATED TO BE EXECUTED IN
CONNECTION WITH THIS NOTE, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL
OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT
TO BANK TO ACCEPT THIS NOTE. EACH OF THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND
REPLACE ANY PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY
LOAN DOCUMENT OR ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION WITH, RELATED TO
OR BEING REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS NOTE.

IN WITNESS WHEREOF, Borrower, on the day and year first above written, has caused this Note to be
executed under seal.

HOME DIAGNOSTICS, INC., a Delaware corporation

By:      (SEAL)

Gregg Johnson, Vice President

	 	 	 	 	 
	STATE OF ILLINOIS
	 	 	)	 
	 
	 	) SS.:
	COUNTY OF LAKE
	 	 	)	 

The foregoing instrument was acknowledged before me March      , 2008, by Gregg Johnson, as
Vice President of HOME DIAGNOSTICS, INC., a Delaware corporation, on behalf of the corporation. He
is personally known to me or who has/have produced a driver’s license as identification and did
(not) take an oath.

     

Name:      

Notary Public, State of Illinois

My commission expires:      

3

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