ENDURANCE SPECIALTY HOLDINGS LTD
EMPLOYMENT AGREEMENT - JAMES R. KRONER
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>8
<FILENAME>b400219ex10_5.htm
<DESCRIPTION>EMPLOYMENT AGREEMENT - JAMES R. KRONER
<TEXT>
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Prepared and filed by St Ives Burrups
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<p align="right"><font size="2" face="Times New Roman, Times, serif">Exhibit 10.5</font></p>
<p align="center"><font size="2" face="serif"><b>EMPLOYMENT AGREEMENT</b></font></p>
<div style="text-indent: 3%">
<p><font size="2" face="Times New Roman, Times, serif">This
    Employment Agreement (this &#147;Agreement&#148;)
  is entered into as of April 30, 2004 (the &#147;Effective Date&#148;) between
  Endurance Specialty Insurance Ltd., a Bermuda company (the &#147;Company&#148;),
  and James R. Kroner (the &#147;Executive&#148;).</font></p>
  <p><font size="2" face="serif"> WHEREAS, it is deemed by the Company to be in
    the best interest of the Company to assure continuation of Executive&#146;s
    employment; </font> </p>

  <p><font size="2" face="serif"> WHEREAS, the Company and the Executive have
    determined to enter into this Agreement pursuant to which the Company will
    continue to employ the Executive on the terms and conditions set forth herein;
    and </font> </p>

  <p><font size="2" face="serif"> WHEREAS, this Agreement replaces that certain
    Employment Agreement, dated as of January 16, 2003, between the Company and
    the Executive (the &#147;Agreement&#148;). </font> </p>

  <p><font size="2" face="serif"> NOW, THEREFORE, in consideration of the premises
    and the mutual agreements contained herein, the Company and the Executive
    hereby agree as follows: </font> </p>

  <p><font size="2"> <b><font face="serif">1.</font></b>&nbsp;<b><font face="sans-serif">
    </font><u><font face="serif">Defined Terms</font></u><font face="serif">.</font></b>
    </font><font size="2" face="serif">For purposes of this Agreement, the following
    terms </font><font size="2" face="serif">shall have the meanings indicated
    below: </font> </p>

  <p><font size="2" face="serif"> (a)</font><font size="2" face="serif"> &#147;Business&#148;
    shall mean any property or casualty coverages underwritten by the Company
    or any of its subsidiaries as an insurer or reinsurer during the Employment
    Period or the one-year period immediately preceding the commencement of the
    Employment Period. </font> </p>

  <p><font size="2" face="serif"> (b)</font><font size="2" face="serif"> &#147;Cause&#148;
    for termination by the Company of the Executive&#146;s employment shall mean
    (i) any intentional act of fraud, embezzlement or theft by the Executive in
    connection with his duties hereunder or in the course of his employment hereunder
    or the Executive&#146;s admission or conviction of, or plea of nolo contendere
    to, a felony or of any crime involving moral turpitude, fraud, embezzlement,
    theft or misrepresentation; (ii) any gross negligence or willful misconduct
    of the Executive resulting in a loss to the Company or any of its subsidiaries,
    or damage to the reputation of the Company or any of its subsidiaries; (iii)
    any breach by the Executive of any one or more of the covenants contained
    in Section 11, 12 or 13 hereof; or (iv) any violation of any statutory or
    common law duty of loyalty to the Company or any of its subsidiaries. </font>
  </p>

  <p><font size="2" face="serif"> (c)</font><font size="2" face="sans-serif">
    </font><font size="2" face="serif">A &#147;Change in Control&#148; shall have
    the meaning ascribed to such term in the Stock Option Plan, as such meaning
    may be amended from time to time; provided, that any amendment adverse to
    the Executive shall not be binding upon him under this Agreement without his
    written consent. Notwithstanding the foregoing, a &#147;Change in Control&#148;
    shall not be deemed to have occurred by virtue of an initial public offering
    of the ordinary shares, par value $1.00 per share, of the Company. </font>
  </p>

  <p><font size="2" face="serif"> (d)</font><font size="2" face="serif"> &#147;Disability&#148;
    shall be deemed the reason for the termination by the </font> </p>

  <p><font size="2"> <font face="serif">Company of the Executive&#146;s employment,
    if, (i) as a result of the Executive&#146;s incapacity due to physical or
    mental illness, fails to perform the essential functions of the Executive&#146;s
    position </font><font size="2" face="serif"> required of the Executive hereunder
    for a continuous period of 120 days or any 360 days during the Employment
    Period Term, and (ii) the Company shall have given the Executive a Notice
    of Termination for Disability. </font> </font></p>
</div>
<p align="center"><font size="2" face="serif"> 1 </font></p>
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<p><font size="2" face="Times New Roman, Times, serif">(e) &#147;</font><font size="2" face="serif">Employment
    Period&#148; shall mean the period (which in no event shall extend beyond
    the expiration of the Term and may end earlier pursuant to Section 3(b) hereof)
    during which Executive has an obligation to render services hereunder, as
    described in Section 4 hereof.</font></p>
  <p><font size="2" face="serif"> (f)</font><font size="2" face="sans-serif">
    </font><font size="2" face="serif">&#147;Equity Incentive Awards&#148; shall
    mean any equity incentive award granted by the Company to the Executive under
    the Stock Option Plan or any equity incentive plan of the Company operating
    as a successor thereto.</font><font size="2"> </font></p>

  <p><font size="2" face="serif"> (g)</font><font size="2" face="serif"> &#147;Good
    Reason&#148; for termination by the Executive of the Executive&#146;s employment
    shall mean a breach by the Company of any material provision of this Agreement
    which breach remains uncured for a period of 30 days following the Company&#146;s
    receipt of notice of such breach by the Executive. The Executive&#146;s right
    to terminate the Executive&#146;s employment for Good Reason shall not be
    affected by the Executive&#146;s incapacity due to physical or mental illness.
    </font> </p>

  <p><font size="2" face="serif"> (h)</font><font size="2" face="sans-serif">
    </font><font size="2" face="serif">&#147;Stock Option Plan&#148; shall mean
    the Amended and Restated 2002 Stock Option Plan of Endurance Specialty Holdings
    Ltd., as it may be amended from time to time. </font> </p>
    <p><font size="2"> <b><font face="serif">2.</font><font face="sans-serif"> </font><u><font face="serif">Employment</font></u><font face="serif">. </font></b><font face="serif">The
          Company hereby agrees to employ the Executive and the Executive hereby
          agrees to be employed by the Company upon the terms and subject to
          the conditions contained in this Agreement.</font> </font></p>
    <p><font size="2"> <b><font face="serif">3.</font></b>&nbsp;<b><font face="sans-serif"> </font><u><font face="serif">Term</font></u></b> </font></p>

  <p><font size="2" face="serif"> (a)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Duration of Term</font></u><font face="serif">.
    Unless earlier terminated as provided in Section 3(b) hereof, the Executive&#146;s
    employment with the Company under this Agreement shall commence at the Effective
    Date and shall end on December 17, 2006 (the &#147;Term&#148;). </font></font>
  </p>

  <p><font size="2" face="serif"> (b)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Termination of Employment during
    the Term</font></u><font face="serif">.</font> </font><font size="2" face="serif">Nothing
    in this Section 3 </font><font size="2" face="serif">shall limit the right
    of the Company or the Executive to terminate the Executive&#146;s employment
    under this Agreement during the Term hereof on the terms and conditions set
    forth in Section 7 hereof. </font></p>

  <p><font size="2"> <b><font face="serif">4.</font></b>&nbsp;<b><font face="sans-serif">
    </font><u><font face="serif">Position and Duties</font></u><font face="serif">.</font></b>
    </font><font size="2" face="serif">The Company shall employ the Executive
    during </font><font size="2"><font face="serif">the Employment Period as its
    Chief Financial Officer. During the Employment Period, the Executive shall
    perform faithfully and loyally and to the best of the Executive&#146;s abilities
    the duties assigned to the Executive from time to time by the Company. The
    Executive shall perform such duties in accordance with the policies and procedures
    adopted by the Company from time to time. The Executive shall devote his full
    business time, attention and effort to the affairs of the Company and its
    subsidiaries and shall use his reasonable best efforts to promote the interests
    of the Company and its subsidiaries. Notwithstanding the foregoing, the Executive
    may continue to serve as a member of the boards of directors of WJ Communications,
    Inc. Maxxim Medical, Inc. and ACMI Circon Corporation and may engage in charitable,
    civic or </font> <font face="serif">2 </font><font size="2" face="serif">
    community activities, provided that such activities do not interfere with
    the Executive&#146;s duties hereunder or violate the terms of any of the covenants
    contained in Sections 11, 12 or 13 hereof. </font> </font> </p>
</div>
<p align="center"><font size="2" face="serif">2</font> </p>
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<div style="text-indent: 3%">
<p><font size="2" face="Times New Roman, Times, serif"><b>5. <u>Place
      of Performance. </u></b>The principal place of employment
      and office of the Executive shall be in Bermuda, or such other location
      as may be agreed to in writing by the Executive. In the event that the
      Executive&#146;s Bermuda work permit is not renewed or extended at any
      time during the Employment Period, Executive agrees to perform his duties
      at a location mutually convenient for the executive and the Company.</font></p>
  <p><font size="2"> <b><font face="serif">6.</font></b>&nbsp;<b><font face="sans-serif">
    </font><u><font face="serif">Compensation</font></u><font face="serif">.</font></b>
    </font><font size="2" face="serif">(a) <u>Base Salary</u>. </font><font size="2" face="serif">During
    the Employment Period, the </font><font size="2" face="serif">Company shall
    pay to the Executive a base salary at rate no less than US $500,000 per annum
    (&#147;Base Salary&#148;), payable in accordance with the Company&#146;s executive
    payroll policy. </font></p>

  <p><font size="2" face="serif"> (b)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Annual Bonus</font></u><font face="serif">.
    The Executive shall be eligible to receive an annual incentive bonus payable
    in cash, Equity Incentive Awards or some combination thereof (&#147;Annual
    Bonus&#148;) with respect to each fiscal year which ends during the Employment
    Period. The Annual Bonus shall be based upon (i) the performance of the Company,
    (ii) the performance of the business unit or units of the Company for which
    the Executive is responsible and (iii) the Executive&#146;s personal contribution
    to the success of the Company, each as determined by the Chief Executive Officer
    in his sole discretion. The Annual Bonus shall not exceed 150% of the Executive&#146;s
    Base Salary. Such Annual Bonus shall be paid after the end of the fiscal year
    at the same time as annual bonuses are paid to other executives.</font> </font></p>

  <p><font size="2" face="serif"> (c)</font> <font size="2" face="serif"><u>Housing
    Allowance</u></font><font face="serif">.</font> <font size="2" face="serif">The
    Company shall pay the Executive&#146;s proper and </font><font size="2" face="serif">reasonable
    expenses relating to the maintenance of the Executive&#146;s primary residence
    in </font> <font size="2" face="serif">Bermuda during the Employment Period.
    Prior to such payment the Executive shall provide to the Company any substantiation
    for such expenses requested by the Company. Notwithstanding the foregoing,
    the maximum annual amount the Company shall pay pursuant to this Section 6(c)
    shall be US $100,000, which maximum amount shall be prorated for any partial
    year worked by the Executive during the Employment Period. </font> </p>

  <p><font size="2" face="serif"> (d)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Tax Gross-Up</font></u><font face="serif">.
    To the extent that the Executive incurs any United States federal or state
    ordinary income tax liability on account of the housing allowance specified
    in Section 6(c) hereof, the Company shall reimburse the Executive for all
    such tax liability incurred and all United States federal and state ordinary
    income tax liability incurred as a result of the tax gross-up payments specified
    pursuant to this Section 6(d). </font></font> </p>

  <p><font size="2" face="serif"> (e)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Relocation Expenses</font></u><font face="serif">.
    The Company shall pay the Executive&#146;s proper and reasonable expenses
    relating to the relocation of the Executive&#146;s residence in a manner agreeable
    to the Company and the Executive (&#147;Relocation Expenses&#148;) upon the
    termination of the Executive&#146;s employment by the Company for any reason
    other than by the Company for Cause or by the Executive without Good Reason.
    Prior to such payment, the Executive shall provide to the Company any substantiation
    for such expenses requested by the Company. </font></font> </p>

  <p><font size="2" face="serif"> (f)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Other Benefits</font></u><font face="serif">.
    During the Employment Period, the Executive shall be entitled to participate
    in (i) the Company&#146;s medical and dental plans, (ii) a suitable pension
    arrangement in accordance with Bermuda law<b> </b>and (iii) any other employee
    benefit plans made </font><font size="2" face="serif"> generally available
    to executives of the Company (such benefits set forth in items (i), (ii) and
    (iii) hereof being hereinafter referred to as the &#147;Employee Benefits&#148;).
    The Executive shall be entitled to five weeks of paid vacation. The Executive
    also shall be entitled to take time off for illness in accordance with the
    Company&#146;s policy for executives and to receive all other fringe benefits
    as are from time to time made generally available to executives of the Company.
    </font> </font></p>
</div>
<p align="center"><font size="2" face="serif"> 3 </font> </p>
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<div style="text-indent: 3%">
<p><font size="2" face="Times New Roman, Times, serif">(g) </font><font size="2"><u><font face="serif">Expense
        Reimbursement</font></u><font face="serif">. During the Employment Period,
        the Company shall reimburse the Executive, in accordance with the Company&#146;s
        policies and procedures, for all proper and reasonable expenses incurred
        by the Executive in the performance of the Executive&#146;s duties hereunder.</font></font></p>
  <p><font size="2"> <b><font face="serif">7.</font><font face="sans-serif"> </font><u><font face="serif">Termination</font></u><font face="serif">. </font></b><font face="serif">The
          Executive&#146;s employment hereunder may be terminated, and the Employment
          Period hereunder shall be ended, as follows: </font></font> </p>

  <p><font size="2" face="serif"> (a) <u>Death</u>. The Executive&#146;s employment
    shall terminate upon the Executive&#146;s death. Upon such a termination,
    this Agreement shall automatically terminate and all rights of the Executive
    and the Executive&#146;s heirs, executors and administrators to compensation
    and other benefits under this Agreement shall cease immediately, except that
    the Executive&#146;s heirs, executors or administrators, as the case may be,
    shall become entitled to the payments and benefits provided in Section 8(b)
    hereof in accordance with the terms of such Section. </font> </p>

  <p><font size="2" face="serif"> (c)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Disability</font></u><font face="serif">.
    The Company may terminate the Executive&#146;s employment hereunder for Disability.
    Upon such a termination, the Executive shall become entitled to the payments
    and benefits provided in Section 8(b) hereof in accordance with the terms
    of such Section. </font></font> </p>

  <p><font size="2" face="serif"> (d)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Cause</font></u><font face="serif">.
    The Company may terminate the Executive&#146;s employment hereunder for Cause.
    Upon such a termination, the Executive shall become entitled to the payments
    and benefits provided in Section 8(a) hereof in accordance with the terms
    of such Section. </font></font> </p>

  <p><font size="2" face="serif"> (e)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Without Cause</font></u><font face="serif">.
    The Company may terminate the Executive&#146;s employment hereunder without
    Cause. Upon such a termination, the Executive shall become entitled to the
    payments and benefits provided in Section 8(b) hereof in accordance with the
    terms of such Section. </font></font> </p>
</div>

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  <tr>
    <td width="3%">&nbsp;</td>
    <td ><font size="2" face="serif"> (f)</font><font size="2" face="sans-serif">&nbsp;
      </font><font size="2"><u><font face="serif">Termination by the Executive</font></u><font face="serif">.</font></font><font size="2">&nbsp;
      </font> </td>
  </tr>
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    <td>&nbsp;</td>
    <td height="21">&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><div style="text-indent: 3%"><font size="2" face="serif">
        (i)</font><font size="2" face="sans-serif"> </font><font size="2" face="serif">The
        Executive may terminate the Executive&#146;s employment hereunder for
        Good Reason. Upon a Good Reason termination, the Executive shall become
        entitled to the payments and benefits provided in Section 8(b) hereof
        in accordance with the terms of such Section. </font> </div></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><div style="text-indent: 3%"><font size="2" face="serif">
        (ii)</font><font size="2" face="sans-serif"> </font><font size="2" face="serif">The
        Executive may terminate the Executive&#146;s employment hereunder without
        Good Reason, upon giving notice of thirty (30) days to the Company. In
        the event of such a termination, the Executive shall comply with any reasonable
        request of the Company to assist in providing for an orderly transition
        of authority, but such assistance shall not delay the Executive&#146;s
        termination of employment longer than sixty </font><font size="2"> <font face="serif">4
        </font><font size="2" face="serif"> (60) days beyond the submission by
        the Executive of a Notice of Termination. Upon such a termination, the
        Executive shall become entitled to the payments and benefits provided
        in Section 8(a) hereof in accordance with the terms of such Section. </font>
        </font> </div></td>
  </tr>
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    <td>&nbsp;</td>
    <td>&nbsp;</td>
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</table>
    <p>&nbsp;</p>
<p align="center"><font size="2" face="serif">4</font> </p>
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<div style="text-indent: 3%">
<p><font size="2" face="Times New Roman, Times, serif">(g) <u>N</u></font><font size="2"><u><font face="serif">otice
        of Termination</font></u><font face="serif">. Any purported termination
        of the Executive&#146;s employment (other than termination pursuant to
        Section 7(a) hereof) shall be communicated by written Notice of Termination
        to the other party hereto in accordance with Section 19 hereof. For purposes
        of this Agreement, a &#147;Notice of Termination&#148; shall mean a
        notice that shall indicate the specific termination provision in this
        Agreement relied upon and shall set forth in reasonable detail the facts
        and circumstances claimed to provide a basis for termination of the Executive&#146;s
        employment under the provision so indicated.</font></font></p>
  <p><font size="2" face="serif"> (h)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Date of Termination</font></u><font face="serif">.
    For purposes of this Agreement, &#147;Date of </font></font><font size="2" face="serif">Termination&#148;
    shall mean the following: (i) if the Executive&#146;s employment is terminated
    by the Executive&#146;s death, the date of the Executive&#146;s death; (ii)
    if the Executive&#146;s employment is terminated for Disability pursuant to
    Section 7(b) hereof, thirty (30) days after the Notice of Termination is given
    (provided that the Executive shall not have returned to the full-time performance
    of the Executive&#146;s duties during such thirty (30) day period); (iii)
    if the Executive&#146;s employment is terminated for Cause pursuant to Section
    7(c) hereof, the date specified in the Notice of Termination; (iv) if the
    Executive&#146;s employment is terminated by the Executive without Good Reason
    pursuant to Section 7(e)(ii) hereof, the date determined in accordance with
    said Section; and (v) if the Executive&#146;s employment is terminated for
    any other reason, the date specified in the Notice of Termination (which,
    in the case of a termination by the Company, shall not be less than thirty
    (30) days and, in the case of a termination by the Executive, shall not be
    less than fifteen (15) days nor more than sixty (60) days, respectively, from
    the date such Notice of Termination is given). </font> </p>
    <p><font size="2"> <b><font face="serif">8.</font></b>&nbsp;<b><font face="sans-serif"> </font><u><font face="serif">Compensation
              Upon Termination of Employment</font></u><font face="serif">. </font></b> </font></p>

  <p><font size="2" face="serif"> (a)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Termination by the Company with
    Cause or by the Executive without Good Reason</font></u><font face="serif">.
    If the Executive&#146;s employment hereunder is terminated by the Company
    with Cause or by the Executive without Good Reason, then all obligations of
    the Company hereunder shall cease, except that the Executive shall be entitled
    to (i) accrued Base Salary through and including the Date of Termination,
    (ii) reimbursement for any expenses which are properly incurred by the Executive
    prior to the Date of Termination, but for which the Executive has not yet
    been reimbursed by the Company (&#147;Unreimbursed Expenses&#148;), (iii)
    a cash payment equal to the pro rata portion of the Executive&#146;s Base
    Salary for any vacation days accrued and unused in the calendar year in which
    the Date of Termination occurs (&#147;Accrued Vacation&#148;) and (iv) the
    Employee Benefits to which the Executive was entitled as of the Date of Termination
    in accordance with the terms of the plans and programs of the Company under
    which such Employee Benefits are provided. The vesting, ability to exercise
    and termination of the Executive&#146;s Equity Incentive Awards shall be determined
    in accordance with the terms of the Stock Option Plan and the incentive award
    agreements governing such Equity Incentive Awards. The Company shall have
    no additional obligations to the Executive under this Agreement except to
    the extent provided in this Section 8(a) and Section 17 hereof. </font></font>
</div>
<p align="center"><font size="2" face="serif"> 5 </font> </p>
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<div style="text-indent: 3%"><font size="2" face="serif"> (b)</font><font size="2" face="sans-serif">
  </font><font size="2"><u><font face="serif">Termination by the Company without
  Cause, by Death, for Disability or</font></u><font face="serif"> <u>by the Executive
  with Good Reason</u>. If the Executive&#146;s employment hereunder is terminated
  by the Company without Cause, by the Executive&#146;s Death, by the Company
  for Disability or by the Executive with Good Reason, then: </font></font> </div>
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    <td colspan="2"> <div style="text-indent: 3%"><font size="2" face="serif">
        (i)</font><font size="2" face="sans-serif"> </font><font size="2" face="serif">the
        Company shall pay the Executive&#146;s Base Salary to the Executive through
        the Date of Termination at the rate in effect immediately prior to the
        Date of Termination, together with all compensation and benefits to which
        the Executive was entitled through the Date of Termination under the terms
        of the Company&#146;s compensation and benefit plans, programs or arrangements
        as in effect immediately prior to the Date of Termination; </font> </div></td>
  </tr>
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    <td>&nbsp;</td>
    <td height="21">&nbsp;</td>
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  <tr>
    <td colspan="2"><div style="text-indent: 3%"><font size="2" face="serif">
        (ii)</font><font size="2" face="sans-serif"> </font><font size="2" face="serif">the
        Company shall pay or deliver to the Executive any Annual Bonus which has
        been allocated or awarded (but not yet paid or delivered) to the Executive
        for a completed fiscal year preceding the Date of Termination under any
        Annual Bonus plan; </font> </div></td>
  </tr>
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    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><div style="text-indent: 3%"><font size="2" face="serif">
        (iii)</font><font size="2" face="sans-serif"> </font><font size="2" face="serif">in
        lieu of any severance benefit otherwise payable to the Executive, the
        Company shall continue to pay the Executive (or his heirs, executors or
        administrators) his Base Salary as in effect immediately prior to the
        Date of Termination, in accordance with the Company&#146;s executive payroll
        policy, through December 17, 2006 (the &#147;Severance Period&#148;);
        provided, however, that (I) in the event the Date of Termination follows
        a Change in Control, the payments requirement to be made to the Executive
        under this Section 8(b)(iii) shall be made in one lump sum as soon as
        practicable following the Date of Termination and (II) in the event of
        a Change in Control during the Severance Period, any amounts to which
        the Executive is entitled under this Section 8(b)(iii) which remain unpaid
        as of the date of such Change in Control shall be paid to the Executive
        in one lump sum as soon as practicable following the date of such Change
        in Control; </font> </div></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><div style="text-indent: 3%"><font size="2" face="serif">
        (iv)</font><font size="2" face="sans-serif">&nbsp; </font><font size="2" face="serif">during
        the Severance Period, the Company shall arrange to provide the Executive
        and his eligible dependents Employee Benefits similar to those provided
        to the Executive and his eligible dependents immediately prior to the
        Date of Termination; provided, however, that, benefits otherwise receivable
        pursuant to this Section 8(b)(iv) shall be reduced to the extent benefits
        of the same type are received by or made available to Executive during
        the Severance Period (and any such benefits received by or made available
        to the Executive shall be reported to the Company by the Executive); </font>
      </div></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><div style="text-indent: 3%"><font size="2" face="serif">
        (v)</font><font size="2" face="sans-serif">&nbsp; </font><font size="2" face="serif">the
        vesting, ability to exercise and termination of the Executive&#146;s Equity
        Incentive Awards shall be determined in accordance with the terms of the
        Stock Option Plan and the incentive award agreements governing such Equity
        Incentive Awards;</font><font size="2">&nbsp; </font></div></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><div style="text-indent: 3%"><font size="2" face="serif">
        (vi)</font><font size="2" face="sans-serif">&nbsp; </font><font size="2" face="serif">the
        Company shall make a cash payment to the Executive for (x) Unreimbursed
        Expenses and (y) Accrued Vacation;</font><font size="2">&nbsp; </font></div></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><div style="text-indent: 3%"><font size="2" face="serif">
        (vii)</font><font size="2" face="sans-serif">&nbsp; </font><font size="2" face="serif">the
        Company shall pay the Executive&#146;s Relocation Expenses; and </font>
      </div></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
  <tr>
    <td colspan="2"><div style="text-indent: 3%"><font size="2" face="serif">
        (viii)</font><font size="2" face="sans-serif">&nbsp; </font><font size="2" face="serif">the
        Company shall have no additional obligations to the Executive under this
        Agreement except to the extent provided in Section 17 hereof. </font>
      </div></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
  </tr>
</table>
<p align="center"><font size="2" face="serif"> 6 </font> </p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="page_21"></a>
<p>
<div style="text-indent: 3%">
<p><font size="2" face="Times New Roman, Times, serif">(c)</font><font size="2" face="sans-serif"> </font><font size="2"><u><font face="serif">General</font></u><font face="serif">.
      Amounts which are vested benefits or which the Executive is otherwise entitled
      to receive under any plan, policy, practice or program of or any contract
      or agreement with the Company or its subsidiaries at or subsequent to the
      Date of Termination shall be payable in accordance with such plan, policy,
      practice or program or contract or agreement except as explicitly modified
      by this Agreement. The Executive must (i) return all Company property in
      the possession of the Executive and (ii) execute the General Release attached
      hereto as Exhibit A in order to receive any of the payments or benefits
      set forth in this Section 8.</font></font></p>
  <p><font size="2"> <b><font face="serif">9.</font></b>&nbsp;<b><font face="sans-serif"> </font><u><font face="serif">No
              Mitigation; Limited Offset</font></u><font face="serif">.</font></b> </font></p>

  <p><font size="2" face="serif"> The Company agrees that, if the Executive&#146;s
    employment with the Company terminates during the Term, then, except as may
    be required by applicable law, the Executive is not required to seek other
    employment or to attempt in any way to reduce any amounts payable to the Executive
    by the Company pursuant to Section 8 hereof. However, such amounts shall be
    reduced by the amount of salary, bonus or other compensation which the Executive
    earns from a subsequent employer that relates to the period for which the
    amount is payable to the Executive hereunder. The Executive shall promptly
    notify the Company of his acceptance of employment with another employer during
    the Severance Period. </font> </p>
    <p><font size="2"> <b><font face="serif">10.</font><font face="sans-serif"> </font><u><font face="serif">Tax
              Withholding</font></u><font face="serif">. </font></b><font face="serif">The
              Company shall deduct from the amounts payable to the Executive
              pursuant to this Agreement the amount of taxes that the Company
              is required to withhold pursuant to applicable laws, rules and
              regulations. </font></font> </p>

  <p><font size="2"> <b><font face="serif">11.</font><font face="sans-serif">
    </font><u><font face="serif">Noncompetition; Nonsolicitation</font></u><font face="serif">.</font></b>
    </font><font size="2" face="serif">(a) <u>General</u>. </font><font size="2" face="serif">The
    Executive </font><font size="2" face="serif">acknowledges that in the course
    of the Executive&#146;s employment with the Company the Executive will become
    familiar with trade secrets and other confidential information concerning
    the Company and its subsidiaries and that the Executive&#146;s services will
    be of special, unique and extraordinary value to the Company and its subsidiaries.
    </font> </p>

  <p><font size="2" face="serif"> (b)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Noncompetition</font></u><font face="serif">.
    The Executive agrees that during the Employment Period the Executive shall
    not in any manner, directly or indirectly, through any person, firm or corporation,
    alone or as a member of a partnership or as an officer, director, stockholder,
    investor or employee of or consultant to any other corporation or enterprise
    or otherwise, engage or be engaged, or assist any other person, firm, corporation
    or enterprise in engaging or being engaged, in the Business) in any geographic
    area in which the Company or any of its subsidiaries is then conducting such
    Business.</font> </font></p>

  <p><font size="2" face="serif"> (c)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Nonsolicitation</font></u><font face="serif">.
    The Executive further agrees that during the Employment Period and for a period
    of one year thereafter the Executive shall not (i) in any manner, directly
    or indirectly, induce or attempt to induce any employee of the Company or
    any of its subsidiaries to terminate or abandon his or her employment for
    any purpose whatsoever or (ii) in connection with the Business, call on, service,
    solicit or otherwise do business with any customer of the Company or any of
    its subsidiaries. </font></font> </p>

  <p><font size="2" face="serif"> (d)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Exceptions</font></u><font face="serif">.
    Nothing in this Section 11 shall prohibit the Executive from being (i) a stockholder
    in a mutual fund or a diversified investment company or (ii) an owner of not
    more than two percent of the outstanding stock of any class of a corporation,
    any securities of</font> <font face="serif">which are publicly traded, so
    long as the Executive has no active participation in the business of such
    corporation. </font></font></div>
<p align="center"><font size="2" face="serif"> 7 </font> </p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="page_22"></a>
<p>
<div style="text-indent: 3%">
<p><font size="2" face="Times New Roman, Times, serif">(e) <u>Reformation</u>.
      If, at any time of enforcement of this Section 11, a court or an arbitrator
      holds that the restrictions stated herein are unreasonable and/or unenforceable
      under circumstances then existing, the parties hereto agree that the maximum
      period, scope or geographical area reasonable and/or enforceable under
      such circumstances shall be substituted for the stated period, scope or
      area and that the court or arbitrator shall be allowed to revise the restrictions
      contained herein to cover the maximum period, scope and area permitted
      by law. This Agreement shall not authorize a court or arbitrator to increase
      or broaden any of the restrictions in this Section 11.</font></p>
  <p><font size="2"> <b><font face="serif">12.</font><font face="sans-serif"> </font><u><font face="serif">Confidentiality</font></u><font face="serif">. </font></b><font face="serif">The
          Executive shall not, at any time during the Employment Period or thereafter,
          make use of or disclose, directly or indirectly, any (i) trade secret
          or other confidential or secret information of the Company or of any
          of its subsidiaries or (ii) other technical, business, proprietary
          or financial information of the Company or of any of its subsidiaries
          not available to the public generally or to the competitors of the
          Company or to the competitors of any of its subsidiaries (&#147;Confidential
          Information&#148;), except to the extent that such Confidential Information
          (a) becomes a matter of public record or is published in a newspaper,
          magazine or other periodical or on electronic or other media available
          to the general public, other than as a result of any act or omission
          of the Executive, (b) is required to be disclosed by any law, regulation
          or order of any court or regulatory commission, department or agency,
          provided that the Executive gives prompt notice of such requirement
          to the Company to enable the Company to seek an appropriate protective
          order, or (c) is required to be used or disclosed by the Executive
          to perform properly the Executive&#146;s duties under this Agreement.
          Promptly following the termination of the Executive&#146;s employment
          with the Company, the Executive shall surrender to the Company all
          records, memoranda, notes, plans, reports, computer tapes and software
          and other documents and data which constitute Confidential Information
          which the Executive may then possess or have under the Executive&#146;s
          control (together with all copies thereof). </font></font> </p>
    <p><font size="2"> <b><font face="serif">13.</font><font face="sans-serif"> </font><u><font face="serif">Inventions</font></u><font face="serif">. </font></b><font face="serif">The
          Executive hereby assigns to the Company the Executive&#146;s entire right, title
          and interest in and to all discoveries and improvements, patentable
          or otherwise, trade secrets and ideas, writings and copyrightable material,
          which may be conceived by the Executive or developed or acquired by
          the Executive during the Employment Period, which may pertain directly
          or indirectly to the business of the Company or any of its subsidiaries.
          The Executive agrees to disclose fully all such developments to the
          Company upon its request, which disclosure shall be made in writing
          promptly following any such request. The Executive shall, upon the
          Company&#146;s request, execute, acknowledge and deliver to the Company
          all instruments and do all other acts which are necessary or desirable
          to enable the Company or any of its subsidiaries to file and prosecute
          applications for, and to acquire, maintain and enforce, all patents,
          trademarks and copyrights in all countries. </font></font> </p>

  <p><font size="2"> <b><font face="serif">14.</font><font face="sans-serif">
    </font><u><font face="serif">Enforcement</font></u><font face="serif">. </font></b><font face="serif">The
    parties hereto agree that the Company and its subsidiaries would be damaged
    irreparably in the event that any provision of Sections 11, 12 or 13 of this
    Agreement was not performed in accordance with its terms or was otherwise
    breached and that money damages would be an inadequate remedy for any such
    nonperformance or breach. Accordingly, the Company and its successors and
    permitted assigns shall be entitled, in </font><font size="2" face="serif">
    addition to other rights and remedies existing in their favor, to an injunction
    or injunctions to prevent any breach or threatened breach of any of such provisions
    and to enforce such provisions specifically (without posting a bond or other
    security). The Executive agrees that the Executive will submit to the personal
    jurisdiction of the courts of Bermuda in any action by the Company to enforce
    an arbitration award against the Executive or to obtain interim injunctive
    or other relief pending an arbitration decision. </font> </font> </div>
<p align="center"><font size="2" face="serif"> 8 </font> </p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="page_23"></a>
<p>
<div style="text-indent: 3%">
<p><font size="2" face="Times New Roman, Times, serif"><b>15.</b>
  <b><u>Representations</u></b>. The Executive 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 the Executive is bound, (b) the
  Executive is not a party to or bound by any employment agreement, noncompetition
  agreement or confidentiality agreement with any other person or entity and (c)
  upon the execution and delivery of this Agreement by the Company, this Agreement
  shall be the valid and binding obligation of the Executive, enforceable in accordance
  with its terms.</font></p>
  <p><font size="2"> <b><font face="serif">16.</font><font face="sans-serif"> </font><u><font face="serif">Survival</font></u><font face="serif">. </font></b><font face="serif">Sections
          11, 12, 13 and 14 of this Agreement shall survive and continue in full
          force and effect in accordance with their respective terms, notwithstanding
          any termination of the Employment Period. </font></font> </p>
    <p><font size="2"> <b><font face="serif">17.</font><font face="sans-serif"> </font><u><font face="serif">Arbitration</font></u><font face="serif">. </font></b><font face="serif">Except
          as otherwise set forth in Section 14 hereof, any dispute or controversy
          between the Company and the Executive, whether arising out of or relating
          to this Agreement, the breach of this Agreement, or otherwise, shall
          be settled by arbitration in Bermuda in accordance with Bermuda law
          then in effect, and judgment on the award rendered by the arbitrator
          may be entered in any court having jurisdiction thereof. The arbitrator
          shall have the authority to award any remedy or relief that a court
          of competent jurisdiction could order or grant, including, without
          limitation, the issuance of an injunction. However, either party may,
          without inconsistency with this arbitration provision, apply to any
          court having jurisdiction over such dispute or controversy and seek
          interim provisional, injunctive or other equitable relief until the
          arbitration award is rendered or the controversy is otherwise resolved.
          Except as necessary in court proceedings to enforce this arbitration
          provision or an award rendered hereunder, or to obtain interim relief,
          neither a party nor an arbitrator may disclose the existence, content
          or results of any arbitration hereunder without the prior written consent
          of the Company and the Executive.</font> </font></p>
    <p><font size="2"> <b><font face="serif">18.</font><font face="sans-serif"> </font><u><font face="serif">Indemnification</font></u><font face="serif">. </font></b><font face="serif"> With
          respect to any claim, loss, damage or expense (including attorneys&#146; fees)
          arising from the performance by the Executive of his duties as an officer
          or director of the Company, the Executive shall be entitled to indemnification
          by the Company to the fullest extent permitted by law and to reimbursement
          under any directors&#146; and officers&#146; liability insurance of
          the Company that may be in effect from time to time. </font></font> </p>

  <p><font size="2"> <b><font face="serif">19.</font><font face="sans-serif">
    </font></b> <b><u><font face="serif">Notices</font></u><font face="serif">.
    </font></b><font face="serif">All notices and other communications required
    or permitted hereunder shall be in writing and shall be deemed given when
    (a) delivered personally or by overnight courier to the following address
    of the other party hereto (or such other address for such party as shall be
    specified by notice given pursuant to this Section) or (b) sent by facsimile
    to the following facsimile number of the other party hereto (or such other
    facsimile number for </font><font size="2" face="serif"> such party as shall
    be specified by notice given pursuant to this Section), with the confirmatory
    copy delivered by overnight courier to the address of such party pursuant
    to this Section 14: </font> </font> </div>
<p align="center"><font size="2" face="serif"> 9 </font> </p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<p><font size="2"><a name="page_24"></a></font></p>
<div style="margin-left: 3%">
  <table width="60%" border="0" cellpadding="0" cellspacing="0">
    <tr>
      <td colspan="2"><font size="2" face="serif">If to the Company, to: </font>
      </td>
    </tr>
    <tr>
      <td colspan="2">&nbsp;</td>
    </tr>
    <tr>
      <td width="10%">&nbsp;</td>
      <td><font size="2" face="serif"> Endurance Specialty Insurance Ltd. <br>
        Wellesley House<br>
        90 Pitts Bay Road <br>
        Hamilton HM 08, Bermuda <br>
        Attention: General Counsel <br>
        Facsimile: (441) 278-0401 </font></td>
    </tr>
    <tr>
      <td>&nbsp;</td>
      <td>&nbsp;</td>
    </tr>
  </table>

</div>
<div style="text-indent: 3%">
<p><font size="2" face="Times New Roman, Times, serif">If to the Executive, to the residence address or
  residence facsimile number of the Executive set forth in the records of the
  Company.</font></p>
  <p><font size="2"> <b><font face="serif">20.</font><font face="sans-serif"> </font><u><font face="serif">Severability</font></u><font face="serif">. </font></b><font face="serif">Whenever
          possible, each provision of this Agreement shall be interpreted in
          such manner as to be effective and valid under applicable law, but
          if any provision of this Agreement is held to be invalid, illegal or
          unenforceable in any respect under applicable law or rule in any jurisdiction,
          such invalidity, illegality or unenforceability shall not affect the
          validity, legality or enforceability of any other provision of this
          Agreement or the validity, legality or enforceability of such provision
          in any other jurisdiction, but this Agreement shall be reformed, construed
          and enforced in such jurisdiction as if such invalid, illegal or unenforceable
          provision had never been contained herein. </font></font> </p>
    <p><font size="2"> <b><font face="serif">21.</font><font face="sans-serif"> </font><u><font face="serif">Entire
              Agreement</font></u><font face="serif">. </font></b><font face="serif">This
              Agreement, including Exhibits A and B hereto, constitutes the entire
              agreement and understanding between the parties with respect to
              the subject matter hereof and supersedes and preempts any prior
              understandings, agreements (including any employment agreements)
              or representations by or between the parties, written or oral,
              which may have related in any manner to the subject matter hereof.
              Any employment agreement entered into between the Company and the
              Executive prior to the date of this Agreement shall be of no further
              force or effect. </font></font> </p>

  <p><font size="2"> <b><font face="serif">22.</font><font face="sans-serif">
    </font><u><font face="serif">Successors and Assigns</font></u><font face="serif">.</font></b>
    </font><font size="2" face="serif">This Agreement shall be enforceable by
    the </font><font size="2" face="serif">Executive and the Executive&#146;s
    heirs, executors, administrators and legal representatives, and by the Company
    and its successors and assigns. In the event that following the termination
    of the Executive&#146;s employment the Executive shall die at a time when
    the Executive is entitled to the continuation of any payments or benefits
    hereunder, such payments or benefits shall continue to be provided to the
    Executive&#146;s heirs, executors, administrators or legal representatives.
    </font></p>
    <p><font size="2"> <b><font face="serif">23.</font><font face="sans-serif"> </font><u><font face="serif">Governing
              Law</font></u><font face="serif">. </font></b><font face="serif">This
              Agreement shall be governed by and construed and enforced in accordance
              with the internal laws of Bermuda, without regard to principles
              of conflict of laws. </font></font> </p>

  <p><font size="2"> <b><font face="serif">24.</font><font face="sans-serif">
    </font><u><font face="serif">Amendment and Waiver</font></u><font face="serif">.</font></b>
    </font><font size="2" face="serif">The provisions of this Agreement may be
    </font><font size="2" face="serif">amended or waived only by the written agreement
    of the Company and the Executive, and no course of conduct or failure or delay
    in enforcing the provisions of this Agreement shall affect the validity, binding
    effect or enforceability of this Agreement. </font> </p>
</div>
<p align="center"><font size="2" face="serif"> 10 </font> </p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="page_25"></a>
<p>
<div style="text-indent: 3%">
<p><font size="2" face="Times New Roman, Times, serif"><b>25.</b>
  <u><b>Counterparts</b></u>. This Agreement may be executed in two counterparts,
  each of which shall be deemed to be an original and both of which together shall
  constitute one and the same instrument.</font></p>
  <p><font size="2" face="serif"> IN WITNESS WHEREOF, the parties hereto have
    executed this Agreement as of the date first written above. </font> </div>
<p>
<table width="100%" border=0 cellspacing=0 cellpadding=0>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top"><font size="2"> <font face="serif">Endurance </font><font size="2" face="serif">Specialty</font><font face="serif">
      </font><font size="2" face="serif">Insurance</font><font face="serif"> Limited
      </font></font> </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top"><font size="2"> <font face="serif">By: <u>/s/ Kenneth J.
      LeStrange&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font><font size="2" face="serif"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font><font face="serif"><u>&nbsp;&nbsp;&nbsp;</u></font><font size="2" face="serif"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font><font face="serif"><u>&nbsp;&nbsp;&nbsp;&nbsp;</u></font><font face="serif"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u></font>
      </font> </td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top"><font size="2"> <font face="serif">Title: </font><font size="2" face="serif"><u>Chairman,
      President &amp; Chief Executive Officer</u></font></font></td>
  </tr>
  <tr>
    <td valign="top">&nbsp;</td>
    <td valign="top">&nbsp;</td>
  </tr>
  <tr>
    <td valign="top" width="50%">&nbsp;</td>
    <td valign="top"><font size="2" face="serif"><u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/s/
          James R. Kroner&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u><br>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; James
R. Kroner</font></td>
  </tr>
</table>
<p align="center"><font size="2" face="serif"> 11 </font></p>
<hr noshade align="center" width="100%" size=2>
<div style="page-break-before:always"></div>
<page>
<a name="page_26"></a>
<p align="right"><font size="2" face="serif"> <b>EXHIBIT A</b> </font></p>
<p align="center"><font size="2" face="serif"> <u>GENERAL RELEASE</u></font></p>
<div style="text-indent: 3%">
<p><font size="2" face="Times New Roman, Times, serif">This
    General Release is executed by James R. Kroner (the &#147;Executive&#148;).</font></p>
  <p><font size="2" face="serif"> WHEREAS, the Executive&#146;s employment with
    Endurance Specialty Insurance Ltd., a Bermuda company (the &#147;Company&#148;)
    is terminating; </font></p>

  <p><font size="2" face="serif"> WHEREAS, the Executive has had 21 days to consider
    the form of this General Release; </font> </p>

  <p><font size="2" face="serif"> WHEREAS, the Company advised the Executive in
    writing to consult with an attorney before signing this General Release; </font>
  </p>

  <p><font size="2" face="serif"> WHEREAS, the Executive acknowledges that the
    amounts to be paid and the benefits to be provided to the Executive pursuant
    to Section 8 of the employment agreement, dated as of April 30, 2004, between
    the Company and the Executive (the &#147;Employment Agreement&#148;), are
    in consideration of, and are sufficient to support, the general release set
    forth in Section 2 of this General Release; and </font></p>

  <p><font size="2" face="serif"> WHEREAS, the Executive understands that the
    Company regards the representations and covenants by the Executive in this
    General Release as material and that the Company is relying on such representations
    and covenants in paying the Executive the amount set forth in Section 8 of
    the Employment Agreement and in providing the Executive the benefits set forth
    in Section 8 of the Employment Agreement. </font> </p>

  <p><font size="2" face="serif"> THE EXECUTIVE THEREFORE AGREES AS FOLLOWS: </font>
  </p>

  <p><font size="2" face="serif"> 1.</font><font size="2" face="sans-serif"> </font><font size="2"><u><font face="serif">Payments</font></u><font face="serif">.
    The Executive&#146;s employment with the Company shall terminate on [ ], and
    the Executive shall receive a certain amount pursuant to Section 8 of the
    Employment Agreement and certain benefits pursuant to Section 8 of the Employment
    Agreement in accordance with the terms and subject to the conditions thereof.
    </font></font> </p>

  <p><font size="2" face="serif"> 2.</font><font size="2" face="sans-serif"> </font><font size="2"><u><font face="serif">General
    Release</font></u><font face="serif">. (a) <u>General</u>. The Executive,
    on behalf of the Executive and anyone claiming through the Executive, hereby
    agrees not to sue the Company or any division, subsidiary, affiliate or other
    related entity of the Company (whether or not such entity is wholly owned)
    or any of the past, present or future directors, officers, administrators,
    trustees, fiduciaries, employees, agents, attorneys or shareholders of the
    Company or any of such other entities, or the predecessors, successors or
    assigns of any of them (hereinafter referred to as the &#147;Released Parties&#148;),
    and agrees to release and discharge, fully, finally and forever, the Released
    Parties from any and all claims, causes of action, lawsuits, liabilities,
    debts, accounts, covenants, contracts, controversies, agreements, promises,
    sums of money, damages, judgments and demands of any nature whatsoever, in
    law or in equity, both known and unknown, asserted or not asserted, foreseen
    or unforeseen, which the Executive ever had or may presently have against
    any of the Released Parties arising from the beginning of time up to and including
    the effective date of this General Release, including, without limitation,
    all matters in any way related to the </font> <font face="serif">Executive&#146;s
    employment by the Company or any of its affiliates, the terms and conditions
    thereof, any failure to promote the Executive and the termination or cessation
    of the Executive&#146;s employment with the Company or any of its affiliates,
    and including, without limitation, any and all claims arising under (i) The
    Employment Act 2000, the Human Rights Act 1981 or the Commission for Unity
    and Racial Equality Act 1996, each enacted in Bermuda and as may be amended
    from time to time or (ii) the Civil Rights Act of 1964, the Civil Rights Act
    of 1991, the Civil Rights Act of 1866, the Age Discrimination in Employment
    Act, the Older Workers&#146; Benefit Protection Act, the Family and Medical
    Leave Act, the Americans With Disabilities Act or the Employee Retirement
    Income Security Act of 1974, each enacted in the United States and as may
    be amended from time to time, or any other Bermuda, United States or foreign
    statute, regulation, ordinance or order, or pursuant to any common law doctrine;
    <u>provided</u>, <u>however,</u> that nothing contained in this General Release
    shall apply to, or release the Company from, any obligation of the Company
    contained in the Employment Agreement or this General Release. The consideration
    payable to the Executive pursuant to Section 8 of the Employment Agreement
    is accepted by the Executive as being in full accord, satisfaction, compromise
    and settlement of any and all claims or potential claims, and the Executive
    expressly agrees that, except for the amount payable to the Executive under
    Section 8 of the Employment Agreement, the benefits to be provided to the
    Executive under Section 8 of the Employment Agreement and as provided in Section
    2(b) of this General Release, (i) the Executive is not entitled to, and shall
    not receive, any further recovery of any kind from the Company or any of the
    other Released Parties and (ii) in the event of any further proceedings whatsoever
    based upon any matter released herein, neither the Company nor any of the
    other Released Parties shall have any further monetary or other obligation
    of any kind to the Executive, including any obligation for any costs, expenses
    or attorneys&#146; fees incurred by or on behalf of the Executive. The Executive
    agrees that the </font><font size="2" face="serif"> Executive has no present
    or future right to employment with the Company or any of the other Released
    Parties. </font> </font> </div>
<p align="center"><font size="2" face="serif"> A-1 </font></p>
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<div style="text-indent: 3%">
<p><font size="2" face="Times New Roman, Times, serif">(b) <u>Unenforceability</u>.
      In the event that the general release set forth in Section 2(a) of this
      General Release is found by an arbitrator or other appropriate decisionmaker
      to be unenforceable and the Executive subsequently obtains a monetary award
      payable by the Company or any of the other Released Parties, the arbitrator
      or other decisionmaker shall have the authority to reduce such monetary
      award by the lesser of (i) the General Release Consideration and (ii) the
      amount of the monetary award.</font></p>
  <p><font size="2" face="serif"> (c)</font><font size="2" face="sans-serif">
    </font><font size="2"><u><font face="serif">Representations</font></u><font face="serif">.
    The Executive expressly represents and warrants that the Executive is the
    sole owner of the actual and alleged claims, demands, rights, causes of action
    and other matters that are released herein; that the same have not been transferred
    or assigned or caused to be transferred or assigned to any other person, firm,
    corporation or other legal entity; and that the Executive has the full right
    and power to grant, execute and deliver the general release, undertakings
    and agreements contained herein. </font></font> </p>

  <p><font size="2"> <font face="serif">3.</font>&nbsp;<font face="sans-serif">
    </font><u><font face="serif">ACKNOWLEDGMENT BY EXECUTIVE</font></u><font face="serif">.</font>
    </font><font size="2" face="serif">BY EXECUTING THIS </font><font size="2"><font face="serif">GENERAL
    RELEASE, THE EXECUTIVE EXPRESSLY ACKNOWLEDGES THAT THE EXECUTIVE HAS READ
    THIS GENERAL RELEASE CAREFULLY, THAT THE EXECUTIVE FULLY UNDERSTANDS ITS TERMS
    AND CONDITIONS, THAT THE EXECUTIVE HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY
    PRIOR TO EXECUTING THIS GENERAL RELEASE, THAT THE EXECUTIVE HAS BEEN ADVISED</font>
    <font face="serif">THAT THE EXECUTIVE HAS<b> </b>21 DAYS WITHIN WHICH TO DECIDE
    WHETHER OR NOT TO EXECUTE THIS GENERAL RELEASE AND THAT THE EXECUTIVE INTENDS
    TO BE LEGALLY BOUND BY IT. DURING A PERIOD OF SEVEN DAYS FOLLOWING THE DATE
    OF THE EXECUTIVE&#146;S EXECUTION OF THIS GENERAL RELEASE, THE EXECUTIVE SHALL
    HAVE THE RIGHT TO REVOKE THIS GENERAL RELEASE BY SERVING WITHIN SUCH PERIOD
    WRITTEN NOTICE OF REVOCATION.</font> </font> </p>
</div>
<p>
<p align="center"><font size="2" face="serif"> A-2 </font></p>
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<p>
<div style="text-indent: 3%">
<p><font size="2" face="Times New Roman, Times, serif">4. <u>Entire
        Agreement</u>. The Employment Agreement and
        this General Release constitute the entire understanding between the
        parties. The Executive has not relied on any oral statements that are
        not included in the Employment Agreement or this General Release.</font></p>
  <p><font size="2" face="serif"> 5.</font><font size="2" face="sans-serif"> </font><font size="2"><u><font face="serif">Severability</font></u><font face="serif">.
    If any provision of this General Release shall be held invalid or unenforceable,
    such invalidity or unenforceability shall not affect any other provision hereof,
    and this General Release shall be construed and enforced as if such provision
    had not been included herein. </font></font> </p>

  <p><font size="2" face="serif"> 6.</font><font size="2" face="sans-serif"> </font><font size="2"><u><font face="serif">Governing
    Law</font></u><font face="serif">. This General Release shall be construed,
    interpreted and applied in accordance with the internal laws of Bermuda without
    regard to the principles of conflicts of laws.</font></font></p>
</div>
<table width="100%" border="0" cellpadding="0" cellspacing="0">
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    <td><font size="2" face="serif">Date: _____________________________________</font></td>
    <td width="6%">&nbsp;</td>
    <td width="44%"><font size="2" face="serif"> ____________________________________________</font></td>
  </tr>
  <tr>
    <td>&nbsp;</td>
    <td>&nbsp;</td>
    <td><div align="center"><font size="2" face="serif">James R. Kroner </font></div>
    </td>
  </tr>
</table>
<p>&nbsp;</p>
<p align="center"><font size="2" face="serif">A-3 </font></p>
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