On August 4, 2006, Martin B. Cummings entered into an employment agreement with Republic Underwriters, to be effective as of the Closing Date, that provides that he will serve as Republic Underwriters' Chief Financial Officer and Vice President. The term of the agreement extends three years from the Closing Date, at which time it terminates unless the parties agree to extend the agreement on a year-to-year basis, a new agreement is executed or the agreement is terminated by either party upon 90 days' written notice. The agreement provides for an annual base salary of $240,000, which is subject to increase by the Board, and provides that Mr. Cummings will be eligible to participate in an annual bonus plan providing for a performance bonus consistent with the bonus opportunities as in effect for the period immediately prior to the consummation of the Merger and subject to such terms, conditions and goals as may be established by the Board. Mr. Cummings may also participate in present and future benefit plans and programs that Republic Underwriters may provide to other senior executives. If Mr. Cummings' employment is terminated for reasons other than a breach of his confidentiality or non-competition agreement, his breach of any material term of the employment agreement, death, disability, cause or voluntary termination, or if he leaves for good reason (as defined in the employment agreement), he will be entitled to receive a severance payment in an amount equal to six months of his base salary and accrued but unpaid vacation time to the extent Republic Underwriters' policy or applicable law requires such payment. Mr. Cummings will be granted stock options and restricted stock pursuant to the Republic Underwriters' equity incentive plan. All of his Option Shares and restricted shares are subject to a call right of Republic Underwriters following termination of Mr. Cummings' employment on terms and conditions set forth in the employment agreement. Alternatively, Mr. Cummings has the right to sell his Option Shares and vested restricted shares to Republic Underwriters (i) in the case of termination of employment without cause or for good reason or (ii) if after five years from the Closing Date, Republic Companies Group is not then a publicly traded company on terms and conditions set forth in the employment agreement. Mr. Cummings has entered into a confidentiality agreement to keep secret and treat as confidential all information concerning the Republic Group during the tenure of his employment and thereafter. Mr. Cummings also has entered into a non-competition agreement that restricts him from engaging in specified competitive activities for six months and soliciting the Republic Group's employees, customers, suppliers or business relations during his employment and for 12 months following the date of his termination. The agreement is conditional on the consummation of the Merger. If the Merger is not consummated, the terms of the agreement will be null, void and of no effect.