Exhibit 10.6


 


SERVICE
AGREEMENT


 


THIS AGREEMENT is made on this 24th day of January 2006.


 


BETWEEN:


 


MONTPELIER REINSURANCE LTD., whose registered office is situate at Crown House,
4 Par-la-Ville Road, Hamilton Bermuda (the “Company”); and


 


William Pollett


“The Palms”


4 Overock Hill


Pembroke, HM 05


Bermuda


 


WHEREAS the parties desire to record the terms
and conditions upon which the Employee is employed by the Company.


 


NOW THEREFORE in consideration of the mutual
covenants and promises herein contained


 


IT IS HEREBY AGREED as follows:


 


1.             Interpretation


 


1.1           In this Agreement unless the context otherwise
requires the following words and expressions shall have the following meanings:


 


this “Agreement” means this service agreement and includes all schedules hereto;


 


the “Board” means the board of directors of the Company;


 


the “Companies Act” means the Companies Act 1981;


 


“Group Company” means and includes any company which is from time to time a holding
company (as defined by Section 86 of the Companies Act, but irrespective
of whether it is a Bermuda company or an overseas company) of the Company, a
subsidiary company (as so defined) of the Company, a subsidiary company (as so
defined) of a holding company (as so defined) of the Company or in which the
Company owns at least 50% of the issued share capital;


 


the “Parties” means the parties to this Agreement;


 

















 


1.2           In this Agreement unless the context otherwise requires:


 


1.2.1        references to statutory provisions shall be construed
as references to those provisions as amended or re-enacted or as their
application is modified by other provisions from time to time and shall include
references to any provisions of which they are re-enactments (whether with or
without modification); and


 


1.2.2        references to clauses and schedules are references to
clauses hereof and schedules hereto; references to sub-clauses or paragraphs
are, unless otherwise stated, references to sub-clauses of the clause or
paragraphs of the schedule in which the reference appears;


 


1.2.3        references to the singular shall include the plural
and vice versa and references to the masculine shall include the feminine
and/or neuter and vice versa; and


 


1.2.4        references to persons shall include companies,
partnerships, associations and bodies of persons, whether incorporated or
unincorporated.


 


2.             Appointment


 


Subject to, and conditional
upon, initial and continued permission being granted to work and reside in
Bermuda by the Bermuda Department of Immigration of the Ministry of Home
Affairs, the Company hereby appoints
the Employee and the Employee hereby agrees to serve the Company as Treasurer
at the level of Senior Vice President subject to the terms and conditions
hereinafter contained.


 


3.             Term


 


The
appointment of the Employee hereunder began on February 1st 2006 and shall
continue unless and until terminated in accordance with the provisions
hereinafter contained.


 


4.             Duties and Responsibilities


 


During the continuance of his employment
hereunder:


 


4.1           The Employee shall perform such duties and exercise
such powers in relation to the business of the Company or of any Group Company
as may from time to time reasonably be assigned to or vested in him by the
Board and shall give to the Board such information regarding the affairs of the
Company and any Group Company as it shall require and at all times and in all
respects conform to and comply with the reasonable directions and regulations
made by the Board. The Employee shall perform such services for any Group
Company (without further remuneration except as otherwise agreed) and shall
accept such offices in any such Group Companies as the Board may reasonably
require.


 


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4.2           The Employee shall well and faithfully serve the
Company and the Group Companies and use his best endeavours to promote develop
and extend their businesses and interests giving at all times the full benefit
of his knowledge, expertise, technical skill and ingenuity.


 


4.3           The Employee shall not without the consent of the
Board directly or indirectly engage in any other business or be concerned or
interested in any other business of a similar nature to or which would or might
compete with the business for the time being carried on by the Company or any
Group Company save that he may (but without prejudice to clause 4.2) be
interested as a holder or beneficial owner of not more than 5% of any class of
stock, shares or debentures in any company (other than the Company, in which
case, such limit shall not apply) whose stock, shares or debentures are listed
or dealt in on an appointed stock exchange (as defined in the Companies Act).


 


5.             Remuneration and Reimbursement


 


5.1           The Company shall pay to the Employee by
way of remuneration for his services hereunder a salary at the rate (subject as
hereinafter provided) of US$ 250,000 per annum. Such salary shall be inclusive
of any director’s fees payable to the Employee by the Company or any Group
Company and accordingly either the Employee shall pay over or procure to be
paid over to the Company all such fees received or receivable by him or his
remuneration hereunder shall be reduced pro tanto.  The said salary shall be payable by equal
monthly instalments in arrears on the day appointed by the Board for the payment
of employees’ salaries or pro rata where the Employee is only employed
hereunder during part of the month. The Compensation Committee of the Company’s
Board, subject to ratification by the Board, may increase or reduce the
Employee’s salary on each anniversary of the date of this Agreement, but not
below the amount of the Employee’s starting salary.


 


5.2           The Company shall also pay to the Employee all
reasonable travelling hotel and other out-of-pocket expenses which are properly
incurred by him in or about the performance of his duties hereunder and for
which vouchers (if so required) are provided to the reasonable satisfaction of
the Board.


 


5.3           The Company
will pay for two business-class round-trip flights to the United Kingdom per
annum for the Employee and his family.


 


5.4           The Employee shall be entitled to participate in:


 


(i)            the Company’s Medical, Dental and Vision Plans and
other insurance plans from time to time subject to the provisions of the
Company’s insurance plans in effect at the time;


 


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(ii)           a suitable pension arrangement in accordance with
Bermuda law (“Pension Plan”) from time to time subject to the provisions of
such pension plan in effect at the time, provided, however, that in the event
the Executive should leave the Company of his own accord within 12 months of
the date of this Agreement first written above he will forfeit all
contributions to the Pension Plan made by the Company on his behalf;


 


(iii)          the Company’s Annual Bonus Plan and Long Term
Incentive Plan subject to the provisions of such plan in effect at the time;


 


(iv)          subsidized parking and gym membership;


 


(v)           Reasonable tax advisory services at the Company’s
cost; and


 


(vi)          Any other employment benefit plans generally available
to Employees in the Company of the Employee’s stature, to the extent not
duplicative of benefits otherwise provided by the Company.


 


The details of these benefits, plans and
schemes are set out in separate documents, copies of which will be provided on
request.  The benefits, plans and schemes
may be changed at the Company’s discretion.


 


5.5           During the Employee’s appointment under this Agreement, he
shall receive a housing allowance in Band A.


 


5.6           The Employee
agrees that the Company may deduct from his pay any sums which the Employee may
owe the Company including, without limitation, any overpayments or loans made
to him by the Company or losses suffered by the Company as a result of the
Employee’s breach of this Agreement.


 


6.             Normal Hours and Holidays


 


The Employee shall conform to such hours of
work as may from time to time reasonably be required of him and shall not be
entitled to receive any additional remuneration for work outside his normal
hours.  In addition to the usual public holidays the Employee shall,
subject as mentioned in the Schedule, be entitled to 25 days holiday in each
year to be taken at such time or times as may be approved by the Chief
Financial Officer of the Company.  Five days’ holiday entitlement may be
carried forward to the next succeeding year with the consent of the Chief
Financial Officer.  Any remaining, unused holiday entitlement is
forfeited.  The entitlement to holiday (and on termination of employment
holiday pay in lieu of holiday) accrues pro rata throughout each year, provided
that fractions of days shall be disregarded in calculating entitlement to
holiday or payment in lieu of holiday.


 


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7.             Confidentiality


 


7.1           The Employee shall not either during the continuance
of his employment hereunder (otherwise than in the proper performance of his
duties hereunder) or at any time after the determination thereof divulge to any
person whomsoever and shall use his reasonable endeavours to prevent the
publication or disclosure of any trade secret or other confidential information
concerning the business, finances, accounts, dealings, transactions or affairs
of the Company or any Group Company or of any of their respective clients
entrusted to him or arising or coming to his knowledge during the course of his
employment hereunder or otherwise.


 


7.2           The Employee shall upon the termination of his
employment hereunder immediately deliver up to the Company all fee schedules,
lists of clients, correspondence and other documents, papers and property
belonging to the Company or any Group Company or related to any of the matters
referred to in clause 7.1 which may have been prepared by him or have come into
his possession in the course of his employment hereunder and shall not retain
any copies thereof.


 


8.             Change of Status


 


8.1           If, before the expiration or determination of this
Agreement, the employment of the Employee hereunder shall be terminated by
reason of the liquidation of the Company or for the purpose of reconstruction
or amalgamation, and he shall be offered employment with any concern or
undertaking resulting from such reconstruction or amalgamation on terms and
conditions not less favourable (financially and in personal status) than the
terms of this Agreement, then he shall have no claim against the Company in respect
of the termination of his employment hereunder save in respect of accrued
benefits.


 


8.2           Unless this agreement has been terminated under clause
9, if for any reason the Employee shall either:


 


8.2.1        at the Company’s request resign as a director of the
Company or any Group Company; or


 


8.2.2        be removed from office as a director of the Company or
any Group Company;


 


then, notwithstanding his so ceasing to be a
director, this Agreement shall not automatically terminate and thereupon (and
without any claim against the Company in respect of such loss of office) the
Employee’s employment hereunder shall continue for the remaining period of this
Agreement and all the terms and conditions of this Agreement shall with the
necessary variations apply to the Employee’s employment but in any event, the
Employee’s basic annual salary will not at any time be less than the Employee’s
starting salary under this agreement.


 


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9.             Termination


 


9.1           Without prejudice to clauses 9.3 or 9.5
the Employee or the Company may terminate the Employment by giving to the other
party not less than 6 months’ written notice.


 


9.2           Without prejudice to its rights to
terminate the Employment under clause 9.1 or its rights to suspend the Employee,
the Company may at its sole discretion terminate the Employment with immediate
effect at any time and whether or not notice has been given by either party to
terminate the Employment by giving notice in writing to the Employee and if it
does so the Company shall pay the Employee within five business days of the
Termination Date, in lieu of notice under clause 9.1, a lump sum equal to the
salary in the amount it would have paid to the Employee if the Employment had
terminated in accordance with clause 9.1.


 


9.3           This Agreement shall be subject to
termination by the Company by summary notice in writing without pay in lieu of
notice:


 


9.3.1                        if the Employee’s application for permission to
work and reside in Bermuda is refused or the Employee’s work permit and/or
permission to reside is revoked, and or a renewal application is refused


 


9.3.2                        if the Employee shall become of unsound mind or be or
become a patient for the purpose of any statute relating to mental health;


 


9.3.3                        if the Employee shall at any time be prevented by
illness or accident from performing his duties for a period of 6 consecutive
months or if he shall be absent from his duties by reason of illness or
accident for more than 180 working days in any consecutive twelve months
(provided that any such periods may be extended at the sole discretion of the
Board);


 


9.3.4                        other than by written
notice, if the Employee terminates his employment for any reason prior to the
expiration of this Agreement other than in accordance with the clause 9.1 or if
the Employee shall have failed or neglected efficiently and diligently to
discharge his duties hereunder having received a written warning for the
misconduct within the previous 6 months or shall have committed any serious
breach of his obligations hereunder or shall have been guilty of conduct
tending to bring himself or the Company or any Group Company into disrepute or
calculated or likely to affect prejudicially the interests of the Company or
any Group Company or shall have committed an act of bankruptcy or compounded
with his creditors generally.


 


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9.4           The termination by the Company of this
Agreement shall be without prejudice to any claim which the Company may have
for damages arising from any breach thereof by the Employee giving rise to such
termination.


 


9.5           The normal retirement age for employees
of the Company is 60 years of age.  The
Employee’s Employment will terminate automatically without notice on his 60th birthday.


 


9.6           This Agreement shall not, save as
hereinbefore set out in this Clause, be subject to termination by notice or
otherwise by the Company or by the Executive.


 


9.7           Until this Agreement is terminated
pursuant to clause 9.3, the Employee shall remain entitled to receive his
salary payable hereunder in full notwithstanding illness or other incapacity.


 


9.8           After notice of termination has been
given by either party or if the Employee seeks to resign without notice or by
giving shorter notice than that required under this Agreement then provided the
Company continues to pay the Executive the contractual benefits in accordance
with this Agreement, the Company has at its discretion the right for the notice
period or balance of the notice period (the “Garden Leave Period”) then
outstanding until the termination date of this Agreement to:


 


9.8.1                        exclude the Employee from the Company’s premises
and require the Employee not to attend at the Company’s premises; and/or


 


9.8.2                        require the Employee to carry out no duties; and/or


 


9.8.3                        require the Employee not to communicate or deal with
employees, agents, consultants, clients or other representatives of the
Company;


 


Provided always that the
maximum permitted Garden Leave Period shall be six months.


 


10.           Consequence of Termination


 


10.1         Upon the termination of this Agreement howsoever
arising, the Employee shall at any time or from time to time thereafter upon
the request of the Company resign, without claim for compensation for loss of
office, as a director of the Company and such offices held by him in any of the
Group Companies as may be so requested and should he fail to do so, the Company
is hereby irrevocably authorised to appoint some person in his name and on his
behalf to sign and do any documents or things necessary or requisite to give
effect thereto.


 


10.2         Notwithstanding anything else to the contrary herein,
should the Company terminate this Agreement:


 


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(a) pursuant to clause
9.3.1, then the Employee shall be entitled to receive three months salary by
way of repatriation expenses together with three months accommodation allowance
at the rate set out in clause 5.5 and reimbursement of a one way business class
air fare for himself and his family to the [United States/United
Kingdom/Canada], and all other payments under this Agreement shall immediately
cease and the Company shall have no further obligations to the Employee
arising hereunder;


 


(b)  pursuant to clause 9.3.2 or clause 9.3.3, then the Employee shall continue to receive his salary
for a period of 12 months following the termination of this Agreement and the Company
shall have no further obligations to the Employee arising hereunder;


 


(c) pursuant to
clause 9.3.4, then all payments under this Agreement shall immediately cease
and the Company shall have no further obligations to the Employee arising
hereunder.


 


11.           Non-Competition


 


11.1         Since the Employee has obtained in the course of his
employment prior to the date hereof and is likely to obtain in the course of
his employment hereunder knowledge of the trade secrets and also other
confidential information in regard to the business of the Company and of any
Group Company with which he becomes associated, the Employee hereby agrees with
the Company that in addition to the restrictions contained in clause 4.3 he
will not in Bermuda, the United States or the European Economic Community
(excluding the UK):


 


11.1.1      during the period of 6 months following the
termination of his employment hereunder (howsoever caused) either on his own
account or for any other person, firm or company directly or indirectly be
engaged in or concerned with any business or undertaking which is engaged in or
carries on in Bermuda, the United States or the European Economic Community
(excluding the UK) any insurance business which competes or seeks to compete
with the business carried on by the Company or any other Group Company at the
date of termination.


 


11.1.2      During the period of 12 months following the
termination aforesaid either on his own account or for any other person, firm
or company directly or indirectly solicit, interfere with or endeavour to
entice away from the Company or any Group Company the custom of any person,
firm or company who at the date of termination aforesaid or who in the period
of 12 months immediately prior to such date was a customer or client of or in
the habit of dealing with the Company or any Group Company or who at such date
was to his knowledge negotiating with the Company or any Group Company in
relation to all or part of its business.


 


11.1.3      During the period of 12 months following the
termination aforesaid either on his own account or for any other person, firm
or company solicit the services of or 


 


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endeavour to entice away
from the Company or any Group Company any director, employee or consultant of
the Company or any Group Company (whether or not such person would commit any
breach of his contract of employment or engagement by reason of leaving the
service of such company) nor shall the Employee knowingly employ or aid or
assist in or procure the employment by any other person, firm or company of any
such person.


 


11.2         While the restrictions aforesaid are considered by the
Parties to be reasonable in all the circumstances it is agreed that if any of
such restrictions shall, taken together, be adjudged to go beyond what is
reasonable in all the circumstances for the protection of the legitimate
interests of the Company or any Group Company but would be adjudged reasonable
if part of the wording thereof were deleted or modified the said restrictions
shall apply with such words deleted or modified.


 


11.3         The Employee hereby agrees that he will at the request
and cost of the Company enter into a direct agreement or undertaking with any
Group Company whereby he will accept restrictions and provisions corresponding
to the restrictions and provisions herein contained (or such of them as may be
appropriate in the circumstances) in relation to such services and such area
and for such period as such company or companies may reasonably require for the
protection of its or their legitimate interests provided that the terms of such
restrictions and provisions will not be more onerous than the restrictions and
provisions of this agreement.


 


12.           Untrue Statements


 


The Employee shall not knowingly at any time
make any untrue statement in relation to the Company or any Group Company and
in particular shall not after the determination of his employment hereunder
wrongfully represent himself as being employed by or connected with the Company
or any Group Company.


 


13.           Schedule


 


The provisions set out in the schedule hereto
shall apply as if incorporated in this Agreement.


 


14.           Intellectual Property


 


The Employee may make discover or create
Intellectual Property in the course of his duties under this Agreement and
agrees that in this respect he has a special obligation to further the
interests of the Company.


 


Subject to the provisions of the Patents Act
1977 the Registered Designs Act 1949 and the Copyright Designs and Patents Act
1988 if at any time during his employment under this Agreement the Employee
makes or discovers or participates in the making or 


 


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discover of any Intellectual
Property relating to or capable of being used in the business for the time
being carried on by the Company or any Group Companies full details of the
Intellectual Property shall immediately be communicated by him to the Company
and shall be the absolute property of the Company.  At the request and expense of the Company the
Employee shall give and supply all such information data drawings and
assistance as may be requisite to enable the Company to exploit the
Intellectual Property to the best advantage and shall execute all documents and
to all things which may be necessary or desirable for obtaining patent or other
protection for the Intellectual Property in such parts of the world as may be
specified by the Company and for vesting the same in the Company or as it may
direct.


 


The Employee irrevocable
appoints the Company to be his agent in his name and on his behalf to sigh
execute or do any such instrument or thing and generally to use his name for
the purpose of giving to the Company (or its nominee) the full benefit of the
provisions of this clause and in favour of any third party a certificate in
writing signed by any director or the secretary of the Company that any
instrument or act falls within the authority conferred by this clause shall be
conclusive evidence that such is the case.


 


If the Intellectual Property
is not the property of the Company the Company shall subject to the provisions
of the Patents Act 1977 have the right to acquire for itself or its nominee his
rights in the Intellectual Property within 3 months after disclosure pursuant
to this clause on fair and reasonable terms to be agreed or settled by a single
arbitrator.


 


The Employee waives all of
his moral rights (as defined in the Copyright, Designs and Patents Act 1988) in
respect of any acts of the Company or any acts of third parties done with the
Company’s authority in relation to any Intellectual Property which is the
property of the Company by virtue of this clause.


 


Rights and obligations under
this clause shall continue in force after termination of this Agreement in
respect of Intellectual Property made during the Employee’s Employment under
this Agreement and shall be binding upon his representatives.


 


15.             Dispute Resolution and Disciplinary Procedures


 


If the Employee has a
grievance regarding the Employment he should, in the first instance, speak to
the Chief Financial Officer.  If the
grievance is not resolved to his satisfaction, he should then refer to the
dispute resolution procedure, which will be provided to him with his letter of
employment.


 


The disciplinary procedures
applicable to the Employee will be provided to him with his letter of
employment.


 


The dispute resolution and
grievance procedures do not form part of this Agreement.


 


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16.           Delegation


 


The Company may at any time and from time to
time delegate its power and authority under this Agreement to any Group Company
and such delegation (or the revocation thereof) shall be effective upon the
Company’s giving written notice of the same to the Employee.


 


17.           Notices


 


Notices may be given by either Party by
pre-paid first class post or by hand delivery addressed to the other Party at
(in the case of the Company) its registered office for the time being and (in
the case of the Employee) his last known address.  Any such notice given by post shall be deemed
to have been served on the second week day after despatch (public holidays
excepted) and any notice so given by hand shall be deemed to have been served
when delivered if delivered during normal business hours or, if delivered
outside such hours, at the next time after delivery when normal business hours
commence


 


18.           Miscellaneous


 


The expiration or termination of this Agreement
howsoever arising shall not operate to affect such of the provisions hereof as
are expressed or intended to remain in full force and effect notwithstanding
such termination.


 


If any of the clauses, conditions, covenants or
restrictions of this Agreement or any deed or document emanating from it shall
be found to be void but would be valid if some part thereof were deleted or
modified, then such clause, condition, covenant or restriction shall apply with
such deletion or modification as may be necessary to make it valid and
effective.


 


This Agreement shall be binding and ensure for
the benefit of the successors of the Parties but shall not be assignable.


 


This Agreement (together with any documents
referred to herein) constitutes the whole agreement between the Parties
relating to its subject matter.


 


The headings in this Agreement are inserted for
convenience only and shall not affect the construction of this Agreement.


 


This Agreement may be executed in counterparts
each of which when executed and delivered shall constitute an original but all
such counterparts together shall constitute one and the same instrument.


 


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No provision in this
Agreement may be amended unless such amendment is agreed to in writing, signed
by the Employee and by a duly authorised officer of the Company.  No waiver by either 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.  Any waiver must be in writing and signed by
the Employee or a duly authorised officer of the Company, as the case may be.


 


This Agreement shall be
governed by and construed in accordance with the laws of Bermuda and the
Parties hereby irrevocably submit to the non-exclusive jurisdiction of the
courts of Bermuda.


 


 


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


 


 


	
  SIGNED by:

  	
  /s/ MONTPELIER REINSURANCE LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SIGNED by:

  	
  /s/ WILLIAM POLLETT

  	
   

  



 


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THE SCHEDULE


 


1.             Hours of Work:  
The Employee shall conform to such hours of work as may reasonably be
required of him for the proper performance of his duties hereunder and shall
not be entitled to receive any additional remuneration for work outside his
normal hours.


 


2.             Medical and Other Insurance:  The Employee will be entitled to participate
in the Company medical insurance plan and other insurance plans from time to
time subject to the provisions of the company’s insurance plans in effect at
the time.


 


3.             Pension Provisions: 
The Employee will be entitled to participate in the Company’s pension
plan from time to time subject to the provisions of such pension plan in effect
at the time.


 


4.             Incentive Plans: 
The Employee will be entitled to participate in the Montpelier Annual
Incentive Plan, the Montpelier Long-Term Incentive Plan and any other incentive
plan for which the Employee is eligible, from time to time subject to the
provisions of such plans in effect at the time.


 


5.             Employee Handbook: The Employee shall adhere to the
Company’s Employee Handbook, a copy of which has been given to the
Employee.  The Handbook contains details
of Company policies and procedures and descriptions of disciplinary and
grievance procedures, dress code and other matters relevant to the Employee’s
employment.  The Company reserves the
right to vary the Handbook from time to time.


 


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