ARCH CAPITAL GROUP LTD.


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


                   LONG TERM INCENTIVE PLAN FOR NEW EMPLOYEES


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




     1. Purposes. The purposes of the Long Term Incentive Plan for New Employees
are to advance the interests of Arch Capital Group Ltd. and its stockholders by
providing a means to attract, retain, and motivate newly hired employees of the
Company upon whose judgment, initiative and efforts the continued success,
growth and development of the Company is dependent.

     2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below:

          "Affiliate" means any entity other than the Company and its
     Subsidiaries that is designated by the Board or the Committee as a
     participating employer under the Plan, provided that the Company directly
     or indirectly owns at least 20% of the combined voting power of all classes
     of stock of such entity or at least 20% of the ownership interests in such
     entity or the entity owns, directly or indirectly, 20% of the combined
     voting power of all classes of stock of the Company or at least 20% of the
     ownership interests of the Company.

          "Award" means any Option, SAR, Restricted Share, Restricted Share
     Unit, Dividend Equivalent or Other Share-Based Award granted to an Eligible
     Employee under the Plan.

          "Award Agreement" means any written agreement, contract, or other
     instrument or document evidencing an Award.

          "Beneficiary" means the person, persons, trust or trusts which have
     been designated by such Eligible Employee in his or her most recent written
     beneficiary designation filed with the Company to receive the benefits
     specified under this Plan upon the death of the Eligible Employee, or, if
     there is no designated Beneficiary or surviving designated Beneficiary,
     then the person, persons, trust or trusts entitled by will or the laws of
     descent and distribution to receive such benefits.

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

          "Code" means the Internal Revenue Code of 1986, as amended from time
     to time. References to any provision of the Code shall be deemed to include
     successor provisions thereto and regulations thereunder.


<PAGE>
                                      -2-


          "Committee" means the full Board; provided however, that if the Board
     designates a Board committee or subcommittee to administer the Plan,
     "Committee" shall mean such designated Board committee or subcommittee.

          "Company" means Arch Capital Group Ltd., a corporation organized under
     the laws of Bermuda, or any successor corporation.

          "Dividend Equivalent" means a right, granted under Section 5(f), to
     receive cash, Shares, or other property equal in value to dividends paid
     with respect to a specified number of Shares. Dividend Equivalents may be
     awarded on a free-standing basis or in connection with another Award, and
     may be paid currently or on a deferred basis.

          "Eligible Employee" means an individual not previously employed by the
     Company or its Affiliates who is selected by the Committee to receive an
     Award under the Plan as an inducement essential to the individual's
     entering into an employment contract with the Company or an Affiliate.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended
     from time to time. References to any provision of the Exchange Act shall be
     deemed to include successor provisions thereto and regulations thereunder.

          "Fair Market Value" means, with respect to Shares or other property,
     the fair market value of such Shares or other property determined by such
     methods or procedures as shall be established from time to time by the
     Committee. Unless otherwise determined by the Committee in good faith, the
     Fair Market Value of Shares shall mean the mean between the high and low
     selling prices per Share on the immediately preceding date (or, if the
     Shares were not traded on that day, the next preceding day that the Shares
     were traded) on the principal exchange on which the Shares are traded, as
     such prices are officially quoted on such exchange.

          "Option" means a right, granted under Section 5(b) to purchase Shares.

          "Other Share-Based Award" means an offer made under Section 5(g) to
     purchase Shares.

          "Participant" means an Eligible Employee who has been granted an Award
     under the Plan.

          "Plan" means this Long Term Incentive Plan For New Employees.

          "Restricted Shares" means an Award of Shares under Section 5(d) that
     may be subject to certain restrictions and to a risk of forfeiture.

          "Restricted Share Unit" means a right, granted under Section 5(e), to
     receive Shares or cash at the end of a specified deferral period.


<PAGE>
                                      -3-


          "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
     applicable to the Plan and Participants, promulgated by the Securities and
     Exchange Commission under Section 16 of the Exchange Act.

          "SAR" or "Share Appreciation Right" means the right, granted under
     Section 5(c), to be paid an amount measured by the difference between the
     exercise price of the right and the Fair Market Value of Shares on the date
     of exercise of the right, with payment to be made in cash, Shares, or
     property as specified in the Award or determined by the Committee.

          "Shares" means common stock, $.01 par value per share, of the Company.

          "Subsidiary" means any corporation (other than the Company) in an
     unbroken chain of corporations beginning with the Company if each of the
     corporations (other than the last corporation in the unbroken chain) owns
     shares possessing 50% or more of the total combined voting power of all
     classes of stock in one of the other corporations in the chain.

     3. Administration.

     (a) Authority of the Committee. The Plan shall be administered by the
Committee, and the Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the provisions of
the Plan:

          (i) to select Eligible Employees to whom Awards may be granted;

          (ii) to designate Affiliates;

          (iii) to determine the type or types of Awards to be granted to each
     Eligible Employee;

          (iv) to determine the type and number of Awards to be granted, the
     number of Shares to which an Award may relate, the terms and conditions of
     any Award granted under the Plan (including, but not limited to, any
     exercise price, grant price, or purchase price, and any bases for adjusting
     such exercise, grant or purchase price, any restriction or condition, any
     schedule for lapse of restrictions or conditions relating to
     transferability or forfeiture, exercisability, or settlement of an Award,
     and waiver or accelerations thereof, and waivers of performance conditions
     relating to an Award, based in each case on such considerations as the
     Committee shall determine), and all other matters to be determined in
     connection with an Award;

          (v) to determine whether, to what extent, and under what circumstances
     an Award may be settled, or the exercise price of an Award may be paid, in
     cash, Shares, other Awards, or other property, or an Award may be
     cancelled, forfeited, exchanged, or surrendered;


<PAGE>
                                      -4-


          (vi) to determine whether, to what extent, and under what
     circumstances cash, Shares, other Awards, or other property payable with
     respect to an Award will be deferred either automatically, at the election
     of the Committee, or at the election of the Eligible Employee;

          (vii) to prescribe the form of each Award Agreement, which need not be
     identical for each Eligible Employee;

          (viii) to adopt, amend, suspend, waive, and rescind such rules and
     regulations and appoint such agents as the Committee may deem necessary or
     advisable to administer the Plan;

          (ix) to correct any defect or supply any omission or reconcile any
     inconsistency in the Plan and to construe and interpret the Plan and any
     Award, rules and regulations, Award Agreement, or other instrument
     hereunder;

          (x) to accelerate the exercisability or vesting of all or any portion
     of any Award or to extend the period during which an Award is exercisable;
     and

          (xi) to make all other decisions and determinations as may be required
     under the terms of the Plan or as the Committee may deem necessary or
     advisable for the administration of the Plan.

     (b) Manner of Exercise of Committee Authority. The Committee shall have
sole discretion in exercising its authority under the Plan. Any action of the
Committee with respect to the Plan shall be final, conclusive, and binding on
all persons, including the Company, Subsidiaries, Affiliates, Eligible
Employees, any person claiming any rights under the Plan from or through any
Eligible Employee, and shareholders. The express grant of any specific power to
the Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. The Committee may
delegate to officers or managers of the Company or any Subsidiary or Affiliate
the authority, subject to such terms as the Committee shall determine, to
perform administrative functions and, with respect to Awards granted to persons
not subject to Section 16 of the Exchange Act, to perform such other functions
as the Committee may determine, to the extent permitted under Rule 16b-3 (if
applicable) and applicable law. Notwithstanding any provision of this Plan to
the contrary, the Committee may grant Awards which are subject to the approval
of the Board; provided that an Award shall be subject to Board approval only if
the Committee expressly so states.

     (c) Limitation of Liability. Each member of the Committee shall be entitled
to, in good faith, rely or act upon any report or other information furnished to
him or her by any officer or other employee of the Company or any Subsidiary or
Affiliate, the Company's independent certified public accountants, or other
professional retained by the Company to assist in the administration of the
Plan. No member of the Committee, nor any officer or employee of the Company
acting on behalf of the Committee, shall be personally liable for any action,
determination, or interpretation taken or made in good faith with respect to the
Plan, and all members of the Committee and any of-


<PAGE>
                                      -5-


ficer or employee of the Company acting on their behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action, determination, or interpretation.

     4. Shares Subject to the Plan.

     (a) Subject to adjustment as provided in Section 4(c) hereof, the total
number of Shares reserved for issuance under the Plan shall be 4,600,000. No
Award may be granted if the number of Shares to which such Award relates, when
added to the number of Shares previously issued under the Plan, exceeds the
number of Shares reserved under the preceding sentence. If any Awards are
forfeited, cancelled, terminated, exchanged or surrendered, including in
connection with satisfying tax withholding requirements or exercising Awards, or
such Award is settled in cash or otherwise terminates without a distribution of
Shares to the Participant, any Shares counted against the number of Shares
reserved and available under the Plan with respect to such Award shall, to the
extent of any such forfeiture, settlement, termination, cancellation, exchange
or surrender, again be available for Awards under the Plan. Upon the exercise of
any Award granted in tandem with any other Awards, such related Awards shall be
cancelled to the extent of the number of Shares as to which the Award is
exercised.

     (b) Any Shares distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Shares or treasury Shares including Shares
acquired by purchase in the open market or in private transactions.

     (c) In the event that the Committee shall determine that any dividend in
Shares, recapitalization, Share split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Shares such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of Eligible Employees under the Plan, then the Committee shall make such
equitable changes or adjustments as it deems appropriate and, in such manner as
it may deem equitable, adjust any or all of (i) the number and kind of shares
which may thereafter be issued under the Plan, (ii) the number and kind of
shares, other securities or other consideration (including cash) issued or
issuable in respect of outstanding Awards, and (iii) the exercise price, grant
price, or purchase price relating to any Award. In addition, the Committee is
authorized to make adjustments in the terms and conditions of, and the criteria
and performance objectives included in, Awards in recognition of unusual or
non-recurring events (including, without limitation, events described in the
preceding sentence) affecting the Company or any Subsidiary or Affiliate or the
financial statements of the Company or any Subsidiary or Affiliate, or in
response to changes in applicable laws, regulations, or accounting principles.

     5. Specific Terms of Awards.

     (a) General. Awards may be granted on the terms and conditions set forth in
this Section 5. In addition, the Committee may impose on any Award or the
exercise thereof, at the date of grant or thereafter (subject to Section 7(d)),
such additional terms and conditions, not inconsistent with the provisions of
the Plan, as the Committee shall determine, including terms regarding forfei-


<PAGE>
                                      -6-


ture of Awards or continued exercisability of Awards in the event of termination
of employment by the Eligible Employee.

     (b) Options. The Committee is authorized to grant Options to Eligible
Employees on the following terms and conditions. All of such Options shall be
nonqualified stock options for purposes of the Code.

          (i) Exercise Price. The exercise price per Share purchasable under an
     Option shall be determined by the Committee, and the Committee may, without
     limitation, set an exercise price that is based upon achievement of
     performance criteria if deemed appropriate by the Committee.

          (ii) Time and Method of Exercise. The Committee shall determine at the
     date of grant or thereafter the time or times at which an Option may be
     exercised in whole or in part (including, without limitation, upon
     achievement of performance criteria if deemed appropriate by the
     Committee), the methods by which such exercise price may be paid or deemed
     to be paid (including, without limitation, broker-assisted exercise
     arrangements), the form of such payment (including, without limitation,
     cash, Shares, notes or other property), and the methods by which Shares
     will be delivered or deemed to be delivered to Eligible Employees.

     (c) SARs. The Committee is authorized to grant SARs (Share Appreciation
Rights) to Eligible Employees on the following terms and conditions:

          (i) Right to Payment. An SAR shall confer on the Eligible Employee to
     whom it is granted a right to receive with respect to each Share subject
     thereto, upon exercise thereof, the excess of (1) the Fair Market Value of
     one Share on the date of exercise (or, if the Committee shall so determine
     in the case of any such right, the Fair Market Value of one Share at any
     time during a specified period before or after the date of exercise) over
     (2) the exercise price of the SAR as determined by the Committee as of the
     date of grant of the SAR (which, in the case of an SAR granted in tandem
     with an option, shall be equal to the exercise price of the underlying
     Option).

          (ii) Other Terms. The Committee shall determine, at the time of grant
     or thereafter, the time or times at which an SAR may be exercised in whole
     or in part, the method of exercise, method of settlement, form of
     consideration payable in settlement, method by which Shares will be
     delivered or deemed to be delivered to Eligible Employees, whether or not
     an SAR shall be in tandem with any other Award, and any other terms and
     conditions of any SAR.

     (d) Restricted Shares. The Committee is authorized to grant Restricted
Shares to Eligible Employees on the following terms and conditions:

          (i) Issuance and Restrictions. Restricted Shares shall be subject to
     such restrictions on transferability and other restrictions, if any, as the
     Committee may


<PAGE>
                                      -7-


     impose at the date of grant or thereafter, which restrictions, if any, may
     lapse separately or in combination at such times, under such circumstances
     (including, without limitation, upon achievement of performance criteria if
     deemed appropriate by the Committee), in such installments, or otherwise,
     as the Committee may determine. Except to the extent restricted under the
     Award Agreement relating to the Restricted Shares, an Eligible Employee
     granted Restricted Shares shall have all of the rights of a shareholder
     including, without limitation, the right to vote Restricted Shares and the
     right to receive dividends thereon. If the lapse of restrictions is
     conditioned on the achievement of performance criteria, the Committee shall
     select the criterion or criteria from the following list, as the Committee
     may deem appropriate: appreciation in value of the Shares, total
     shareholder return, earnings per share, operating income, net income, pro
     forma net income, return on equity, return on designated assets, return on
     capital, economic value added, earnings, revenues, expenses, operating
     profit margin, operating cash flow, or net profit margin. The Committee
     must certify in writing prior to the lapse of restrictions conditioned on
     the achievement of performance criteria that such performance criteria were
     in fact satisfied.

          (ii) Forfeiture. Except as otherwise determined by the Committee, at
     the date of grant or thereafter, upon termination of employment during any
     applicable restriction period, Restricted Shares and any accrued but unpaid
     dividends or Dividend Equivalents that are at that time subject to
     restrictions shall be forfeited; provided, however, that the Committee may
     provide, by rule or regulation or in any Award Agreement, or may determine
     in any individual case, that restrictions or forfeiture conditions relating
     to Restricted Shares will be waived in whole or in part in the event of
     terminations resulting from specified causes, and the Committee may in
     other cases waive in whole or in part the forfeiture of Restricted Shares.

          (iii) Certificates for Shares. Restricted Shares granted under the
     Plan may be evidenced in such manner as the Committee shall determine. If
     certificates representing Restricted Shares are registered in the name of
     the Eligible Employee, such certificates shall bear an appropriate legend
     referring to the terms, conditions, and restrictions applicable to such
     Restricted Shares, and the Company shall retain physical possession of the
     certificate.

          (iv) Dividends. Dividends paid on Restricted Shares shall be either
     paid at the dividend payment date, or deferred for payment to such date as
     determined by the Committee, in cash or in unrestricted Shares having a
     Fair Market Value equal to the amount of such dividends. Shares distributed
     in connection with a Share split or dividend in Shares, and other property
     (including deferred cash) distributed as a dividend, shall be subject to
     restrictions and a risk of forfeiture to the same extent as the Restricted
     Shares with respect to which such Shares or other property has been
     distributed.

     (e) Restricted Share Units. The Committee is authorized to grant Restricted
Share Units to Eligible Employees, subject to the following terms and
conditions:


<PAGE>
                                      -8-


          (i) Award and Restrictions. Delivery of Shares or cash, as the case
     may be, will occur upon expiration of the deferral period specified for
     Restricted Share Units by the Committee (or, if permitted by the Committee,
     as elected by the Eligible Employee). In addition, Restricted Share Units
     shall be subject to such restrictions as the Committee may impose, if any
     (including, without limitation, the achievement of performance criteria if
     deemed appropriate by the Committee), at the date of grant or thereafter,
     which restrictions may lapse at the expiration of the deferral period or at
     earlier or later specified times, separately or in combination, in
     installments or otherwise, as the Committee may determine. If the lapse of
     restrictions is conditioned on the achievement of performance criteria, the
     Committee shall select the criterion or criteria from the list of criteria
     set forth in Section 5(d)(i). The Committee must certify in writing prior
     to the lapse of restrictions conditioned on the achievement of performance
     criteria that such criteria were in fact satisfied.

          (ii) Forfeiture. Except as otherwise determined by the Committee at
     date of grant or thereafter, upon termination of employment (as determined
     under criteria established by the Committee) during the applicable deferral
     period or portion thereof to which forfeiture conditions apply (as provided
     in the Award Agreement evidencing the Restricted Share Units), or upon
     failure to satisfy any other conditions precedent to the delivery of Shares
     or cash to which such Restricted Share Units relate, all Restricted Share
     Units that are at that time subject to deferral or restriction shall be
     forfeited; provided, however, that the Committee may provide, by rule or
     regulation or in any Award Agreement, or may determine in any individual
     case, that restrictions or forfeiture conditions relating to Restricted
     Share Units will be waived in whole or in part in the event of termination
     resulting from specified causes, and the Committee may in other cases waive
     in whole or in part the forfeiture of Restricted Share Units.

     (f) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to Eligible Employees. The Committee may provide, at the date of
grant or thereafter, that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Shares, or
other investment vehicles as the Committee may specify, provided that Dividend
Equivalents (other than freestanding Dividend Equivalents) shall be subject to
all conditions and restrictions of the underlying Awards to which they relate.

     (g) Other Share-Based Awards. The Committee is authorized under the Plan,
subject to limitations under applicable law, to offer to sell Shares to Eligible
Employees for an amount not less than the Fair Market Value per Share. The
Committee shall determine the other terms and conditions of such offers.

     6. Certain Provisions Applicable to Awards.

     (a) Stand-Alone, Additional, Tandem and Substitute Awards. Awards granted
under the Plan may, in the discretion of the Committee, be granted to Eligible
Employees either alone or in addition to, in tandem with, or in exchange or
substitution for, any other Award granted under the Plan or any award granted
under any other plan or agreement of the Company, any Sub-


<PAGE>
                                      -9-


sidiary or Affiliate, or any business entity to be acquired by the Company or a
Subsidiary or Affiliate, or any other right of an Eligible Employee to receive
payment from the Company or any Subsidiary or Affiliate. Awards may be granted
in addition to or in tandem with such other Awards or awards, and may be granted
either as of the same time as or a different time from the grant of such other
Awards or awards. The per Share exercise price of any Option, grant price of any
SAR, or purchase price of any other Award conferring a right to purchase Shares
which is granted, in connection with the substitution of awards granted under
any other plan or agreement of the Company or any Subsidiary or Affiliate or any
business entity to be acquired by the Company or any Subsidiary or Affiliate,
shall be determined by the Committee, in its discretion. Notwithstanding the
foregoing, the exercise price of any Option, grant price of any SAR or purchase
price of any other Award conferring a right to purchase Shares which is granted
in exchange or substitution for an option, SAR or other award granted by the
Company (other than in connection with a transaction described in Section 4(c)
hereof) shall not be less than the exercise price, grant price or purchase price
of the exchanged or substituted option, SAR or other award, and outstanding
Awards shall not be amended (other than in connection with a transaction
described in Section 4(c) hereof) to reduce the exercise price, grant price or
purchase price of any such Award.

     (b) Terms of Awards. The term of each Award granted to an Eligible Employee
shall be for such period as may be determined by the Committee.

     (c) Form of Payment Under Awards. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company or a Subsidiary
or Affiliate upon the grant, maturation, or exercise of an Award may be made in
such forms as the Committee shall determine at the date of grant or thereafter,
including, without limitation, cash, Shares, or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis. The
Committee may make rules relating to installment or deferred payments with
respect to Awards, including the rate of interest to be credited with respect to
such payments.

     (d) Nontransferability. Except as set forth below and except for vested
Shares, Awards shall not be transferable by an Eligible Employee except by will
or the laws of descent and distribution (except pursuant to a Beneficiary
designation) and shall be exercisable during the lifetime of an Eligible
Employee only by such Eligible Employee or his guardian or legal representative.
Notwithstanding the foregoing, if the Committee expressly so provides in the
applicable Award agreement (at the time of grant or at any time thereafter), an
Award granted hereunder may be transferred by a Participant to members of his or
her "immediate family" or to a trust or other entity established for the
exclusive benefit of solely one or more members of the Participant's "immediate
family," and any such transfer by a Participant must be for no consideration.
Any Award held by the transferee will continue to be subject to the same terms
and conditions that were applicable to the Award immediately prior to the
transfer, except that the Award will be transferable by the transferee only by
will or the laws of descent and distribution. For purposes hereof, "immediate
family" means the Participant's children, stepchildren, grandchildren, parents,
stepparents, grandparents, spouse, siblings (including half brothers and
sisters), in-laws, and relationships arising because of legal adoption. An
Eligible Employee's rights under the Plan may not be pledged, mortgaged,
hypothecated, or otherwise encumbered, and shall not be subject to claims of the
Eligible Employee's creditors.


<PAGE>
                                      -10-


     7. General Provisions.

     (a) Compliance with Legal and Trading Requirements. The Plan, the granting
and exercising of Awards thereunder, and the other obligations of the Company
under the Plan and any Award Agreement, shall be subject to all applicable
federal and state laws, rules and regulations, and to such approvals by any
regulatory or governmental agency as may be required. The Company, in its
discretion, may postpone the issuance or delivery of Shares under any Award
until completion of such stock exchange or market system listing or registration
or qualification of such Shares or other required action under any state or
federal law, rule or regulation as the Company may consider appropriate, and may
require any Participant to make such representations and furnish such
information as it may consider appropriate in connection with the issuance or
delivery of Shares in compliance with applicable laws, rules and regulations. No
provisions of the Plan shall be interpreted or construed to obligate the Company
to register any Shares under federal or state law.

     (b) No Right to Continued Employment or Service. Neither the Plan nor any
action taken thereunder shall be construed as giving any employee or director
the right to be retained in the employ or service of the Company or any of its
Subsidiaries or Affiliates, nor shall it interfere in any way with the right of
the Company or any of its Subsidiaries or Affiliates to terminate any employee's
or director's employment or service at any time.

     (c) Taxes. The Company or any Subsidiary or Affiliate is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Shares, or any payroll or other payment
to an Eligible Employee, amounts of withholding and other taxes due in
connection with any transaction involving an Award, and to take such other
action as the Committee may deem advisable to enable the Company and Eligible
Employees to satisfy obligations for the payment of withholding taxes and other
tax obligations relating to any Award. This authority shall include authority to
withhold or receive Shares or other property and to make cash payments in
respect thereof in satisfaction of an Eligible Employee's tax obligations.

     (d) Changes to the Plan and Awards. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of shareholders of the Company or
Participants; provided, however, that, without the consent of an affected
Participant, no amendment, alteration, suspension, discontinuation, or
termination of the Plan may impair the rights or, in any other manner, adversely
affect the rights of such Participant under any Award theretofore granted to him
or her.

     (e) No Rights to Awards; No Shareholder Rights. No Eligible Employee or
employee shall have any claim to be granted any Award under the Plan, and there
is no obligation for uniformity of treatment of Eligible Employees and
employees. No Award shall confer on any Eligible Employee any of the rights of a
shareholder of the Company unless and until Shares are duly issued or
transferred to the Eligible Employee in accordance with the terms of the Award.

     (f) Unfunded Status of Awards. The Plan is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan or any
Award shall give any such Participant any


<PAGE>
                                      -11-


rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company's obligations under the Plan to
deliver cash, Shares, other Awards, or other property pursuant to any Award,
which trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan unless the Committee otherwise determines with the consent of
each affected Participant.

     (g) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the shareholders of the Company for approval shall
be construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including, without
limitation, the granting of options and other awards otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.

     (h) Not Compensation for Benefit Plans. No Award payable under this Plan
shall be deemed salary or compensation for the purpose of computing benefits
under any benefit plan or other arrangement of the Company for the benefit of
its employees or directors unless the Company shall determine otherwise.

     (i) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award. In the case of Awards to Eligible Employees,
the Committee shall determine whether cash, other Awards, or other property
shall be issued or paid in lieu of such fractional Shares or whether such
fractional Shares or any rights thereto shall be forfeited or otherwise
eliminated.

     (j) Governing Law. The validity, construction, and effect of the Plan, any
rules and regulations relating to the Plan, and any Award Agreement shall be
determined in accordance with the laws of Bermuda without giving effect to
principles of conflict of laws.

     (k) Effective Date; Plan Termination. The Plan shall become effective as of
October 23, 2001, (the "Effective Date"). The Plan shall terminate as to future
awards on the date which is ten (10) years after the Effective Date.

     (l) Titles and Headings. The titles and headings of the sections in the
Plan are for convenience of reference only. In the event of any conflict, the
text of the Plan, rather than such titles or headings, shall control.