**Exhibit 10.3**

** **

**ORIENT-EXPRESS HOTELS LTD.**

 

**2007 PERFORMANCE SHAREPLAN**

 

(Asadopted by the Board of Directors on May 7, 2007 and approved byshareholders on June 15, 2007, and amended by the Board of Directors on January 20,2009)

 

**1.****                ****2007 Performance Share Plan (the “Plan”)**

 

Orient-Express Hotels Ltd. (the “Company”) maygrant, in the manner and upon the terms and conditions set forth in this Plan,rights to purchase (“Awards”) not in excess of an aggregate of 500,000 Class Acommon shares of the Company (adjusted, if necessary, in accordance with Section 10)to eligible directors, officers and employees of the Company and itssubsidiaries (as determined in accordance with Section 3). Shares subjectto Awards may be either authorized but unissued shares or acquired shares.

 

**2.****                ****Administration of the Plan**

 

(a)    The Plan shall be administered, and Awardshereunder shall be granted, by the Board of Directors of the Company (the “Board”)or, at the discretion of the Board, the Compensation Committee (the “Committee”)thereof. In the event the Committee is the administrator in respect of anyAwards, references in the Plan to the Board, other than in paragraph (c) belowand Sections 5(a), 9, 11 and 12, shall be deemed to be references to theCommittee with respect to such Awards. Any decision of the Board shall be finaland conclusive in all matters relating to the Plan. The Board may act only by amajority of its members in office, except that the members may authorize anyone or more of their number or the Secretary of the Company to execute anddeliver documents on their behalf. No member of the Board shall be liable foranything done or omitted to be done by him or by any other member in connectionwith the Plan, except for his own willful misconduct or as expressly providedby statute.

 

(b)    The Board may make or vary regulations forthe administration and operation of the Plan not inconsistent with theprovisions hereof and may establish terms, conditions, including Companyperformance goals to be attained as a condition to the vesting of Awards (“PerformanceCriteria”), if any, and restrictions applicable to such Awards, which maydiffer with respect to each grantee. The authority of the Board shall include,but shall not be limited to, the authority to determine the extent to which anyPerformance Criteria have been satisfied, to determine whether, to what extentand under what circumstances an Award may be settled, canceled, forfeited oraccelerated, to make adjustments in the terms and conditions of any Award in accordancewith the Plan, to construe or interpret the Plan and Awards and determinegrantees’ rights thereunder.

 

(c)    For purposes of making Awards, the Committeeshall be comprised solely of directors who are “independent directors” pursuantto New York Stock Exchange requirements.

 

**3.****                ****To Whom Awards May Be Granted**

 

(a)    Awards may be granted to those directors,officers and employees of the Company or any subsidiary thereof who, in theopinion of the Board, have contributed significantly to the growth and progressof the Company or any subsidiary or to persons who, in the opinion of theBoard, hold promise of contributing to the growth and progress of the Companyor any 

 

----

 

subsidiary andwho can be attracted to directorship, officership or employment through thegrant of Awards under the Plan. The Board is hereby given the authority todetermine which of the eligible directors, officers and employees are to begranted Awards and the number of shares underlying each such Award.

 

(b)    The term “subsidiary” means any corporationin an unbroken chain of corporations beginning with the Company, each of whichowns at the time any Award is granted (except in the case of the last suchcorporation in the chain) shares possessing 50 percent or more of the totalcombined voting power of all classes of shares in one of the other corporationsin such chain.

 

(c)    The terms and conditions of an Award shallbe set forth in a written Award notice provided to the grantee, which shallindicate the date of the grant of the Award, the number of shares to which theAward relates, the Purchase Price of such shares, and any Performance Criteriaupon which the vesting of such Award may be conditioned.

 

**4.****                ****Purchase Price of Shares**

 

Theprice that must be paid by a grantee to obtain shares pursuant to the Awardshall be $.01 per share (the “Purchase Price”), representing the par value ofeach share.

 

**5.****                ****Circumstances Under Which Awards May BeGranted**

 

(a)    Awards may be granted at any time and fromtime to time on or after the date on which the Plan is adopted by the Board andbefore the expiration of ten years therefrom. If prior to the expiration of tenyears from the date on which the Plan is adopted, an Award or any portion of anAward expires or otherwise lapses without shares having been distributed, theshares underlying such Award shall thereupon become available for making Awardsto other eligible directors, officers and employees.

 

(b)    Awards shall be granted at such times asdetermined by the Board.

 

(c)    The maximum number of shares subject to allAwards under the Plan shall be the number of shares in Section 1. Themaximum number of shares that may be subject to any Award to any individualshall be within the discretion of the Board, subject to the number of sharesremaining under the Plan that have not been the subject of Awards at the timeof the grant of such Award.

 

**6.****                ****Awards Not Assignable**

 

EveryAward under the Plan shall provide that neither the Award nor any rights underthe Award shall be transferable by the grantee, other than by will or the lawsof descent and distribution, and that it is exercisable, during his lifetime,only by the grantee.

 

**7.****                ****Manner of Payment of Awards**

 

(a)    As soon as practicable after an Award vestsin accordance with Section 8, and in any event not later than the 15th day of the third month of the calendar yearfollowing the calendar year in which the Award vests, the Company shall (i) causea certificate or certificates for the number of shares in respect of which theAward vests to be registered in the name of the grantee, in such denominationsas the grantee may direct, and shall deliver such certificate or certificatesto or upon the order of the grantee, and (ii) pay the grantee an amount incash equal to the value of the dividends, if any, and without interest, thatwould have been paid on the acquired shares in respect of dividend record datesoccurring during the period between the date of the Award and the date ofvesting of such Award, unless otherwise determined by the Board (the “DividendEquivalent”); provided, however, that no payments shall be made 

 

2

----

 

under this Section 7(a) unlessthe grantee shall have paid the Company, in the manner determined by the Board,the full Purchase Price for all shares to be acquired by the grantee.

 

(b)    To the extent permitted under applicablelaw, the Board, in its sole discretion, may pay the grantee a cash amount inlieu of the delivery of shares and payment of cash in paragraph (a), and infull satisfaction thereof, equal to the total of (i) the DividendEquivalent (as defined in paragraph (a) above), and (ii) the fairmarket value of the aggregate number of shares in respect of which the Awardvests, less the Purchase Price of same, such payment to be made not later thanthe payment date in paragraph (a) above. For these purposes, the “fairmarket value” of each share shall be determined based on the closing price of ashare on the New York Stock Exchange (or any other national securities exchangein the United States of America on which the Company’s Class A commonshares are then listed) on the date the Award vests.

 

(c)    The grantee shall be entitled, from the dateshares are registered in his or her name, to all the rights of a shareholder asto such shares, including the right to vote the shares and to receive andretain all dividends paid thereon.

 

(d)    Notwithstanding paragraph (a) above,unless otherwise provided in a grantee’s Award, in the event that any shares orcash to be paid to the grantee in connection with a change in the ownership oreffective control of the Company or the ownership of a substantial portion ofthe assets of the Company, as described in Section 280G of the U.S.Internal Revenue Code of 1986, as amended (the “Code”), pursuant to the Plan,any Award, or otherwise (including, without limitation, the acceleration of anypayment, award, distribution or benefit) (the “Payment”) constitutes an “excessparachute payment” within the meaning of Section 280G of the Code, thegrantee shall be paid an additional amount (the “Gross-Up Payment”) such thatthe net amount retained by the grantee after deduction of (i) any excisetax imposed under Section 4999 of the Code and (ii) any federal,state and local income and employment tax and excise tax imposed upon theGross-Up Payment shall be equal to the Payment. For purposes of determining theamount of the Gross-Up Payment, the grantee shall be deemed to pay (I) federalincome tax and employment taxes at the highest marginal rate of federal incomeand employment taxation in the calendar year in which the Gross-Up Payment isto be made and (II) state and local income taxes at the highest marginalrate of taxation in the state and locality of the grantee’s residence in thecalendar year in which the Gross-Up Payment is to be made, net of the maximumreduction in federal income taxes that may be obtained from the deduction ofsuch state and local taxes.  Thegrantee shall provide the Company with the information necessary to compute theGross-Up Payment, and the Company shall pay the grantee the Gross-Up Paymentnot later than the last day of the calendar year next following the calendaryear in which the grantee pays the taxes referred to in clauses (i) and (ii) ofthe preceding sentence.

 

(e)    Notwithstanding any provision of the Plan tothe contrary, no payment shall be made in respect of any transaction involvingan Award unless and until the grantee pays, in the manner determined by theBoard, all applicable tax withholdings due in connection with such transactionand which the grantee’s employer is required to withhold.

 

(f)     In the event that any payment is made underthis Section 7 following the grantee’s death, the Plan shall pay thegrantee’s estate or any person who acquired the Award by bequest or inheritanceor by reason of the death of the grantee, subject to the provisions of Section 8,at the time, in the manner and subject to the conditions set forth in this Section 7as if such person were the grantee; provided, however, that such person shallhave furnished the Board with evidence satisfactory to the Board of such person’sright to the Award.

 

3

----

 

**8.****                ****Circumstances Under Which Awards Shall andShall Not Vest**

 

(a)   *Vesting*. EveryAward under the Plan shall provide that:

 

(i)     it shall not vest until the shares reservedfor issuance under such Award have been listed upon any national securitiesexchange in the United States of America on which the Company’s Class Acommon shares are then listed;

 

(ii)    it shall not vest until the expiration of aperiod of at least one year from the date the Award was granted, except asprovided in (iii) and (iv) below;

 

(iii)   it shall not vest if the grantee is not adirector, officer or employee of the Company or a subsidiary thereof on thedate the Award would otherwise vest; provided, however, that a grantee ceasingto be a director, officer or employee of the Company or a subsidiary thereof onaccount of

 

(I)        retirement at or after the normalretirement date in any applicable pension plan of the Company in which thegrantee participates,

 

(II)       injury or disability as determined underany disability insurance policy or plan of the Company in which the granteeparticipates,

 

(III)      dismissal for redundancy,

 

(IV)      death, or

 

(V)       on concurrence of the Board (whichconcurrence may be granted or withheld in its sole discretion), the sale orother disposition of the subsidiary for which the person acts as director orofficer or which employs the employee or the operating division of the Companyor a subsidiary for which the employee performs his employment,

 

shall, subject to (vi) below, vestin his or her Award as of the date of the event in (I) - (V), asdetermined by the Board;

 

(iv)   in the event of a Change in Control (asdefined in Section 9), subject to (vi) below, the Award shall vest onthe date of the relevant event, as determined by the Board;

 

(v)    it shall not vest unless the Board shall besatisfied that the issuance of shares in connection with that Award will be incompliance with all relevant rules and regulations of the United StatesSecurities and Exchange Commission; and

 

(vi)   it shall not vest unless and until the Boardcertifies that any Performance Criteria upon which the vesting of that Award isconditioned have been satisfied.

 

(b)   *Performance Criteria*.The Board may establish Performance Criteria which must be satisfied as acondition for any Award to vest. Such Performance Criteria shall be set forthin the notice of Award and shall be based on objective performance goals overthe performance period determined by the Board. Such goals may be based on oneor more business criteria that apply to the grantee, a business unit of theCompany, or the Company as a whole, including, but not limited to, share price,market share, sales, earning per share, earnings before tax, return on equity,total shareholder return, or costs. The Board may also provide for pro-ratasatisfaction of Performance Criteria in the event of (i) a grantee’stermination of employment before the expiration of a performance period onaccount of the events in paragraph (a)(iii)(I)-(V) above, or (ii) aChange in Control (as defined in Section 9), in either case before theexpiration of the relevant performance period.

 

4

----

 

ThePerformance Criteria shall be determined in accordance with generally acceptedaccounting principles, if applicable, and shall be subject to certification bythe Board, provided, that the Board shall have the authority to make equitableadjustments to the Performance Criteria (i) in recognition of unusual ornon-recurring events affecting the Company or its subsidiaries or the financialstatements of the Company or any subsidiary, (ii) in response to changesin applicable laws or regulations, (iii) to account for items of gain,loss or expense determined to be extraordinary or unusual in nature orinfrequent in occurrence, or related to the disposal of a segment of abusiness, or (iv) related to a change in accounting principles.

 

Thefailure to satisfy the Performance Criteria within the performance period overwhich such Performance Criteria is measured shall cause the Awards subject tosuch Performance Criteria to lapse and become void to the extent that thePerformance Criteria have not been met as of the last day of such performanceperiod.

 

**9.****                ****Change in Control**

 

Forpurposes of the Plan, “Change in Control” means any of the following events:

 

(a)    any “person” (as that term is defined forthe purposes of Section 13(d) or 14(d) of the U.S. SecuritiesExchange Act of 1934), other than any subsidiary of the Company, shall directlyor indirectly acquire more than 40% of the voting shares of the Company thenoutstanding and then entitled to vote generally in the election of directors ofthe Company; or

 

(b)    individuals who, on the date of adoption ofthe Plan, constitute the Company’s Board (or the successors of such individualsnominated by such Board or a committee thereof on which such individuals ortheir successors constitute a majority) shall cease to constitute a majority ofthe Company’s Board; or

 

(c)    the Company amalgamates, merges orconsolidates with or into any other corporation, other than a corporation whichdirectly, or indirectly through one or more intermediaries, is controlled byany subsidiary of the Company, without the approval of the Company’s Boardconstituted as provided in clause (b) above; or

 

(d)    the Company sells, leases, exchanges orotherwise disposes of all or substantially all of its assets and businesswithout the approval of the Company’s Board constituted as provided in clause (b) above.

 

Theobligations of the Company under the Plan shall be binding upon any successorcompany, corporation or other organization resulting from any amalgamation,merger, consolidation or other reorganization of the Company, or upon anysuccessor company, corporation or organization succeeding to all orsubstantially all of the assets and business of the Company, in any such casewhich would constitute a Change in Control. The Company agrees that it willmake appropriate provisions for the preservation of all grantees’ rights underthe Plan in any agreement or plan that it may enter into or adopt to effect anysuch amalgamation, merger, consolidation, reorganization or transfer of assetsconstituting a Change in Control.

 

**10.****         ****Adjustment of Number or Kind of Shares**

 

Ifthe Company shall effect one or more share splits, share dividends,combinations of shares, exchanges of shares, repurchases, recapitalizations orsimilar capital adjustments, the Board shall appropriately adjust the aggregatenumber of shares with respect to which Awards have been made or may be madeunder the Plan in order to prevent dilution or enlargement of the rights ofgrantees under Awards. Every Award under the Plan shall 

 

5

----

 

providethat, in the event of any such capital adjustments, the number and kind ofshares to which it applies shall be appropriately adjusted.

 

**11.****         ****Amendment**

 

ThePlan may be amended from time to time by the Board. No amendment shall alter orimpair any of the rights or obligations of any person, without his consent,under any Award theretofore granted under the Plan.

 

**12.****         ****Termination**

 

ThePlan shall terminate upon the first of the following dates or events to occur:

 

(a)    if the Company is a participant in anycorporate amalgamation, merger, consolidation or other transaction and noprovision is made at the time of the transaction to continue the Plan, exceptas provided in Section 9;

 

(b)    resolution of the Board terminating thePlan; or

 

(c)    on May 7, 2017.

 

Inthe event of termination of the Plan in any of the ways provided hereinabove,the provisions of the Plan shall continue in full force and effect as regardsany Awards prior to such termination.

 

**13.****         ****Effect of Awards Upon Employment**

 

Nothingin the Plan shall be construed as giving any person acting as a director orofficer of or employed by the Company or any subsidiary thereof the right to beretained in such directorship, officership or employment. The Company and anysubsidiary thereof and the shareholders shall have the right to dismiss anydirector, officer or employee at any time with or without cause and withoutliability for the effect which such dismissal might have upon him as aparticipant under the Plan, and under no circumstances shall a person ceasingto be a director, officer or employee by reason of dismissal or otherwise beentitled to or claim against the Company or any subsidiary thereof anycompensation for or in respect of any consequent reduction or loss of hisrights or benefits (actual or prospective) under any Award held by him or herin connection with the Plan.

 

Anydetermination by the Board that the grantee is eligible for vesting under Section 7(a)(iii)(II) isconditioned upon the grantee’s consent to the use of his or her personalinformation, including medical records, for the purpose of making the necessarydetermination as to the grantee’s injured or disabled condition.

 

**14.****         ****No Funding**

 

Nothingcontained in the Plan or any Award shall require the Company or any subsidiarythereof to set aside any funds or shares for delivery hereunder. No grantee ofany Award or any other person obtaining the Award upon the grantee’s deathshall have any rights under the Plan that are greater than those of a generalcreditor of the Company.

 

**15.****         ****Construction**

 

Inall respects the Plan shall be governed by, and be construed in accordancewith, the laws of the Islands of Bermuda.

 

6

----