** **

**Exhibit- 10.14**

 

**MONTPELIERRE HOLDINGS, LTD.2007 LONG-TERM INCENTIVE PLAN**

 

**1.          Purpose**

 

The purpose of the Montpelier Re Holdings, Ltd. 2007Long-Term Incentive Plan is to advance the interests of Montpelier Re Holdings,Ltd. and its shareholders by providing to certain of the key employees,non-employee directors and consultants of the Company and its subsidiarieslong-term incentive awards relating to the Shares. The Plan shall becomeeffective upon its adoption by the Board of the Company and the approval of itsshareholders. Defined terms used in the Plan shall have the meanings set forthin paragraph 9.

 

**2.          Administration**

 

(a)  *Committee*.  ThePlan shall be administered by the Committee. No member of the Committee shallbe an employee of the Company or a subsidiary of the Company. Each Committeemember shall meet the appropriate independence requirements of the SEC, NYSE orother share exchange as appropriate, BSX, and the BMA, and any other body withenforceable jurisdiction.

 

(b)  *ExclusiveDiscretion*.  The Committee shall have exclusive authorityto select the individuals to be granted Awards, to determine the type, size andterms of the Awards and to prescribe the form of the instruments embodyingAwards. The Committee shall be authorized to interpret the Plan and the Awardsgranted under the Plan, to establish, amend and rescind any rules andregulations relating to the Plan and to make any other determinations which itbelieves necessary or advisable for the administration of the Plan. TheCommittee may correct any defect or supply any omission or reconcile anyinconsistency in the Plan or in any Award in the manner and to the extent theCommittee deems desirable to carry it into effect. Any decision of theCommittee in the administration of the Plan, as described herein, shall befinal and conclusive.

 

(c)  *NoLiability*.  The Committee may act only by a majority ofits members in office, except that the members thereof may authorize any one ormore of their number or any officer of the Company to execute and deliverdocuments on behalf of the Committee. No member of the Committee shall beliable for anything done or omitted to be done by him or her or by any othermember of the Committee in connection with the Plan, except for his or her ownwillful misconduct or as expressly provided by statute.

 

**3.          Eligibilityand Participation**

 

(a)  *Eligibility*.  Onlythose key employees, non-employee directors, and consultants of the Company ora subsidiary thereof who are selected by the Committee shall be eligible toreceive Awards.

 

(b)  *ParticipatingSubsidiaries*.  If a subsidiary of the Company wishes toparticipate in the Plan, and its participation shall have been approved by theBoard, the Board of Directors of the subsidiary shall adopt a resolution inform and substance satisfactory to the Committee authorizing participation bythe subsidiary in the Plan. A subsidiary may cease to participate in the Planat any time by action of the Board or by action of the Board of Directors ofsuch subsidiary, which latter action shall be effective not earlier than thedate of delivery to the Secretary of the Company of a certified copy of aresolution of the subsidiary’s Board of Directors taking such action.Termination of participation in the Plan shall not relieve a subsidiary of anyobligations theretofore incurred by it under the Plan.

 

**4.          AuthorizedShares**

 

(a)  *MaximumNumber of Shares Subject to Awards*.  Subject toadjustment as provided in paragraph 11 herein, the maximum number ofShares that may be issued under the Plan shall be 6,200,000.

 

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(b)  *Rules forDetermining Shares Available for Issuance*.  If,pursuant to the terms of an Award, the number of Shares with respect to whichthe Award relates may be increased upon the attainment of certain performanceobjectives or upon the occurrence of such other event(s) as may bespecified by the Committee in an Award Agreement, the maximum number of Shareswith respect to which such Award potentially may relate shall count against themaximum number of Shares which may be delivered under the Plan for so long assuch Award is outstanding prior to final settlement thereof. Upon settlement ofsuch Award, only the Shares delivered thereunder shall be considered “issuedunder the Plan” for purposes of paragraph 4(a). Any Shares underlying aforfeited Award or portion thereof shall again be considered available forissuance under the Plan. Upon exercise of an SAR, the full number of Sharesunderlying such Award shall reduce the Shares available for issuance under thePlan.

 

(c)  *Rightswith Respect to Shares*.  The Committee may, but shall inno event be required to, provide dividend equivalent rights with respect toAwards, subject to such limitations and conditions as the Committee mayestablish. Otherwise, a Participant to whom Awards are granted (and any personsucceeding to such Participant’s rights pursuant to the Plan) shall have norights as a shareholder with respect to any Shares to which such Awards relateunless and until a Share certificate is issued to the Participant upon exerciseor vesting of an Award.

 

**5.          ShareAppreciation Rights**

 

(a)  *SARs*.  Subjectto the terms and provisions of the Plan, SARs may be granted to Participants insuch number, and upon such terms, and at any time and from time to time asshall be determined by the Committee. A Share Appreciation Right entitles theParticipant to receive upon exercise of the Award a payment equal to theproduct of (x) the excess, if any, of the Fair Market Value of a Share onthe date of grant over the Grant Price times (y) the number of Shares withrespect to which the SAR is exercised. The Grant Price of each SAR shall be notless than the Fair Market Value per Share on the date of grant of the SARAward.

 

(b)  *AwardAgreements*.  Each SAR grant shall be evidenced by an AwardAgreement that shall specify the number of Shares to which the SAR relates, theterm of the SAR, the vesting conditions, and such other provisions as theCommittee shall determine.

 

(c)  *Vesting*.  SARsshall be exercisable only if and to the extent they have vested. The vesting ofa SAR may be conditioned upon continued employment or service, as the case maybe, of a Participant, satisfaction of performance goals, or such otherconditions as the Committee may, in its sole discretion, determine.

 

(d)  *Form ofPayment*.  At the discretion of the Committee, the paymentof SARs upon exercise may be in cash, in Shares of equivalent value or in somecombination thereof.

 

(e)  *Terminationof Employment*.  Each SAR Award Agreement shall set forththe extent to which the Participant shall have the right to exercise the SARfollowing termination of the Participant’s employment or, if the Participant isa non-employee director or consultant, service with the Company or any of itssubsidiaries. Such provisions shall be determined in the sole discretion of theCommittee, shall be included in the Award Agreement entered into withParticipants, need not be uniform among all SARs awarded under the Plan, andmay reflect distinctions based on the reasons for termination of employment orservice, as the case may be. In no way would an acceleration of any awarded butunvested SARs occur due to a termination of employment or service for cause.

 

(f)  *Non-transferability*.  Exceptas otherwise provided in a Participant’s Award Agreement, SARs shall not betransferable by Participants otherwise than by will or the laws of descent anddistribution, and shall be exercisable during a Participant’s lifetime only bysuch Participant. A beneficiary designation under paragraph 14 shall notbe a violation of this paragraph.

 

**6.          RestrictedShare Units**

 

(a)  *RSUs*.  Subjectto the terms and provisions of the Plan, RSUs may be granted to Participants insuch number, and upon such terms, and at any time and from time to time asshall be determined by the Committee. Restricted Share Units entitle theParticipant to receive upon settlement of the Award a payment equal to the FairMarket Value of a Share on the Valuation Date, times the number of RSUs beingsettled.

 

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(b)  *AwardAgreement*.  Each grant of RSUs shall be evidenced by anAward Agreement that shall specify the number of Shares to which the Awardrelates, the period of restriction, the vesting conditions, the settlement dateand such other provisions as the Committee shall determine.

 

(c)  *Vesting*.  Subjectto the terms and provisions of the Plan, the Committee shall impose such vestingconditions on any RSUs as it may deem advisable and as are set forth in theAward Agreement including, without limitation, vesting conditions based uponcontinued employment with or service as a non-employee director or consultantof the Company or a subsidiary. The vesting period for RSUs with noperformance-based vesting characteristics must be at least three years (vestingmay occur ratably on each month, quarter or annual anniversary of the grantdate over such vesting period). The vesting period for RSUs withperformance-based vesting characteristics must be at least one year. TheCommittee may grant a “de minimis” number of RSUs that do not comply with theforegoing minimum vesting standards. For this purpose “de minimis” means thatthe aggregate number of Shares delivered in respect of such RSUs together withany Performance Shares and Share Awards (if applicable) not meeting suchrequirements will not exceed ten percent (10%) of the total number of Sharesauthorized under the Plan.

 

(d)  *Payment*.  Paymentof RSUs shall be made as soon as practicable following the Valuation Date. Atthe discretion of the Committee, the payment upon settlement of RSUs may be incash, in Shares of equivalent value or in some combination thereof.

 

(e)  *Terminationof Employment*.  Each Award Agreement shall set forth theextent to which the Participant shall or shall not have the right to receive apayment with respect to his or her RSUs following termination of theParticipant’s employment or, if the Participant is a non-employee director orconsultant, service with the Company or any one of its subsidiaries. Suchprovisions shall be determined in the sole discretion of the Committee, shallbe included in the Award Agreement entered into with each Participant, need notbe uniform among all RSUs granted under the Plan, and may reflect distinctionsbased on the reasons for termination of employment or service, as the case maybe. In no way would an acceleration of any awarded but unvested RSUs occur dueto a termination of employment or service for cause.

 

(f)  *Non-transferability*.  Exceptas otherwise provided in a Participant’s Award Agreement, RSUs may not be sold,transferred, pledged, assigned, or otherwise alienated or hypothecated, otherthan by will or by the laws of descent and distribution. A beneficiarydesignation under paragraph 14 shall not be a violation of this paragraph.

 

**7.          PerformanceShares**

 

(a)  *PerformanceShares*.  Subject to the terms and provisions of the Plan,Performance Shares may be granted to Participants in such number, and upon suchterms, and at any time and from time to time as shall be determined by theCommittee. Performance Shares entitle the Participant to receive uponsettlement of the Award a payment equal to the Fair Market Value of a Share onthe Valuation Date, times the number of Performance Shares that are determinedby the Committee to have vested.

 

(b)  *AwardAgreements*.  Each grant of Performance Shares shall beevidenced by an Award Agreement that shall specify the number of Shares towhich the Award relates, the applicable performance objectives upon whichvesting is conditioned, the settlement date and such other provisions as theCommittee shall determine.

 

(c)  *Vesting*.  Subjectto the terms and provisions of the Plan, the Committee shall impose suchvesting conditions on any Performance Shares as it may deem advisable and asare set forth in the Award Agreement including, without limitation, vestingconditions based upon achievement of performance goals (Company-wide, businessunit, individual or other) and continued employment with or service as anon-employee director or consultant of the Company or a subsidiary. The vestingperiod for Performance Shares with no performance-based vesting characteristicsmust be at least three years (vesting may occur ratably on each month, quarteror annual anniversary of the grant date over such vesting period). The vestingperiod for Performance Shares with performance-based vesting characteristicsmust be at least one year. The Committee may grant a “de minimis” number ofPerformance Shares that do not comply with the foregoing minimum vestingstandards. For this purpose “de minimis” means the number described inparagraph 6(c).

 

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(d)  *AwardPeriod*.  The Award Period in respect of any Award ofPerformance Shares shall be such period as the Committee shall determine.Unless otherwise determined by the Committee, all Award Periods shall commenceas of the beginning of the fiscal year of the Company in which such Award ismade. An Award Period may contain a number of performance periods, each ofwhich shall commence on or after the first day of the Award Period and shallend no later than the last day of the Award Period. At the time each Award ismade, the Committee shall establish performance objectives to be attainedwithin the performance periods as the means of determining the number orpercentage of Performance Shares earned. The performance objectives shall beselected by the Committee in its sole discretion and specified in theParticipant’s Award Agreement. The performance objectives may relate to theCompany, one or more of its subsidiaries, or one or more of its divisions,units, partnerships, joint ventures or minority investments, product lines orproducts and any combination of the foregoing, and may be applied on anabsolute basis and/or be relative to one or more peer group companies orindices, or any combination thereof, all as the Committee shall determine.Performance objectives may also be calculated without regard to extraordinaryitems.

 

(e)  *Payment*.  Paymentof Performance Shares shall be made as soon as practicable following theValuation Date. At the discretion of the Committee, the payment upon settlementof Performance Shares may be in cash, in Shares of equivalent value or in somecombination thereof.

 

(f)  *Terminationof Employment*.  Each Award Agreement shall set forth theextent to which the Participant shall have the right to receive payment ofPerformance Shares following termination of the Participant’s employment or, ifthe Participant is a non-employee director or consultant, service with theCompany or any one of its subsidiaries. Such provisions shall be determined inthe sole discretion of the Committee, shall be included in the Award Agreemententered into with Participants, need not be uniform among all PerformanceShares awarded under the Plan, and may reflect distinctions based on thereasons for termination of employment or service, as the case may be. In no waywould an acceleration of any awarded but unvested Performance Shares occur dueto a termination of employment or service for cause.

 

(g)  *Non-transferability*.  Exceptas otherwise provided in a Participant’s Award Agreement, Performance Sharesmay not be sold, transferred, pledged, assigned, or otherwise alienated orhypothecated, other than by will or by the laws of descent and distribution. Abeneficiary designation under paragraph 14 shall not be a violation ofthis paragraph.

 

**8.          ShareAwards**

 

(a)  *Shares*.  Subjectto the terms and provisions of the Plan, the Committee may grant Shares toParticipants in such number, and upon such terms, and at much times as shall bedetermined by the Committee.

 

(b)  *AwardAgreements*.  Share Awards may, but need not, be governedby an Award Agreement.

 

(c)  *Vesting*.  UnlessShare Awards are (i) made in settlement of compensation entitlements thatwould otherwise be paid in cash, (ii) delivered upon achievement ofpre-established performance objectives relating to the financial or otheroperations of the Company or a unit thereof, or (iii) delivered insettlement of other Awards, Share Awards shall be subject to the minimumvesting provisions set forth in paragraphs 6(c) and 7(c).

 

(d)  *Terminationof Employment*.  If Share Awards are subject to vesting,the Award Agreement shall set forth the treatment of such Award upontermination of the Participant’s employment or service. Such provisions shallbe determined in the sole discretion of the Committee, shall be included in theAward Agreement entered into with Participants, need not be uniform among allShare Awards awarded under the Plan, and may reflect distinctions based on thereasons for termination of employment or service, as the case may be. In no waywould an acceleration of any awarded but unvested Share Awards occur due to atermination of employment or service for cause.

 

(e)  *Par Value*.  Participantsreceiving Share Awards shall be required to make payment of or otherwisesatisfy any requirement for par value of the Shares, as shall be required bythe Committee in its sole discretion. Upon delivery of a Share Award, theParticipant shall acquire all the rights of a Shareholder of the Company inrespect thereto, except as may be otherwise specified by the Committee in theAward Agreement in its sole discretion.

 

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**9.          Definitions**

 

(a) “**AwardAgreement**” shall mean any written agreement or other instrument ordocument evidencing any Award granted under the Plan which may, but need not,be executed or acknowledged by a Participant.

 

(b) “**AwardPeriod**” shall havethe meaning specified in paragraph 7.

 

(c) “**Awards**” shall mean Performance Shares,Restricted Stock Units, Stock Appreciation Rights and Share Awards.

 

(d) “**beneficialowner(s)**” shall havethe meaning specified in paragraph 10.

 

(e) “**Board**” shall mean the Board of Directors ofthe Company.

 

(f) “**Cause**” shall mean (i) willful grossnegligence or willful gross misconduct by the Participant in connection withhis or her employment with the Company or one of its subsidiaries which causes,or is likely to cause, material loss or damage to the Company or (ii) convictionof an offense (other than a road traffic offense or other non-material offensenot subject to a custodial sentence).

 

(g) “**Change inControl**” shall havethe meaning specified in paragraph 10.

 

(h) “**Committee**” shall mean the Compensation andNominating Committee of the Board, or such other committee of the Board havingresponsibility for executive compensation by whatever name.

 

(i) “**Company**” shall mean Montpelier Re Holdings,Ltd.

 

(j) “**ConstructiveTermination**” shallmean a termination of a Participant’s employment with the Company or asubsidiary at the initiative of the Participant that the Participant declaresby prior written notice delivered to the Secretary of the Company to be aConstructive Termination by the Company or subsidiary and which follows (i) amaterial decrease in his or her salary or bonus opportunity or (ii) amaterial diminution in the authority, duties or responsibilities of his or herposition with the result that the Participant makes a determination in goodfaith that he or she cannot continue to carry out his or her job insubstantially the same manner as it was intended to be carried out immediatelybefore such diminution. Notwithstanding anything herein to the contrary,Constructive Termination shall not occur within the meaning of this paragraphunless, within 120 days of the event constituting ConstructiveTermination, the Participant has given to the Company or subsidiary, as thecase may be, a notice of intent to terminate employment due to a ConstructiveTermination and the Company or subsidiary, as the case may be, has been givenan opportunity (and has failed) over a 30 day period to cure thecircumstances constituting Constructive Termination.

 

(k) “**ContinuingDirector**” shall havethe meaning set forth in paragraph 10.

 

(l) “**Disability**” shall mean the inability of theParticipant to perform in all material respects his or her duties andresponsibilities to the Company, or any subsidiary of the Company, by reason ofa physical or mental disability or infirmity which inability is reasonablyexpected to be permanent and has continued (i) for a period of sixconsecutive months or (ii) such shorter period as the Committee maydetermine in good faith. The disability determination shall be in the solediscretion of the Committee and a Participant (or his or her representative)shall furnish the Committee with medical evidence documenting the Participant’sdisability or infirmity which is reasonably satisfactory to the Committee.

 

(m) “**EffectiveDate**” shall mean thedate the Plan becomes effective in accordance with paragraph 1.

 

(n) “**ExchangeAct**” shall mean theU.S. Securities Exchange Act of 1934, as amended.

 

(o) “**FairMarket Value**” shallmean (i) for purposes of paragraph 9(p), the final sentence ofparagraph 5(a) and the reference to Grant Price in paragraph 18,the closing price per Share on the New York Stock Exchange on the date inquestion, or, if such date is not a trading day, on the next succeeding tradingday and (ii) for all other purposes under the Plan, the 5-day average ofthe daily closing prices of the Shares on the New York Stock Exchange or suchother principal securities exchange on which the Shares are traded, as reportedin The Wall Street Journal, for the 5 consecutive trading days 

 

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previous to andincluding as the last day the relevant date or, if there is no such trading onthe relevant date, then on the last previous day on which the Shares weretraded.

 

(p) “**GrantPrice**” shall mean theFair Market Value per Share on the date of grant of an SAR.

 

(q) “**group**” shall have the meaning specified inparagraph 10.

 

(r) “**Participant**” means an individual selected by theCommittee to receive an Award in accordance with paragraph 3.

 

(s) “**PerformanceShare**” shall mean anAward granted in accordance with paragraph 7.

 

(t) “**person**”shall have the meaning specified in paragraph 10.

 

(u) “**Plan**” means this Montpelier Re Holdings,Ltd. 2007 Long-Term Incentive Plan.

 

(v) “**RestrictedStock Unit**” or “**RSU**”shall mean an Award granted in accordance with paragraph 6.

 

(w) “**Shares**” shall mean common shares of theCompany having a par value of 1/6 cents per share.

 

(x) “**ShareAward**” shall mean anAward granted in accordance with paragraph 8.

 

(y) “**StockAppreciation Rights**”or “**SARs**” shall mean an Awardgranted in accordance with paragraph 5.

 

(z) “**Successor Entity**” shall have the meaning set forth inparagraph 10.

 

(aa) “**TerminationWithout Cause**” shallmean a termination of the Participant’s employment with the Company and anysubsidiary of the Company other than for death, Disability or for Cause.Notwithstanding anything herein to the contrary, if the Participant’semployment with the Company or one of its subsidiaries shall terminate due to aChange in Control described in subparagraph 10(b)(iii), where the Participantis employed by the purchaser, as described in such subparagraph, and suchpurchaser formally assumes the Company’s obligations under this Plan or placesthe Participant in a similar or like plan with no diminution of the value ofthe awards outstanding at the time of the Change in Control, such terminationshall not be deemed to be a “**TerminationWithout Cause**.”

 

(bb) “**ValuationDate**” shall mean thedate determined by the Committee in its sole discretion following the vestingdate of an Award on which the Fair Market Value of the Shares vesting pursuantto such Award shall be valued.

 

**10.          Changein Control**

 

(a)  *Effect ofChange in Control*.  If within 24 months following theoccurrence of a Change in Control (as defined in subparagraph 10(b)) there is aTermination Without Cause (as defined in paragraph 9(aa)) or aConstructive Termination (as defined in paragraph 9(j)) of the employmentof a participant, then, except as otherwise specifically provided in aParticipant’s Award Agreement, and unless otherwise specifically prohibitedunder applicable laws, or by the rules and regulations of any governinggovernmental agencies or securities exchanges:

 

(i) any and all SARs granted hereunder shallbecome immediately exercisable;

 

(ii) any period(s) of restriction imposed onRSUs or Share Awards shall lapse; and

 

(iii) the target performance goals or payoutopportunities attainable under all outstanding Awards of Performance Sharesshall be deemed to have been fully attained for all then open performanceperiods.

 

(b) For purposes of this Plan, a “**Change in Control**” within the meaning of subparagraph 10(a) shall occur if:

 

(i) any “person” or “group” (within the meaningof Sections 12(d) and 14(d)(2) of the Exchange Act, other thanthe Company or one of its subsidiaries, becomes the “beneficial owner” (withinthe meaning of Rule 13d-3 under the Exchange Act) of thirty-five percent(35%) or more of the Company’s then outstanding Shares; provided, however, that

 

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if all orsubstantially all of the individuals and entities who were the “beneficialowners” of the Company’s outstanding Shares immediately prior to suchacquisition beneficially own, directly or indirectly, more than fifty percent(50%) of the outstanding Shares of the “person” or “group” that acquired theCompany’s Shares (the “Successor Entity”) in substantially the same proportionsas their ownership immediately prior to such Successor Entity’s acquisition ofthe Company’s then outstanding Shares, such acquisition shall not constitute aChange in Control; provided, further, that for purposes of this subparagraph10(b)(i), the following acquisitions (or changes in beneficial ownershipresulting from the following acquisitions) shall not constitute a Change inControl: (A) any acquisition by the Company or (B) any acquisition byan employee benefit plan (or related trust) sponsored or maintained by theCompany or any entity controlled by the Company;

 

(ii) the Continuing Directors, as defined insubparagraph 10(c), cease for any reason to constitute a majority of the Board;or

 

(iii) the business of the Company for which theParticipant’s services are principally performed is disposed of by the Companypursuant to a sale or other disposition of all or substantially all of thebusiness or business related assets of the Company (including the sale ordisposition of shares of a subsidiary of the Company).

 

(c) For the purposes of this Plan, “**Continuing Director**” shall mean a member of the Board (i) who is not an employeeof the Company or its subsidiaries or a holder of, or an employee or anaffiliate of an entity or group that holds, thirty-five percent (35%) or moreof the Company’s Shares and (ii) who either was a member of the Board on January 1,2007, or who subsequently became a director of the Company and whose election,or nomination for election, by the Company’s shareholders was approved by avote of a majority of the Continuing Directors then on the Board (which term,for purposes of this definition, shall mean the whole Board and not anycommittee thereof). Any action, approval of which shall require the approval ofa majority of the Continuing Directors, may be authorized by one ContinuingDirector, if he or she is the only Continuing Director on the Board, but nosuch action may be taken if there are not Continuing Directors on the Board.

 

**11.          Antidilutionand Other Adjustments**

 

In the event of any change in the outstanding Sharesof the Company by reason of any Share split, Share dividend, recapitalization,merger, consolidation, reorganization, combination or exchange of Shares orother similar event, the Committee shall equitably adjust the maximum number ofShares which may be issued under paragraph 4(a) of the Plan, thenumber of Shares to which outstanding Awards relate, the Grant Price per Shareunder any outstanding SAR, or any performance goal, in such manner as may benecessary, in the Committee’s discretion, to avoid enhancement or diminution ofthe benefits or potential benefits intended to be awarded to Participantshereunder. The Committee’s determinations under this paragraph 11 shall beconclusive and binding for all purposes of the Plan.

 

**12.          Deferralof Awards**

 

Subject to the terms and conditions of the MontpelierRe Holdings Ltd. Voluntary Deferred Compensation Plan (including, withoutlimitation, eligibility restrictions and the timely filing of deferralelections) and such other restrictions and conditions as the Committee mayprescribe, a Participant may elect to defer receipt of payment that otherwisewould be made under an Award.

 

**13.          DisputeResolution**

 

(a)  *Mediation*.  Ifa dispute arises out of or relates to this Plan or a Participant’s AwardAgreement or the breach thereof, and if the dispute cannot be settled throughnegotiation, the parties agree first to try in good faith to settle the disputeby mediation administered by the American Arbitration Association under itsNational Rules for the Resolution of Employment Disputes, before resortingto binding arbitration as provided for in subparagraph 13(b).

 

(b)  *Arbitration*.  Ifa dispute arising out of or relating to this Plan or a Participant’s AwardAgreement cannot be settled amicably by the parties through negotiation ormediation, such dispute shall be finally, exclusively and conclusively settledby mandatory arbitration conducted expeditiously in accordance with theAmerican Arbitration Association rules, by a single independent arbitrator. Ifthe parties are unable to agree on the selection of an arbitrator, then eitherthe Participant or the Company may petition the American ArbitrationAssociation for the appointment of the arbitrator, which appointment shall 

 

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be made within ten(10) days of the petition therefor. Either party to the dispute mayinstitute such arbitration proceeding by giving written notice to the otherparty. A hearing shall be held by the arbitrator in New York or Bermuda, asagreed by the parties (or, failing such agreement, in Bermuda), within thirty(30) days of his or her appointment. The decision of the arbitrator shallbe final and binding upon the parties and shall be rendered pursuant to awritten decision that contains a detailed recital of the arbitrator’sreasoning. Judgment upon the award rendered may be entered in any court havingjurisdiction thereof.

 

**14.          Designationof Beneficiary by Participant**

 

A Participant may name a beneficiary to receive anypayment to which he or she may be entitled in respect of Awards under the Planin the event of his or her death on a form to be provided by the Committee. AParticipant may change his or her beneficiary designation from time to time inthe same manner. If no designated beneficiary is living on the date on whichany amount becomes payable to a Participant’s executors or administrators, theterm “beneficiary” as used in the Plan shall include such person or persons.

 

**15.          Applicationof Securities Laws**

 

If applicable, the issuance or delivery of Sharespursuant to the Plan shall be subject to, and shall comply with, any applicablerequirements of federal and state securities laws, rules and regulations(including, without limitation, the provisions of the Securities Act of 1933,the Exchange Act, and the rules and regulations promulgated thereunder),any securities exchange upon which the Shares may be listed and any other lawor regulation applicable thereto. The Company shall not be obligated to issueor deliver any Shares pursuant to the Plan if such issuance or delivery would,in the opinion of the Committee, violate any such requirements. The foregoingshall not, however, be deemed to require the Company to effect any registrationof Shares under any such law or regulation, although the Company may elect todo so.

 

**16.          BermudaGovernment Regulations**

 

The Company shall not issue any Shares hereunderunless and until all licenses, permissions and authorizations required to begranted by the Government of Bermuda, or by any authority or agency thereof,shall have been duly received.

 

**17.          MiscellaneousProvisions**

 

(a)  *No Rightsto Awards*.  No employee or other person shall have anyclaim or right to be granted an Award under the Plan. Neither the Plan nor anyaction taken hereunder shall be construed as giving any individual any right tobe retained in the service or employ of the Company or any subsidiary. In theevent of a Participant’s termination of employment or service with the Companyor a subsidiary, the Participant shall not be entitled by way of compensationfor breach of his or her employment agreement to any remuneration for his orher loss of rights under the Plan. Awards and amounts received thereunder shallnot be considered to be wages or compensation for purposes of the determinationof entitlements under any pension, severance or other arrangement of theCompany.

 

(b)  *NoAssignment*.  Except as otherwise specifically provided ina Participant’s Award Agreement, and except as provided in paragraph 14, aParticipant’s rights and interest under the Plan may not be assigned ortransferred in whole or in part either directly or by operation of law orotherwise (except in the event of a Participant’s death), including but notlimited to, execution, levy, garnishment, attachment, pledge, bankruptcy or inany other manner and no such right or interest of any Participant in the Planshall be subject to any obligation or liability or such Participant.

 

(c)  *Withholding*.  TheCompany and its subsidiaries shall have the right to deduct from any paymentmade under the Plan any federal, state or local income or other taxes requiredby law to be withheld with respect to such payment. It shall be a condition tothe obligation of the Company to make a payment upon exercise or settlement ofan Award, or other event in connection with which a tax withholding obligationarises, that the Participant (or any beneficiary or person entitled to paymenthereunder) pay to the Company (either in cash or, if the Committee shallpermit, in Shares having a fair market value, determined in the Committee’sdiscretion, at such time equal to the minimum amount required to be withheld),upon its demand, such amount as may be required by the Company for the purposeof satisfying any liability to withhold federal, state or local income or othertaxes. If the amount requested is not paid, the Company may refuse to make apayment to such Participant.

 

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(d)  *Expenses*.  Theexpenses of the Plan shall be borne by the Company. However, if an Award ismade to an employee, non-employee director or consultant in the service of asubsidiary and if such Award results in payment of cash to the Participant,such subsidiary shall pay to the Company an amount equal to such cash payment.

 

(e)  *Successors*.  ThePlan, and all obligations of the Company under the Plan with respect to Awardsgranted hereunder, shall be binding on any successor to the Company, whetherthe existence of such successor is the result of a direct or indirect purchase,merger, consolidation, or otherwise, of all or substantially all of thebusiness and/or assets of the Company.

 

(f)  *NoSeparate Fund*.  The Plan shall be unfunded. The Companyshall not be required to establish any special or separate fund or to make anyother segregation of assets to assure the payment of any Award under the Plan.

 

(g)  *Consentto Authority of Committee*.  By accepting any Award orother benefit under the Plan, each Participant and each person claiming underor through him or her shall be conclusively deemed to have indicated his or heracceptance and ratification of, and consent to, any action taken under the Planby the Company, the Board or the Committee.

 

**18.          Amendment**

 

The Plan and any Award Agreement hereunder may beamended at any time and from time to time by the Board, but no amendment thatis required to be approved by the shareholders of the Company by law, rule, orregulation, including stock exchange listing rules, and no amendment that wouldsignificantly expand the benefits intended to be made available to Participantsunder outstanding Awards under the Plan shall be effective unless and until thesame is approved by the shareholders of the Company. No amendment of the Planor any Award Agreement shall adversely affect any right of any Participant withrespect to any Award previously granted without such Participant’s writtenconsent. Notwithstanding the foregoing, (i) except in connection with atransaction described in paragraph 11, the terms of any SAR Award shallnot be amended to reduce the Grant Price thereof to an amount less than theFair Market Value on the date of grant of such Award and (ii) except inthe event of a Participant’s death, Disability, retirement or termination ofemployment other than for Cause or a Change in Control, the terms of an RSU,Performance Award or Share Award (if applicable) held by such Participant shallnot be amended to accelerate the vesting thereof. In any event, in no way wouldan acceleration of any awarded but unvested awards, in whatever form, occur dueto a termination of employment or service for cause.

 

**19.          Termination**

 

This Plan shall terminate upon the earlier of (i) theadoption of a resolution of the Board terminating the Plan, or (ii) fouryears after the Effective Date hereof. No termination of the Plan shall alteror impair any of the rights or obligations of any person, without his or herconsent, under any Award previously granted under the Plan.

 

**20.          GoverningLaw**

 

The Plan shall be governed by and construed inaccordance with the laws of Bermuda, without regard to conflicts of lawsprinciples.

 

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