**Exhibit  - 10.5**

 

**SERVICEAGREEMENT**

 

 

 

**THIS AGREEMENT** is made as of the 25th day of March, 2002

 

BETWEEN**:**

 

**MONTPELIER REINSURANCE LTD**., whose registered office is situate at ClarendonHouse, 2 Church Street, Hamilton Bermuda (the “Company”); and

 

**CHRISTOPHER L. HARRIS**, of 16 Inghams Drive, Pembroke, Bermuda HM04 (the “Executive”).

 

WHEREAS the parties desire to record the termsand conditions upon which the Executive is employed by the Company.

 

NOW THEREFORE in consideration of the mutualcovenants and promises herein contained

 

IT IS HEREBY AGREED as follows:

 

1.                                       Interpretation

 

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

 

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

 

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

 

the “Companies Act” means the Companies Act 1981;

 

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

 

the “Parties” means the parties to this Agreement;

 

1.2                                 In this Agreement unless the context otherwise requires:

 

 

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1.2.1                        references to statutory provisions shall be construed asreferences to those provisions as amended or re-enacted or as their applicationis modified by other provisions from time to time and shall include referencesto any provisions of which they are re-enactments (whether with or withoutmodification); and

 

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

 

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

 

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

 

2.                                       Appointment

 

Subject to,and conditional upon, initial and continued permission being granted to workand reside in Bermuda by the Bermuda Department of Immigration of the Ministry ofHome Affairs, the Company hereby appointsthe Executive and the Executive hereby agrees to serve the Company as ChiefActuary and Senior Vice President subject to the terms and conditionshereinafter contained.

 

3.                                       Term

 

Theappointment of the Executive hereunder began on 25th March 2002 and shall continue unless and until terminated in accordance with theprovisions hereinafter contained.

 

4.                                       Duties and Responsibilities

 

During the continuance of his employmenthereunder:

 

4.1                                 The Executive shall perform such duties and exercisesuch powers in relation to the business of the Company or of any Group Companyas may from time to time reasonably be assigned to or vested in him by theBoard and shall give to the Board such information regarding the affairs of theCompany and any Group Company as it shall require and at all times and in allrespects conform to and comply with the reasonable directions and regulationsmade by the Board. The Executive shall perform such services for any GroupCompany (without further remuneration except as otherwise agreed) and shallaccept such offices in any such Group Companies as the Board may reasonablyrequire.

 

 

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

 

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

 

4.4                                 The Companyreserves the right to require the Executivenot to attend work/and or not to undertake all or any of his duties hereunderduring a period of up to 12 months immediately preceding the termination of hisemployment, provided always that the Company shall continue to pay the Executive’s salary and contractualbenefits for such period.  This Clause4.4 shall not affect the general right of the Company to suspend the Executive for good cause.

 

5.                                       Remuneration and Reimbursement

 

5.1                                 The Company shall payto the Executive by way of remuneration for his services hereunder a salary atthe rate (subject as hereinafter provided) of US$240,000 per annum. Such salaryshall be inclusive of any director’s fees payable to the Executive by theCompany or any Group Company and accordingly either the Executive shall payover or procure to be paid over to the Company all such fees received orreceivable by him or his remuneration hereunder shall be reduced protanto.  The said salary shall be payableby equal monthly instalments in arrears on the day appointed by the Board forthe payment of employees’ salaries or pro rata where the Executive is onlyemployed hereunder during part of the month. The Compensation Committee of theCompany’s Board, subject to ratification by the Board, may increase or reducethe Executive’s salary on each anniversary of the date of this Agreement, butnot below the amount of the Executive’s starting salary.

 

5.2                                 The Company shall also pay to the Executive allreasonable travelling hotel and other out-of-pocket expenses which are properlyincurred by him in or about the performance of his duties hereunder and for whichvouchers (if so required) are provided to the reasonable satisfaction of theBoard.

 

5.3                                 The Companywill pay for two business-class round-trip flights to the United States perannum for the Executive and his  family.

 

5.4                                 The Executive shall be entitled to participate in:

 

 

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                                                (i)                                     the Company’s medical and Dental Plan

 

                                                (ii)                                  a suitable pension arrangement in accordance with Bermuda law; and

 

(iii)                               Any other employment benefit plans generally availableto executives in the Company of the Executive’s stature, to  the extent not duplicative of benefitsotherwise provided by the Company.

 

5.5                                 During the Executive’s appointmentunder this Agreement, he shall receive a housing allowance of $6,500 per month,plus a tax gross-up payment to reimburse the Executive for any income taxespaid by the Executive on the allowance.

 

6.                                       Normal Hours and Holidays

 

The Executive shall conform to such hours ofwork as may from time to time reasonably be required of him and shall not beentitled to receive any additional remuneration for work outside his normalhours.  In addition to the usual publicholidays the Executive shall, subject as mentioned in the Schedule, be entitledwithout loss of remuneration to 25 days holiday in each year to be taken atsuch time or times as may be approved by the Chief Executive Officer of theCompany.  Any entitlement to holidayremaining at the end of any year may be carried forward to the next succeedingyear but no further.  The entitlement toholiday (and on termination of employment holiday pay in lieu of holiday)accrues pro rata throughout each year, provided that fractions of days shall bedisregarded in calculating entitlement to holiday or payment in lieu ofholiday.

 

7.                                       Confidentiality

 

7.1                                 The Executive shall not either during the continuanceof his employment hereunder (otherwise than in the proper performance of hisduties hereunder) or at any time after the determination thereof divulge to anyperson whomsoever and shall use his reasonable endeavours to prevent thepublication or disclosure of any trade secret or other confidential informationconcerning the business, finances, accounts, dealings, transactions or affairsof the Company or any Group Company or of any of their respective  clients entrusted to him or arising or comingto his knowledge during the course of his employment hereunder or otherwise.

 

7.2                                 The Executive shall upon the termination of hisemployment hereunder immediately deliver up to the Company all fee schedules,lists of clients, correspondence and other documents, papers and propertybelonging to the Company or any Group Company or related to any of the mattersreferred to in clause 7.1 which may have been prepared by him or have come intohis possession in the course of his employment hereunder and shall not retainany copies thereof.

 

 

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8.                                       Change of Status

 

8.1                                 If, before the expiration or determination of thisAgreement, the employment of the Executive hereunder shall be terminated byreason of the liquidation of the Company or for the purpose of reconstructionor amalgamation, and he shall be offered employment with any concern orundertaking resulting from such reconstruction or amalgamation on terms and conditionsnot less favourable (financially and in personal status) than the terms of thisAgreement, then he shall have no claim against the Company in respect of thetermination of his employment hereunder save in respect of accrued benefits.

 

8.2                                 Unless this agreement has been terminated under clause9, if for any reason the Executive shall either:

 

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

 

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

 

then, notwithstanding his so ceasing to be adirector, this Agreement shall not automatically terminate and thereupon (andwithout any claim against the Company in respect of such loss of office) theExecutive’s employment hereunder shall continue for the remaining period ofthis Agreement and all the terms and conditions of this Agreement shall withthe necessary variations apply to the Executive’s employment but in any event,the Executive’s basic annual salary will not at any time be less than theExecutive’s starting salary under this agreement.

 

9.                                       Termination

 

9.1                                 This Agreement shallbe subject to termination by the Company by summary notice in writing:

 

9.1.1                                                                        if the Executive’s application for permission to work and reside in Bermuda is refused orthe Executive’s work permit and/or permission to reside is revoked, and or arenewal application is refused

 

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

 

9.1.3                                                                        if the Executive shall at any time be prevented byillness or accident from performing his duties for a period of 6 consecutivemonths or if he shall be absent from his duties by reason of illness oraccident for more than 180 working days in any consecutive 

 

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                             twelve months(provided that any such periods may be extendedat the sole discretion of the Board);

 

9.1.4                                                                        other than bywritten notice, if the Executive terminates his employment for any reason priorto the expiration of thisAgreement other than in accordance with the clause 9.2 (b) or if theExecutive shall have failed or neglected efficiently and diligently todischarge his duties hereunder having received a written warning for themisconduct within the previous 6 months or shall have committed any seriousbreach of his obligations hereunder or shall have been guilty of conducttending to bring himself or the Company or any Group Company into disrepute orcalculated or likely to affect prejudicially the interests of the Company orany Group Company or shall have committed an act of bankruptcy or compoundedwith his creditors generally.

 

9.2                                 Subject to 9.1 above, this Agreement shall be subjectto termination at any time by notice:

 

                                                (a)                                  if by the Company, then upon 12 months’ written notice;  or

 

                                                (b)                                 if by the Executive upon 6 months’ written notice.

 

                                                The Companyreserves the right to terminate the Executive’s appointment by payment in lieuof notice.

 

9.3                                 The termination by the Company of this Agreement shall be withoutprejudice to any claim which the Company may have for damages arising from anybreach thereof by the Executive giving rise to such termination.

 

9.4                                 Until this Agreement is terminated pursuant to clause9.1 or clause 9.2, the Executive shall remain entitled to receive his  salary payable hereunder in fullnotwithstanding illness or other incapacity.

 

10.                                 Consequence of Termination

 

10.1                           Upon the termination of this Agreement howsoeverarising, the Executive shall at any time or from time to time thereafter uponthe request of the Company resign, without claim for compensation for loss ofoffice, as a director of the Company and such offices held by him in any of theGroup Companies as may be so requested and should he fail to do so, the Companyis hereby irrevocably authorised to appoint some person in his name and on hisbehalf to sign and do any documents or things necessary or requisite to giveeffect thereto.

 

 

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

 

(a) pursuant to clause 9.1.1, then theExecutive shall be entitled to receive three months salary by way ofrepatriation expenses together with three months accommodation allowance at therate set out in clause 5.5 and reimbursement of a one way business class airfare for himself and his family to the United States, and all other paymentsunder this Agreement shall immediately cease and the Company shall haveno further obligations to the Executive arising hereunder;

 

(b) pursuant to clause 9.1.2 orclause 9.1.3, then the Executive shall continue to receive his salary for aperiod of 12 months following the termination of this Agreement and the Companyshall have no further obligations to the Executive arising hereunder;

 

(c) pursuant to clause 9.1.4,then all payments under this Agreement shall immediately cease and the Companyshall have no further obligations to the Executive arising hereunder.

 

11.                                 Non-Competition

 

11.1                           Since the Executive has obtained in the course of hisemployment prior to the date hereof and is likely to obtain in the course ofhis employment hereunder knowledge of the trade secrets and also otherconfidential information in regard to the business of the Company and of anyGroup Company with which  he becomesassociated, the Executive hereby agrees with the Company that in addition tothe restrictions contained in clause 4.3 he will not in Bermuda, the UnitedStates of America, the United Kingdom or the European Economic Community:

 

11.1.1                  during the period of 12 months following the termination of hisemployment hereunder (howsoever caused) either on his own account or for anyother person, firm or company directly or indirectly be engaged in or concernedwith any business or undertaking which is engaged in or carries on in Bermuda,the United States of America, the United Kingdom or the European EconomicCommunity any insurance business which competes or seeks to compete with thebusiness carried on by the Company or any other Group Company at the date oftermination.

 

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

 

 

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11.1.3                  During the period of 12 months following the termination aforesaideither on his own account or for any other person, firm or company solicit theservices of or endeavour to entice away from the Company or any Group Companyany director, employee or consultant of the Company or any Group Company(whether or not such person would commit any breach of his contract ofemployment or engagement by reason of leaving the service of such company) norshall the Executive knowingly employ or aid or assist in or procure theemployment by any other person, firm or company of any such person.

 

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

 

11.3                           The Executive hereby agrees that he will at therequest and cost of the Company enter into a direct agreement or undertakingwith any Group Company whereby he will accept restrictions and provisionscorresponding to the restrictions and provisions herein contained (or such ofthem as may be appropriate in the circumstances) in relation to such servicesand such area and for such period as such company or companies may reasonablyrequire for the protection of its or their legitimate interests provided thatthe terms of such restrictions and provisions will not be more onerous than therestrictions and provisions of this agreement.

 

12.                                 Untrue Statements

 

The Executive shall not knowingly at any timemake any untrue statement in relation to the Company or any Group Company andin particular shall not after the determination of his employment hereunderwrongfully represent himself as being employed by or connected with the Companyor any Group Company.

 

13.                                 Schedule

 

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

 

14.                                 Delegation

 

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

 

 

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15.                                 Notices

 

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

 

16.1                           Miscellaneous

 

The expiration or termination of this Agreementhowsoever arising shall not operate to affect such of the provisions hereof asare expressed or intended to remain in full force and effect notwithstandingsuch termination.

 

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

 

16.3                           This Agreement shall be binding and enure for thebenefit of the successors of the Parties but shall not be assignable.

 

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

 

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

 

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

 

16.7                           No provision in this Agreement may be amended unlesssuch amendment is agreed to in writing, signed by the Executive and by a dulyauthorised officer of the Company.  Nowaiver by either Party of any breach by the other Party of any condition orprovision of this Agreement to be performed by such other Party shall be deemeda waiver of a similar or dissimilar condition or provision at the same or anyprior or subsequent time.  Any waivermust be in writing and signed by the Executive or a duly authorised officer ofthe Company, as the case may be.

 

 

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16.8                           This Agreement shall be governed by and construed inaccordance with the laws of Bermuda and the Parties hereby  irrevocably submit to the non-exclusivejurisdiction of the courts of Bermuda.

 

 

 

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

 

 
| SIGNED by                                | )      |
|------------------------------------------|--------|
| on behalf of Montpelier Reinsurance Ltd. | )      |
| in the presence of:                      | )      |
|                                     |   |
|                                     |   |
|  /s/ Mandy White                    |   |
| Witness                                  |   |

 

 

 

 
| SIGNED by Christopher L. Harris | )      |
|---------------------------------|--------|
| in the presence of:             | )      |
|                            |   |
|                            |   |
|  /s/ Christopher L. Harris |   |
| Witness                         |   |

 

 

 

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**THE SCHEDULE**

 

1.                                       Hours of Work:  The Executive shall conform to such hours of work as may reasonably berequired of him for the proper performance of his duties hereunder and shallnot be entitled to receive any additional remuneration for work outside hisnormal hours.

 

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

 

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

 

4.                                       Incentive Plans: The Executive will be entitled to participate in the Montpelier AnnualIncentive Plan, the Montpelier Long-Term Incentive Plan and any other incentiveplan for which the Executive is eligible, from time to time subject to theprovisions of such plans in effect at the time.

 

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

 

 

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