exv10w1



 





EXHIBIT 10.1




ENSTAR GROUP LIMITED

DEFERRED COMPENSATION AND ORDINARY SHARE PLAN

FOR NON-EMPLOYEE DIRECTORS




ARTICLE I

PURPOSE




     The purposes of the Enstar Group Limited Deferred Compensation and Ordinary Share Plan for
Non-Employee Directors (the “Plan”) are to enable Enstar Group Limited (“the Company”) to attract
and retain qualified persons to serve as Non-Employee Directors, to solidify the common interests
of its Non-Employee Directors and shareholders by enhancing the equity interests of Non-Employee
Directors in the Company, and to encourage the highest level of Non-Employee Director performance
by providing such Non-Employee Directors with a proprietary interest in the Company’s performance
by permitting Non-Employee Directors to receive all or a portion of their Retainer and Meeting Fees
in the form of Ordinary Shares and to defer all or a portion of their Retainer and Meeting Fees in
the form of Share Units.



ARTICLE II

EFFECTIVE DATE




     The Plan shall be effective as of June 5, 2007.



ARTICLE III

DEFINITIONS




     Whenever used in the Plan, the following terms shall have the respective meanings set forth
below:



     3.1 “Account” means, with respect to each Participant, the Participant’s separate individual
bookkeeping account established and maintained by the Company for the exclusive purpose of
accounting for the Participant’s Share Units hereunder.



     3.2 “Beneficiary” means, with respect to each Participant, the recipient or recipients
designated by the Participant who are, upon the Participant’s death, entitled in accordance with
the Plan’s terms to receive the benefits to be paid with respect to the Participant.



     3.3 “Board” means the Board of Directors of the Company.



     3.4 “Change in Control” means, with respect to the Company:




	 	(a)	 	the acquisition by any person, entity or “group” required to
file a Schedule 13D or Schedule 14D-1 under the Exchange Act (excluding, for
this purpose, the Company, its subsidiaries, any employee benefit plan of the
Company or its subsidiaries which acquire ownership of voting securities




 









 






	 	 	 	of the Company) of beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of 50% or more of either the then outstanding
Ordinary Shares or the combined voting power of the Company’s then
outstanding voting securities entitled to vote generally in the election of
directors;






	 	(b)	 	the election or appointment to the Board, or resignation of or
removal from the Board, of directors with the result that the individuals who
as of the date hereof constituted the Board (the “Incumbent Board”) no longer
constitute at least a majority of the Board, provided that any person who
becomes a director subsequent to the date hereof whose appointment, election,
or nomination for election by the Company’s shareholders, was approved by a
vote of at least a majority of the Incumbent Board (other than an appointment,
election or nomination of an individual whose initial assumption of office is
in connection with an actual or threatened election contest relating to the
election of the directors of the Company) shall be, for purposes of this Plan,
considered as though such person were a member of the Incumbent Board; or






	 	(c)	 	approval by the shareholders of the Company of:






	 	(i)	 	a reorganization, merger or consolidation by
reason of which persons who were the shareholders of the Company
immediately prior to such reorganization, merger or consolidation do
not, immediately thereafter, own more than 50% of the combined voting
power of the reorganized, merged or consolidated Company’s then
outstanding voting securities entitled to vote generally in the
election of directors, or
	 
	 	(ii)	 	a liquidation or dissolution of the Company or
the sale, transfer, lease or other disposition of all or substantially
all of the assets of the Company (whether such assets are held directly
or indirectly); and such transaction is consummated.





     Notwithstanding the foregoing, an event shall not constitute a Change in Control unless such
event constitutes a “change in control event” as defined in final regulation issued by the Internal
Revenue Service under Code Section 409A.



     3.5 “Code” means the United States Internal Revenue Code of 1986, as amended, including any
regulations promulgated by the Internal Revenue Service with respect to the provisions of the Code,
and any successor thereto.



     3.6 “Committee” means any committee of the Board.



     3.7 “Ordinary Shares” means the ordinary shares of the Company, par value $1.00 per share.



-2-









 





     3.8 “Company” means Enstar Group Limited (formerly known as Castlewood Holdings Limited), a
Bermuda corporation, and any successor thereto.



     3.9 “Director” means an individual who is a member of the Board.



     3.10 “Exchange Act” means the United States Securities Exchange Act of 1934, as amended.



     3.11 “Market Value” means the following, arrived at by a good faith determination of the
Board:




	 	(a)	 	The closing price of the Ordinary Shares on a registered
securities exchange or an over-the-counter market on the applicable date; or
	 
	 	(b)	 	Such other method of determining fair market value that
complies with Code Section 409A and that is adopted by the Board.





     3.12 “Non-Employee Director” means a Director who is not an officer or employee of the Company
or any of its subsidiaries.



     3.13 “Participant” means any Non-Employee Director who has made an election to receive all or
a portion of such Non-Employee Director’s Retainer and Meeting Fees in the form of Ordinary Shares
and/or to defer payment of all or a portion of such Retainer and Meeting Fees in the form of Share
Units.



     3.14 “Retainer and Meeting Fees” means the retainer and meeting fees payable to Non-Employee
Directors for service on the Board and attendance at Board and Committee meetings, as such retainer
and meetings fees shall be established from time-to-time by the Board, but excluding any
reimbursement received by Non-Employee Directors for expenses incurred in performance of service as
a Director.



     3.15 “Share Unit” means a measure of value, expressed as Ordinary Shares, credited to a
Participant under this Plan who has elected hereunder to receive all or a portion of such
Participant’s Retainer and Meeting Fees in the form of Ordinary Shares and has elected hereunder to
defer receipt of such Ordinary Shares in accordance with the provisions hereof. No certificates
shall be issued with respect to such Share Units, but the Company shall maintain an Account in the
name of the Participant to which the Share Units shall be credited.



     3.16 “Termination” means retirement from the Board or termination of service as a Director for
any other reason; provided, however, that no Termination shall be deemed to have occurred unless
such retirement or termination from service constitutes a “separation from service” with the
meaning of Code Section 409A(a)(2)(A)(i).



-3-









 





ARTICLE IV

ELECTION TO RECEIVE ORDINARY SHARES FOR RETAINER AND

MEETING FEES AND TO DEFER

RETAINER AND MEETING FEES IN SHARE UNITS




     4.1 Election. On or before December 31 of any Company fiscal year, a Non-Employee
Director may elect to: (a) receive all or a specified portion of his or her Retainer and Meeting
Fees for the following fiscal year in the form of Ordinary Shares; and (b) defer payment with
respect to all or a portion of his or her Retainer and Meeting Fees for the following fiscal year
in the form of Share Units which shall be payable only upon the Non-Employee Director’s
Termination. All such elections shall be made upon the form of election prescribed by the Company
for such purpose and shall be effective upon receipt by the Company of such election form duly
executed by the Participant.



     For the 2007 calendar year, a Non-Employee Director may choose to received Ordinary Shares
under the Plan only with respect to Retainer and Meeting Fees payable on or after June 30, 2007 and
may elect to defer payment with respect to Retainer and Meeting Fees payable for services rendered
on or after June 30, 2007, by filing an election to so participate on or before June 30, 2007. A
Non-Employee Director elected to fill a vacancy on the Company’s Board and who was not a
Non-Employee Director on the preceding December 31, or whose term of office as a Non-Employee
Director did not begin until after that date, may file an election to participate in the Plan and
commence deferral of receipt of Retainer and Meeting Fees payable to such Non-Employee Director
during the thirty (30)-day period following the date on which such Non-Employee Director joined the
Board as a Non-Employee Director, if so permitted by Code Section 409A. Such election shall only
apply to Retainer and Meeting Fees earned after the date on which such election is filed.



     4.2 Revocation or Modification of Election. An effective election made pursuant to
Section 4.1 may not be revoked or modified with respect to the Retainer and Meeting Fees payable
for a fiscal year or portion of a fiscal year for which such election is effective. An effective
election may be revoked or modified for any subsequent fiscal year by the filing of an election on
or before December 31 of the preceding fiscal year for which such revocation or modification is to
be effective. No such revocation or modification shall affect the deferral of receipt of Retainer
and Meeting Fees previously deferred hereunder.



     4.3 Ordinary Share Election. When a Participant elects pursuant to Section 4.1 to
receive all or a portion of the Participant’s Retainer and Meeting Fees in the form of Ordinary
Shares, the number of whole shares to be distributed to the Participant, with any fractional shares
to be paid in cash, as of the date the Retainer and Meeting Fee would otherwise have been payable
to the Participant, shall be equal to the dollar amount of the Retainer and Meeting Fee which
otherwise would have been payable to the Participant divided by the Market Value on such date.



     4.4 Deferred Retainer Election; Share Units. When a Participant elects pursuant to
Section 4.1 to defer all or a portion of the Participant’s Retainer and Meeting Fees in Share
Units, the number of whole and fractional Share Units, computed to three decimal places, to be



-4-









 







credited to the Participant’s Account, on the date the deferred Retainer and Meeting Fee would
otherwise have been payable to the Participant, shall be equal to the dollar amount of the deferred
Retainer and Meeting Fee which otherwise would have been payable to the Participant divided by the
Market Value on such date.



ARTICLE V

DIVIDENDS AND ADJUSTMENTS




     5.1 Dividends. To the extent the Company shall declare and pay any cash dividends on
the Ordinary Shares, the Account of a Participant shall be credited with an additional number of
whole and fractional Share Units, computed to three decimal places, equal to the product of the
dividend per share then payable, multiplied by the number of Share Units then credited to such
Account, divided by the Market Value on the dividend payment date.



     5.2 Adjustments. The number of Share Units credited to a Participant’s Account
pursuant to Article IV and the number of Ordinary Shares available for issuance hereunder pursuant
to Article VI shall be appropriately adjusted for any change in the Ordinary Shares by reason of
any merger, reclassification, consolidation, recapitalization, share dividend, share split or any
similar change affecting the Ordinary Shares.



ARTICLE VI

ISSUANCE OF ORDINARY SHARES




     6.1 Number Of Shares. The maximum number of Ordinary Shares available for issuance
hereunder shall be 100,000 shares, subject to adjustment as set forth in Article V.



     6.2 Securities Compliance; Restricted Securities. Any Ordinary Shares issued
hereunder shall constitute “restricted securities” under applicable securities laws and shall not
be transferable by the recipient thereof except pursuant to a registration statement filed under
the Securities Act of 1933, as amended, or in accordance with an exemption from such registration
requirements. Certificates evidencing Ordinary Shares issued hereunder shall bear a legend
reflecting such transfer restrictions and such other matters as the Board shall deem necessary and
appropriate to ensure compliance with applicable securities laws.



ARTICLE VII

PAYMENT OF SHARE UNITS




     7.1 Manner of Payment Upon Termination. All Share Units held in a Participant’s
Account shall be paid to the Participant as a lump sum distribution within thirty (30) days after
the Participant’s Termination. Payment with respect to Share Units shall be effected through the
issuance by the Company to the Participant of an equivalent number of whole Ordinary Shares, with
any fractional share paid in cash.



     7.2 Manner of Payment Upon Death. If a Participant dies while Share Units are held in
the Participant’s Account, such Share Units will be paid to the Beneficiary or the Participant’s
estate, as the case may be, within ninety (90) days from the date of the Participant’s



-5-









 







death. Payment with respect to such Share Units shall be effected through the issuance by the
Company to the Beneficiary or the Participant’s estate, as the case may be, of an equivalent number
of whole Ordinary Shares, with any fractional share paid in cash.



     7.3 Payments Upon Change in Control. Notwithstanding any provision of this Plan to
the contrary, if a Change in Control of the Company occurs, Share Units held in a Participant’s
Account will be paid in a lump sum distribution within fifteen (15) days after such Change in
Control. Payment with respect to such Share Units shall be effected through the issuance by the
Company to the Participant of an equivalent number of whole Ordinary Shares, with any fractional
share paid in cash. In addition, the Company shall reimburse a Participant for the legal fees and
expenses incurred if the Participant is required to seek to obtain or enforce any right to
distribution. Notwithstanding any provisions of this Plan to the contrary, the provisions of this
Section 7.3 may not be amended by an amendment effected within three years following a Change in
Control.



     7.4 No Acceleration of Payment. Notwithstanding any provision hereof to the contrary,
the acceleration of payment of Share Units is prohibited unless expressly permitted under Code
Section 409A.



ARTICLE VIII

BENEFICIARY DESIGNATION




     Each Participant shall be entitled to designate a Beneficiary or Beneficiaries (which may be
an entity other than a natural person) who, following the Participant’s death, will be entitled to
receive any payments to be made under this Plan. At any time, and from time to time, any
designation may be changed or canceled by the Participant without the consent of any Beneficiary.
Any designation, change, or cancellation must be by written notice filed with the Company and shall
not be effective until received by the Company. Payment shall be made in accordance with the last
unrevoked written designation of Beneficiary that has been signed by the Participant and delivered
by the Participant to the Company prior to the Participant’s death. If the Participant designates
more than one Beneficiary, any payments under this Plan to the Beneficiaries shall be made in equal
shares unless the Participant has designated otherwise, in which case the payments shall be made in
the proportions designated by the Participant. If no Beneficiary has been named by the Participant
or if all Beneficiaries predecease the Participant, payment shall be made to the Participant’s
estate.



ARTICLE IX

TRANSFERABILITY RESTRICTIONS




     The Plan shall not in any manner be liable for, or subject to, the debts and liabilities of
any Participant or Beneficiary. No payee may assign any payment due such party under the Plan. No
benefits at any time payable under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, attachment, garnishment, levy, execution, or other
legal or equitable process, or encumbrance of any kind.



-6-









 





ARTICLE X

FUNDING POLICY




     The Company’s obligations under the Plan shall be totally unfunded so that the Company is
under merely a contractual duty to make payments when due under the Plan. The promise to pay shall
not be represented by notes and shall not be secured in any way.



ARTICLE XI

ADMINISTRATION




     The Plan shall be administered by the Board. The Board shall have authority to interpret the
Plan, and to prescribe, amend and rescind rules and regulations relating to the administration of
the Plan, and all such interpretations, rules and regulations shall be conclusive and binding on
all Participants. The Board may employ agents, attorneys, accountants, or other persons and
allocate or delegate to them powers, rights, and duties, all as the Board may consider necessary or
advisable to properly carry out the administration of the Plan.



ARTICLE XII

AMENDMENT AND TERMINATION




     Subject to the limitations on amendments set forth in Section 7.3, the Company, by resolution
duly adopted by the Board, shall have the right, authority and power to alter, amend, modify,
revoke, or terminate the Plan; provided however, that shareholder approval shall be required for
any amendment for which shareholder approval is required under the rules of the exchange or market
on which the Ordinary Shares are listed and traded. No alteration, amendment, modification,
revocation or termination of the Plan shall adversely affect the rights of any Participant with
respect to any Share Units held in such Participant’s Account, unless the Participant shall consent
thereto in writing. Distribution of Share Units held in Participant’s Account may be distributed
upon a termination of the Plan at the discretion of the Board, provided that such distribution
satisfies the requirements of Code Section 409A.



ARTICLE XIII

MISCELLANEOUS




     13.1 No Right to Continue as a Director. Nothing in this Plan shall be construed as
conferring upon a Participant any right to continue as a member of the Board.



     13.2 No Interest as a Shareholder. Share Units do not give a Participant any rights
whatsoever with respect to Ordinary Shares until such time and to such extent that payment of Share
Units is made in Ordinary Shares upon the Participant’s Termination.



     13.3 No Right to Corporate Assets. Nothing in this Plan shall be construed as giving
the Participant, the Participant’s designated Beneficiaries or any other person any equity or
interest of any kind in the assets of the Company or any subsidiary or creating a trust of any kind
or a fiduciary relationship of any kind between the Company or any subsidiary and any person. As to
any claim for payments due under the provisions of the Plan, a Participant, Beneficiary and



-7-









 







any other persons having a claim for payments shall be general unsecured creditors of the
Company.



     13.4 Code Section 409A Compliance. The Plan is intended to be administered in a
manner consistent with the requirements, where applicable, of Code Section 409A. Where reasonably
possible and practicable, the Plan shall be administered in a manner to avoid the imposition on
Non-Employee Directors of immediate tax recognition and additional taxes under Code Section 409A.
Notwithstanding the foregoing, neither the Company nor the Board shall have any liability to any
person in the event that Code Section 409A applies under the Plan in a manner that results in
adverse tax consequences to the Non-Employee Director or his or her Beneficiaries.



     13.5 No Limit on Further Corporate Action. Nothing contained in the Plan shall be
construed so as to prevent the Company from taking any corporate action which is deemed by the
Company to be appropriate or in its best interest.



     13.6 Governing Law. The Plan shall be governed by the applicable Code provisions to
the maximum extent possible. Otherwise, the laws of Bermuda (without reference to principles of
conflicts of laws) shall govern the operation of, and the rights of Participants under, the Plan.



     13.7 Headings. The headings of articles, sections, subsections, paragraphs or other
parts of the Plan are for convenience of reference only and do not define, limit, construe, or
otherwise affect its contents.




-8-