Document:

Exhibit
10.2

 

AXIS
CAPITAL HOLDINGS LIMITED

 

LONG-TERM
EQUITY COMPENSATION PLAN

 

Restricted
Stock Agreement

 

You (the “Participant”) have been granted a
restricted stock award (the “Award”) of ordinary shares, par value $0.0125 per
share (“Share”), of AXIS Capital Holdings Limited, a Bermuda company (the “Company”),
pursuant to the AXIS Capital Holdings Limited 2003 Long-Term Equity
Compensation Plan (the “Plan”).  The date
of grant of the Award (the “Award Date”) and the number of Shares subject to
the Award (the “Award Shares”) are as set forth in your restricted stock
account maintained on the Smith Barney Benefit Access website or such other
website as may be designated by the Committee (“Benefit Access”).

 

By your acceptance of the grant of the Award
on Benefit Access, you agree that the Award is granted under and governed by
the terms and conditions of the Plan and this Restricted Stock Agreement (the “Agreement”).

 

1.             GRANT OF
RESTRICTED STOCK.

 

(a)           Award.  On the terms and conditions set forth in this Agreement, the
Company hereby grants to the Participant on the Award Date the Award Shares.

 

(b)           Plan and
Defined Terms. The
Award is granted pursuant to the Plan, a copy of which the Participant
acknowledges having received.  The terms
and provisions of the Plan are incorporated into this Agreement by this
reference.  All capitalized terms that
are used in this Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Plan.

 

2.             ISSUANCE OF
SHARES.

 

Subject to Section 4,
the Shares subject to the Award will be issued to the Participant and generally
shall have the rights and privileges of a shareholder of the Company as to such
Shares.

 

3.             PERIOD OF
RESTRICTION.

 

The Shares subject to the Award shall be
restricted during the period (the “Period of Restriction”) commencing on the
Award Date and expiring on the first to occur of:

 

(a)           The date three years after the
Award Date;

 

(b)           The Participant’s Retirement,
death or permanent Disability; or

 

 

(c)           A Change in Control.

 

4.             RESTRICTIONS, VOTING RIGHTS AND
DIVIDENDS.

 

(a)           Restrictions. 
During the Period of Restriction, the following restrictions shall
apply: (i) the Shares subject to the Award may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated and (ii) the stock
certificates, if any, representing the Shares subject to the Award shall be
deposited with the Company or as the Committee may otherwise direct and the
Participant shall not be entitled to delivery of a stock certificate.  If the Participant’s employment terminates
during the Period of Restriction for any reason other than Retirement, death or
permanent Disability, the Shares subject to the Award shall be immediately
repurchased by the Company for an aggregate repurchase price of US$1 (One
United States Dollar) without liability or further action or obligation on the
part of the Company.  Upon the repurchase
of any Shares, any dividends and interest set aside thereon shall be
transferred to the Company without further action by the Participant, and the
Participant shall immediately thereby relinquish and cease to hold any right,
title or interest to any such dividends and interest.

 

(b)           Voting Rights.  Participant shall be entitled to exercise
full voting rights with respect to the Shares during the Period of Restriction.

 

(c)           Dividends. 
Dividends may be paid to Participant with respect to the Shares during
the Period of Restriction as determined from time to time by the
Committee.  Any Dividends paid with respect
to the Shares during the Period of Restriction will be held by the Company, or
a depository appointed by the Committee, for the Participant’s account, and
interest may be paid on the amount of cash dividends held at a rate and subject
to such terms as may be determined by the Committee.  All cash or share dividends so held, and any
interest so paid, shall initially be subject to forfeiture as set forth in subsection 4(a)
but shall become non-forfeitable and payable at upon the expiration or
termination of the Period of Restriction.

 

(d)           Leaves of
Absence.  For
any purpose under this Agreement, employment shall be deemed to continue while
the Participant is on a bona fide leave of absence, if such leave was approved
by the Company in writing and if continued crediting of employment for such
purpose is expressly required by the terms of such leave or by applicable law
(as determined by the Company).

 

5.             RESTRICTIONS ON
TRANSFER.

 

(a)           Transfer
Restrictions.  Regardless of whether the offering and sale
of Shares under the Plan have been registered under the U.S. Securities Act of
1933, as amended (the “Securities Act”) or otherwise, the Company, in its sole
discretion, may impose restrictions upon the sale, pledge or other transfer of
such Shares (including the placement of appropriate legends on stock
certificates or the imposition of stop-transfer instructions) if, in the
judgment of the Company, such restrictions are necessary or desirable in order
to achieve compliance with the Company’s Bye-Laws, the Securities Act, the U.S.
Securities Exchange Act of 1934, as amended, the securities laws of any country
or state or any other applicable law, rule or regulation.

 

2

 

(b)           Legends. 
All certificates evidencing Shares issued under this Agreement shall
bear such restrictive legends as are required or deemed advisable by the
Company under the provisions of any applicable law, rule or regulation.  If, in the opinion of the Company and its
counsel, any legend placed on a stock certificate representing Shares issued
under this Agreement is no longer required, the holder of such certificate
shall be entitled to exchange such certificate for a certificate representing
the same number of Shares but without such legend.

 

6.             MISCELLANEOUS
PROVISIONS.

 

(a)           Bye-Laws. 
All Shares acquired pursuant to this Agreement shall be subject to any
applicable restrictions contained in the Company’s Bye-Laws.

 

(b)           No Retention
Rights.  Nothing in this Agreement or in the Plan
shall confer upon the Participant any right to continue employment for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Company or any Affiliate employing or retaining the
Participant or of the Participant, which rights are hereby expressly reserved
by each, to terminate his or her employment at any time and for any reason,
with or without Cause.

 

(c)           Notice. 
Any notice required by the terms of this Agreement shall be given in
writing and shall be deemed effective upon delivery by hand, upon delivery by
reputable express courier or, if the recipient is located in the United States,
upon deposit with the United States Postal Service, by registered or certified
mail, with postage and fees prepaid. 
Notice shall be addressed to the Company at its principal executive
office and to the Participant at the address that he or she most recently
provided in writing to the Company.

 

(d)           Choice of Law. 
This Agreement shall be governed by, and construed in accordance with,
the laws of Bermuda.

 

(e)           Counterparts. 
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

(f)            Modification or
Amendment.  This Agreement may only be modified or amended
by written agreement executed by the parties hereto; provided, that the
adjustments permitted pursuant to Section 4.2 of the Plan may be made
without such written agreement.

 

(g)           Severability. 
In the event any provision of this Agreement shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions of this Agreement, and this Agreement shall be construed
and enforced as if such illegal or invalid provision had not been included.

 

3

 

AXIS
CAPITAL HOLDINGS LIMITED

DIRECTORS
LONG-TERM EQUITY COMPENSATION PLAN

 

Nonqualified
Stock Option Agreement

 

You (the “Optionee”) have been granted an
option (the “Option”) to purchase ordinary shares, par value $0.0125 per share
(“Share”), of AXIS Capital Holdings Limited, a Bermuda company (the “Company”),
pursuant to the AXIS Capital Holdings Limited 2003 Directors Long-Term Equity
Compensation Plan (the “Plan”).  The date
of grant of the Option (the “Grant Date”), the number of Shares subject to the
Option (the “Option Shares”), the exercise price of the Option (the “Grant
Price”) and the expiration date of the Option (the “Expiration Date”) are set
forth in your stock option account maintained on the Smith Barney Benefit
Access website or such other website as may be designated by the Committee (“Benefit
Access”).

 

By your acceptance of the grant of the Option
on Benefit Access, you agree that the Option is granted under and governed by
the terms and conditions of the Plan and this Stock Option Agreement (the “Agreement”).

 

SECTION 1.         GRANT OF
OPTION.

 

(a) Option.  On the terms and conditions set forth in this
Agreement, the Company grants to the Optionee on the Grant Date the Option to
purchase at the Grant Price the Option Shares. 
The Option is intended to be a Nonqualified Stock Option.

 

(b) Plan and Defined Terms. 
The Option is granted pursuant to the Plan, a copy of which the Optionee
acknowledges having received.  The terms
and provisions of the Plan are incorporated into this Agreement by this
reference.  All capitalized terms that
are used in this Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Plan.

 

SECTION 2.         RIGHT TO EXERCISE.

 

The Optionee may exercise all or part of the
Option at any time before its expiration to the extent that the Option is
vested.  The Option vests in three equal
installments on the first, second and third anniversary of the Grant Date;
provided, that if the Option Shares are not evenly devisable by three, then no
fractional shares shall vest or be exercised and the installments shall be as
equal as possible with any smaller installments vesting first.  In addition, the Option shall become 100%
vested upon the date that Optionee’s service terminates due to Retirement (as
defined below), death or permanent Disability (as defined below) and upon a
Change of Control The exercise procedures set forth in Section 6.6 of the
Plan shall govern the exercise of the Option.

 

 

SECTION 3.         ISSUANCE OF SHARES.

 

Subject to Section 5, after the Option
has been exercised and payment for the full amount of the Exercise Price has
been received, the Shares as to which the Option has been exercised will be
issued to the Optionee.

 

SECTION 4.         TERM AND
EXPIRATION.

 

(a) Basic Term. 
Subject to earlier termination pursuant to the terms hereof, the Option
shall expire on the Expiration Date, which date is 10 years after the Grant
Date.

 

(b) Termination of Serivce. 
If the Optionee’s service terminates, the Option shall expire
immediately with respect to the number of Shares for which the Option is not
yet vested and shall expire with respect to the number of Shares for which the
Option is vested upon the earliest of the following occasions:

 

(i)         The Expiration Date as set forth in subsection 4(a);

 

(ii)        The date three months after the termination of the Optionee’s
service for a reason other than removal for Cause (as defined below),
Retirement, death or permanent Disability of the Optionee;

 

(iii)       The date one year after the termination of the Optionee’s
service due to the Retirement, death or permanent Disability of the Optionee;
or

 

(iv)       The date of the removal for Cause of the Optionee.

 

(c) Expiration. 
If the Optionee dies after termination of service but before the
expiration of the Option, all or part of this Option may be exercised prior to
expiration by the personal representative of the Optionee or by any person who
has acquired the Option directly from the Optionee by will, bequest or
inheritance, but only to the extent that the Option was vested upon termination
of the Optionee’s service.  Upon a Change
of Control, the Option shall remain exercisable until the expiration date
determined pursuant to subsection 4(a).

 

(d) Definitions 
For purposes of this Agreement,

 

(i)         the term “Cause” shall mean (A) the willful misconduct or
gross negligence of Optionee in connection with the performance of Optionee’s
duties as a director of the Company or any of its Affilate, (B) the willful
engagement by the Optionee in misconduct that is demonstrably injurious to the
Company (monetarily or otherwise), (C) the Optionee’s violation of any
confidentiality, non-solicitation or non-competition obligation to the Company
to which the Optionee is subject or (D) the Optionee’s conviction of, or
pleading guilty or nolo contendere to, a felony or a crime involving moral
turpitude;

 

2

 

(ii)        The term “Retirement” shall mean the Participant’s
termination of service with the Company and all of its Affiliates but only if
either (A) such termination shall have occurred on or after the date on which
he or she shall have attained age 60 and prior to such termination the
Participant shall have completed 10 years of continuous service as a Director
with the Company or any of its Affiliates or (B) such termination shall have
occurred on or after the date on which he or she shall have attained age 60 and
the Board by affirmative action determines such termination shall constitute a
Retirement for purposes of the Plan; and

 

(iii)       The
term “Disability” shall have the meaning determined by the Committee.

 

SECTION 5.         LEGALITY OF
INITIAL ISSUANCE.

 

No Shares shall be issued upon the exercise
of this Option unless and until the Company has determined that:

 

(a) The delivery of such Shares
would not violate the provisions of any applicable law, rule or regulation or
the Company’s Bye-Laws; and

 

(b) All applicable tax withholding
obligations have been satisfied (or arrangements to satisfy such obligations
have been made).

 

SECTION 6.         RESTRICTIONS ON
TRANSFER.

 

(a) Transfer Restrictions. 
Regardless of whether the offering and sale of Shares under the Plan
have been registered under the U.S. Securities Act of 1933, as amended (the “Securities
Act”) or otherwise, the Company, in its sole discretion, may impose
restrictions upon the sale, pledge or other transfer of such Shares (including
the placement of appropriate legends on stock certificates or the imposition of
stop-transfer instructions) if, in the judgment of the Company, such
restrictions are necessary or desirable in order to achieve compliance with the
Company’s Bye-Laws, the Securities Act, the U.S. Securities Exchange Act of
1934, as amended, the securities laws of any country or state or any other
applicable law, rule or regulation.

 

(b) Legends. 
All certificates evidencing Shares purchased under this Agreement shall
bear such restrictive legends as are required or deemed advisable by the
Company under the provisions of any applicable law, rule or regulation.  If, in the opinion of the Company and its
counsel, any legend placed on a stock certificate representing Shares sold
under this Agreement is no longer required, the holder of such certificate
shall be entitled to exchange such certificate for a certificate representing
the same number of Shares but without such legend.

 

3

 

SECTION 7.         MISCELLANEOUS
PROVISIONS.

 

(a) Rights as a Shareholder. 
Neither the Optionee nor the Optionee’s representative shall have any
rights as a shareholder with respect to any Shares subject to the Option until
the Option has been exercised and Shares have been issued to the Optionee or
representative, as the case may be.

 

(b) Bye-Laws. 
All Shares acquired pursuant to the Option shall be subject to any
applicable restrictions contained in the Company’s Bye-Laws.

 

(c) No Retention Rights. 
Nothing in this Agreement or in the Plan shall confer upon the Optionee
any right to continue service for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Company or any
Affiliate on whose board the Optionee serves or of the Optionee, which rights
are hereby expressly reserved by each, to terminate his or her service at any
time and for any reason in accordance with applicable law, rule or regulation
and the Company’s Bye-Laws.

 

(d) Notice. 
Any notice required by the terms of this Agreement shall be given in
writing and shall be deemed effective upon delivery by hand, upon delivery by
reputable express courier or, if the recipient is located in the United States,
upon deposit with the United States Postal Service, by registered or certified
mail, with postage and fees prepaid. 
Notice shall be addressed to the Company at its principal executive office
and to the Optionee at the address that he or she most recently provided in
writing to the Company.

 

(e) Choice of Law. 
This Agreement shall be governed by, and construed in accordance with,
the laws of Bermuda.

 

(f) Counterparts.   This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

 

(g) Modification or Amendment. 
This Agreement may only be modified or amended by written agreement
executed by the parties hereto; provided, that the adjustments permitted
pursuant to Section 4.2 of the Plan may be made without such written
agreement.

 

(h) Severability. 
In the event any provision of this Agreement shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions of this Agreement, and this Agreement shall be construed
and enforced as if such illegal or invalid provision had not been included.

 

4

 

AXIS
CAPITAL HOLDINGS LIMITED

DIRECTORS
LONG-TERM EQUITY COMPENSATION PLAN

 

Restricted
Stock Agreement

 

You (the “Participant”) have been granted a
restricted stock award (the “Award”) of ordinary shares, par value $0.0125 per
share (“Share”), of AXIS Capital Holdings Limited, a Bermuda company (the “Company”),
pursuant to the AXIS Capital Holdings Limited 2003 Directors Long-Term Equity
Compensation Plan (the “Plan”).  The date
of grant of the Award (the “Award Date”) and the number of Shares subject to
the Award (the “Award Shares”) are as set forth in your restricted stock
account maintained on the Smith Barney Benefit Access website or such other
website as may be designated by the Committee (“Benefit Access”).

 

By your acceptance of the grant of the Award
on Benefit Access, you agree that the Award is granted under and governed by
the terms and conditions of the Plan and this Restricted Stock Agreement (the “Agreement”).

 

1.             GRANT OF
RESTRICTED STOCK.

 

(a)           Award.  On the terms and conditions set forth in this Agreement, the
Company hereby grants to the Participant on the Award Date the Award Shares.

 

(b)           Plan and
Defined Terms.   The Award is granted pursuant to
the Plan, a copy of which the Participant acknowledges having received.  The terms and provisions of the Plan are
incorporated into this Agreement by this reference.  All capitalized terms that are used in this
Agreement and not otherwise defined herein shall have the meanings ascribed to
them in the Plan.

 

2.             ISSUANCE OF
SHARES.

 

Subject to Section 4,
the Shares subject to the Award will be issued to the Participant and generally
shall have the rights and privileges of a shareholder of the Company as to such
Shares.

 

3.             PERIOD OF
RESTRICTION.

 

The Shares subject to the Award shall be restricted
during the period (the “Period of Restriction”) commencing on the Award Date
and expiring on the first to occur of:

 

(a)           The date six months after the
Award Date;

 

(b)           The Participant’s Retirement (as
defined below), death or permanent

 

 

Disability (as
defined below); or

 

(c)           A Change in Control.

 

4.             RESTRICTIONS, VOTING RIGHTS AND
DIVIDENDS.

 

(a)           Restrictions. 
During the Period of Restriction, the following restrictions shall
apply: (i) the Shares subject to the Award may not be sold, transferred,
pledged, assigned or otherwise alienated or hypothecated and (ii) the stock
certificates, if any, representing the Shares subject to the Award shall be
deposited with the Company or as the Committee may otherwise direct and the
Participant shall not be entitled to delivery of a stock certificate.  If the Participant’s service terminates
during the Period of Restriction for any reason other than Retirement, death or
permanent Disability, the Shares subject to the Award shall be immediately
repurchased by the Company for an aggregate repurchase price of US$1 (One
United States Dollar) without liability or further action or obligation on the
part of the Company.  Upon the repurchase
of any Shares, any dividends and interest set aside thereon shall be transferred
to the Company without further action by the Participant, and the Participant
shall immediately thereby relinquish and cease to hold any right, title or
interest to any such dividends and interest.

 

(b)           Voting Rights.  Participant shall be entitled to exercise
full voting rights with respect to the Shares during the Period of Restriction.

 

(c)           Dividends. 
Dividends may be paid to Participant with respect to the Shares during
the Period of Restriction as determined from time to time by the Committee.  Any Dividends paid with respect to the Shares
during the Period of Restriction will be held by the Company, or a depository
appointed by the Committee, for the Participant’s account, and interest may be
paid on the amount of cash dividends held at a rate and subject to such terms
as may be determined by the Committee. 
All cash or share dividends so held, and any interest so paid, shall
initially be subject to forfeiture as set forth in subsection 4(a) but
shall become non-forfeitable and payable at upon the expiration or termination
of the Period of Restriction.

 

(d)           Definitions.      For purposes of this Agreement:

 

(i)         The term “Retirement” shall mean the Participant’s
termination of service with the Company and all of its Affiliates but only if
either (A) such termination shall have occurred on or after the date on which
he or she shall have attained age 60 and prior to such termination the
Participant shall have completed 10 years of continuous service as a Director
with the Company or any of its Affiliates or (B) such termination shall have
occurred on or after the date on which he or she shall have attained age 60 and
the Board by affirmative action determines such termination shall constitute a
Retirement for purposes of the Plan; and

 

(ii)        The term “Disability” shall have the meaning determined by
the Committee.

 

18.          RESTRICTIONS ON
TRANSFER.

 

(a)           Transfer
Restrictions.  Regardless of whether the offering and sale
of

 

2

 

Shares under the Plan have been registered under the U.S. Securities
Act of 1933, as amended (the “Securities Act”) or otherwise, the Company, in
its sole discretion, may impose restrictions upon the sale, pledge or other
transfer of such Shares (including the placement of appropriate legends on
stock certificates or the imposition of stop-transfer instructions) if, in the
judgment of the Company, such restrictions are necessary or desirable in order
to achieve compliance with the Company’s Bye-Laws, the Securities Act, the U.S.
Securities Exchange Act of 1934, as amended, the securities laws of any country
or state or any other applicable law, rule or regulation.

 

(b)           Legends. 
All certificates evidencing Shares issued under this Agreement shall
bear such restrictive legends as are required or deemed advisable by the
Company under the provisions of any applicable law, rule or regulation.  If, in the opinion of the Company and its
counsel, any legend placed on a stock certificate representing Shares issued
under this Agreement is no longer required, the holder of such certificate
shall be entitled to exchange such certificate for a certificate representing
the same number of Shares but without such legend.

 

6.             MISCELLANEOUS
PROVISIONS.

 

(a)           Bye-Laws. 
All Shares acquired pursuant to this Agreement shall be subject to any
applicable restrictions contained in the Company’s Bye-Laws.

 

(b)           No Retention
Rights.  Nothing in this Agreement or in the Plan
shall confer upon the Participant any right to continue service for any period
of specific duration or interfere with or otherwise restrict in any way the
rights of the Company or any Affiliate on whose board the Participant serves or
of the Participant, which rights are hereby expressly reserved by each, to
terminate his or her service at any time and for any reason in accordance with
applicable law, rule or regulation and the Company’s Bye-Laws.

 

(c)           Notice. 
Any notice required by the terms of this Agreement shall be given in
writing and shall be deemed effective upon delivery by hand, upon delivery by
reputable express courier or, if the recipient is located in the United States,
upon deposit with the United States Postal Service, by registered or certified
mail, with postage and fees prepaid. 
Notice shall be addressed to the Company at its principal executive
office and to the Participant at the address that he or she most recently
provided in writing to the Company.

 

(d)           Choice of Law. 
This Agreement shall be governed by, and construed in accordance with,
the laws of Bermuda.

 

(e)           Counterparts. 
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

(f)            Modification or
Amendment.  This Agreement may only be modified or amended
by written agreement executed by the parties hereto; provided, that the
adjustments permitted pursuant to Section 4.2 of the Plan may be made
without such written agreement.

 

(g)           Severability. 
In the event any provision of this Agreement shall be held

 

3

 

illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of this Agreement, and this Agreement shall
be construed and enforced as if such illegal or invalid provision had not been
included.

 

4

 

AXIS
CAPITAL HOLDINGS LIMITED

LONG-TERM
EQUITY COMPENSATION PLAN

 

Nonqualified
Stock Option Agreement

 

You (the “Optionee”) have been granted an
option (the “Option”) to purchase ordinary shares, par value $0.0125 per share
(“Share”), of AXIS Capital Holdings Limited, a Bermuda company (the “Company”),
pursuant to the AXIS Capital Holdings Limited 2003 Long-Term Equity
Compensation Plan (the “Plan”).  The date
of grant of the Option (the “Grant Date”), the number of Shares subject to the
Option (the “Option Shares”), the exercise price of the Option (the “Grant
Price”) and the expiration date of the Option (the “Expiration Date”) are set
forth in your stock option account maintained on the Smith Barney Benefit
Access website or such other website as may be designated by the Committee (“Benefit
Access”).

 

By your acceptance of the grant of the Option
on Benefit Access, you agree that the Option is granted under and governed by
the terms and conditions of the Plan and this Stock Option Agreement (the “Agreement”).

 

SECTION 1.         GRANT OF
OPTION.

 

(a) Option.  On the terms and conditions set forth in this
Agreement, the Company grants to the Optionee on the Grant Date the Option to
purchase at the Grant Price the Option Shares. 
The Option is intended to be a Nonqualified Stock Option.

 

(b) Plan and Defined Terms. 
The Option is granted pursuant to the Plan, a copy of which the Optionee
acknowledges having received.  The terms
and provisions of the Plan are incorporated into this Agreement by this
reference.  All capitalized terms that
are used in this Agreement and not otherwise defined herein shall have the
meanings ascribed to them in the Plan.

 

SECTION 2.         RIGHT TO EXERCISE.

 

The Optionee may exercise all or part of the
Option at any time before its expiration to the extent that the Option is
vested.  The Option vests in three equal
installments on the first, second and third anniversary of the Grant Date;
provided, that if the Option Shares are not evenly devisable by three, then no
fractional shares shall vest or be exercised and the installments shall be as
equal as possible with any smaller installments vesting first.  In addition, the Option shall become 100%
vested upon the date that Optionee’s employment terminates due to Retirement,
death or permanent Disability and upon a Change of Control The exercise
procedures set forth in Section 6.6 of the Plan shall govern the exercise
of the Option.

 

 

SECTION 3.         ISSUANCE OF
SHARES.

 

Subject to Section 5, after the Option
has been exercised and payment for the full amount of the Exercise Price has
been received, the Shares as to which the Option has been exercised will be
issued to the Optionee.

 

SECTION 4.         TERM AND
EXPIRATION.

 

(a) Basic Term. 
Subject to earlier termination pursuant to the terms hereof, the Option
shall expire on the Expiration Date, which date is 10 years after the Grant
Date.

 

(b) Termination of Employment. 
If the Optionee’s employment terminates, the Option shall expire
immediately with respect to the number of Shares for which the Option is not
yet vested and shall expire with respect to the number of Shares for which the
Option is vested upon the earliest of the following occasions:

 

(i)         The Expiration Date as set forth in subsection 4(a);

 

(ii)        The date three months after the termination of the Optionee’s
employment for a reason other than Cause (as defined below), Retirement, death
or permanent Disability of the Optionee;

 

(iii)       The date one year after the termination of the Optionee’s
employment due to the Retirement, death or permanent Disability of the
Optionee; or

 

(iv)       The date of the termination of the Optionee’s employment for
Cause.

 

(c) Expiration. 
If the Optionee dies after termination of employment but before the
expiration of the Option, all or part of this Option may be exercised prior to
expiration by the personal representative of the Optionee or by any person who
has acquired the Option directly from the Optionee by will, bequest or
inheritance, but only to the extent that the Option was vested upon termination
of the Optionee’s employment.  Upon a
Change of Control, the Option shall remain exercisable until the expiration
date determined pursuant to subsection 4(a).

 

(d) Definition of “Cause.” 
For purposes of this Agreement, the term “Cause” shall mean (i) the
willful misconduct or gross negligence of Optionee in connection with the
performance of Optionee’s duties as an employee of the Company, (ii) the
willful engagement by the Optionee in misconduct that is demonstrably injurious
to the Company (monetarily or otherwise), (iii) the Optionee’s violation of any
confidentiality, non-solicitation or non-competition obligation to the Company
to which the Optionee is subject or (iv) the Optionee’s conviction of, or
pleading guilty or nolo contendere to, a felony or a crime involving moral
turpitude.

 

2

 

(e) Leaves of Absence. 
For any purpose under this Agreement, employment shall be deemed to
continue while the Optionee is on a bona fide leave of absence, if such leave
was approved by the Company in writing and if continued crediting of employment
for such purpose is expressly required by the terms of such leave or by
applicable law (as determined by the Company).

 

SECTION 5.         LEGALITY OF
INITIAL ISSUANCE.

 

No Shares shall be issued upon the exercise
of this Option unless and until the Company has determined that:

 

(a) The delivery of such Shares
would not violate the provisions of any applicable law, rule or regulation or
the Company’s Bye-Laws; and

 

(b) All applicable tax withholding
obligations have been satisfied (or arrangements to satisfy such obligations
have been made).

 

SECTION 6.         RESTRICTIONS ON
TRANSFER.

 

(a) Transfer Restrictions. 
Regardless of whether the offering and sale of Shares under the Plan
have been registered under the U.S. Securities Act of 1933, as amended (the “Securities
Act”) or otherwise, the Company, in its sole discretion, may impose
restrictions upon the sale, pledge or other transfer of such Shares (including
the placement of appropriate legends on stock certificates or the imposition of
stop-transfer instructions) if, in the judgment of the Company, such
restrictions are necessary or desirable in order to achieve compliance with the
Company’s Bye-Laws, the Securities Act, the U.S. Securities Exchange Act of
1934, as amended, the securities laws of any country or state or any other
applicable law, rule or regulation.

 

(b) Legends. 
All certificates evidencing Shares purchased under this Agreement shall
bear such restrictive legends as are required or deemed advisable by the
Company under the provisions of any applicable law, rule or regulation.  If, in the opinion of the Company and its
counsel, any legend placed on a stock certificate representing Shares sold
under this Agreement is no longer required, the holder of such certificate
shall be entitled to exchange such certificate for a certificate representing
the same number of Shares but without such legend.

 

3

 

SECTION 7.         MISCELLANEOUS
PROVISIONS.

 

(a) Rights as a Shareholder. 
Neither the Optionee nor the Optionee’s representative shall have any
rights as a shareholder with respect to any Shares subject to the Option until
the Option has been exercised and Shares have been issued to the Optionee or
representative, as the case may be.

 

(b) Bye-Laws. 
All Shares acquired pursuant to the Option shall be subject to any
applicable restrictions contained in the Company’s Bye-Laws.

 

(c) No Retention Rights. 
Nothing in this Agreement or in the Plan shall confer upon the Optionee
any right to continue employment for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company or
any Affiliate employing or retaining the Optionee or of the Optionee, which
rights are hereby expressly reserved by each, to terminate his or her
employment at any time and for any reason, with or without Cause.

 

(d) Notice. 
Any notice required by the terms of this Agreement shall be given in
writing and shall be deemed effective upon delivery by hand, upon delivery by
reputable express courier or, if the recipient is located in the United States,
upon deposit with the United States Postal Service, by registered or certified
mail, with postage and fees prepaid. 
Notice shall be addressed to the Company at its principal executive
office and to the Optionee at the address that he or she most recently provided
in writing to the Company.

 

(e) Choice of Law. 
This Agreement shall be governed by, and construed in accordance with,
the laws of Bermuda.

 

(f) Counterparts. 
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

(g) Modification or Amendment. 
This Agreement may only be modified or amended by written agreement
executed by the parties hereto; provided, that the adjustments permitted
pursuant to Section 4.2 of the Plan may be made without such written
agreement.

 

(h) Severability. 
In the event any provision of this Agreement shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions of this Agreement, and this Agreement shall be construed
and enforced as if such illegal or invalid provision had not been included.

 

4Exhibit
10.3

 

2004
ANNUAL INCENTIVE PLAN

 

AXIS Capital Holdings
Limited (the “Company”) has established the 2004 Annual Incentive Plan (the “Plan”)
to enable eligible employees of the Company and its subsidiaries to share in
the success of the Company.  The terms of
the Plan are as set forth herein.

1.             Eligibility. 
Any person who is employed by the Company or one of its subsidiaries and
who is a Grade 13 or above shall be entitled to an annual allocation from the
Bonus Pool (as defined in Section 2) and shall be a “Participant” in the Plan
from and after January 1, 2004.

2.             Bonus Pool. 
The “Bonus Pool” shall be an amount determined by the Compensation
Committee of the Board of Directors (the “Committee”) based on the Company’s
gross written premiums and/or net income for each fiscal year and goals
established by the Company’s management and approved by the Committee for each
fiscal year.

3.             Allocations. 
The Bonus Pool shall be allocated to the Participants by the Committee
based upon recommendations made by the Chief Executive Officer and President.  A Participant’s interest in the Bonus Pool shall
be referred to herein as the Participant’s “Allocation”.

4.             Vesting.  Each
Participant shall have a fully vested right in his or her Allocation as of December
31 of the fiscal year for which the Bonus Pool and Allocation has been
determined, except as set forth in this Section 4.  If a Participant’s employment with the
Company and its subsidiaries terminates prior to December 31 for any reason, or
if a Participant terminates his or her employment prior to the date of payment,
or if the Company terminates a Participant's employment for cause prior to the
date of payment, he or she shall cease to be a Participant as of his or her termination
date, his or her Allocation shall be forfeited as of his or her termination
date and the Participant shall have no rights to payments under the Plan,
except to the extent of any contractual obligation to any Participant that the
Company or any of its subsidiaries may have.

5.             Payment. 
Any Participant who becomes vested in his or her Allocation shall
receive a lump sum cash payment of the value of his or her Allocation as soon
as practicable after December 31 of the fiscal year for which the Bonus Pool
and Allocation has been determined.  In
the event of the Participant’s death, any payments hereunder shall be made to the
Participant’s estate.  Any payments
hereunder shall be subject to such withholdings as may be required by
applicable law.

6.             Interpretation of Plan.  The Committee shall have the authority to
administer the Plan, to conclusively make all determinations under the Plan and
to interpret the Plan.  Any such
determinations or interpretations made by the Committee shall be binding on all
persons.

7.             Governing Law. 
The Plan shall be governed by the laws of Bermuda.

8.             No Guarantee of Continued Employment.  Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any of its subsidiaries to
terminate any employee’s employment at any time, nor shall it confer upon any
Participant any right to continue in the employ of the Company or any of its
subsidiaries.  For purposes of the Plan,
temporary absence from employment because of illness, vacation, approved leaves
of absence 

 

 

and transfers of employment among the Company and its subsidiaries
shall not be considered to terminate an employee’s employment.

9.             Successors. 
All obligations of the Company under the Plan shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect merger, consolidation, purchase of all or substantially
all of the business and/or assets of the Company or otherwise.

10.           Amendment and Termination.  This Plan may be amended or terminated at any
time by the Committee; provided, that no amendment shall be given effect to the
extent that it would have the effect of reducing a Participant’s then current
Allocation.

 

2

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