Document:

Exhibit 4.2 

THIRD AMENDED AND RESTATED

NAC RE CORP.

1989 STOCK OPTION PLAN

(AS AMENDED AND RESTATED ON APRIL 30, 2010)

1.
Purpose and Structure

          The
purpose of this 1989 Stock Option Plan (the “1989 Plan”) is to encourage and
enable certain officers of NAC Re Corp. (the “Company”) and its subsidiaries to
a proprietary interest in XL Group plc, formerly XL Capital Ltd, (the “Parent
Company”) through the ownership of common stock of the Parent Company (“Common
Stock”). Such ownership will provide such officers with a more direct stake in
the future welfare of the Company and encourage them to remain with the Company
or a subsidiary of the Company. It is also expected that the 1989 Plan will
encourage qualified persons to seek and accept employment with the Company. 

          Pursuant
to the 1989 Plan, certain officers will be offered the opportunity to acquire
Common Stock through the grant of stock options including both “non-qualified”
stock options (“NQSOs”) and “incentive stock options” (which term, when used
herein, shall have the meaning ascribed thereto by Section 422A(b) of the
Internal Revenue Code of 1986, as amended the “Code”) (“ISOs”). In addition,
the 1989 Plan provides for the granting of stock appreciation rights (“SARs”).
The “Options” hereinafter means stock options (including both NQSOs and ISOs)
and SARs. “Subsidiary” hereinafter means any present or future corporation
which is or would be a “subsidiary corporation” of the Company as the term is
defined in Section 425 of the Code determined as if the Company were the
employer corporation. 

2. Administration of the 1989 Plan 

          The
1989 Plan shall be administered by the Committee as described in Paragraph 3.
In administering the 1989 Plan, the Committee may adopt rules and regulations
for carrying out the 1989 Plan. Any interpretation and decision with regard to
any question arising under the 1989 Plan made by the Committee shall be final
and conclusive on all participants in the 1989 Plan (“Participants”) and all
other employees of the Company or a Subsidiary. The Committee shall determine
the officers to whom, and the time or times at which, grants shall be made, the
number of Options to be included in the grants, the number of Options which
shall be granted as NQSOs, ISOs and SARs. 

3. Committee 

          The
“Committee” shall mean the entire Board of Directors of the Parent Company (the
“Board”), the Compensation Committee of the Board, or any successor Committee
approved by the Board. No one shall be a Participant in the 1989 Plan while
serving as a member of the Committee or for one year thereafter. 

          The
Board may at any time and from time to time remove any member of the Committee,
with or without cause, appoint additional members of the Committee and fill
vacancies, however 

caused,
in the Committee. A majority of the members of the Committee shall constitute a
quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination of the Committee reduced to writing and
signed by all of the members of the Committee shall be as effective as if it
had been made at a meeting duly called and held. 

4. Shares of Stock subject to the 1989 Plan

          Except
as provided in Subparagraph 7(i) and 7(j) and Paragraph 8, the number of shares
that may be issued or transferred pursuant to the exercise of NQSOs or ISOs
granted under the 1989 Plan plus the number of shares subject to SARS granted
under the 1989 Plan shall not exceed 500,000 shares of the Common Stock. Such
shares may be authorized and unissued shares or previously issued shares
acquired or to be acquired by the Parent Company and held in treasury. Any
shares subject to an Option, which, for any reason, expires or is terminated
unexercised may again be subject to an Option right under the 1989 Plan.
Notwithstanding any other provision of the 1989 Plan and any action of the
Committee the aggregate Fair Market Value (determined at the time the ISO is
granted) of the stock with respect to which ISOs are exercisable for the first
time by a Participant during any calendar year (under all plans of the Company
and any parent and subsidiary of the Company which provides for granting ISOs)
shall not exceed $100,000 or any other limit prescribed by the Code. If such
limitation is exceeded, such excess shall be treated as NQSOs. 

5.
Eligibility 

          Options
may be granted only to officers of the Company or a Subsidiary as selected by
the Committee as being potential contributors to the successful operation of
the Company or a Subsidiary. 

6.
Granting of Options

          All
ISOs granted pursuant to the 1989 Plan shall be granted no later than September
8, 1998. NQSOs and SARs may be granted at any time. The date of the grant of
any Option shall be the date on which the Committee authorizes the grant of
such Option by resolution. 

7.
Terms and Conditions of
Options 

          Options
shall be evidenced by stock option agreements, which agreements need not be
identical and shall contain in substance the following terms and conditions: 

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           (a)
 Option Price. The purchase price under each stock option shall be 100%
 of the Fair Market Value of the Common Stock at the time the stock option is
 granted. In the case of an ISO granted to a Participant owning more than 10%
 of the total combined voting power of all classes of stock of the Parent
 Company, or of any subsidiary of the Parent Company, actually or
 constructively under Section 425(d) of the Code (a “10% Shareholder”), the
 purchase price shall not be less than 110% of the fair market value of the
 Common Stock subject to the ISO at the time of its grant. 

 
	
  

 	
  

 
	
  

 	
           (b)
 SARs. Upon exercise of a SAR, the holder thereof shall be entitled to
 receive from the Company consideration in an amount equal to the product of
 (i) the difference between the-fair market value of one share of
 Common Stock at the date of exercise and the fair market value of one share
 of Common Stock on the date the SAR was granted, and (ii) the number of
 shares of Common Stock subject to the SAR, or that portion of the SAR, which
 is exercised. Upon the exercise of a SAR, the holder may specify the form of
 consideration to be paid to the holder, which shall be in cash, in Common
 Stock, or in any combination thereof, provided, however, that the Committee,
 in its sole discretion, may decide that such consideration be paid in such
 combination of cash and Common Stock as the Committee shall decide. Stock
 Option Agreements with respect to SARs may provide that such SARs are
 automatically converted into NQSOs upon the conversion date specified by the
 Committee at the time of grant. 

 
	
  

 	
  

 
	
  

 	
           (c)
 Exercise of Options and Medium and Time of Payment. 

 
	
  

 	
  

 
	
  

 	
           An
 Option may be exercised only by written notice of intent to exercise such
 Option with respect to a specified number of shares of the Common Stock and
 payment to the Company of the amount of the option price for the number of
 shares of the Common Stock in the case of an exercise of a stock option.
 Stock purchased pursuant to the exercise of a stock option shall at the time
 of purchase be paid for in full (i) in cash, (ii) with shares of Common Stock
 (including restricted stock) to be valued at the Fair Market Value thereof on
 the date of such exercise, (iii) by written notice to the Company to withhold
 from those shares of Common Stock that would otherwise be obtained upon such
 stock option exercise, a number of shares having a Fair Market Value on the
 date of exercise equal to the option exercise price, (iv) by such other means
 which the Committee determines to be consistent with the purpose of the 1989
 Plan and applicable law, or (v) a combination of the foregoing. Upon receipt
 of the payment, the Company shall, without stock transfer tax to the Participant or other person
 entitled to exercise the stock option, deliver to the person exercising such
 option a certificate or certificates for such shares. It shall be a condition
 to the performance of the Company’s obligation to procure the issue or
 transfer of Common Stock upon exercise of a stock option that the person
 exercising the stock option pay, or make provision satisfactory to the
 Company for the payment of, any taxes (other than stock transfer taxes) which
 the Company is obligated to collect with respect to the issue or transfer of Common
 Stock upon such exercise. The payment of such taxes may be made by written
 notice to the Company to withhold from those shares that would otherwise be
 obtained upon the stock option exercise, a number of shares having a Fair
 Market Value on the date of exercise equal to the tax payment. 

 

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           The
 Committee may establish a program through which Participants can borrow funds
 with which to purchase stock pursuant to exercise of a stock option.
 Eligibility of any Participant for such borrowing will be determined solely
 at the discretion of the Committee. Any such loan shall bear interest at a
 rate sufficient to avoid the imputation of interest under any section of the
 Code. 

 
	
  

 	
  

 
	
  

 	
           (d)
 Exercise Period. No ISO may be exercised after 10 years from the date
 it is granted. In the case of an ISO granted to a 10% Shareholder, such ISO,
 by its terms, as determined by the Committee, shall be exercisable only
 within five years from the date of grant. Options other than an ISO granted
 to a 10% Shareholder become exercisable in such installments and over such
 time period as the Committee shall determine at the time of grant; provided,
 however, that unless the Committee shall otherwise determine, Options become
 exercisable over the first six years after they are granted as follows: 20%
 of the Option is exercisable at the end of the second year following the date
 of grant; an additional 20% becomes exercisable at the end of the third year
 following the date of grant; an additional 20% becomes exercisable at the end
 of the fourth year following the date of grant; an additional 20% becomes
 exercisable at the end of the fifth year following the date of grant; and the
 remaining 20% becomes exercisable at the end of the sixth year following the
 date of grant. Notwithstanding the prior sentence, the Committee may issue
 Options with a more accelerated maturity schedule, but in no event within 6
 months of the date of grant, if the Committee believes it will be in the best
 interests of the Company. 

 
	
  

 	
  

 
	
  

 	
           (e)
 Rights as a Stockholder. No holder of any Option shall have rights as
 a stockholder with respect to any shares issuable or transferable upon
 exercise thereof until the date a stock certificate is issued to him for such
 shares. Except as otherwise expressly provided in the 1989 Plan, no
 adjustment shall be made for dividends or other rights for which the record
 date is prior to the date such stock certificate is issued. 

 
	
  

 	
  

 
	
  

 	
           (f)
 Non-Assignability of Options. No Option shall be assignable or
 transferable by the Participant except by will or by the laws of descent and
 distribution. During the lifetime of a Participant, Options shall be
 exercisable only by him. 

 
	
  

 	
  

 
	
  

 	
           (g)
 Effect of Termination of Employment or Death. 

 
	
  

 	
  

 
	
  

 	
           No
 Option shall be exercisable after termination of employment with the Company
 or a Subsidiary, except as provided in this subparagraph. Notwithstanding the
 provisions contained herein, in no event shall an ISO be exercisable after 10
 years from the date it is granted. Options shall not be affected by any
 change of employment so long as the Participant continues to be employed by
 either the Company or a Subsidiary. 

 
	
  

 	
  

 
	
  

 	
           In
 the event of the retirement of a Participant with the consent of the Company,
 or due to death or disability of the Participant (“Retirement”), NQSOs and/or
 SARs or unexercised portions thereof which were otherwise exercisable on the
 date of Retirement shall expire unless exercised within one year after the
 date of Retirement. 

 

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           In
 the event of the discharge or resignation of a Participant, or the retirement
 of a Participant without the consent of the Company (“Termination”), Options
 or unexercised portions thereof which were otherwise exercisable on the date
 of Termination shall expire unless exercised within a period of three months
 after the date of Termination. 

 
	
  

 	
  

 
	
  

 	
           In
 the event that a Participant ceases to be an employee of the Company or a
 Subsidiary for any reason, including Retirement or Termination, his Options
 shall terminate and be null and void to the extent they are not immediately
 exercisable on the date of Retirement or Termination. Notwithstanding the
 foregoing, the Committee may, if it determines that to do so would be in the
 Company’s best interests, provide in a specific case or cases for the
 exercise of NQSOs or SARs which would not otherwise be immediately
 exercisable on the date of such Termination or Retirement, upon such terms
 and conditions as the Committee determines to be appropriate. 

 
	
  

 	
  

 
	
  

 	
           In
 the event of the discharge of a Participant for cause, the Committee may, in
 its sole discretion, annul all of his Options, in which case such Options,
 whether or not exercisable on the date of discharge, shall terminate and be
 null and void. 

 
	
  

 	
  

 
	
  

 	
           Nothing
 in the 1989 Plan or in any Option shall confer any right to continue in the
 employ of the Company or a Subsidiary or interfere in any way with the right
 of the Company or Subsidiary of the Company to terminate the employment of
 the Participant at any time. 

 
	
  

 	
  

 
	
  

 	
           Notwithstanding
 any other provision in the 1989 Plan, ISOs will expire unless exercised
 within three months of termination of employment for any reason, except in
 the case of termination by reason of death or permanent and total disability
 (within the meaning of Treasury Regulations Section 14a.422A-1(A-2(b)), in
 which case the ISO will expire unless exercised within one year of
 termination. 

 
	
  

 	
  

 
	
  

 	
           (h)
 Leave of Absence. In the case of a Participant on an approved leave of
 absence, the Committee may, if it determines that to do so would be in the
 best interests of the Company, provide in a specific case for continuation of
 Options during such leave of absence, such continuation to be on such terms and
 conditions as the Committee determines to be appropriate, except that in no
 event shall an Option be exercisable after ten years from the date it is
 granted. 

 
	
  

 	
  

 
	
  

 	
           (i)
 Recapitalization. 

 
	
  

 	
  

 
	
  

 	
           In
 the event that dividends payable in Common Stock during any fiscal year of
 the Parent Company exceed in aggregate five percent (5%) of the Common Stock
 issued and outstanding at the beginning of the year, or in the event there is
 during any fiscal year of the Parent Company one or more alterations or
 re-organizations whatsoever taking place in the capital structure of the
 Parent Company resulting in an increase or decrease by more than five percent
 (5%) of the shares outstanding at the beginning of the year, the number of
 shares available under the 1989 Plan shall be increased or decreased
 proportionately, as the case may be, and the number of shares deliverable
 upon the exercise thereafter of any stock option theretofore granted shall be
 increased or decreased proportionately, as the case may 

 

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 be,
 without change in the aggregate purchase price. Appropriate adjustment shall
 also be made to the exercise price of any outstanding SAR and to the number
 of shares considered to be subject to such SAR as is necessary to protect the
 value of such SAR at the time of such dividend or other action necessitating
 such adjustment. All adjustments shall be made as of the day such action
 necessitating such adjustment becomes effective. 

 
	
  

 	
  

 
	
  

 	
           Common
 Stock alterations or re-organizations during any fiscal year that do not
 exceed in the aggregate five percent (5%) of the Common Stock issued and
 outstanding at the beginning of such year shall be ignored for purposes of
 the 1989 Plan. 

 
	
  

 	
  

 
	
  

 	
           Notwithstanding
 any other provision in the 1989 Plan, no adjustment may be made that reduces
 the amount to be paid per share of Common Stock to less than the par value of
 the share of Common Stock. 

 
	
  

 	
  

 
	
  

 	
           (j)
 Sale or Reorganization. 

 
	
  

 	
  

 
	
  

 	
           In
 case the Company is merged or consolidated with another corporation, or in
 case the property or stock of the Company is acquired by another corporation,
 or in case of a separation, reorganization, or liquidation of the Company,
 the Board, or the board of directors of any corporation assuming the obligations
 of the Company hereunder, shall either (i) make appropriate provisions for
 the protection of the value of any outstanding Options by the substitution on
 an equitable basis of appropriate stock of the Company, or appropriate stock
 of the merged, consolidated, or otherwise reorganized corporation, provided
 only that in the case of an ISO, any such adjustment shall be subject to the
 requirements of Section 425 of the Code, and in the case of SARs, any
 additional adjustments to terms of the SARs will be made as necessary to
 ensure that the value of any unexercised SAR is not diminished, or (ii) give
 written notice to holders that their Options will become immediately
 exercisable, notwithstanding any waiting period otherwise prescribed by the
 Committee, and that such Options must be exercised within sixty (60) days of
 the date of such notice or they will be terminated. 

 
	
  

 	
  

 
	
  

 	
           (k)
 Change in Control.

 
	
  

 	
  

 
	
  

 	
           Notwithstanding
 any other provision in the 1989 Plan, in the event of a Change in Control, as
 defined below, the Committee in its sole discretion may provide for immediate
 exercise, but in no event within 6 months of the date of grant, of any or all
 Options which are not yet exercisable at the time of the Change in Control
 and which are held by Participants who are employed by the Company or a
 Subsidiary at the time of the Change in Control. “Change in Control” is
 hereby defined as either (i) the acquisition of 30% or more of the
 outstanding voting securities of the Company by any person, (ii) a tender
 offer for Parent Company stock or a proxy contest for the election of
 directors, if, after such tender offer or proxy contest, the persons who were
 directors immediately prior to such tender offer or proxy contest would not
 constitute a majority of the Board, or (iii) approval by Parent Company
 stockholders of either an agreement for a transaction 

 

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 whereby
 the Company will cease to be traded on a national securities exchange or a
 sale by the Company of all or substantially all of its assets. 

 
	
  

 	
  

 
	
  

 	
           (l)
 General Restrictions. 

 
	
  

 	
  

 
	
  

 	
           Each
 Option granted under the 1989 Plan shall be subject to the requirement that
 if at any time the Board shall determine, in its discretion, that the
 listing, registration or qualification of the shares issuable or transferable
 upon exercise thereof upon any securities exchange or under any state or
 federal law, or the consent or approval of any governmental regulatory body
 is necessary or desirable as a condition of, or in connection with the
 granting of such Option, or the issue, transfer or purchase of shares
 thereunder, such Option may not be exercised in whole or in part unless such
 listing, registration, qualification, consent, or approval shall have been
 effected or obtained free of any conditions not acceptable to the Board. The
 Company shall not be obligated to procure the sale or issue of any shares of
 Common Stock in any manner in contravention of the Securities Act of 1933, as
 amended, or any state securities law. The Board or the Committee may, in
 connection with the granting of each Option, require the Participant to whom
 the Option is to be granted to enter into an agreement with the Company
 stating that as a condition precedent to each exercise of the Option, in
 whole or in part, he shall, if then required by the Company, represent to the
 Company in writing that such exercise is for investment only and not with a
 view to distribution, and also setting forth such other terms and conditions
 as the Board or the Committee may prescribe. 

 

8.
Termination of the
1989 Plan. 

          The
Board shall have the right to amend, suspend, or terminate the 1989 Plan at any
time; provided, however, that no such action shall affect or in any way impair
the rights of a Participant or other holder under any Option theretofore
granted under the 1989 Plan; and, provided further, unless first duly approved
by the holders of Common Stock entitled to vote thereon at a meeting (which may
be the annual meeting) duly called and held for such purpose, except as
provided in Subparagraphs 7(i) and 7(j), no amendment or change shall be made
in the 1989 Plan: (i) increasing the total number of shares which may be issued
or transferred under the 1989 Plan; (ii) changing the purchase price for the
shares subject to Options; (iii) extending the period during which Options may
be granted or exercised under the 1989 Plan; or (iv) changing the designation
of employees eligible to receive Options under the 1989 Plan. 

9.
Restriction on Sale of
Shares.

          Without
prior written notice to the Company, no Common Stock acquired by a Participant
upon exercise of an ISO granted hereunder shall be disposed of by the
Participant within two years from the date such ISO was granted, nor within one
year after the transfer of such stock to the Participant; provided, however,
that a transfer to a trustee, receiver, or other fiduciary in any insolvency
proceeding, as described in Section 422A(c)(3) of the Code, shall not be deemed
to be such a disposition. 

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10. Effective Date of the 1989 Plan. 

          The
1989 Plan is effective as of September 9, 1988, the date of its adoption by the
Board, subject, however, to approval by the stockholders of the Company within
12 months thereafter; and if such approval is not obtained, the 1989 Plan shall
terminate and any and all Options granted during such interim period shall also
terminate and be of no further force or effect. The 1989 Plan shall terminate
at such time as no further shares of Common Stock are available for issue upon
the exercise or transfer of Options hereunder (including shares available due
to the forfeiture or expiration of Options), or on such earlier date as the
Board may determine. Any Option outstanding at the termination date shall
remain outstanding until it has either expired or has been exercised. 

 11. Purchase for Investment and Waivers. 

          Unless
the shares to be issued upon the exercise of an Option by a Participant shall
be registered prior to the issuance thereof under the Securities Act of 1933,
as amended, such Participant will, as a condition of the Company’s obligation
to procure the issue of such shares, be required to give a representation in writing
that he is acquiring such shares for his own account as an investment and not
with a view to, or for sale in connection with, any distribution thereof. 

          In
the event of the death of a Participant, an additional condition of exercising
any Option shall be the delivery to the Company of such tax waivers and other
documents as the Committee shall determine. 

 12. Miscellaneous. 

          Any
references herein to sections of the Code, regulations thereunder or rules
under the Exchange Act shall also mean successor provisions to such sections,
regulations or rules. 

          For
purposes of the 1989 Plan, Fair Market Value shall be determined in accordance
with the Code and the regulations thereunder. 

8Exhibit 4.3 

XL GROUP plc

 (formerly XL Capital Limited)

1991 PERFORMANCE INCENTIVE PROGRAM

 (AS AMENDED AND RESTATED ON APRIL 30, 2010)

1. INTRODUCTION 

A. Purpose of the Program 

          XL Group
plc (the “Company”) has established the Program to further its long-term
financial success by offering stock, and stock-based compensation, to employees
of the Company whereby they can share in achieving and sustaining such success.
The Program also provides a means to attract and retain the executive talent needed
to achieve the Company’s long-term growth and profitability objectives. 

B. Definitions 

          When used
in the Program, the following terms shall have the meanings set forth below: 

          “Award(s)”
shall mean Performance Shares, Restricted Stock, Restricted Stock Units,
Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights
or Performance Units granted under the Program. 

          “Board”
shall mean the Board of Directors of the Company. 

          “Change of
Control” shall be deemed to have occurred if and when any person, meaning an
individual, a partnership, or other group or association as defined in Sections
13(d) and 14(d) of the United States Securities Exchange Act of 1934 (other
than a group of which the Company is a member or which has been organized by
the Company for the purpose of making such acquisition), acquires, directly or
indirectly, 40 percent or more of the combined voting power of the outstanding
securities of the Company having a right to vote in the election of directors,
including but not limited to a transaction pursuant to i) a compromise or
arrangement sanctioned by the Court under section 201 of the Companies Act 1963
of the Republic of Ireland or ii) section 204 of the Companies Act 1963 of the
Republic of Ireland. Ownership of 40 percent or more of the combined voting
power of the outstanding securities of the Company by any person controlled
directly or indirectly by the Company shall not be deemed a Change of Control
of the Company. 

          “Code”
shall mean the United States Internal Revenue Code of 1986, as amended. 

          “Committee”
shall mean the entire Board or the Compensation Committee, or such other
committee or subcommittee of the Board as may be designated by the Board to administer
the Program. 

          “Common
Stock” shall mean the ordinary shares of the Company and may be either stock
previously authorized but unissued, or stock reacquired by the Company. 

          “Company”
shall mean XL Group plc, an Irish company, any other entity in which XL Group
plc owns 20% or more of the ordinary voting power or equity, and any successor
in a reorganization or similar transaction. 

          “Disability”
shall mean the inability of a Participant to perform the services normally
rendered due to any physical or mental impairment that can be expected to be of
either permanent or indefinite duration, as determined by the Committee on the
basis of appropriate medical evidence, and that results in the Participant’s
Termination of Employment; provided,
however, that with respect to any Participant who has entered into
an employment agreement with the Company, the term of which has not expired at
the time a determination concerning Disability is to be made, Disability shall
have the meaning attributed in such employment agreement. 

          “Fair
Market Value” shall mean with respect to a given day, the closing sales price
of Common Stock, as reported by such responsible reporting service as the
Committee may select, or if there were no transactions in the Common Stock on
such day, then the last preceding day on which transactions took place. The
foregoing notwithstanding, the Committee may determine the Fair Market Value in
such other manner as it may deem more appropriate for Program purposes or as is
required by applicable laws or regulations. 

          “Incentive
Stock Option” or “ISO” shall mean a right to purchase the Company’s Common
Stock which is intended to comply with the terms and conditions for an
incentive stock option as set forth in Section 422 of the Code, or such other
sections of the Code as may be in effect from time to time. 

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          “Nonstatutory
Stock Option” or “NQSO” shall mean a right to purchase the Company’s Common
Stock which is not intended to comply with the terms and conditions for a
tax-qualified stock option, as set forth in Section 422 of the Code, or such
other sections of the Code as may be in effect from time to time. 

          “Participant”
shall mean any employee of the Company and any member of the Board (whether or
not an employee of the Company) who, in the judgment of the Committee, is in a
position to make a substantial contribution to the management, growth, and
success of the Company and is thus designated by the Committee to receive an Award; provided, however, that after April 29,
2005 no Award may be granted under the Program to a member of the Board who is
not also an employee of the Company. 

          “Performance
Goal” shall mean any financial, statistical or other measure selected by the
Committee, including without limitation (a) the attainment of a specified
financial or statistical objective or (b) the performance of the Company
relative to a peer group as applicable to a specific Performance Period. 

          “Performance
Period” shall mean a period set by the Committee over which Performance Shares
or Performance Units may be earned. There may be more than one Performance
Period in existence at any one time, and the duration of Performance Periods
may differ from each other. 

          “Performance
Shares” shall mean Common Stock granted to a Participant with respect to a
Performance Period under Article III of the Program, together with any other
rights attached thereto or associated therewith including without limitation
any right to receive cash in connection therewith. 

          “Performance
Unit” shall mean a cash award made pursuant to Section VI of the Program. 

          “Program”
shall mean the Company’s 1991 Performance Incentive Program, as amended and
restated herein. 

          “Restricted
Stock” shall mean a share of Common Stock granted to a Participant under
Article IV of the Program. Restricted Stock awards entitle the Participant to
receive shares of Common Stock which have certain restrictions that lapse upon
satisfaction of conditions imposed by the Committee at the time of award. 

          “Restricted
Stock Unit” shall mean an award made under Article VIII of the Program under
which each unit represents a right to receive a share of Common Stock upon the
terms, and subject to the conditions, set forth by the Committee. 

          “Retirement”
shall mean, except as otherwise set forth in an Award agreement, a
Participant’s Termination of Employment by reason of the Participant’s
retirement at his normal retirement date, pursuant to and in accordance with a
pension, retirement or similar plan or other regular retirement practice of the
Company, or in accordance with the early retirement provisions thereof. 

          “Stock
Appreciation Rights” or “SARs” shall mean a right granted to a Participant
under Article V of the Program, which grants the Participant the right to
receive the difference between the Fair Market Value of the Common Stock on the
date of exercise and the price at which the SAR was granted. 

          “Termination
of Employment” shall mean a cessation of the employee-employer relationship
between a Participant and the Company for any reason or, in the case of a
member of the Board, termination of the director’s service on the Board for any
reason. 

II. PROGRAM ADMINISTRATION 

A. Administration 

          The Program
shall be administered by the Committee. Subject to the express provisions of
the Program, the Committee shall have full and exclusive authority to interpret
the Program, to prescribe, amend and rescind rules and regulations relating to
the Program and to make all other determinations deemed necessary or advisable
in the implementation and administration of the Program; provided, however, that subject to the
express provisions hereof or 

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unless required by applicable law or regulation, no action of the
Committee shall adversely affect the terms and conditions of any Award made to,
or any rights hereunder or under any grant letter of, any Participant, without
such Participant’s consent. The Committee’s interpretation and construction of
the Program shall be conclusive and binding on all persons, including the
Company and all Participants. The Company and the Committee may delegate their
authority to perform any of their ministerial or similar administrative
functions under this Program to other persons. 

B. Participation 

          The
Committee may, from time to time, make all determinations with respect to
selection of Participants and the Award or Awards to be granted to each
Participant. In making such determinations, the Committee may take into account
the nature of the services rendered or expected to be rendered by the
respective Participants, their present and potential contributions to the
Company’s success and such other factors as the Committee in its discretion
shall deem relevant. 

C. Maximum Number of Shares
Available 

          Subject to
adjustment as provided under Article II, Paragraph D of the Program, the
maximum number of shares which may be granted under the Program after February
27, 2009 is 16,969,264 plus shares which subsequently become available as a
result of forfeitures, cancellation or expiration of Awards under the Program.
Stock can be issued as any form of Award, except that, for each Restricted
Stock, Restricted Stock Unit, Stock Appreciation Rights, or Performance Share
Award issued, the number of shares of Common Stock available under the Program
will be reduced by two shares. In the event that an Award issued under the
Program expires or is terminated unexercised as to any shares covered thereby,
or shares are forfeited for any reason under the Program, such shares shall
thereafter be again available for issuance under the Program. At the
Committee’s discretion, these shares may be granted as stock options,
Performance Shares, Restricted Stock, Restricted Stock Units, Stock
Appreciation Rights or any combination of these provided that the combined
total number of shares granted does not exceed either the overall share
authorization described above or the specific share authorization set forth
above for Performance Shares, Stock Appreciation Rights, Restricted Stock and
Restricted Stock Units. Forfeited Awards that counted as two shares under the
rule described above will result in the addition to shares available for
issuance under the Program of two available shares per share forfeited, but any
subsequent issuance of those shares in the form of Restricted Stock, Restricted
Stock Units, Stock Appreciation Rights, or Performance Share Awards will result
in a reduction of two shares available under the Program for each share issued.

          Subject to
adjustment as provided under Article II, Paragraph D of the Program, (i) the
maximum number of shares of Common Stock with respect to which stock options
and Stock Appreciation Rights may be granted during a calendar year to any
Participant under the Program shall be 1,000,000 shares, and (ii) with respect
to Performance Shares, Performance Units, Restricted Stock or Restricted Stock
Units intended to qualify, as set forth in Article VII, as performance-based
compensation within the meaning of Section 162(m) of the Code, the maximum
number of shares of Common Stock (or amount of cash in the case of Performance
Units) subject to such awards granted during a calendar year to any Participant
under the Program shall be the equivalent of 300,000 shares. 

          No
Incentive Stock Options shall be granted after April 29, 2018. 

D. Adjustments 

          In the
event of any alteration or re-organization whatsoever taking place in the
capital structure of the Company whether by way of capitalization of profits or
reserves, capital distribution, rights issue, consolidation or sub-division of
Shares, the conversion of one class of share to another or reduction of capital
or otherwise, the number of shares of Common Stock available for grant under
this Program shall be adjusted proportionately or otherwise by the Board, and
where deemed appropriate, the number of shares covered by outstanding stock
options or SARs, the number of Performance Shares, shares of Restricted Stock
and Restricted Stock Units outstanding, and the exercise price of outstanding
stock options and SARs shall be similarly adjusted. Also, in instances where
another corporation or other business entity is acquired by the Company, and
the Company has assumed outstanding employee option grants under a prior
existing plan of the acquired entity, similar adjustments are permitted at the
discretion of the Committee. In the event of any other change affecting the Common
Stock reserved under the Program, such adjustment, if any, as may be deemed
equitable by the Board, shall be made to give proper effect to such event.
Notwithstanding any provision hereof to the contrary, i) no adjustment shall be
made pursuant to this Article II.D. that would cause any Award that is not
otherwise deferred compensation pursuant to Section 409A of the Code to be
treated as deferred compensation pursuant 

4

to Section 409A of the Code, and ii) no adjustment may be made that
reduces the amount to be paid up per share to less than the par value of the
share. 

E. Registration Conditions 

          1. Unless
issued pursuant to a registration statement under the U.S. Securities Act of
1933, as amended, no shares shall be issued to a Participant under the Program
unless the Participant represents and agrees with the Company that such shares
are being acquired for investment and not with a view to the resale or
distribution thereof, or such other documentation is provided by the
Participant as may be required by the Company, unless in the opinion of counsel
to the Company such representation, agreement or documentation is not necessary
to comply with such Act. 

          2. Any on
the resale of shares shall be evidenced by the following legend on the stock
certificate or other such legend as the Company deems appropriate. 

          “The shares
represented by this certificate have not been registered under the Securities
Act of 1933, as amended. The shares cannot be offered, transferred or sold unless
(a) a registration statement under such Act is in effect with respect to such
shares, or (b) a written opinion from counsel acceptable to the Company is
obtained to the effect that no such registration is required. The Company
reserves the right to refuse the transfer of such shares until such conditions
have been fulfilled. The Articles of Association of the Company contain other
restrictions on share transfers.” 

          Any
certificate issued at any time in exchange or substitution for any certificate
bearing such legend (or such other legend deemed appropriate by the Company)
shall also bear such a legend unless, in the opinion of counsel or the Company,
the securities represented thereby need no longer be subject to the restriction
contained herein. The provisions of this paragraph shall be binding upon all
subsequent holders of certificates bearing such legend. 

F. Committee Action 

          The
Committee may, through Award agreements, limit its discretion under this
Program. To the extent such discretion is not specifically waived in an Award
agreement, the Committee shall retain such discretion. 

G. No Option or SAR Repricing
Without Shareholder Approval 

          Except as
provided in Article II.D hereof relating to certain anti-dilution adjustments,
unless the approval of shareholders of the Company is obtained, ISOs, NQSOs and
SARs issued under the Program shall not be amended to lower their exercise
prices, and ISOs, NQSOs and SARs issued under the Plan will not be exchanged
for other stock options or SARs with lower exercise prices. 

III. PERFORMANCE SHARES 

A. Grant of Performance Shares 

          After
selecting Participants who will receive Awards of Performance of Shares for a
given Performance Period, the Committee shall inform each such Participant of
the Award to be granted to the Participant at the completion of the Performance
Period, and the applicable terms and condition of the Award. The Committee
shall cause to be issued to each Participant a grant letter specifying the number
of Performance Shares under his Award and the number of Performance Shares
which may be awarded subject to the terms and conditions of such grant letter
and the Program. 

B. Establishment of Performance
Goals 

          1. The
Committee shall establish the Performance Goals for each Performance Period.
The Committee shall also establish a schedule for such Performance Period
setting forth the percentage of the Performance Share Award which will be
earned, based on the extent to which the Performance Goals for such Performance
Period are actually achieved, the date on which Performance Shares awarded
hereunder shall vest, or the date on which such Performance Shares shall be
forfeited (in whole or in part) by the Company for failure to meet the
Performance Goals, as specified by the Committee. 

5

          2. As
promptly as practical after each Performance Period, the Committee shall
determine whether, or the extent to which, the Performance Goals have been
achieved. Based on such determination, the Participant shall be deemed to have
earned the Performance Shares awarded to him, or a percentage thereof as
provided in any schedule established by the Committee. In addition, the
Committee may, from time to time during a Performance Period and consistent with
the terms and conditions of applicable Awards and Performance Goals, determine
that all or a portion of the Performance Shares awarded to one or more
Participants have been earned. 

          3. If
during the course of a Performance Period, there should occur, in the opinion
of the Committee, significant changes in economic conditions or in the nature
of the operations of the Company, or any other pertinent changes which the
Committee did not foresee or accurately predict the extent of in establishing
the Performance Goals for such Performance Period and which, in the Committee’s
sole judgment, have, or are expected to have, a substantial effect on the
performance of the Company during the Performance Period, the Committee may
make such adjustment to the Performance Goals or measurements of such
Performance Goals as the Committee, in its sole judgment, may deem appropriate.

C. Termination of Employment 

          In the
event of a Participant’s Termination of Employment prior to satisfaction of
conditions related to outstanding Performance Share Awards for reasons other
than discharge or resignation, the Participant or the Participant’s estate or
beneficiary, in the sole discretion of the Committee, may be entitled to
receive from Performance Shares held by the Corporation a pro rata number of
shares with respect to that Performance Share Award, or such other portion of
the Award, if any, as the Committee shall determine. In the event of
Termination of Employment due to resignation or discharge, the Award will be
cancelled, and the Participant shall not be entitled to any further
consideration with respect to the forfeited Performance Shares, subject to the
discretion of the Committee to release restrictions on all or any part of an
Award. 

IV. RESTRICTED STOCK 

A. Grant of Restricted Stock 

          1.
Following the selection of Participants who will receive a Restricted Stock
Award, the Committee shall inform each such Participant of the number of
Restricted Stock shares granted to the Participant and the terms and applicable
conditions of the Award. 

          2. Each
certificate for Restricted Stock shall be registered in the name of the
Participant and deposited, together with a stock power endorsed in blank, with
the Company. 

B. Other Terms and Conditions 

          Company
stock, when awarded pursuant to a Restricted Stock Award, will be represented
by a stock certificate registered in the name of the Participant who is granted
the Restricted Stock Award. Such certificate shall be deposited together with a
stock power endorsed in blank with the Company. The Participant shall be
entitled to receive dividends and all other distributions during the
restriction period and shall have all shareholder’s rights with respect to such
stock, if any, with the exception that: (1) the Participant may not transfer
ownership of the shares during the restriction period except by will or the
laws of descent and distribution, (2) the Participant will not be entitled to
delivery of the stock certificate during the restriction period, (3) the
Company will retain custody of the stock during the restriction period, and (4)
a breach of a restriction or a breach of the terms and conditions established
by the Committee pursuant to the Restricted Stock Award will cause a forfeiture
of the Restricted Stock shares. The Committee may impose additional
restrictions, terms, or conditions upon the Restricted Stock Award. 

C. Restricted Stock Award Agreement 

          Each
Restricted Stock Award shall be evidenced by a Restricted Stock Award agreement
in such form and containing such terms and conditions not inconsistent with the
provisions of the Program as the Committee from time to time shall approve. 

6

D. Termination of Employment 

          In the
event of a Participant’s Termination of Employment prior to satisfaction of
conditions related to outstanding Restricted Stock Awards for reasons other
than discharge or resignation, the Participant or the Participant’s estate or
beneficiary, in the sole discretion of the Committee, may be entitled to
receive from Restricted Stock shares held by the Corporation a pro rata number
of shares with respect to that Restricted Stock Award, or such other portion of
the Restricted Stock Award, if any, as the Committee shall determine. In the
event of Termination of Employment due to resignation or discharge, all
Restricted Stock shares held by the Company shall be forfeited, and the
Participant shall not be entitled to any further consideration with respect to
the forfeited Restricted Stock shares, subject to the discretion of the
Committee to release of restrictions on all or any part of an Award, or unless
otherwise stated in the Restricted Stock agreement. 

E. Payment for Restricted Stock 

          Restricted
Stock Awards may be made by the Committee under which the Participant shall,
upon payment of the par value, or, in the alternative, under which the
Participant shall pay all (or any lesser amount than all) of the Fair Market
Value of the stock, determined as of the date the Restricted Stock Award is
made, receive a Restricted Stock Award. If payment is required, such purchase
price shall be paid as provided in the Restricted Stock Award Agreement. 

V. STOCK OPTIONS 

A. Stock Option Terms and Conditions

          All stock
options granted to Participants under the Program shall be evidenced by
agreements which shall be subject to applicable provisions of the Program, and
such other provisions as the Committee may adopt, including the following
provisions: 

          1. Price: The option price per share of
Nonstatutory Stock Options (NQSOs) and Incentive Stock Options (ISOs) shall not
be less than 100 percent of the Fair Market Value of a share of Common Stock on
the date of grant. 

          2. Period: An ISO shall not be exercisable
for a term longer than ten years from date of its grant. NQSOs shall have a
term not longer than ten years from the date of grant. 

          3. Time of Exercise: The Committee may
prescribe the timing of the exercise of the stock option and any minimums and
installment provisions and may accelerate the time at which a stock option
becomes exercisable. 

          4. Exercise Procedures: A stock option, or a
portion thereof, shall be exercised by delivery of notice of exercise to the
Company or the Program administrator designated from time to time by the
Company and payment of the full price of the shares being purchased. Such
notice shall be given in the form designated from time to time by the Company. 

          5. Payment: The price of an exercised stock
option, or portion thereof, may be paid: 

	
  

 	
  

 
	
  

 	
 (a) in cash or
 check, bank draft or money order payable to the order of the Company; or 

 
	
  

 	
  

 
	
  

 	
 (b) through the
 delivery of shares of Common Stock owned by the Participant, having an
 aggregate Fair Market Value as determined on the date of exercise equal to
 the option price, or 

 
	
  

 	
  

 
	
  

 	
 (c) by a
 combination of both a and b above. 

 

          The
Committee may impose such limitations and prohibitions on the use of any shares
of Common Stock to exercise a stock option as it deems appropriate. 

          6. Special Rule for Incentive Stock Options:
Notwithstanding any other provisions of the Program, the aggregate Fair Market
Value of the shares of Common Stock, determined as of the time the stock option
is granted, for which the 

7

Participant may first exercise Incentive Stock Options in any calendar
year shall not exceed U.S. $100,000 or such other individual employee grant
limit as may be in effect under the Code. 

          7. Effect of Leaves of Absence: It shall not
be considered a Termination of Employment when a Participant is placed by the
Company on military leave, sick leave or other bona fide leave of absence. In
case of such leave of absence, the employment relationship for Program purposes
shall be continued until the later of the date when such leave of absence
equals ninety days or when the Participant’s right to reemployment with the
Company shall no longer be guaranteed either by statute or contract. 

          8. Termination of Employment: In the event
of Termination of Employment, the following provisions shall apply unless
waived by the Committee, or as otherwise specifically provided in the Stock
Option agreement: 

          (a)
Discharge for Cause: All outstanding options shall be cancelled 

          (b) Termination
Other Than for Cause: Unless and except as otherwise specified in a
Participant’s agreement, all options shall expire on the earlier of (i) 90 days
following the Termination of Employment or (ii) the expiration of the full term
of the option. 

Notwithstanding the foregoing, the Committee may rescind the right to
exercise stock options following Termination of Employment if the Participant
has been found to be directly or indirectly engaged in any activity which is in
competition with the Company or otherwise adverse to or not in the best
interest of the Company. 

B. Stock Appreciation Rights (SARs).

          The
Committee is authorized to grant SARs to Participants on the following terms
and conditions: 

          1. An SAR
shall confer on the Participant to whom it is granted a right to receive with
respect to each share of Common Stock subject thereto, upon exercise thereof,
the excess of (1) the Fair Market Value of one share of Common Stock on the
date of exercise over (2) the exercise price per share of the SAR, as
determined by the Committee as of the date of grant of the SAR (which shall not
be less than the Fair Market Value per Share on the date of grant of the SAR). 

          2. The
Committee shall determine, at the time of grant or thereafter, the time or
times at which an SAR may be exercised in whole or in part (which shall not be
more than ten years after the date of grant of the SAR), the method of
exercise, method of settlement, method by which shares of Common Stock will be
delivered or deemed to be delivered to Participants, whether or not an SAR
shall be in tandem with any other Award, and any other terms and conditions of
any SAR. The Committee shall determine at the time of grant of the SAR the form
of consideration payable in settlement of the SAR (which may be shares of
Common Stock or cash). 

VI. PERFORMANCE UNIT AWARDS 

          A. Each
Award shall be subject to the limitations and terms provided in the Program. A
new Award may commence on the first anniversary date of the preceding Award.
The Committee shall grant to each Participant in a Performance Unit Award a
number of units with a target cash value as shall be established by the
Committee prior to the first year of each Performance Period. 

          B. To allow
for recognition of significant individual contributions to the Company’s
performance, individual awards of Performance Units may be granted to new
Participants during the first year of a Performance Period, at the discretion
of the Committee. 

          C.
Performance Unit Awards for each Participant shall be recommended by the Chief
Executive Officer and submitted to the Committee for approval. Participants
will generally be notified of their individual Performance Unit Award within
the first six months of a Performance Period. 

          D.
Performance Goals for each Performance Period will be recommended by the Chief
Executive Officer of the Company, and submitted to the Committee for approval. 

8

          E. Once a
Performance Period has begun and Performance Goals have been established, they
may not be changed for that Performance Period except in the event of: 

          (1) A
significant acquisition of another business concern by the Company, as deemed
by the Committee; 

          (2) A
disposition of a significant part of the business by the Company, as deemed by
the Committee; 

          (3) An
external calamitous event, such as a natural disaster, which has a significant
effect on the Company, as determined by the Committee; 

          (4) Any
significant changes to the legislation, as deemed by the Committee; or 

          (5) Any
other extraordinary event, as deemed by the Committee. 

          F. A
performance valuation schedule shall be recommended by the Chief Executive
Officer of the Company and approved by the Committee before Performance Unit
Awards are granted under the Program. The Committee shall approve or modify the
proposed schedule which will contain various levels of performance and
corresponding Performance Unit values. 

          G. At the
end of a Performance Period, the Committee shall review actual performance and
determine the Award payouts, if any. 

          H. In the
event of a Participant’s Termination of Employment prior to the satisfaction of
conditions related to outstanding Performance Unit Awards for reasons other
than discharge or resignation, the Participant, or the Participant’s estate or
beneficiary, in the sole discretion of the Committee, may be entitled to
receive a pro-rata distribution of outstanding Performance Unit Awards. In the
event of Termination of Employment due to resignation or discharge, all Awards
will be cancelled, and the Participant shall not be entitled to any further
consideration with respect to the forfeited Performance Units, subject to the
discretion of the Committee. 

VII. PERFORMANCE AWARDS 

A. Performance Awards Granted to
Designated Participants 

          If the
Committee determines that an award of Performance Shares, Performance Units,
Restricted Stock or Restricted Stock Units to be granted to a Participant should qualify as “performance-based
compensation” for purposes of Section 162(m) of the Code, the grant, vesting
and/or settlement of such award shall be contingent upon achievement of
pre-established performance goals and other terms set forth in this Article
VII.A. 

          1. Performance Goals Generally. The
performance goals for such awards (“Performance Awards”) shall consist of one
or more business criteria and a targeted level or levels of performance with
respect to each of such criteria, as specified by the Committee consistent with
this Article VII.A. Performance goals shall be objective and shall otherwise
meet the requirements of Section 162(m) of the Code and regulations thereunder
(including Regulation 1.162-27 and successor regulations thereto). The
Committee may determine that such Performance Awards shall be granted, vested
and/or settled upon achievement of any one performance goal or that two or more
of the performance goals must be achieved as a condition to grant, vesting
and/or settlement of such Performance Awards. Performance goals may differ for
Performance Awards granted to any one Participant or to different Participants.

          2. Business Criteria. One or more of the
following business criteria for the Company, on a consolidated basis, and/or
for specified subsidiaries or business units of the Company (except with
respect to the total stockholder return and earnings per share criteria), shall
be used by the Committee in establishing performance goals for such Performance
Awards: (1) earnings per share; (2) revenues; (3) cash flow; (4) cash flow
return on investment; (5) return on assets, return on investment, return on
capital, return on equity; (6) economic value added; (7) operating margin; (8)
net income; pretax earnings; pretax earnings before interest, depreciation and
amortization; pretax operating earnings after interest expense and before
incentives, service fees, and extraordinary or special items; operating
earnings; (9) total stockholder 

9

return; and (10) any of the above goals as compared to the performance
of a published or special index deemed applicable by the Committee including,
but not limited to, the Standard & Poor’s 500 Stock Index. 

          3. Performance Period; Timing for Established
Performance Goals. Achievement of performance goals in respect of
such Performance Awards shall be measured over a performance period, as
specified by the Committee. Performance goals shall be established not later
than 90 days after the beginning of any performance period applicable to such
Performance Awards, or at such other date as may be required or permitted for
“performance-based compensation” under Section 162(m) of the Code. 

          4. Settlement of Performance Awards; Other Terms.
Settlement of such Performance Awards shall be in cash, Common Stock or other
property, in the discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in
connection with such Performance Awards, but may not exercise discretion to
increase any such amount payable to a Participant in respect of a Performance
Award subject to this Article VII.A. The Committee shall specify the
circumstances in which such Performance Awards shall be paid or forfeited in
the event of Termination of Employment by the Participant prior to the end of a
performance period or settlement of Performance Awards. 

B. Written Determination 

          All
determinations by the Committee as to the establishment of performance goals or
potential individual Performance Awards and as to the achievement of
performance goals relating to Performance Awards under Article VII.A. shall be
made in writing in the case of any award intended to qualify under Section
162(m) of the Code. 

VIII. RESTRICTED STOCK UNITS 

A. Grant of Restricted Stock Units 

          Following
the selection of Participants who will receive an award of Restricted Stock
Units, the Committee shall inform each such Participant of the number of
Restricted Stock Units granted to the Participant and the terms and applicable
conditions of the Restricted Stock Unit Award. 

B. Other Terms and Conditions 

          Restricted
Stock Unit Awards will provide for the delivery of the number of shares of
Common Stock equivalent to the number of Restricted Stock Units at the time and
subject to the terms and conditions set forth by the Committee. Delivery of
shares of Common Stock pursuant to the Restricted Stock Unit Awards will occur
upon expiration of the deferral period specified by the Committee. In addition,
Restricted Stock Unit Awards shall be subject to such restrictions, including
forfeiture conditions, as the Committee may impose. Prior to distribution of
shares of Common Stock under a Restricted Stock Unit Award, the Participant
shall have no rights as a shareholder with respect to the shares subject to the
Award. 

C. Restricted Stock Unit Award
Agreement 

          Each
Restricted Stock Unit Award shall be evidenced by a Restricted Stock Unit Award
Agreement in such form and containing such terms and conditions, not
inconsistent with the provisions of the Program, as the Committee from time to
time shall approve. 

D. Termination of Employment 

          In the
event of a Participant’s Termination of Employment prior to satisfaction of
conditions related to an outstanding Restricted Stock Unit Award for reasons
other than discharge or resignation, the Participant or the Participant’s
estate or beneficiary, in the sole discretion of the Committee, may be entitled
to receive from the Restricted Stock Unit Award a pro rata number of shares
with respect to the Restricted Stock Unit Award, or such other portion of the
Restricted Stock Unit Award, if any, as the Committee shall determine. In the
event of Termination of Employment due to resignation or discharge, all
Restricted Stock Units held by the Participant shall be forfeited, and the
Participant shall not be entitled to any further consideration with respect to
the forfeited Restricted Stock Units, subject to the discretion of the Committee
to 

10

release restrictions and deliver shares in respect of all or any part
of an Award, or unless otherwise stated in the Restricted Stock Unit Award
Agreement. 

IX. GENERAL PROVISIONS 

A. Amendment and Termination of
Program 

          The Board
may, at any time and from time to time, suspend or terminate the Program in
whole or amend it from time to time in such respects as the Board may deem
appropriate; provided, however,
that, without the consent of an affected Participant, no amendment, suspension,
or termination of the Program may adversely affect the rights of such
Participant under any Award theretofore granted to him or her. 

B. Government and Other Regulations 

          The right
of the Company to issue Awards under the Program shall be subject to all
applicable laws, rules and regulations, and to such approvals by any government
agencies as may be required. 

C. Other Compensation Plans and
Programs 

          The Program
shall not be deemed to preclude the implementation by the Company of other
compensation plans or programs which may be in effect from time to time. 

D. Miscellaneous Provisions 

          1. No Right to Continue Employment: Nothing
in the Program or in any Award confers upon any Participant the right to
continue in the employ of the Company or interferes with or restricts in any
way the rights of the Company to discharge any Participant at any time for any
reason whatsoever, with or without cause. 

          2. Non-Transferability: Except as otherwise
determined by the Committee and set forth in the applicable Award agreement,
prior to being earned under Articles III, IV, or VI, being exercised under
Article V, or having shares distributed under Article VIII, no right or
interest of any Participant in any Award under the Program shall be (a)
assignable or transferable, except by will or the laws of descent and
distribution or a valid beneficiary designation taking effect at death made in
accordance with procedures established by the Committee, or (b) liable for, or
subject to, any lien, obligation or liability, except to the extent that
Non-Qualified Stock Options may be pledged as security in a margin account for
their exercise. 

          3. Designation of Beneficiary: A
Participant, in accordance with procedures established by the Committee, may
designate a person or persons to receive, in the event of the Participant’s
death, (a) any payments with respect to which the Participant would then be
entitled, and (b) the right to continue to participate in the Program to the
extent of such Participant’s outstanding Awards. Such designation shall be made
upon forms supplied by and delivered to the Company and may be revoked in
writing. 

          4. Withholding Taxes: The Company may
require a payment from a Participant to cover applicable withholding for income
and employment taxes. The Company reserves the right to offset such tax payment
from any other funds which may be due the Participant by the Company. 

          5. Program Expenses: Any expenses of
administering the Program shall be borne by the Company. 

          6. Construction of Program: The
interpretation of the Program and the application of any rules implemented
hereunder shall be determined solely in accordance with the laws of the State
of New York. 

          7. Unfunded Program: The Program shall be
unfunded, and the Company shall not be required to segregate any assets which
may at any time be represented by Awards. Any liability of the Company to any
person with respect to an Award under this Program shall be based solely upon
any obligations which may be created by this Program. No such 

11

obligation of the Company shall be deemed to be secured by any pledge
or other encumbrance on any property of the Company. 

          8. Benefit Plan Computations: Except as
otherwise determined by the Company, any benefits received or amounts paid to a
Participant with respect to any Award granted under the Program shall not have
any effect on the level of benefits provided to or received by any Participant,
or the Participant’s estate or beneficiary, as part of any employee benefit
plan (other than the Program) of the Company. 

          9. Pronouns, Singular and Plural: The
masculine maybe read as feminine, the singular as plural and the plural as
singular as necessary to give effect to the Program. 

E. Effective Dates 

          The
amendment and restatement of the Program will become effective on approval by
the Board of the Company, subject to shareholder approval. All outstanding
Awards shall remain in effect until all outstanding awards have been earned,
have been exercised or repurchased, have expired or have been cancelled. 

F. Section 409A 

          It is
intended that the Plan and Awards issued thereunder will comply with Section
409A of the Code (and any regulations and guidelines issued thereunder) to the
extent the Awards are subject thereto, and the Plan and such Awards shall be
interpreted on a basis consistent with such intent. The Plan and any Award
agreements issued thereunder may be amended in any respect deemed by the Board
or the Committee to be necessary in order to preserve compliance with Section
409A of the Code. In the case of any Award that, for purposes of Section 409A
of the Code, was not earned and vested on December 31, 2004, that is treated as
“deferred compensation” subject to Section 409A of the Code and is held by a
Participant who is subject to United States income tax, notwithstanding any
provision in an Award Agreement to the contrary, (i) in the case of any payment
under the Award that is to be made upon a termination of employment or other
service, (x) such termination of employment or other service will be deemed to
occur upon the Participant’s “separation from service” with the Company (within
the meaning of Treas. Reg. Section 1.409A-1(h)), and (y) if the Participant is
deemed on the date of his or her “separation from service” to be a “specified
employee” (within the meaning of Treas. Reg. Section 1.409A-1(i)), then with
regard to any payment that is required to be delayed pursuant to Section
409A(a)(2)(B) of the Code, such payment shall not be made prior to the earlier
of (A) the expiration of the six (6)-month period measured from the date of the
Participant’s “separation from service,” or (B) the date of the Participant’s
death (the “Delay Period”); and, upon the expiration of the Delay Period, all
payments delayed pursuant hereto (whether they would have otherwise been
payable in a single sum or in installments in the absence of such delay) shall
be paid to the Participant in a lump sum, and any remaining payments due under
the Award shall be paid in accordance with the normal payment dates specified
for them, and (ii) in the case of any payment under the Award that is to be
made upon a Change of Control, for this purpose Change of Control shall mean a
transaction or event that constitutes both a Change of Control (as defined in
the Plan) and a “change in control event” (as defined in Treas. Reg. Section
1.409A-3(i)(5)) with respect to the Company. The Company shall not have any obligation
to indemnify or otherwise protect any Participant from any obligation to pay
any taxes pursuant to Section 409A of the Code. 

12

ADDENDUM FOR FRENCH STOCK OPTIONS

          The
following additional provisions constitute the 2002 French Stock Option
Addendum (the “French Addendum”). 

A. Purpose of the French Addendum 

          The
Committee has prescribed these additional provisions to the Program to permit
French Participants to be granted French Options under the Program and only
modify the Program as it relates to French Options granted under the Program to
French Participants. These provisions apply to French Participants
notwithstanding any other provisions of the Program, and do not apply to or
modify the Program in respect of any other Participants. 

          The Board
has adopted these additional provisions in accordance with Article II,
Paragraph A of the Program. 

B. Definitions 

1. When used in this French Addendum, the following terms shall have
the meanings set forth below:

	
  

 	
  

 	
  

 
	
  

 	
 “Award” (or “stock
 option”) shall mean a French Option granted under the terms of the French
 Addendum and the Program. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Cause” shall
 mean: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 a. conviction of
 the French Participant of a felony involving moral turpitude or dishonesty; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 b. the French
 Participant, in carrying out his or her duties for the Company, has been
 guilty of (1) gross neglect or (2) wilful misconduct; provided, however, that
 any act or failure to act by the French Participant shall not constitute
 Cause for this purpose if such act or failure to act was committed, or
 omitted, by the French Participant in good faith and in a manner reasonably
 believed to be in the overall best interests of the Company. The
 determination of whether the French Participant acted in good faith and that
 he or she reasonably believed his or her action to be in the Company’s
 overall best interest will be in the reasonable judgment of the General
 Counsel of the Company, or, if the General Counsel shall have an actual or
 potential conflict of interest, the Committee; or 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 c. the French
 Participant’s continued wilful refusal to obey any appropriate policy or
 requirement duly adopted by the Company and the continuance of such refusal
 after receipt of notice. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Company” shall
 mean XL Group plc, an Irish company. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “French Option”
 shall mean a right to acquire stock granted under this French Addendum. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “French
 Participant” shall mean an employee of a Group Company to whom a subsisting
 French Option has been granted under this French Addendum, and any reference
 to “Participant” in the other provisions of this Program shall be construed
 as if it were a reference to “French Participant”. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Group Company”
 shall mean XL Group plc, an Irish Company, or any other entity in which XL
 Group plc owns 20% or more of the ordinary voting power or equity. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Market Value”
 shall mean on any day the market value of a share as derived from the closing
 price of the Company’s Common Stock on the composite tape of the New York
 Stock Exchange, and any reference to “Fair Market Value” in the other
 provisions of the Program shall be construed as though it were a reference to
 “Market Value” for the purposes of grants under this French Addendum. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Trading Day”
 shall mean any day that the New York Stock Exchange is open for business. 

 

2. The following definitions in Article I Paragraph B of the Program
shall not apply to this French Addendum: 

13

          “Incentive
Stock Option” 

          “Nonstatutory
Stock Option” 

          “Performance
Goal” 

          “Performance
Period” 

          “Performance
Shares” 

          “Performance
Unit” 

          “Restricted
Stock” 

          “Restricted
Stock Unit” 

          “Stock
Appreciation Rights” or “SARs” 

C. Provisions relating to
performance shares, restricted stock, restricted stock units, performance unit
awards and performance awards 

          Articles
III, IV, VI, VII, and VIII of the Program shall not apply to French Options. 

D. Participation 

1. French Options may be granted to any employee including “PDG” and
managers “mandataires sociaux”. 

2. No French Options may be granted to consultants who do not have a
work contract with the Company. 

3. No French Options may be granted to an Administrator or member of
the Conseil de Surveillance, who does not have a work contract with the
Company. 

4. No French Options may be granted to any employee who, at the date of
grant, holds shares representing 10% or more of the issued share capital of XL
Capital Ltd. 

E. Price 

1. The option price per share of French Options shall not be less than:

A) for French Options relating to newly issued shares of Common Stock,
the higher of: 

i) 100 percent of the Market Value of a share of Common Stock on the
date of grant; and 

ii) 80 per cent of the average of the middle market quotations for a
share of Common Stock derived from the composite tape of the New York Stock
Exchange for the 20 consecutive Trading Days preceding the date of grant of
such option. 

B) for French Options relating to shares of Common Stock purchased by
the Company, the higher of: 

i) 80 per cent of the average purchase price of a share of Common Stock
purchased by the Company; and 

ii) 80 per cent of the average middle market quotations for a share of
Common Stock derived from the composite tape of the New York Stock Exchange for
the 20 consecutive Trading Days preceding the date of grant of such option. 

14

2. The option price of a French Option shall be determined and fixed at
the date of grant and may be adjusted only upon the occurrence of any of the
events specified under the French Code of Commerce (section L. 225-181) in
accordance with French law. 

F. Date of grant 

No French Option may be granted: 

1. during the 20 consecutive Trading Days after the payment of a
dividend; 

2. during the 20 consecutive Trading Days after an increase of capital
reserved to the shareholders; 

3. during the 10 consecutive Trading Days preceding the date of
publication of the consolidated accounts or any annual financial statements of
the Company; 

4. during the 10 consecutive Trading Days following the date of
publication of the consolidated accounts or any annual financial statements of
the Company; 

5. during the period starting on any date on which the corporate
management of the Company is aware of unpublished price-sensitive information
and ending 10 Trading Days after the publication of such information; 

G. Exercise following death of
French Participant 

          The heirs
of a deceased French Participant may exercise the French Option during the period
of six months following the date of death. The French Option may not be
assigned or transferred in any other circumstances, and any purported transfer,
assignment, or charge shall cause the French Option to lapse forthwith. 

H. Disposal of shares 

          Any
disposal of Common Stock by a French Participant less than four years after the
date of grant, and regardless of whether he has left employment with the
Company, shall be accompanied by a notice of disposal sent by the French
Participant to his employing company or former employing company within one
week of the disposal. 

I. Lapse of French Options 

	
  

 	
  

 
	
  

 	
 French Options
 granted under this French Addendum shall lapse upon the first of the
 following events to occur: 

 
	
  

 	
  

 
	
  

 	
 1. the tenth
 anniversary of the date of grant of the French Option; 

 
	
  

 	
  

 
	
  

 	
 2. the third
 anniversary of the Retirement or Disability of the French Participant; 

 
	
  

 	
  

 
	
  

 	
 3. six months
 following the death of the French Participant; 

 
	
  

 	
  

 
	
  

 	
 4. unless
 otherwise provided in an Employment Agreement between the French Participant
 and the Company, the third anniversary of the termination of the French
 Participant’s employment by the Company not for Cause within two years
 following a Change of Control (the “Post-Change Period”); 

 
	
  

 	
  

 
	
  

 	
 5. ninety days
 following termination of the French Participant’s employment by the Company
 not for Cause outside a Post-Change Period; 

 
	
  

 	
  

 
	
  

 	
 6. the last date
 of employment of the French Participant if employment is terminated by the
 Company for Cause; 

 
	
  

 	
  

 
	
  

 	
 7. the French
 Participant being adjudicated bankrupt; or 

 

15

	
  

 	
  

 
	
  

 	
 8. thirty days
 after the last date of employment of the French Participant if employment
 terminates other than as set forth above in this paragraph. 

 

          J. Exercise of French Options 

          1. Article
V, Paragraphs A.1, A.2, A.3 and A.6 of the Program shall not apply. 

          2. Subject
to the time limits in Paragraph I above, the French Options shall become
exercisable according to the vesting schedule detailed in the French Participant’s
stock option agreement; provided, however, that the option shall be immediately
exercisable in full in the event of a Change of Control or upon termination of
the French Participant’s employment due to death or Disability. 

          3. The
French Option may be exercisable in whole or in part by the French Participant
giving written notice of exercise to the Company or the Program administrator
designated from time to time by the Company stating the number of shares with
respect to which the French Option is being exercised, in the form prescribed
by the Company. Such exercise shall be effective upon receipt of such notice by
the Company or Program administrator and payment in full of the option price. 

          4. When a
French Option is exercised only in part, the balance shall remain exercisable
on the same terms as originally applied to the whole French Option and the
Company shall issue a new option certificate accordingly as soon as possible
after the partial exercise. 

          5. The
French Participant may exercise his French Option at any time after the French
Option becomes exercisable in accordance with Subparagraph 2 of this Paragraph
J and before the French Option lapses for any reason stated in Paragraph I of
this French Addendum.

16

2002 ITALIAN STOCK OPTION
ADDENDUM

          The
following additional provisions constitute the 2002 Italian Stock Option
Addendum (the “Italian Addendum”). 

A. Purpose of the Italian Addendum 

          The
Committee has prescribed these additional provisions to the Program to permit
Italian Participants to be granted Italian Options under the Program and only
modify the Program as it relates to Italian Options granted under the Program
to Italian Participants. These provisions apply to Italian Participants notwithstanding
any other provisions of the Program, and do not apply to or modify the Program
in respect of any other Participants. 

          The Board
has adopted these additional provisions in accordance with Article II,
Paragraph A of the Program. 

B. Definitions 

1. When used in this Italian Addendum, the following terms shall have
the meanings set forth below: 

	
  

 	
  

 	
  

 
	
  

 	
 “Award” shall mean
 an Italian Option granted under the terms of the Italian Addendum and the
 Program. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Cause” shall
 mean: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 a. conviction of
 the Italian Participant of a felony involving moral turpitude or dishonesty; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 b. the Italian
 Participant, in carrying out his or her duties for the Company, has been
 guilty of (1) gross neglect or (2) wilful misconduct; provided, however, that
 any act or failure to act by the Italian Participant shall not constitute
 Cause for this purpose if such act or failure to act was committed, or
 omitted, by the Italian Participant in good faith and in a manner reasonably
 believed to be in the overall best interests of the Company. The
 determination of whether the Italian Participant acted in good faith and that
 he or she reasonably believed his or her action to be in the Company’s
 overall best interest will be in the reasonable judgment of the General
 Counsel of the Company, or, if the General Counsel shall have an actual or
 potential conflict of interest, the Committee; or 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 c. the Italian
 Participant’s continued wilful refusal to obey any appropriate policy or
 requirement duly adopted by the Company and the continuance of such refusal
 after receipt of notice. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Date of Offer”
 shall mean the date of the meeting during which the Committee resolves to
 grant Italian Options pursuant to Article II, Paragraph B of the Program. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Fair Market
 Value” shall mean on any day the market value of a share as derived from the
 closing price of the Company’s Common Stock on the composite tape of the New
 York Stock Exchange. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Italian Option”
 shall mean a right to acquire stock granted under this Italian Addendum. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Italian
 Participant” shall mean an Italian resident employee of the Company to whom a
 subsisting Italian Option has been granted under this Italian Addendum, and
 any reference to “Participant” in the other provisions of this Program shall
 be construed as if it were a reference to “Italian Participant”. 

 

2. The following definitions in Article I Paragraph B of the Program
shall not apply to this Italian Addendum: 

          “Incentive
Stock Option” 

          “Nonstatutory
Stock Option” 

          “Performance
Goal” 

          “Performance
Period” 

17

          “Performance
Shares” 

          “Performance
Unit” 

          “Restricted
Stock” 

          “Restricted
Stock Units” 

          “Stock
Appreciation Rights” or “SARs” 

C. Provisions relating to
performance shares, restricted stock, restricted stock units performance unit
awards and performance awards 

          Articles
III, IV, VI, VII, and VIII of the Program shall not apply to Italian Options. 

D. Participation 

1. Italian Options may be granted to any Italian resident employee of
the Company save for the exceptions listed in sub-paragraph 2 and 3 of this
paragraph D. 

2. No Italian Options may be granted to any person who is not an
employee of the Company. 

3. No Italian Options may be granted to any employee who, at the date
of grant, holds either:

shares representing 10% or more of the issued share
capital of XL Capital Ltd; or,

10% or more of the voting rights exercisable in
the ordinary general shareholders’ meeting. 

E. Price 

1. The option price per share of Italian Options shall be: 

a. for Italian Options relating to newly issued shares of Common Stock,
not less than 100 per cent of the Fair Market Value of a share of Common Stock
on the date of grant; and 

b. for Italian Options relating to shares of Common Stock purchased by
the Company, not less than the nominal value of a Share 

provided that such option price shall not be less than the average of
the middle market quotations for a share of Common Stock derived from the
composite tape of the New York Stock Exchange for the period commencing on the
same date as the Date of Offer in the previous calendar month (or in the event
that such date does not exist, the last day of that preceding calendar month)
and ending on the Date of Offer of such Italian Option.

F. Exercise following death of
Italian Participant 

Italian Options may be assigned or otherwise transferred only in the
following circumstances: 

1. by will or the laws of descent and distribution; or 

2. by valid beneficiary designation taking effect at death made in
accordance with procedures established by the Committee. 

          G. Lapse of Italian Options 

Italian Options granted under this Italian Addendum shall lapse upon
the first of the following events to occur: 

18

1. the tenth anniversary of the date of grant of the Italian Option; 

2. the third anniversary of the Retirement or Disability of the Italian
Participant; 

3. six months following the death of the Italian Participant; 

4. unless otherwise provided in an Employment Agreement between the
Italian Participant and the Company, the third anniversary of the termination
of the Italian Participant’s employment by the Company not for Cause within two
years following a Change of Control (the “Post-Change Period”); 

5. ninety days following termination of the Italian Participant’s
employment by the Company not for Cause outside a Post-Change Period; 

6. the last date of employment of the Italian Participant if employment
is terminated by the Company for Cause; 

7. the Italian Participant being adjudicated bankrupt; or 

8. thirty days after the last date of employment of the Italian
Participant if employment terminates other than as set forth above in this
paragraph. 

          H. Exercise of Italian Options 

1. Article V, Paragraphs A.1, A.2, A.3 and A.6 of the Program shall not
apply. 

2. Subject to the time limits in Paragraph G above, the Italian Options
shall become exercisable according to the vesting schedule detailed in the
Italian Participant’s stock option agreement; provided, however, that the
option shall be immediately exercisable in full in the event of a Change of
Control or upon termination of the Italian Participant’s employment due to
death or Disability. 

3. The Italian Option maybe exercisable in whole or in part by the
Italian Participant giving written notice of exercise to the Company or the
Program administrator designated from time to time by the Company stating the
number of shares with respect to which the Italian Option is being exercised,
in the form prescribed by the Company. Such exercise shall be effective upon
receipt of such notice by the Company or Program administrator and payment in
full to the Company of the option price. 

4. When an Italian Option is exercised only in part, the balance shall
remain exercisable on the same terms as originally applied to the whole Italian
Option and the Company shall issue a new option certificate accordingly as soon
as possible after the partial exercise. 

5. The Italian Participant may exercise his Italian Option at any time
after the Italian Option becomes exercisable in accordance with Subparagraph 2
of this Paragraph H and before the Italian Option lapses for any reason stated
in Paragraph G of this Italian Addendum. 

19

ADDITIONAL PROVISIONS FOR UK
PARTICIPANTS

          The
following additional provisions constitute the 2002 UK Approved Stock Option
Appendix (the “UK Subplan”) for UK Participants. 

A. Purpose of the UK Subplan 

          The
Committee has prescribed these additional provisions to the Program to permit
UK Participants to be granted Approved Options under the Program. These
provisions are to be read as a continuation of the Program and only modify the
Program as it relates to Approved Options granted under the Program to UK
Participants. These provisions do not apply to or modify the Program in respect
of any other Participants. 

          The Board
has adopted these additional provisions in accordance with Article II,
Paragraph A of the Program. 

          In the
event of any conflict between the terms of the Program and the UK Subplan, the
terms of the UK Subplan will take precedence insofar as Approved Options
granted to UK Eligible Employees are concerned. 

B. Definitions 

1. When used in this UK Subplan, the following additional terms shall
have the meanings set forth below: 

	
  

 	
  

 	
  

 
	
  

 	
 “Approved Option”
 shall mean a right to acquire Common Stock granted under this UK Subplan to a
 UK Participant while this UK Subplan is approved by the UK Inland Revenue
 under the Taxes Act. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Associated
 Company” in relation to the Company shall have the meaning given by s416 of
 the Taxes Act. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Cause” shall
 mean: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 a. conviction of
 the UK Participant of a felony involving moral turpitude or dishonesty; 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 b. the UK
 Participant, in carrying out his or her duties for the Company, has been
 guilty of (1) gross neglect or (2) willful misconduct; provided, however,
 that any act or failure to act by the UK Participant shall not constitute
 Cause for this purpose if such act or failure to act was committed, or
 omitted, by the UK Participant in good faith and in a manner reasonably
 believed to be in the overall best interests of the Company. The
 determination of whether the UK Participant acted in good faith and that he or
 she reasonably believed his or her action to be in the Company’s overall best
 interest will be in the reasonable judgment of the General Counsel of the
 Company, or, if the General Counsel shall have an actual or potential
 conflict of interest, the Committee; or 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 c. the UK
 Participant’s continued wilful refusal to obey any appropriate policy or
 requirement duly adopted by the Company and the continuance of such refusal
 after receipt of notice. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Control” shall
 have the meaning given by section 840 of the Taxes Act. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Eligible
 Employee” shall mean: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 a. any full-time
 director employed by a Participating Company and required to devote not less
 than 25 hours per week to his duties (excluding meal breaks); or 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 b. any other
 employee of a Participating Company 

 
	
  

 	
  

 	
  

 
	
  

 	
 provided that the
 director or employee is not precluded by paragraph 8 of Schedule 9 (material
 interest in a close company) from participating in this UK Subplan. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Exchange Rate”
 shall mean, on any day it falls to be calculated, the closing mid-point of
 the pound/dollar exchange rate quoted in the Financial Times on that day. 

 

20

	
  

 	
  

 	
  

 
	
  

 	
 “Group Company”
 shall mean: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 a. the Company; or
 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 b. any company
 under the Control of the Company. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Participating
 Company” shall mean any Group Company which is permitted by the Inland
 Revenue to participate in the Program and which is designated by the
 Committee as a Participating Company or a jointly owned company for which the
 prior consent of the Inland Revenue has been obtained provided that if any
 jointly owned company which has been nominated as a Participating Company
 ceases to satisfy the necessary Inland Revenue requirements (unless as a
 consequence of such cessation if becomes under the control of the Company) it
 shall forthwith cease to be a Participating Company. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Schedule 9” shall
 mean Schedule 9 to the Taxes Act. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Taxes Act’ ‘shall
 mean the Income and Corporation Taxes Act 1988. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “UK Subplan” shall
 mean the 2002 UK Approved Stock Option Appendix, as amended from time to
 time. 

 

2. When used in this UK Subplan, the following terms in Article I,
Provision B shall be modified as set forth below in relation to Approved
Options only: 

	
  

 	
  

 	
  

 
	
  

 	
 “Award” shall mean
 Approved Options granted under the terms of the Program and the UK Subplan. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Common Stock”
 shall mean the Class A ordinary shares of the Company, par value of $0.01 per
 share, which satisfy the requirements of paragraph 10-14 of Schedule 9, and
 may be either stock previously authorized but unissued, or stock acquired by
 the Company. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Company” shall
 mean XL Group plc, and Irish Company. 

 
	
  

 	
  

 	
  

 
	
  

 	
 “Market Value”
 shall mean in respect of a share comprised in an Approved Option: 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 a. On any day, the
 market value of a share as derived from the mid-market price of the Company’s
 Common Stock on the composite tape of the New York Stock Exchange; or 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 b. If the shares
 are not for the time being fully quoted on the New York Stock Exchange or the
 Daily Official List of the London Stock Exchange, the value of a share over
 which such Approved Option is granted as determined by the Committee as at
 the date of grant and having regard to the provisions of Part VIII of the
 Taxation of Chargeable Gains Act 1992 and agreed in advance with the Inland
 Revenue Shares Valuation Division. Any reference to “Fair Market Value” in
 the other provisions of the Program shall be construed as though it were a
 reference to “Market Value” for the purposes of grants under this UK Subplan.
 

 
	
  

 	
  

 	
  

 
	
  

 	
           “UK
 Participant” shall mean an Eligible Employee to whom a subsisting Approved
 Option has been granted under this UK Subplan, and any reference to
 “Participant” in the other provisions of this Program shall be construed as
 if it were a reference to “UK Participant”. 

 

3. Terms and expressions not defined in this Paragraph B have the same
meaning as in section 185 and Schedule 9 of the Taxes Act, where appropriate. 

4. References to any statutory provision are to that provision as
amended or re-enacted from time to time. 

5. All references in the Program to Stock Appreciation Rights and
Incentive Stock Options shall not apply for the purposes of options granted
under this UK Subplan.

21

C. Administration 

1. Article II, Paragraph A of the Program shall be modified by the
addition of the following words “No amendment to the UK Subplan or to this
Program in so far as it applies to Approved Options shall become effective
unless and until it is approved by the UK Inland Revenue. No Approved Options
may be granted unless and until the UK Subplan is approved by the UK Inland
Revenue.” 

2. The rights and obligations of an option holder under the terms of
his contract of employment are not affected by his participation in this UK
Subplan. 

D. Adjustments to share capital 

1. Article II, Paragraph D shall be amended by the deletion of the
words “stock splits in the capitalization of the Company” and replaced by the
following “any capitalization (other than a scrip issue), rights issue,
consolidation, subdivision, reduction or other variation of the share capital
of the Company”. 

2. Article II, Paragraph D shall be amended by the deletion of the
second and third sentences beginning “Also, in instances...” and finishing
“...proper effect to such an event”. 

3. Article II, Paragraph D of the Program shall be modified so that
after the words “outstanding stock options shall be similarly adjusted”, the
following words are inserted: 

a. the aggregate amount payable on the exercise of an Approved Option
in full is not increased; 

b. no adjustment shall be made without the prior approval of the Inland
Revenue; and 

c. following the adjustment the shares of Common Stock continue to
satisfy the conditions specified in paragraph 10-14 inclusive of Schedule 9.” 

E. Provisions relating to
performance shares, restricted stock, restricted stock units, performance unit
awards and performance awards 

Articles II Paragraph F, III, IV, VI, VII, VIII, and IX Paragraph D.4
of the Program shall not apply to Approved Options. 

F. Grant of Approved Options 

1. Approved Options granted to Eligible Employees chosen to participate
may be granted by deed. A single deed of grant may be executed in favor of any
number of Eligible Employees. 

2. The first sentence of Article V, Paragraph A.1 shall be deleted and
replaced with the following words; 

“All Approved Options granted to UK Participants under this UK Subplan
shall be evidenced by option certificates stating: 

	
  

 	
  

 
	
  

 	
 a. the date of
 grant of the Approved Option; 

 
	
  

 	
  

 
	
  

 	
 b. the number and
 class of shares over which the Approved Option is granted; 

 
	
  

 	
  

 
	
  

 	
 c. the option
 price payable for each share; 

 
	
  

 	
  

 
	
  

 	
 d. any condition
 as to exercise imposed in accordance with Paragraph F.3 below.” 

 

3. The exercise of an Approved Option may be conditional upon the satisfaction
of objective corporate performance condition(s) imposed by the Committee at the
date of grant. Any such performance conditions shall be deemed waived in the
event of a Change of Control, or termination of employment by reason of death
or Disability. 

22

G. Price 

Article V, Paragraph A.1 shall be modified by the addition of the
following words; 

“The option price per share of Approved Options shall not be less than
100 per cent of the Market Value of a share of Common Stock on the date of grant.”

H. Period 

Article V, Paragraph A.2 shall be modified so that after the words “an
ISO” the words “or an Approved Option” shall be inserted. 

I. Time of Exercise 

Article V, Paragraph A.3 shall be deleted and replaced with the
following words; 

“Time of Exercise: Subject to the time limit in Article V, Paragraph
A.2, one-third of the Approved Options shall become exercisable on each of the
first three anniversaries of the date of grant; provided, however, that the
option shall be immediately exercisable in full in the event of a Change of
Control or upon termination of the UK Participant’s employment due to his or
her death or Disability. 

J. Payment 

Article V, Paragraphs A.5.b and A.5.c shall be deleted and replaced
with a new paragraph A.5.b as follows; 

“by arrangements with the Company, which arrangements shall have been
approved in advance by the UK Inland Revenue.’ 

K. Limit on value of Approved
Options held 

The following new paragraph shall be inserted after Article V,
Paragraph A.6; 

          “Special
Rule for Approved Options; notwithstanding any other provision of the Program,
the aggregate Market Value of the shares of Common Stock, determined at the
relevant grant dates (converted to pounds sterling at the Exchange Rate on the
relevant dates of grant), which the UK Participant may acquire on the exercise
in full of all unexercised Approved Options then held by him under this UK
Subplan and any other Inland Revenue approved discretionary share option plan
adopted by the Company and any Associated Company, shall not exceed GB£30,000
or such other amount as shall from time to time be specified in paragraph 28 of
Schedule 9.” 

L. Lapse of Approved Options 

Article V, Paragraph A.8 shall be replaced by the following new
paragraph; 

1. Approved Options granted under this UK Subplan shall lapse upon the
first of the following events to occur: 

a. the tenth anniversary of the date of grant of the Approved Option; 

b. the third anniversary of the Retirement or Disability of the UK
Participant; 

c. the first anniversary of the death of the UK Participant; 

d. unless otherwise provided in an Employment Agreement between the UK
Participant and the Company, the third anniversary of the termination of the UK
Participant’s employment by the Company not for Cause within two years
following a Change of Control (the “Post-Change Period”); 

23

e. ninety days following termination of the UK Participant’s employment
by the Company not for Cause outside a Post-Change Period; 

f. the last date of employment of the UK Participant if employment is
terminated by the Company for Cause; 

g. the UK Participant being adjudicated bankrupt; or 

h. thirty days after the last date of employment of the UK Participant
if employment terminates other than as set forth in this paragraph. 

M. Exercise of Approved Options 

1. No Approved Option may be exercised by an individual at any time
when he is precluded by paragraph 8 of Schedule 9 (material interest in a close
company within the preceding 12 months) from participating in this UK Subplan. 

2. No Approved Option may be exercised at any time when the shares
which may be thereby acquired do not satisfy the conditions specified in
paragraphs 10 - 14 of Schedule 9. 

3. The Approved Option maybe exercisable in whole or in part by the UK
Participant giving notice of exercise the Company or the Program administrator
designated from time to time by the Company stating the number of shares with
respect to which the Approved Option is being exercised, in the form prescribed
by the Company. Such exercise shall be effective upon receipt of such notice by
the Company or Program administrator and payment in full to the Company of the
option price. 

4. Shares of Common Stock shall be allotted and issued pursuant to a
notice of exercise within 30 days of the date of exercise and a definitive
share certificate issued to the option holder in respect thereof. Save for any
rights determined by reference to a date preceding the date of allotment, such
shares of Common Stock shall rank pari passu with the other shares of the same
class in issue at the date of allotment. 

5. When an Approved Option is exercised only in part, the balance shall
remain exercisable on the same terms as originally applied to the whole
Approved Option and the Company shall issue a new option certificate
accordingly as soon as possible after the partial exercise. 

6. The Approved Option maybe exercised by the personal representatives
of a deceased UK Participant during the period of one year following the date
of death. The Approved Option may not be assigned or transferred in any other
circumstances, and any purported transfer, assignment, or charge shall cause
the Approved Option to lapse forthwith. 

7. The UK Participant may exercise his Approved Option at any time
after the Approved Option becomes exercisable in accordance with Paragraph I
above and before the Approved Option lapses for any reason stated in Paragraph
L of this UK Subplan. 

N. Effective dates 

          In relation
to Approved Options, Article VIII Paragraph E shall be modified so that after
the words “shareholder approval” the words “and the approval of the UK Inland
Revenue to the UK Subplan” shall be inserted. 

O. Exchange of Approved Options on a
takeover 

1. If any company (“the Acquiring Company”) obtains Control of the
Company within the circumstances specified in paragraph 15(1) of Schedule 9 to
the Taxes Act, any UK Participant may, by agreement with the Acquiring Company
at any time within the period specified in paragraph 15(2) of that Schedule 9,
release his Approved Option (“the Old Option”) in consideration of the grant to
him of a new approved option (“the New Option”) which is equivalent to the Old
Option (by virtue of satisfying the requirements of paragraph 15(3) of Schedule
9 of the Taxes Act) but relates to stock in a different company (whether the
Acquiring Company itself or another company within its group). 

24

2. Where any New Options are granted pursuant to Paragraph O.1 above
they shall be regarded for the purposes of the subsequent application of the
provisions of this UK Subplan as having been granted at the time when the
corresponding Old Options were granted and, with effect from the date on which
the New Options are granted: 

a. save for the definitions of “Participating Company” and “Group
Company” in Paragraph B of this UK Subplan, references to “the Company”
(including the definition in Paragraph B of this Subplan) shall be construed as
being references to the Acquiring Company or such other company to whose stock
the New Options relate; and 

b. references to “Common Stock” (including the definition in Paragraph
B of this Subplan) shall be construed as being references to stock in the
Acquiring Company or stock in such other company to which the New Options
relate but references to Participating Company shall continue to be construed
as if references to the Company were references to XL Capital Ltd. 

25

Additional Provisions for
Participants in the Republic of Ireland

The following amendments to the Plan shall apply insofar as it relates
to awards made to Participants in the Republic of Ireland. 

1 Clause III C – Performance Shares &
Termination of Employment 

Clause III part C shall be deleted and replaced with the following: 

          In the
event of a Participant’s Termination of Employment prior to satisfaction of
conditions related to outstanding Performance Share Awards for reasons other
than discharge or resignation, the Participant (or the Participant’s legal
personal representative, in the event of his death), in the sole discretion of
the Committee, may be entitled to receive from Performance Shares held by the
Corporation a pro rata number of shares with respect to that Performance Share
Award, or such other portion of the Award, if any, as the Committee shall
determine. In the event of Termination of Employment due to resignation or
discharge, the Award will be cancelled, and the Participant shall not be
entitled to any further consideration with respect to the forfeited Performance
Shares, subject to the discretion of the Committee to release restrictions on
all or any part of an Award. 

2 Clause IV D – Restricted Stock &
Termination of Employment 

Clause IV part D shall be deleted and replaced with the following: 

          In the
event of a Participant’s Termination of Employment prior to satisfaction of
conditions related to outstanding Restricted Stock Awards for reasons other
than discharge or resignation, the Participant (or the Participant’s legal
personal representative, in the event of his death), in the sole discretion of
the Committee, may be entitled to receive from Restricted Stock shares held by
the Corporation a pro rata number of shares with respect to that Restricted
Stock Award, or such other portion of the Restricted Stock Award, if any, as
the Committee shall determine. In the event of Termination of Employment due to
resignation or discharge, all Restricted Stock shares held by the Company shall
be forfeited, and the Participant shall not be entitled to any further
consideration with respect to the forfeited Restricted Stock shares, subject to
the discretion of the Committee to release of restrictions on all or any part
of an Award, or unless otherwise stated in the Restricted Stock agreement. 

3 Clause VI H – Performance Unit Awards &
Termination of Employment 

Clause VI part H shall be deleted and replaced with the following: 

          In the
event of a Participant’s Termination of Employment prior to the satisfaction of
conditions related to outstanding Performance Unit Awards for reasons other
than discharge or resignation, the Participant (or the Participant’s legal
personal representative, in the event of his death), in the sole discretion of
the Committee, may be entitled to receive a pro-rata distribution of
outstanding Performance Unit Awards. In the event of Termination of Employment
due to resignation or discharge, all Awards will be cancelled, and the
Participant shall not be entitled to any further consideration with respect to
the forfeited Performance Units, subject to the discretion of the Committee.

4 Clause VIII D – Restricted Stock Units
& Termination of Employment 

Clause VIII part D shall be deleted and replaced with the following: 

          In the
event of a Participant’s Termination of Employment prior to satisfaction of
conditions related to an outstanding Restricted Stock Unit Award for reasons
other than discharge or resignation, the Participant (or the Participant’s
legal personal representative, in the event of his death), in the sole
discretion of the Committee, may be entitled to receive from the Restricted
Stock Unit Award a pro rata number of shares with respect to the Restricted
Stock Unit Award, or such other portion of the Restricted Stock Unit Award, if
any, as the Committee shall determine. In the event of Termination of Employment
due to resignation or discharge, all Restricted Stock Units held by the
Participant shall be forfeited, and the Participant shall not be entitled to
any further consideration with respect to the forfeited Restricted Stock Units,
subject to the discretion of the Committee to release restrictions and deliver
shares in respect of all or any part of an Award, or unless otherwise stated in
the Restricted Stock Unit Award Agreement. 

26

5 Clause IX D Miscellaneous Provisions 

Paragraphs 1 and 2 of Clause IX part D shall be deleted and replaced
with the following: 

5.1 Employment Rights 

          1. No Right to Continue Employment: Subject
to the relevant provisions of local employment law governing the employment of
a Participant, nothing in the Program or in any Award confers upon any
Participant the right to continue in the employ of the Company or interferes
with or restricts in any way any rights that the Company may have to discharge
any Participant at any time for any reason whatsoever, with or without cause.
Awards made under the Plan, and any other awards the Company may grant in the
future to a Participant, even if such awards are made repeatedly or regularly,
and regardless of their amount, (a) are wholly discretionary, are not a term or
condition of employment and do not form part of a contract of employment, or
any other working arrangement, between the Participant and the Company or any
Subsidiary, as applicable, (b) do not create any contractual entitlement to
receive future awards or to continued employment, and (c) do not form part of
salary or remuneration for purposes of determining pension payments or any
other purposes, including, without limitation, termination indemnities,
severance, resignation, redundancy, bonuses, long-term service awards, pension
or retirement benefits, or similar payments, except as otherwise required by
applicable law. 

5.2 Non-Transferability 

          2. Non-Transferability: Except as otherwise
determined by the Committee and set forth in the applicable Award agreement,
prior to being earned under Articles III, IV, or VI, being exercised under
Article V, or having shares distributed under Article VIII, no right or
interest of any Participant in any Award under the Program shall be (a)
assignable or transferable, except by will or the laws of descent and
distribution, or (b) liable for, or subject to, any lien, obligation or
liability, except to the extent that Non-Qualified Stock Options may be pledged
as security in a margin account for their exercise. 

5.3 Designation 

Paragraph 3 shall be deleted and the subsequent paragraphs 4 to 9 shall
be renumbered accordingly. 

27

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