Document:

EXHIBIT 10.3

 

EXHIBIT 10.3

SERVICE AGREEMENT

     This SERVICE AGREEMENT (the “Agreement”) is made as of this 27th day of
August, 2004, by and between Anthony Taylor, an individual having an address at
Mintflower Place, 8 Par-La-Ville Road, P.O. Box HM 2079, Pembroke HM HX Bermuda
(the “Executive”) and Montpelier Marketing Services (UK) Limited, whose
registered office is located at 6th Floor, Minster Court, Mincing Lane, London
EC3R 7YL (the “Company”).

W I T N E S S E T H:

     WHEREAS, pursuant to a certain Service Agreement, dated as of December 1,
2002 between the Company and the Executive, the Executive has served as
Director and Chairman of the Board of Directors of the Company (the “Board”)
since January 1, 2002; and

     WHEREAS, the Company desires to continue to employ the Executive, and the
Executive desires to continue employment under the terms and conditions of this
Agreement;

     NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained, and for other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:

     1. Employment. The Company hereby shall continue to employ the Executive,
and the Executive hereby accepts the continuation of employment, as Director
and as Chairman of the Board, under the terms and conditions set forth herein.

 

 

     2. Term. Subject to paragraph 6, the Executive shall be employed
hereunder for the period commencing January 1, 2005, which shall be the
effective date (“Effective Date”) of this Agreement, and ending December 31,
2007 (the “Term”).

     3. Duties. (a) During the Term, the Executive shall perform such duties
and exercise such powers in relation to the business of the Company, or of any
Group Company, as may from time to time be assigned to or vested in him by the
Board and shall give to the Board such information regarding the affairs of the
Company, and of any Group Company, as it shall require and at all times in all
respects conform to and comply with the reasonable directions and regulations
made by the Board. The Executive shall perform such services for any Group
Company (without further remuneration except as otherwise agreed), and shall
accept such offices in any such Group Companies as the Board may require. The
Executive shall well and faithfully serve the Company and the Group Companies,
and shall use his best endeavors to promote, develop and extend their
businesses and interests, giving at all times the full benefit of his
knowledge, expertise, technical skill and ingenuity. For purposes of this
Agreement, “Group” shall mean and include Montpelier Re Holdings Limited
(“Holdings”) and its subsidiaries (as defined by of the Companies Act of 1981
(the “Companies Act”), but irrespective of whether it is a Bermuda Company or
an overseas company) and any Company in which Holdings owns at least 50% of the
issued share capital, and “Group Company” shall be construed accordingly.

     (b) In particular, the Executive will act as Chairman of the Board of
Directors of the Company, and will involve himself actively in the marketing
and promotional activities of the

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Company. The Executive shall at no time engage in the following
activities on behalf of any Group Company:

	(i)	 	offer insurance to anyone;
	 
	(ii)	 	negotiate any terms of any insurance contracts;
	 
	(iii)	 	exercise discretion as to whether or not to
refer risks to any Group Company, but rather will refer all
risks to the relevant Group Company in the absence of explicit
instructions to the contrary
	 
	(iv)	 	accept premiums;
	 
	(v)	 	bind risks;
	 
	(vi)	 	negotiate and settle claims;
	 
	(vii)	 	receive notification of claims and instruct loss adjusters;
	 
	(viii)	 	determine underwriting strategy;
	 
	(ix)	 	issue policy documentation to policyholders; and
	 
	(x)	 	imply, directly or indirectly, to a third party
that the Company has authority to engage in any of the
activities set forth in (i) through (ix) above.

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     (c) The Executive’s principal place of employment is at 118 Fenchurch
Street, London EC3 or such other address as may be established as the Company’s
office.

     (d) The Executive shall carry out his duties under this Agreement in the
United Kingdom, and the Company reserves the right to require the Executive to
work at any location in London as the Company may in its absolute discretion
from time to time decide.

     (e) The Executive may be required to travel in the United Kingdom and
overseas (including Europe and the United States) in the proper performance of
his duties, although the Executive will not, without his prior consent be
required to work any contiuous period abroad in excess of one month.

     (f) The Executive agrees that he will devote ten to fifteen percent (10% -
15%) of his time and attention to the affairs of the Company. The Company
recognizes that the executive is a party to a service agreement with Holdings
(the “Bermudian Service Agreement”) under which Executive will devote the
majority of his time to the affairs of Holdings.

     (g) The Company reserves the right to require the Executive not to attend
work and/or not to undertake all or any of his duties hereunder during a period
of up to twelve (12) months immediately preceding the termination of his
employment, provided always that the Company shall continue to pay fees to the
Executive and contractual benefits for such period. This paragraph 3(g) shall
not affect the general right of the Company to suspend the Executive for Cause
(as defined in paragraph 6(c), below).

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     4. Compensation and Related Matters. As full compensation for the
Executive’s performance of his duties and responsibilities hereunder during the
Term, the Company shall pay the Executive the compensation and provide the
benefits set forth below of this Agreement:

     (a) Fees. During the Term of this Agreement, the Company shall pay the
Executive by way of remuneration for his services hereunder directors fees at
the rate (subject as hereinafter provided) of £0.00 per annum. The said fees
shall be payable monthly in arrears on the day appointed by the Board for the
payment of salaries or pro rata if Executive is employed for less than a full
month. The Compensation Committee of the Board, subject to ratification of the
Board, may increase or reduce the Executive’s fees on December 31st each year,
but not below an amount of £0.00 per annum.

     (b) Benefits. The Executive shall be entitled to participate in (i) the
Group’s UK pension scheme; the Company will make a contribution equal to 10% of
the Executive’s fees into such scheme and (ii) any other UK specific schemes in
which executives of the Company participate.

     (c) Paid Holiday. In addition to the usual public holidays, the Executive
shall be entitled to receive twenty-five (25) paid days holiday each year, but
such days shall be inclusive of, and not in addition to, holidays to which the
Executive is entitled pursuant to the Bermudian Service Agreement.

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     (d) Reimbursement. The Executive shall be reimbursed for all documented
business related expenses. All amounts payable under this paragraph 4(d) shall
be subject to the Executive’s presentment to the Company of appropriate
documentation.

     (e) Deductions. The Executive agrees that the Company may deduct from his
pay any sums which the Executive may owe the Company including, without
limitation, any overpayments or loans made to him by the Company or losses
suffered by the Company as a result of the Executive’s breach of this
Agreement.

     5. Confidentiality

     (a) The Executive shall not, either during the continuance of his
employment hereunder (otherwise than in the proper performance of his duties
hereunder) or at any time after the termination thereof, divulge to any person
whomsoever and shall use his reasonable endeavors to prevent the publication or
disclosure of any trade secret or other confidential information concerning the
business, finances, accounts, dealings, transactions or affairs of the Company
or any Group Company or of any of their respective clients entrusted to him or
arising or coming to his knowledge during the course of his employment
hereunder or otherwise; provided that the foregoing shall not prevent or limit
the Executive from complying with any applicable law or with the directive of
any court or administrative body or agency having the legal authority to
..compel testimony from or the production of documents by the Executive. The
provisions of this paragraph 5(a) shall not apply to any information which is
or becomes publicly known (through sources other than the Executive).

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     (b) The Executive shall upon the termination of his employment hereunder
immediately deliver up to the Company all fee schedules, lists of clients,
correspondence and other documents, papers and property belonging to the
Company or any Group Company or related to any of the matters referred to in
paragraph (a), above which may have been prepared by him or have come into his
possession in the course of his employment hereunder and shall not retain any
copies thereof.

     6. Termination. The Executive’s employment shall terminate upon:

     (a) the Executive’s death; or

     (b) the Executive being unable to perform his duties and responsibilities
hereunder due to his disability (as defined below). For purposes of this
Agreement, the term “disability” shall mean that the Executive has been unable
to perform the duties and responsibilities required of him hereunder due to a
physical and/or mental disability for a period of six (6) consecutive months or
for more than one hundred eighty (180) working days, whether or not
consecutive, during any twelve (12) month period; provided that any such
periods may be extended at the sole discretion of the Board. During such
period of disability, the Executive shall continue to receive the fees
described in paragraph 4(a) (less any Company-paid benefits that he receives,
such as short term disability or workers compensation, during such period); or

     (c) the termination of the Executive’s employment by the Company for
“Cause”. For purposes of this Agreement, “Cause” shall mean: (i) conviction of
an offense (other than a road traffic offense or other non-material offense not
subject to a custodial sentence; or (ii) willful

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gross negligence or willful gross misconduct by the Executive in
connection with his employment with the Company or a Group Company which causes
or is likely to cause material loss or damage to the Company or such Group
Company; or

     (d) the resignation of the Executive for “Good Reason”. For purposes of
this Agreement “Good Reason” shall mean: (i) a decrease in the fees paid to the
Executive for services hereunder (except as authorized under paragraph 4 (a));
(ii) a material diminution in the Executive’s authority, duties or
responsibilities of his position with the result that the Executive makes a
determination in good faith that he cannot continue to carry out his job in
substantially the same manner as it was intended to be carried out immediately
before such diminution; and (iv) a material breach by the Company of the terms
of this Agreement; provided that Executive shall have provided written notice
to the Company (attention of at least two members of the Board other than the
Executive), setting forth the alleged Good Reason within 120 days of the event,
and the event shall not have been cured within thirty (30) days of receipt of
the notice.

     (e) the termination of the Executive’s employment by the Company without
cause; or

     (f) the resignation of the Executive without Good Reason or

     (g) automatically upon termination of the Bermudian Service Agreement.

     7. Termination Payments and Benefits.

     If the Executive’s employment is terminated pursuant to paragraph 6 then
in full satisfaction of the Company’s obligations under this Agreement, the
Executive, his beneficiaries or estate, as appropriate, shall be entitled to
receive (A) the fees provided for herein up to and

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including the effective date of termination, prorated on a daily basis;
(B) payment for any accrued, but unused paid holiday as of the effective date
of termination; and (C) any reimbursements to which he may be entitled under
paragraph 4 of this Agreement.

     8. Non-Competition.

     (a) During the Term, the Executive shall not without the consent of the
Board directly or indirectly engage in any other business or be concerned or
interested in any other business of a similar nature to or which would or might
compete with the business for the time being carried on by the Company or any
Group Company save that he may (but without prejudice to paragraph 3) be
interested as a holder or beneficial owner of not more than 5% of any class of
stock, shares or debentures in any company (other than the Company, in which
case, such limit shall not apply) whose stock, shares or debentures are listed
or dealt in on an appointed stock exchange (as defined in the Companies Act).

     (b) Since the Executive has obtained in the course of his employment prior
to the date hereof and is likely to obtain in the course of his employment
hereunder knowledge of the trade secrets and also other confidential
information in regard to the business of the Company and of any Group Company
with which he becomes associated, the Executive hereby agrees with the Company
that in addition to the restrictions contained in paragraph (a), above, he will
not in Bermuda, the United Kingdom or the European Economic Community:

     (i) During the period of 12 months following the termination of his
employment hereunder (howsoever caused) either on his own account or for
any other

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person, firm or company directly or indirectly be engaged in or
concerned with any business or undertaking which is engaged in or carries
on in Bermuda, the United Kingdom or the European Economic Community any
insurance business which competes or seeks to compete with the business
carried on by the Company or any other Group Company at the date of
termination.

     (ii) During the period of 12 months following the termination
aforesaid either on his own account or for any other person, firm or
company directly or indirectly solicit, interfere with or endeavor to
entice away from the Company or any Group Company the custom of any
person, firm or company who at the date of termination aforesaid or who
in the period of 12 months immediately prior to such date was a customer
or client of or in the habit of dealing with the Company or any Group
Company or who at such date was to his knowledge negotiating with the
Company or any Group Company in relation to all or part of its business.

     (iii) During the period of 12 months following the termination
aforesaid either on his own account or for any other person, firm or
company solicit the services of or endeavor to entice away from the
Company or any Group Company any director, employee or consultant of the
Company or any Group Company (whether or not such person would commit any
breach of his contract of employment or engagement by reason of leaving
the service of such company) nor shall the Executive knowingly employ or
aid or assist in or procure the employment by any other person, fir or
company of any such person.

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     (c) While the restrictions aforesaid are considered by the Parties to be
reasonable in all the circumstances, it is agreed that if any of such
restrictions shall, taken together, be adjudged to go beyond what is reasonable
in all the circumstances for the protection of the legitimate interests of the
Company or any Group Company but would be adjudged reasonable if part of the
wording thereof were deleted or modified the said restrictions shall apply with
such words deleted or modified.

     (d) The Executive hereby agrees that he will at the request and at the
cost of the Company enter into a direct agreement or undertaking with any Group
Company whereby he will accept restrictions and provisions corresponding to the
restrictions and provisions herein contained (or such of them as may be
appropriate in the circumstances) in relation to such services and such area
and for such period as such company or companies may reasonably require for the
protection of its or their legitimate interests provided that he terms of such
restrictions and provisions will not be more onerous than the restrictions and
provisions of this Agreement.

     9. Intellectual Property

     (a) The Executive may make discover or create Intellectual Property in the
course of his duties under this Agreement and agrees that in this respect he
has a special obligation to further the interests of the Company.

     (b) Subject to the provisions of the Patents Act 1977 the Registered
Designs Act 1949 and the Copyright Designs and Patents Act 1988, if at any time
during his employment under

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this Agreement the Executive makes or discovers or participates in the
making or discovery of any Intellectual Property relating to or capable of
being used in the business for the time being carried on by the Company or any
Group Companies full details of the Intellectual Property shall immediately be
communicated by him to the Company and shall be the absolute property of the
Company. At the request and expense of the Company the Executive shall give
and supply all such information, data drawings and assistance as may be
requisite to enable the Company to exploit the Intellectual Property to the
best advantage and shall execute all documents and do all things which may be
necessary or desirable for obtaining patent or other protection for the
Intellectual Property in such parts of the world as may be specified by the
Company and for veting the same in the Company or as it may direct.

     (c) The Executive irrevocably appoints the Company to be his agent in his
name and on his behalf to sign execute or do any such instrument or thing and
generally to use his name for the purpose of giving to the Company (or its
nominee) the full benefit of the provisions of this clause and in favour of any
third party a certificate in writing signed by any director or the secretary of
the Company that any instrument or act falls within the authority conferred by
this clause shall be conclusive evidence that such is the case.

     (d) If the Intellectual Property is not the property of the Company, the
Company shall subject to the provisions of the Patents Act 1977 have the right
to acquire for itself or its nominee his rights in the Intellectual Property
within 3 months after disclosure pursuant to this clause on fair and reasonable
terms to be agreed or settled by a single arbitrator.

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     (e) The Executive waives all of his moral rights (as defined in the
Copyright, Designs and Patents Act 1988) in respect of any acts of the Company
or any acts of third parties done with the Company’s authority in relation to
any Intellectual Property which is the property of the Company by virtue of
this clause.

     (f) Rights and obligations under this clause shall continue in force after
termination of this Agreement in respect of Intellectual Property made during
the Executive’s employment under this Agreement and shall be binding upon his
representatives.

     10. Discipline and Grievance Procedures

     (a) If the Executive has a grievance, regarding the employment, he should,
in the first instance speak to the Group’s Chairman. If the grievance is not
resolved to his satisfaction, he should then refer to the grievance procedure,
which will be provided to him with his letter of employment.

     (b) The disciplinary procedures applicable to the Executive will be
provided to him with his letter of employment.

     (c) The disciplinary and grievance procedures do not form part of this
Agreement.

     11. Successors. Except as otherwise provided herein, the Executive’s
performance hereunder are personal to the Executive and shall not be assignable
by the Executive. The Company may at any time and from time to time delegate
its power and authority under this Agreement to any Group Company and such
delegation (or the revocation thereof) shall be effective upon the Company’s
giving written notice of the same to the Executive. The Company

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may assign this Agreement to any Group Company or to any successor to all
or substantially all of the business and/or assets of the Company, whether
directly or indirectly, by purchase, merger, consolidation, acquisition of
stock, or otherwise. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns.

     12. Legal Expenses. The Company will pay or reimburse the Executive for
all costs and expenses (including court costs and attorney’s fees) incurred by
Executive as a result of any claim, action or proceeding arising out of, or
challenging the validity, or enforceability of, this Agreement or any provision
hereof or any benefit or award contemplated herein, but only if the Executive
is the prevailing party, in whole or in significant part, with respect to such
claim, action or proceeding. Executive will pay or reimburse the Company for
all costs and expenses (including court costs and attorney’s fees) incurred by
Company as a result of any claim, action or proceeding arising out of, or
challenging the validity, or enforceability of, this Agreement or any provision
hereof or any benefit or award contemplated herein, but only if the Company is
the prevailing party, in whole or in significant part, with respect to such
claim, action or proceeding.

     13. Survival of Operative Sections. Upon any termination of the
Executive’s employment, the operative provisions of this Agreement, including
but not limited to paragraphs 7,8, 9, 10 and 14, shall survive to the extent
necessary to give effect to the provisions thereof.

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     14. Miscellaneous.

     (a) Waiver; Amendment. The failure of a party to enforce any term,
provision, or condition of this Agreement at any time or times shall not be
deemed a waiver of that term, provision, or condition for the future, nor shall
any specific waiver of a term, provision, or condition at one time be deemed a
waiver of such term, provision, or condition for any future time or times.
This Agreement may be amended or modified only by a writing signed by both
parties hereto.

     (b) Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the law of England and the parties irrevocably
submit to the non-exclusive jurisdiction of the English courts.

     (c) Paragraph Captions. Paragraph and other captions contained in this
Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.

     (d) Severability. Each provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the validity
of the remainder of this Agreement.

     (e) Integrated Agreement. This Agreement constitutes the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements, understandings,
memoranda, term sheets, conversations and negotiations. There are no
agreements, understandings, restrictions, representations or warranties between
the

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parties other than those set forth herein or herein provided for.
Notwithstanding the foregoing, nothing in this Agreement shall reduce or
diminish the Executive’s rights under any employee benefit plan in which he is
a participant or under any stock option, SAR, RSU, Preferred Share (or similar
compensatory award) granted to the Executive by the Company (or any Group
Company) before, on or after the Effective Date.

     (f) Interpretation; Counterparts.

     (i) No provision of this Agreement is to be interpreted for or against
any party because that party drafted such provision.

     (ii) For purposes of this Agreement: “herein, “hereby,” “hereof”,
“hereinafter,” “herewith,” “hereafter” and “hereinafter” refer to this
Agreement in its entirety, and not to any particular paragraph.

     (iii) References to statutory provisions shall be construed as references
to those provisions as amended or re-enacted or as their application is
modified by other provisions from time to time and shall include references to
any provisions of which they are re-enactments (whether with or without
modification).

     (iv) References to the singular shall include the plural and vice versa
and references to the masculine shall include the feminine and/or neuter and
vice versa.

     (v) References to persons shall include companies, partnerships,
associations and bodies of persons, whether incorporated or unincorporated.

     (g) This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, and all of which shall constitute one and
the same instrument.

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     (h) Untrue Statements. The Executive shall not knowingly at any time make
any untrue statement in relation to the Company or any Group Company and in
particular shall not after the determination of his employment hereunder
wrongfully represent himself as being employed by or connected with the Company
or any Group Company.

     (i) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand
delivery, or by facsimile (with confirmation of transmission), or by overnight
courier, or by registered or certified mail, return receipt requested, postage
prepaid, in each case addressed as follows:

	 	 	 	 	 
	

	 	If to the Executive:
	 	Anthony Taylor
	

	 	 	 	Mintflower Place
	

	 	 	 	8 Par-La-Ville Road
	

	 	 	 	P.O. Box HM 2079
	

	 	 	 	Pembroke HM HX Bermuda
	 
	

	 	with copies to:
	 	Mark S. Wintner
	

	 	 	 	Stroock & Stroock & Lavan LLP
	

	 	 	 	180 Maiden Lane
	

	 	 	 	New York, NY 10038
	 
	

	 	If to the Company:
	 	Montpelier Marketing Services (UK) Limited
	

	 	 	 	6th Floor
	

	 	 	 	1 Minster Court
	

	 	 	 	Mincing Lane
	

	 	 	 	London EC3R 7YL

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	 	with copies to:	 	 

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by addressee.

     (j) No Limitations. The Executive represents his employment by the
Company hereunder does not conflict with, or breach any confidentiality,
non-competition or other agreement to which he is a party or to which he may be
subject.

     IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement
as of the date first above written.

	 	 	 	 
	MONTPELIER MARKETING SERVICES (UK) LIMITED

	 	EXECUTIVE
	 
	 	 
	By:
	/s/ T.G.S. Busher
	 	/s/ Anthony Taylor
	 	

	 	

	Name:	Thomas G.S. Busher	 	Anthony Taylor
	Title:	Chief Operating Officer	 

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EXHIBIT 10.4

MONTPELIER RE HOLDINGS LTD.

SEVERANCE PLAN

Preamble

     This Plan is established to provide severance benefits to certain
executives of the Company in the event of a termination of employment in
connection with a Change in Control.

ARTICLE I.

DEFINITIONS

     1.1. Act shall mean The Employment Act 2000.

     1.2. Cause shall have the same meaning as set forth in Article 8 of the
Montpelier Long-Term Incentive Plan.

     1.3. Change in Control shall have the same meaning as set forth in Article
10 of the Montpelier Long-Term Incentive Plan.

     1.4. Code shall mean the Internal Revenue Code of 1986, as the same may be
amended from time to time.

     1.5. Committee shall mean the Compensation and Nominating Committee of the
Company, or such other committee having responsibility for executive
compensation, as appointed by the Board of Directors of the Company.

     1.6. Company shall mean Montpelier Re Holdings Ltd., its subsidiaries and
affiliates, successors and assigns, as well as any other corporation,
partnership, or other type of business entity into which the Company may be
merged, consolidated or otherwise combined.

     1.7. Constructive Termination shall have the same meaning as set forth in
Article 9 of the Montpelier Long-Term Incentive Plan.

     1.8. Effective Date shall mean January 1, 2005.

     1.9. Executive shall mean each such executive officer of the Company as
the Committee in its discretion may deem eligible to participate in the Plan
from time to time.

     1.10. Group A Benefits means severance benefits calculated pursuant to
Section 2.2(a) of the Plan.

     1.11. Group B Benefits means severance benefits calculated pursuant to
Section 2.2(b) of the Plan.

     1.12. Plan means the Montpelier Re Holdings Ltd. Severance Plan.

 

 

     1.13. Salary shall mean the Executive’s annual rate of base pay, provided
however, that none of the following shall be included as base pay:
reimbursement or other expense allowances; fringe benefits (cash and non-cash);
moving expenses; deferred compensation; welfare benefits; incentive or bonus
payments; housing/accommodation allowances; pension contributions; and any
other payments which are not part of an Executive’s base pay, as determined by
the Committee in its sole discretion. Notwithstanding the above, the
Executive’s Salary shall be determined without regard to whether a portion of
an Executive’s Salary is contributed or deferred under any plan of the Company
or is not includable in the gross income of the Executive under Code §§ 125,
402(e)(3), or 402(h).

     1.14. Service Agreement means the Service Agreement entered into between
the Executive and the Company.

     1.15. Severance Date means the date the Executive’s employment with the
Company terminates pursuant to Section 2.1(a) of the Plan.

ARTICLE II.

SEVERANCE BENEFIT

     2.1. Entitlement to Severance Benefits. Notwithstanding any language
contained in an Executive’s Service Agreement to the contrary, on and after the
Effective Date, each Executive shall be entitled to benefits pursuant to this
Article II, provided:

          (a) such Executive’s employment with the Company is terminated in a manner
which would entitle the Executive to Change in Control benefits under Article
10 of the Montpelier Long-Term Incentive Plan; and

          (b) the Executive complies with Section 2.3 of the Plan.

     2.2. Severance Benefit. The Committee shall, in its sole discretion,
determine whether an Executive shall receive Group A Benefits (“Group A
Executive”) or Group B Benefits (“Group B Executive”).

          (a) Group A Benefits. Subject to the provisions of Section 2.3 of the
Plan, within thirty (30) business days after the occurrence of a Group A
Executive’s termination of employment described in Section 2.1(a) of the Plan,
the Company shall pay to such Executive a lump sum cash payment equal to the
product of three (3) times the sum of:

     (i) the Executive’s Salary at the greater of: (1) the annual
rate in effect on the Executive’s Severance Date, or (2) the
annual rate in effect on the date of the Change in Control; plus

     (ii) the Executive’s highest annual bonus paid in the three
(3) years completed prior to the year containing the Executive’s
Severance Date.

2

 

          (b) Group B Benefits. Subject to the provisions of Section 2.3 of the
Plan, within thirty (30) business days after the occurrence of a Group B
Executive’s termination of employment described in Section 2.1(a) of the Plan,
the Company shall pay to such Executive a lump sum cash payment equal to the
product of two (2) times the sum of:

     (i) the Executive’s Salary at the greater of: (1) the annual
rate in effect on the Executive’s Severance Date, or (2) the
annual rate in effect on the date of the Change in Control; plus

     (ii) the Executive’s highest annual bonus paid in the three
(3) years completed prior to the year containing the Executive’s
Severance Date.

          (c) Certain Reductions Disregarded. For purposes of determining an
Executive’s Salary and target bonus opportunity under this Section 2.2, any
reduction in Salary or target bonus opportunity that would constitute a
Constructive Termination shall be deemed not to have occurred.

          (d) Payment in Lieu of Service Agreement. The payment of benefits
pursuant to this Article II shall be in lieu of any salary continuation
payments to which the Executive might otherwise be entitled to receive under
Section 10 of such Executive’s Service Agreement.

          (e) Withholding. Payment of Severance Benefits to an Executive shall be
subject to any applicable withholding requirements for state, payroll tax,
hospital levy, local and federal income taxes and Social Security taxes.

     2.3. Conditions on Payment of Severance Benefit.

          (a) Requirement of Separation Agreement and General Release. Payment of a
Severance Benefit shall be subject to and conditioned upon the Executive’s
execution of a Separation Agreement and General Release (the “Separation
Document”) under which the Executive agrees to a general release of all claims
against the Company. The Committee shall have complete discretion to determine
the form of release which must be executed, provided however, that, except as
otherwise provided in the Plan, the release shall not include a waiver of the
right to payment of any vested, non-forfeitable benefits to which the Executive
(or his or her beneficiary) may be entitled under any plan or arrangement of
the Company which have accrued as of the Severance Date.

          (b) Timely Execution Required. An Executive will have a period of sixty
(60) days from his or her Severance Date to execute the Separation Document.
If the Separation Document is not in effect within the time mentioned above,
the Executive shall not receive a benefit; provided, however, in the event that
good faith negotiations are occurring between the Executive and the Committee
regarding the Separation Document, the Committee may, in its sole discretion,
extend the time period required by this Section. Any such extension by the
Committee shall be in writing and shall indicate a new expiration date by which
a Separation Document must be in effect. Subsequent

3

 

extensions by the Committee are also possible; provided, however, in no
event shall the time available under this subsection exceed one year following
the Severance Date.

     2.4. Payment of Severance Benefits on Death of Executive. In the event of
the death of the Executive after becoming entitled to, but prior to the payment
of, a Severance Benefit, the Severance Benefit shall be paid to the estate of
the Executive in accordance with applicable laws, and such payment shall be a
complete discharge to the Company, the Committee and this Plan of the
obligation to provide such Severance Benefit.

ARTICLE III.

ADMINISTRATION OF PLAN

     3.1. Allocation of Responsibility. The Plan shall be administered by the
Committee. The Committee shall be authorized to interpret the Plan and to
establish, amend and rescind any rules and regulations relating to the Plan and
to make any other determinations that it believes necessary or advisable for
the administration of the Plan. The Committee may correct any defect or supply
any omission or reconcile any inconsistency in the Plan in the manner and to
the extent the Committee deems desirable to carry it into effect. Any decision
of the Committee in the administration of the Plan, as described herein, shall
be final and conclusive. The Committee may act only by a majority of its
members in office, except that the members thereof may authorize any one or
more of their number or any officer of the Company to execute and deliver
documents on behalf of the Committee.

     3.2. Insurance and Indemnity.

          (a) Insurance. The Company, in its discretion, may obtain a policy(ies) of
insurance, insuring any individual to whom fiduciary responsibility with
respect to the Plan has been delegated against any and all costs and
liabilities (including attorneys’ fees) incurred as a result of any act, or
omission to act, in connection with the performance of their duties,
responsibilities and obligations under the Plan and any applicable law.

          (b) Indemnity. No member of the Committee shall be liable for anything
done or omitted to be done by him or her or by any other member of the
Committee in connection with the Plan, except for his or her own willful
misconduct or as expressly provided by statute.

ARTICLE IV.

AMENDMENT, TERMINATION, MERGER, CONSOLIDATION AND

ADOPTION

     4.1. Right to Amend Plan. This Plan may be amended and/or terminated by
the Board of Directors of Montpelier Re Holdings Ltd. at any time; provided,
however, that no such amendment and/or termination shall adversely affect any
Severance Benefit to which an Executive has become entitled prior to such
amendment and/or termination without the written consent of such Executive.

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     4.2. Section 3.2. Section 3.2 shall survive any termination of the Plan
and this Section shall not be amended except to increase the indemnification
and/or insurance of the individuals appointed to the Committee.

     4.3. Merger, Consolidation, or Assignment of Obligation. This Plan may be
merged or consolidated with any other plan subject to treating such merger or
consolidation as an amendment.

ARTICLE V.

GENERAL PROVISIONS

     5.1. Executive’s Rights to Employment, Etc. Nothing in the Plan shall be
construed to give any Executive any rights to continued employment, any legal
or equitable right against the Company, or any officer or employee thereof,
except as expressly provided.

     5.2. Claims Procedure.

          (a) Filing a Claim. All requests for benefits under the Plan shall be
directed to the attention of the Committee in writing.

          (b) Notification of Denial. If the Committee determines that the claimant
is not entitled to receive any of the benefits claimed, the claimant shall be
informed in writing of the specific reason(s) for the denial within 90 days
after the Committee receives the claim unless extended by the Committee by
written notice to the claimant (such extension not to exceed an additional 90
days). If the claimant is not notified within the period described above, the
claim shall be deemed denied and the claimant may then request review of the
denial, subject to the provisions of subsection (c) below.

          (c) Review Procedures. The claimant may, within 60 days after notice of
the Committee’s decision, request a review of the decision, and may submit
further information to establish his or her rights to such benefits. The
Committee shall render its final decision with the specific reasons in writing
within 60 days of receipt of claimant’s request for a review, unless special
circumstances require a further extension of time for processing, in which case
a decision shall be rendered as soon as possible, but not later than 120 days
after receipt of a request for review.

     5.3. Nonalienation or Assignment. None of the benefits under the Plan is
subject to the claims of creditors of any Executive, and will not be subject to
attachment, garnishment, or any other legal process whatsoever. An Executive
may not assign, sell, borrow on, or otherwise encumber any of his or her
accrued benefits in the Plan, nor shall any such benefits be in any manner
liable for or subject to the deeds, contracts, liabilities, engagements, or
torts of any Executive.

     5.4. Applicable Law. This plan shall be administered in Bermuda and its
validity, construction, and all rights hereunder shall be governed by the law
of Bermuda.

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If any provision of the Plan shall be held invalid or unenforceable, the
remaining provisions shall continue to be fully effective.

     5.5. Reliance on Records. The Company and each member of the Committee
shall be entitled to rely conclusively on opinions and reports furnished by
accountants, counsel or other experts employed by the Committee or the Company.

ARTICLE VI.

BENEFIT OBLIGATIONS

     6.1. General Provisions. All obligations to an Executive created under
this Plan shall be the sole responsibility, liability and obligation of the
Company. No Executive shall have a preferred claim on, or any beneficial
ownership interest in, any specific assets of the Company. To the extent that
any Executive acquires a right to receive payments under the Plan, such right
shall be no greater than the right of any unsecured general creditor of the
Company.

     6.2. Executive Contributions. No contributions shall be made by any
Executive in order to receive Severance Benefits under this Plan.

  IN WITNESS WHEREOF, this Severance Plan has been executed by the
appropriate officers of Montpelier Re Holdings, Ltd. to be effective January 1,
2005.

	 	 	 	 	 
	 	 	MONTPELIER RE HOLDINGS LTD.
	 
	 	 	 	 
	

	 	By:	 	/s/ Anthony Taylor
	

	 	 	 	

	

	 	Title:	 	President and Chief Executive Officer
	

	 	 	 	

	

	 	Date:	 	August 27, 2004
	

	 	 	 	

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