Document:

exv10w35

Exhibit 10.35

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is made and entered into as of the
4th day of August, 2008, between DEI HOLDINGS, INC., a Florida corporation (the
“Company”), and KEVIN P. DUFFY (the “Executive”).

Recitals

     A. The Company is engaged in the business of designing and marketing consumer branded vehicle
security and convenience systems, marketing and selling certain SIRIUS-branded satellite radio
receivers and accessories, and supplying home audio and mobile audio and video products
(collectively, and as may be modified by the Company from time to time, the “Business”).

     B. The Company desires to continue to employ the Executive and the Executive desires to
continue to be employed by the Company, upon the terms and conditions set forth in this Agreement.

Agreement

     NOW THEREFORE, in consideration of (i) the Executive’s employment with the Company, (ii) the
compensation paid to the Executive and the benefits provided to the Executive in connection with
such employment, (iii) the Executive’s use of the equipment, supplies, facilities and other
resources of the Company, and (iv) the opportunity provided to the Executive by the Company to
acquire or use information relating to or based on the Business and to work and develop in the
field for which the Executive is employed, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

INTERPRETATION OF THIS AGREEMENT

     1.1. Defined Terms. As used herein, the following terms when used in this Agreement
have the meanings set forth below:

          1.1.1. “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.

          1.1.2. “Base Salary” shall have the meaning given to it under Section 2.2 of this
Agreement.

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

          1.1.4. “Cause” means (i) the failure by the Executive to perform the Executive’s
duties with the Company, as determined by the Board (other than any such failure resulting from the
Executive’s incapacity due to physical or mental illness), which failure to perform is not cured
within 60 days after a written demand for substantial performance is delivered to the Executive by
the Board, (ii) the Executive’s conviction of a felony involving deceit, fraud or moral turpitude
or with respect to which public knowledge thereof could result in a Material Adverse Effect or
materially affect the Executive’s ability to perform his duties, (iii) the engaging by the
Executive in conduct which the Board determines is injurious to the Company, monetarily or
otherwise, or which could result in a Material Adverse Effect, (iv) the commission by the Executive
of an act or acts involving fraud, embezzlement, misappropriation, theft, breach of fiduciary duty
or dishonesty against the property or personnel of the Company or any of its Affiliates, (v) the
breach by the Executive of any of the terms of this Agreement, which breach is not cured within 15
days after written demand to cure such breach is delivered to the Executive by the Board.

          1.1.5. “Change of Control” means (i) any Person (other than the Company or any trustee
or other fiduciary holding securities under an employee benefit plan of the Company) is or becomes
the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as

 

 

amended), directly or indirectly, of securities of the Company representing more than 50% of the
combined voting power of the Company’s then outstanding securities eligible to vote, (ii) the
merger or consolidation of the Company with any other corporation or other business entity, other
than a merger or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction) in which no Person
acquires more than 50% of the combined voting power of the Company’s then outstanding securities
shall not constitute a Change of Control, or (iii) the sale or disposition by the Company of all or
substantially all of its assets.

          1.1.6. “Company” shall have the meaning given to it in the first sentence of this
Agreement.

          1.1.7. “Company Information” means Confidential Information and Trade Secrets.

          1.1.8. “Confidential Information” means confidential data and confidential information
relating to the business of the Company (which does not rise to the status of a Trade Secret under
applicable law) which is or has been disclosed to the Executive or of which the Executive became
aware as a consequence of or through his employment with the Company and which has value to the
Company and is not generally known to the competitors of the Company. Confidential Information
does not include any data or information that (i) has been voluntarily disclosed to the general
public by the Company (other than by any act or omission of the Executive without the approval of
the Board or the Company’s Chief Executive Officer), (ii) otherwise enters the public domain
through lawful means, or (iii) was known to the Executive prior to his employment by the Company.

          1.1.9. “Disability” means the Executive’s inability to perform his normal duties as a
result of incapacity due to physical or mental illness, for any 90 consecutive calendar day period
or any 60 business days (whether or not consecutive) during any 365 calendar day period.

          1.1.10. "Employment Period” shall have the meaning given to it in Section 2.1 hereof.

          1.1.11. “Executive” shall have the meaning given to it in the first sentence of this
Agreement.

          1.1.12. “Good Reason” shall mean (a) the assignment to the Executive of duties
inconsistent with the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section 2.3 of this
Agreement, excluding for this purpose an isolated, insubstantial and inadvertent action not taken
in bad faith and which is remedied by the Company promptly after receipt of notice thereof given by
the Executive; or (b) the Company’s requiring the Executive to be based at any office or location
more than 50 miles from Vista, California, except for travel reasonably required in the performance
of the Executive’s responsibilities.

          1.1.13. “Material Adverse Effect” shall mean a material adverse effect on the
business, assets, properties, results of operations, financial condition or prospects of the
Company or any of its Affiliates.

          1.1.14. “Non-Solicitation Period” shall mean a period of time equal to (i) the
Severance Period, if the Executive is terminated without Cause, or (ii) a period of 12 months after
the Termination Date if the Executive resigns or if the Employment Period terminates for any reason
other than termination by the Company without Cause.

          1.1.15. “Notice of Termination” shall have the meaning given to it in Section 2.1
hereof.

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          1.1.16. “Person” means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity (or any department, agency or political
subdivision thereof).

          1.1.17. “Significant Competitor” has the meaning given to it in Section 3.6 hereof.

          1.1.18. “Significant Customer” has the meaning given to it in Section 3.6 hereof.

          1.1.19. “Subsidiary” when used with respect to any Person means any other Person,
whether incorporated or unincorporated, of which (i) more than 50% of the securities or other
ownership interests or (ii) securities or other interests having by their terms ordinary voting
power to elect more than 50% of the board of directors or others performing similar functions with
respect to such corporation or other organization, is directly owned or controlled by such Person
or by any one or more of its Affiliates.

          1.1.20. “Termination Date” shall have the meaning given to it in Section 2.1 hereof.

          1.1.21. “Trade Secrets” means information of the Company including, but not limited
to, technical or nontechnical data, formulas, patterns, compilations, programs, financial data,
financial plans, product or service plans, business plans or lists of actual or potential customers
or suppliers that (i) derives economic value, actual or potential, from not being generally known
to, and not being readily ascertainable by proper means by, other persons who can obtain economic
value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.

          1.1.22. “Welfare Plan Benefits” shall have the meaning given to it in Section 2.4
hereof.

     1.2. Interpretation. The words “herein,” “hereof,”
“hereunder” and other words of similar import refer to this Agreement as a whole, as the
same from time to time may be amended or supplemented and not any particular section, paragraph,
subparagraph or clause contained in this Agreement. Wherever from the context it appears
appropriate, each term stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in masculine, feminine or neuter gender shall include the masculine,
feminine and the neuter.

ARTICLE II

EMPLOYMENT

     2.1. Duration. The Company agrees to continue to employ the Executive and the
Executive agrees to be so employed until the first to occur of (i) August 4, 2011, (ii) the date
specified in a Notice of Termination given by the Executive in connection with his voluntary
resignation other than for Good Reason (which shall not be less than 60 days from the date such
Notice of Termination is given), (iii) the date specified in a Notice of Termination stating that
the Board has determined that the Executive’s employment be terminated for Cause, (iv) the date
specified in a Notice of Termination given by the Company stating that the Board has determined
that the Executive’s employment with the Company is no longer in the best interest of the Company
(in which event, the Executive will be entitled to severance pay as described in Section 2.4 below)
(termination pursuant to this clause (iv) is sometimes referred to in this Agreement as
“termination without Cause”), (v) the date specified in a Notice of Termination given by
the Executive in connection with his resignation for Good Reason, (vi) the date of the Executive’s
death, or (vii) the date specified in a Notice of Termination given by the Company or the Executive
in connection with a termination of the Executive’s employment by reason of his Disability. For
purposes of this Agreement, the term “Employment Period” shall mean such period of
employment and the term “Termination Date” shall mean the date on which the Employment
Period terminates. Any purported termination of the Executive’s employment by the Company or by
the Executive shall be communicated by written Notice of Termination to the other party hereto in
accordance with Section 4.1 below, which notice shall indicate the specific termination provision
in this Section 2.1 relied upon (a “Notice of Termination”).

     2.2. Salary and Benefits. During the Employment Period, the Company will pay the
Executive a base salary at the rate of $325,000 per annum or at such higher rate as the Board
designates in its sole

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discretion from time to time (“Base Salary”), payable in installments consistent with
the Company’s normal payroll schedule, subject to applicable withholding and other taxes. The Base
Salary shall also be reviewed, at least annually, for additional merit increases and may, by action
and in the discretion of the Board, be increased at any time and from time to time. During the
Employment Period, the Executive shall also be entitled to participate in the following programs
and receive the following benefits:

          2.2.1. the Executive will be entitled to participate in all medical and hospitalization, group
life insurance, retirement and any and all other fringe benefit plans as are from time to time
provided by the Company to its executives, subject to the provisions of such plans, including,
without limitation, eligibility criteria and contribution requirements, as the same may be in
effect from time to time;

          2.2.2. the Executive will be entitled to a maximum of four weeks vacation each year with
salary, which shall be governed by the Company’s vacation policy generally applicable to the
Company’s employees; provided, however, that in no event may a vacation be taken at a time when to
do so could, in the reasonable judgment of the Chairman of the Board or the Company’s Chief
Executive Officer, materially adversely affect the business of the Company;

          2.2.3. the Executive will be entitled to reimbursement for reasonable business expenses
incurred by the Executive (subject to submission of appropriate substantiation by the Executive);

          2.2.4. the Executive will be entitled to reimbursement (subject to submission of appropriate
substantiation by the Executive) for reasonable expenses incurred in attending trade association
meetings and shows for the Executive where such attendance is appropriate for a particular meeting
or show; and

          2.2.5. the Company will, promptly after the end of each calendar year during the Employment
Term, make a payment of $5,000 in deferred salary to the deferred compensation plan previously
established for Executive’s benefit.

     2.3. Services. During the Employment Period, the Executive will serve as the
Executive Vice President and Chief Financial Officer of the Company and will render such services
of an executive and administrative character to the Company (which are within his ability) as the
Board, the Chairman of the Board, or the Company’s Chief Executive Officer may from time to time
direct. The Executive will devote his best efforts and substantially all of his business time and
attention (except for vacation periods and reasonable periods of illness or other incapacity) to
the business of the Company. Notwithstanding the foregoing, Executive may serve on the board of
directors or other governing body of non-profit organizations, schools, trade associations, and
similar entities provided that such service does not materially affect Executive’s performance of
his duties hereunder and that the Board approves such activities upon recommendation of the
Company’s Chief Executive Officer.

     2.4. Severance Pay.

          2.4.1. If, as a result of or following a Change of Control, (i) the Executive’s employment is
terminated without Cause pursuant to Section 2.1(iv), or (ii) the Executive resigns for Good Reason
pursuant to Section 2.1(v) (subject in the case of this clause (ii) to the Executive signing a
release of claims in a form satisfactory to the Company), the Company will pay to the Executive all
amounts due to the Executive as Base Salary pursuant to Section 2.2 above for a period of 18 months
after the Termination Date. If (x) the Executive’s employment is terminated without Cause pursuant
to Section 2.1(iv), or (y) the Executive resigns for Good Reason pursuant to Section 2.1(v), or (z)
as of August 4, 2011, the Company and the Executive have not either extended the Employment Period
or entered in to a new employment agreement (provided that this clause (z) shall only apply if
Employee has given notice to the Board of the expiration of this Agreement at least 90 days but not
more than 180 days prior to its expiration and the Company shall have failed to negotiate in good
faith with the Executive for such extension or new employment agreement), in each case of clause
(x) or (y) or (z) other than as a result of or following a Change of Control, the
Company will pay to the Executive all amounts due to the Executive as Base Salary pursuant to
Section 2.2 above for a period of 12 months after the Termination Date. Such

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payments shall be made in installments, and on the payment dates, on which such Base Salary
would have been paid if the Employment Period had continued for such applicable period. Upon the
making of the last of such payments, except as otherwise provided this Section 2.4, the Company
will have no further obligation to the Executive. All payments of severance under this Section are
subject to the Executive complying with the covenants in Sections 3.1 through (and including) 3.6
of this Agreement.

          2.4.2. In addition, for so long as the Company is making the payments described in Section
2.4.1 (the “Severance Period”), the Company will (i) arrange to provide the Executive with
benefits substantially similar to those which the Executive was receiving or entitled to receive
under the Company’s life, disability, accident and group health insurance plans or any similar
plans in which the Executive was participating immediately prior to the Termination Date
(“Welfare Plan Benefits”) at a cost to the Executive which is not substantially greater
than the cost to him in effect at the Termination Date; provided, however, that to the extent any
such coverage is prohibited by any judicial or legislative authority, the Company shall make
alternative arrangements to provide the Executive with Welfare Plan Benefits, including, but not
limited to, providing the Executive with a payment in an amount equal to his cost of purchasing the
Welfare Plan Benefits, and (ii) if the termination is as a result of or following a Change of
Control, continue during the Severance Period to provide Executive with the automobile-related
benefits that the Executive was receiving immediately prior to the Termination Date. Benefits
otherwise receivable by the Executive pursuant to the preceding sentence shall be reduced to the
extent comparable benefits are actually received on the Executive’s behalf during the Severance
Period, and such benefits actually received by the Executive shall be reported by him to the
Company.

          2.4.3. Notwithstanding anything to the contrary in this Agreement, any severance payments to
be made to the Executive under this Agreement will not be paid during the six (6) month period (or
such other period of time required under Section 409A(a)(2)(B) of the Internal Revenue Code of
1986, as amended (the “Code”)) following the Executive’s separation from service (as
defined in Section 409A of the Code and the regulations and guidance provided by the Internal
Revenue Service thereunder), unless the Company determines, in its good faith judgment, that paying
such amounts at the time or times indicated above would not cause the Executive to incur any
additional tax under Section 409A of the Code (in which case such amounts shall be paid at the time
or times otherwise indicated in this Agreement). If the payment of any amounts are delayed as a
result of the previous sentence, on the first day following the end of the delay, the Company will
pay the Executive a lump-sum amount equal to the cumulative amounts that would have otherwise been
previously paid to the Executive under this Agreement.

     2.5. Incentive Compensation. Executive will be eligible to earn an annual bonus under
the Company’s Executive Bonus Plan based upon the achievement of certain performance objectives to
be established by the Compensation Committee of the Board. The Compensation Committee shall, in
its reasonable sole discretion, determine the extent to which such performance objectives have been
achieved.

     2.6. Equity Participation. Executive shall be eligible to receive equity compensation
as may be determined by the Board or the Compensation Committee based upon such factors as the
Board or the Compensation Committee, in its sole discretion, may deem relevant, including, without
limitation, the performance of the Executive and the Company; provided, however, that the Board or
the Compensation Committee shall grant equity compensation to Executive to the extent grants are
made to the Company’s executive team and in a size proportionate for Executive’s duties.

ARTICLE III

PROPERTY AND BUSINESS OF THE COMPANY

     3.1. Nondisclosure. During the Employment Period and during the periods described in
the last sentence of this Section 3.1, the Executive (a) will receive and hold all Company
Information in trust and in strictest confidence, (b) will protect the Company Information from
disclosure and will in no event take any action causing, or fail to take any action reasonably
necessary to prevent, any Company Information to lose its character as Company Information, and (c)
except as required by the Executive’s duties in the course of his employment by the Company or by
applicable law, will not, directly or indirectly,

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use, disseminate or otherwise disclose any Company Information to any third party without the
prior written consent of the Board or the Company’s Chief Executive Officer, which may be withheld
in the Board’s or the Company’s Chief Executive Officer’s absolute discretion. The provisions of
this Section 3.1 shall survive the termination of the Executive’s employment (i) for a period of
five years with respect to Confidential Information, and (ii) with respect to Trade Secrets, for so
long as any such information qualifies as a Trade Secret under applicable law.

     3.2. Books and Records. All books, records, reports, writings, notes, notebooks,
computer programs, sketches, drawings, blueprints, prototypes, formulas, photographs, negatives,
models, equipment, chemicals, reproductions, proposals, flow sheets, supply contracts, customer
lists and other documents and/or things relating in any manner to the business of the Company
(including but not limited to any of the same embodying or relating to any Confidential Information
or Trade Secrets), whether prepared by the Executive or otherwise coming into the Executive’s
possession, shall be the exclusive property of the Company and shall not be copied, duplicated,
replicated, transformed, modified or removed from the premises of the Company except pursuant to
and in furtherance of the business of the Company and shall be returned immediately to the Company
on the Termination Date or on the Company’s request at any time.

     3.3. Inventions and Patents. Subject to the provisions of Sections 2870 through 2872
of the California Labor Code, the Executive agrees that all inventions, innovations or improvements
in the Company’s method of conducting its business (including new contributions, improvements,
ideas and discoveries, whether patentable or not) conceived or made by him during his employment
with the Company belong to the Company and the Executive hereby assigns all of such contributions,
improvements, ideas and discoveries to the Company. The Executive will promptly disclose such
inventions, innovations and improvements to the Company’s Chief Executive Officer and perform all
actions reasonably requested by the Company’s Chief Executive Officer to establish and confirm such
ownership.

     3.4. Other Businesses. Except as provided in Section 2.3, the Executive shall not,
without the express written consent of the Board, during the Employment Period, become engaged in,
render services for, or permit his name to be used in connection with, any business other than the
business of the Company.

     3.5. Non-Solicitation of Employees. During the Employment Period and for a period of
time equal to the Non-Solicitation Period, the Executive will not, directly or indirectly, (i)
solicit for employment or employ (or attempt to solicit for employment or employ), for himself or
on behalf of any sole proprietorship, partnership, corporation, limited liability company or
business or any other Person (other than the Company or any of its Subsidiaries), any employee of
the Company or any Person who was an employee during the one year period preceding the date of such
solicitation, employment or attempted solicitation or employment, or (ii) encourage any such
employee to leave his or her employment with the Company. To the extent that the covenant provided
for in this Section 3.5 may later be deemed by a court to be too broad to be enforced with respect
to its duration or with respect to any particular activity or geographic area, the court making
such determination shall have the power to reduce the duration or scope of the provision, and to
add or delete specific words or phrases to or from the provision. The provision as modified shall
then be enforced.

     3.6. Non-Solicitation of Customers. During the Employment Period and for a period of
time equal to the Non-Solicitation Period, the Executive will not, directly or indirectly, (i)
solicit sales from any Significant Customer (as defined below) on behalf of any Significant
Competitor (as defined below), or (ii) encourage any Significant Customer to cease its business
relationship with the Company. To the extent that the covenant provided for in this Section 3.6
may later be deemed by a court to be too broad to be enforced with respect to its duration or with
respect to any particular activity, the court making such determination shall have the power to
reduce the duration or scope of the provision, and to add or delete specific words or phrases to or
from the provision. The provision as modified shall then be enforced. A “Significant
Customer” is any customer of the Company or any of its Subsidiaries that during the 12 month
period immediately prior to the Termination Date accounted for $5,000,000 or more of revenue to the
Company and its Subsidiaries. A “Significant Competitor” is any sole proprietorship,
partnership,

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corporation, limited liability company or business or any other Person (other than the Company
or any of its Subsidiaries) that designs, manufactures, sells, markets or distributes products or
services in the vehicle security or convenience, satellite radio, or home audio categories, but
only if annual revenues of such sole proprietorship, partnership, corporation, limited liability
company or business or any other Person with respect to any such products or services exceeds $10
million.

ARTICLE IV

MISCELLANEOUS

     4.1. Notices. Any notice, request, demand, claim or other communication hereunder
that is required to be made in writing shall be deemed duly given on the second business day after
if it is sent by registered or certified mail, return receipt requested, postage prepaid, or, on
the next business day after if sent by a reputable overnight courier such as Federal Express, and
addressed to the intended recipient as set forth below:

     If to the Executive:

Kevin Duffy

12 Becker Drive

Ladera Ranch, CA 92694

E-mail: kpduffy8@yahoo.com

     If to the Company:

c/o Andrew D. Robertson

516 W. Webster Avenue

Chicago, IL 60614

Facsimile: (773) 348-4625

E-mail: andrew.robertson@sbcglobal.net

With copies to (which shall not constitute notice to the Company):

Greenberg Traurig, LLP

2375 E. Camelback Road

Suite 700

Phoenix, Arizona 85016

Attention: Brian H. Blaney, Esq.

Facsimile: (602) 445-8603

E-mail: blaneyb@gtlaw.com

Either party hereto may send any notice, request, demand, claim or other communication hereunder to
the intended recipient at the address set forth above using any other means (including personal
delivery, messenger service, telecopy, telex, ordinary mail or electronic mail), but no such
notice, request, demand, claim or other communication shall be deemed to have been duly given
unless and until it actually is received by the intended recipient. Either party hereto may change
the address to which notices, requests, demands, claims and other communications hereunder are to
be delivered by giving the other party notice in the manner herein set forth.

     4.2. Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, but this Agreement will be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision
had never been contained herein. This Section 4.2 shall be read consistently with Sections 3.5 and
3.6 as the parties intend that such provisions may be modified by a court of competent jurisdiction
only to the extent necessary to allow for enforcement thereof.

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     4.3. Complete Agreement. This Agreement embodies the complete agreement and
understanding between the parties and supersedes and preempts any prior understandings, agreements
or representations by or among the parties, written or oral, which may have related to the subject
matter hereof in any way.

     4.4. Counterparts. This Agreement may be executed on separate counterparts, each of
which is deemed to be an original and all of which taken together constitute one and the same
agreement. Any telecopied signature shall be deemed a manually executed and delivered original.

     4.5. Successors and Assigns. This Agreement is intended to bind and inure to the
benefit of and be enforceable by the Executive and the Company and their respective successors and
assigns (and, in the case of the Executive, heirs and personal representatives), except that
Executive may not assign any of his rights or delegate any of his obligations hereunder.

     4.6. Equitable Remedies. The Executive acknowledges and agrees that the Company
would not have an adequate remedy at law in the event any of the provisions of Article III of this
Agreement are not performed in accordance with their specific terms or are breached. Accordingly,
the Executive agrees that the Company shall be entitled to an injunction or injunctions to prevent
breaches of Article III of this Agreement and to enforce specifically the terms and provisions
thereof in any action instituted in any court of competent jurisdiction, in addition to any other
remedies which may be available to it.

     4.7. Choice of Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of California without regard to conflicts of laws principles thereof and
all questions concerning the validity and construction hereof shall be determined in accordance
with the laws of said state. Subject to the last sentence of this Section 4.7, by execution and
delivery of this Agreement, each Party irrevocably submits to the personal and exclusive
jurisdiction of any federal or state court of competent jurisdiction located in the County of San
Diego, State of California, for himself or herself to enforce this Agreement. Each party agrees
that venue would be proper in any of such courts, and hereby waives any objection that any such
court is an improper or inconvenient forum for the resolution of any such action. The parties
further agree that the mailing by certified or registered mail, return receipt requested, to the
addresses specified for notice in this Agreement, of any process or summons required by any such
court shall constitute valid and lawful service of process against them, without the necessity for
service by any other means provided by statute or rule of court. Nothing in this Agreement shall
affect or limit any right to serve process in any other manner permitted by law or shall be
construed to prevent the Company from bringing and pursuing, or in any way limit, the right of the
Company to bring or pursue, any action arising out of or in connection with Article III in any
jurisdiction where the Executive is subject to personal jurisdiction and venue is proper.

     4.8. Dispute Resolution. Subject to the last sentence of this Section 4.8, if any
dispute arises over the terms of this Agreement between the parties to this Agreement, either
Executive or the Company may submit the dispute to binding arbitration within 30 days after such
dispute arises, to be governed by the evidentiary and procedural rules of the American Arbitration
Association (Employment Arbitration). Executive and the Company shall mutually select one
arbitrator within 10 days after a dispute is submitted to arbitration. In the event that the
parties do not agree on the identity of the arbitrator within such period, the arbitrator shall be
selected by the American Arbitration Association. The arbitrator shall hold a hearing on the
dispute in San Diego, California within 30 days after having been selected and shall issue a
written opinion within 15 days after the hearing. Executive and the Company shall each be
responsible for paying the fees of their own legal counsel, if legal counsel is obtained. Except
for filing fees, all costs of the arbitrator shall be allocated by the arbitrator, but in no event
will the Executive be obligated to pay more than he would have paid in any comparable court action.
Either Executive or the Company, or both parties, may file the decision of the arbitrator as a
final, binding and nonappealable judgment in a court of appropriate jurisdiction. Notwithstanding
the foregoing provisions of this Section 4.8 to the contrary, matters in which an equitable remedy
or injunctive relief is sought by a party, including but not limited to the remedies referred to in
Section 4.6 hereof, shall not be required to be submitted to arbitration, if the party seeking such
remedy or relief objects thereto, but shall instead be subject to the provisions of Section 4.7
hereof.

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     4.9. Amendments and Waivers. No provision of this Agreement may be amended or waived
without the prior written consent of the parties hereto. The waiver by either party to this
Agreement of a breach of any provision of this Agreement shall not be construed or operate as a
waiver of any preceding or succeeding breach of the same or any other term or provision or as a
waiver of any contemporaneous breach of any other term or provision or as a continuing waiver of
the same or any other term or provision.

     4.10. Business Days. Whenever the terms of this Agreement call for the performance of
a specific act on a specified date, which date falls on a Saturday, Sunday or legal holiday, the
date for the performance of such act shall be postponed to the next succeeding regular business day
following such Saturday, Sunday or legal holiday.

     4.11. No Third Party Beneficiary. Except for the parties to this Agreement and their
respective successors, assigns, heirs, and personal representatives, nothing expressed or implied
in this Agreement is intended, or will be construed, to confer upon or give any person other than
the parties hereto and their respective successors and assigns any rights or remedies under or by
reason of this Agreement.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

9

 

     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first above
written.

	 	 	 	 	 
	 	DEI HOLDINGS, INC.

 	 
	 	By:  	/s/ James E. Minarik
 	 
	 	 	James E. Minarik 	 
	 	 	President and Chief Executive Officer 	 
	 
	 	 	 
	 	                                              /s/ Kevin P. Duffy
 	 
	 	Kevin P. Duffy 	 
	 	 	 
	 

10ex10-1.htm

     

    Exhibit
10.1

     

    
      

      

      

      

      

      

      

      

      

      

      AMENDED
AND RESTATED

       

      FLAGSTONE
REINSURANCE HOLDINGS LIMITED

       

      PERFORMANCE
SHARE UNIT PLAN

       

      

      

       

       

      

      16th May,
2008

       

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      
        Flagstone
Reinsurance Holdings Limited

        Performance
Share Unit Plan

        

        
          	
                  1.

                	
                  PURPOSE

                

        

         

        
          	
                   
      

                	
                  The
      purpose of this Plan is to advance the interests of the Company and its
      shareholders by providing PSUs as incentive compensation to certain key
      Employees of the Company and its subsidiaries, as well as, at the discretion of the
      Compensation Committee, employees of companies that provide operational
      support or other services to the
Company.

                

        

         

        
          	
                  2.

                	
                  DEFINITIONS

                

        

         

        
          	
                   
      

                	
                  2.1

                	
                  “Adverse Change in the
      Plan” is defined in paragraph
12.

                

        

         

        
          	
                   
      

                	
                  2.2

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

                

        

         

        
          	
                   
      

                	
                  2.3

                	
                  “Change in
      Control” is defined in paragraph
9.

                

        

         

        
          	
                   
      

                	
                  2.4

                	
                  “Common Shares”
      shall mean common shares of the
Company.

                

        

         

        
          	
                   
      

                	
                  2.5

                	
                  “Company” means
      Flagstone Reinsurance Holdings
Limited.

                

        

         

        
          	
                   
      

                	
                  2.6

                	
                  “Compensation
      Committee” means the Compensation Committee of the
      Board.

                

        

         

        
          	
                   
      

                	
                  2.7

                	
                  “Constructive
      Termination” is defined in paragraph
11.

                

        

         

        
          	
                   
      

                	
                  2.8

                	
                  “Employee” means any person, including
      officers, employed by the Company or any Subsidiary of the Company. Such
      term shall also include directors of the Company or any Subsidiary of the
      Company.  Such term shall also include, at the discretion of the
      Compensation Committee, employees of companies that provide operational
      support or other services to the Company.  A person shall not
      cease to be an Employee in the case of (i) any leave of absence approved
      by the Company or (ii) transfers between locations of the Company or
      between the Company, any Subsidiary or any
      successor.  Notwithstanding anything else contained herein, Mark
      Byrne shall not be considered an Employee for purposes of the
      Plan.

                

        

         

        
          	
                   
      

                	
                  2.9

                	
                  “Exchange
      Act” means the U.S.
      Securities Exchange Act of 1934, as
  amended.

                

        

         

        
          	
                   
      

                	
                  2.10

                	
                  “Hostile
      Takeover Termination”
      is defined in paragraph 13.

                

        

         

        
          	
                   
      

                	
                  2.11

                	
                  “Inter
      Vivos Designee” means any person or body of persons corporate or
      unincorporate, association, trust, partnership or similar entity or
      arrangement designated by an Employee to hold such PSUs granted to the
      Employee under the Plan and receive payments under the Plan during the
      life of the Employee.

                

        

         

        
          	
                   
      

                	
                  2.12

                	
                  “Maximum
      Award” shall mean the
      maximum number of Common Shares that an Employee would be entitled to
      receive if all of the performance goals set forth in a particular PSU were
      satisfied over the Performance Period(s) set forth in such
      PSU.

                

        

         

         

        
          
            
            

          

          
            Page 2 of
13

            
              

            

          

          
            
            

          

        

         

         

         

        
          	
                   
      

                	
                  2.13

                	
                  “Performance
      Period(s)” means the period(s) during which an employee must
      perform pursuant to the grant of a PSU; provided, however, that any such
      period must end on December 31 of the relevant fiscal
  year.

                

        

         

        
          	
                   
      

                	
                  2.14

                	
                  “Plan” means
      this Flagstone Reinsurance Holdings Limited Performance Share Unit
      Plan.

                

        

         

        
          	
                   
      

                	
                  2.15

                	
                  “PSU” means a
      Performance Share Unit.

                

        

         

        
          	
                   
      

                	
                  2.16

                	
                  “Subsidiary”, as
      used herein, has the meaning assigned to the term “subsidiary company” in
      the Companies Act, 1981 of Bermuda.

                

        

         

        
          	
                   
      

                	
                  2.17

                	
                  “Termination Without
      Cause” is defined in paragraph
10.

                

        

         

        
          	
                  3

                	
                  ADMINISTRATION OF THE
  PLAN

                

        

         

        
          	
                   
      

                	
                  3.1

                	
                  Administration.
      The Plan shall be administered by the Compensation
      Committee.   No member of the Compensation Committee shall
      be an Employee of the Company eligible to receive PSUs under the Plan or
      shall have been eligible within one year prior to his appointment to
      receive PSUs under the Plan or to receive awards under any other plan of
      the Company or any of its subsidiaries under which participants are
      entitled to acquire shares, share options or share appreciation rights of
      the Company or any of its
subsidiaries.

                

        

         

        
          	
                   
      

                	
                  3.2

                	
                  Powers
      of the Administrator.  The Compensation Committee shall
      have exclusive authority to select the Employees to be granted PSUs, to
      determine the number of PSUs to be granted and the terms (including the
      performance goals and Performance Period(s)) of such PSUs and to prescribe
      the form of the instruments embodying such PSUs.  The
      Compensation Committee shall be authorized to interpret the Plan and the
      PSUs granted under the Plan, to establish, amend and rescind any rules and
      regulations relating to the Plan and to make any other determinations
      which it believes necessary or advisable for the administration of the
      Plan.  The Compensation Committee may correct any defect or
      supply any omission or reconcile any inconsistency in the Plan or in any
      PSU grant instrument in the manner and to the extent the Compensation
      Committee deems desirable to carry it into effect.  Any decision
      of the Compensation Committee in the administration of the Plan, as
      described herein, shall be final and conclusive.  The
      Compensation 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 Compensation Committee.  No member of
      the Company shall be liable for anything done, or for any failure to act,
      by him or by any other member of the Compensation Committee in connection
      with the Plan, except for his own willful misconduct or as expressly
      provided by statute.

                

        

         

        
          	
                   
      

                	
                  3.3

                	
                  Eligibility.  PSUs may be
      granted only to Employees, excluding Employees whose employment contracts
      specify that they are not entitled to receive
  PSUs.

                

        

         

         

        
          
            
            

          

          
            Page 3 of
13

            
              

            

          

          
            
            

          

        

         

         

        
          	
                  4

                	
                  AWARDS

                

        

         

        
          	
                   
      

                	
                  4.1

                	
                  Type of Awards Under the
      Plan.  Awards under the Plan shall be limited to
      PSUs.

                

        

         

        
          	
                   
      

                	
                  4.2

                	
                  Maximum Number PSUs and Maximum
      Number of Common Shares that may be Issued Pursuant to PSUs Under the
      Plan.  The maximum number of PSUs that may be granted
      under the Plan shall not exceed 5,600,000 PSUs.  The maximum
      number of PSUs that may be granted under the Plan to any one Employee
      shall be half the maximum number of PSUs that may be granted under the
      Plan to all Employees.  The aggregate Maximum Awards that shall
      be issuable under the Plan shall not exceed 11,200,000 Common
      Shares.  If a PSU
      is forfeited or otherwise cancelled, or if an Employee does not achieve
      the Maximum Award pursuant to a PSU, the Common Shares underlying such PSU
      shall become available for future grant under PSUs pursuant the Plan
      (unless the Plan has
terminated).

                

        

         

        
          	
                  5

                	
                  RIGHTS WITH RESPECT TO
  PSUs

                

        

         

        An Employee
to whom PSUs are granted (and any person succeeding to such employee's rights
pursuant to the Plan) shall have no rights as a shareholder with respect to any
Common Shares issuable pursuant thereto until such Employee's name is entered
into the Register of Members of the Company and until the date of the issuance
of a share certificate (whether or not delivered) therefor.  Except as
provided in paragraph 14, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether in
cash, securities or other property) the record date for which is prior to the
date such share certificate is issued.

         

        
          	
                  6

                	
                  PSUs

                

        

         

        The grant of
PSUs to an Employee will entitle him to receive, without payment to the Company,
all or a portion of the Maximum Award, as determined by the Compensation
Committee, if the terms and conditions specified herein and in the PSU are
satisfied.  Payment in respect of a PSU shall be made as provided in
subparagraph 6.6.  Each grant of PSUs shall be subject to the
following terms and conditions:

         

        
          	
                   
      

                	
                  6.1

                	
                  The
      Compensation Committee shall determine the number of PSUs to be granted to
      each Employee.  PSUs may be issued in different classes or
      series having different terms and
conditions.

                

        

         

        
          	
                   
      

                	
                  6.2

                	
                  Subject
      to subparagraph 6.6, at the end of the Performance Period(s) specified in
      the grant of a PSU, an Employee shall be entitled to receive the Maximum
      Award if the performance objectives set forth in the grant of such PSU are
      attained in full.  If the performance objectives specified in
      the grant are attained in part but not in full, the Compensation
      Committee, in its sole discretion, shall determine the percentage of the
      Maximum Award, if any, to which the Employee is entitled under the
      PSU.

                

        

         

         

        
          
            
            

          

          
            Page 4 of
13

            
              

            

          

          
            
            

          

        

         

         

        
          	
                   
      

                	
                  6.3

                	
                  PSUs
      shall be cancelled if the Employee's continuous employment with the
      Company or any of its subsidiaries or with any company that provides operational
      support or other services to the Company shall terminate for any
      reason prior to the end of the Performance Period(s), unless such
      termination results in Related Employment (as defined in paragraph 8), and
      except as otherwise specified in this subparagraph 6.3 or in subparagraphs
      6.4 or 6.5.  Notwithstanding the foregoing and without regard to
      subparagraph 6.2:

                

        

         

        
          	
                   
      

                	
                  6.3.1

                	
                  if an
      Employee shall, while employed by the Company or any of its subsidiaries
      or by any company that
      provides operational support or other services to the Company or
      while engaged in Related Employment, die or become disabled (within the
      meaning of paragraph 7) prior to the end of the Performance Period(s), the
      PSUs granted to such Employee shall be cancelled at the end of the next
      ending Performance Period and he, or his legal representative, as the case
      may be, shall become entitled to receive a cash payment (determined in
      accordance with subparagraph 6.6) in respect of the Common Shares he would
      have received had he been in continuous employment with the Company
      through the end of such Performance Period and had the performance
      objectives, if any, that were imposed been achieved;
  or

                

        

         

        
          	
                   
      

                	
                  6.3.2

                	
                  if an
      Employee shall retire under an approved retirement program of the Company
      or a Subsidiary (or such other plan as may be approved by the Compensation
      Committee, in its sole discretion, for this purpose) prior to the end of
      the Performance Period(s), then:

                

        

         

        
          	
                   
      

                	
                  6.3.2.1

                	
                  if at
      the time of his retirement the Employee is 65 years old or older, the PSUs
      shall be cancelled at the end of the next ending Performance Period, and
      he shall become entitled to receive a cash payment (determined in
      accordance with subparagraph 6.6) in respect of the Common Shares he would
      have received had he been in continuous employment with the Company
      through the end of the Performance Period and had the performance
      objectives, if any, that were imposed been
  achieved,

                

        

         

        
          	
                   
      

                	
                  6.3.2.2

                	
                  if at
      the time of his retirement the Employee is less than 65 years old and his
      retirement occurs before 24 months have elapsed since the grant of the
      PSUs, the PSUs shall be cancelled and the Employee shall become entitled
      to receive a cash payment (determined in accordance with subparagraph 6.6)
      in respect one-ninth of the Common Shares he would have received had he
      been in continuous employment with the Company through the end of the next
      ending Performance Period and had the performance objectives, if any, that
      were imposed been achieved, or

                

        

         

        
          	
                   
      

                	
                  6.3.2.3

                	
                  if at
      the time of his retirement the Employee is less than 65 years old and his
      retirement occurs after 24 months or more have elapsed since the grant of
      the PSUs, the PSUs shall be cancelled and the Employee shall become
      entitled to receive a cash payment (determined in accordance with
      subparagraph 6.6) in respect two-ninths of the Common Shares he would have
      received had he been in continuous employment with the Company through the
      end of the next ending Performance Period and had the performance
      objectives, if any, that were imposed been
  achieved.

                

        

         

         

        
          
            
            

          

          
            Page 5 of
13

            
              

            

          

          
            
            

          

        

         

         

        
          	
                   
      

                	
                  6.4

                	
                  If
      within 24 months after a Change in Control of the Company as defined in
      paragraph 9 and prior to the end of a Performance
  Period:

                

        

         

        
          	
                   
      

                	
                  6.4.1

                	
                  there
      is a Termination Without Cause, as defined in paragraph 10, of the
      employment of an Employee;

                

        

         

        
          	
                   
      

                	
                  6.4.2

                	
                  there
      is a Constructive Termination, as defined in paragraph 11, of the
      employment of an Employee; or

                

        

         

        
          	
                   
      

                	
                  6.4.3

                	
                  there
      occurs an Adverse Change in the Plan, as defined in paragraph 12, in
      respect of an Employee, then:

                

        

         

        
          	
                   
      

                	
                  6.4.3.1

                	
                  the
      Employee shall become entitled to
receive:

                

        

         

        
          	
                   
      

                	
                  6.4.3.1.1

                	
                  The
      Maximum Award multiplied by a fraction the numerator of which is the
      number of full months which have elapsed since the date of the PSU grant
      to the end of the first month in which occurs one of the events described
      in clauses 6.4.1, 6.4.2 or 6.4.3and the denominator of which is the total
      number of months in the Performance Period(s),
  plus

                

        

         

        
          	
                   
      

                	
                  6.4.3.1.2

                	
                  If the
      number of Common Shares determined pursuant to subclause (1) above is less
      than the Maximum Award (such difference being referred to herein as the
      “Deficiency”), the Employee shall receive Common Shares equal to all or a
      portion of such Deficiency as
follows:

                

        

         

        
          	
                   
      

                	
                  6.4.3.1.2.1

                	
                  if the
      Compensation Committee shall have determined, prior to the Change in
      Control and based on the most recent performance status reports, that the
      performance objectives for the particular grant were being met at the date
      of the determination, the Employee shall receive Common Shares equal to
      the full Deficiency, and

                

        

         

        
          	
                   
      

                	
                  6.4.3.1.2.2

                	
                  if the
      determination of the Compensation Committee was that the performance
      objectives for the particular grant were not being met at the date of such
      determination, the Compensation Committee shall at the time of such
      determination have also made a determination as to the percentage of the
      Deficiency as to which the Employee is entitled to receive Common Shares,
      but in no event shall such percentage be less than fifty percent
      (50%).

                

        

         

        
          	
                   
      

                	
                  6.4.3.2

                	
                  Payment
      of any amount in respect of PSUs as described above in this subparagraph
      6.4 shall be made as promptly as possible after the occurrence of one of
      the events described in clauses 6.4.1 through
  6.4.3.

                

        

         

         

        
          
            
            

          

          
            Page 6 of
13

            
              

            

          

          
            
            

          

        

         

         

         

        
          	
                   
      

                	
                  6.5

                	
                  Notwithstanding
      any other provision in the Plan, in the event of a Hostile Takeover
      Termination, the Employee shall immediately become entitled to the Maximum
      Award with respect to all PSUs granted to such Employee.  Such
      Maximum Award shall be payable, in the sole discretion of the Compensation
      Committee, either by issuance of Common Shares or in cash based on the
      market price per Common Share as of the close of trading on the date of a
      Hostile Takeover Termination.

                

        

         

        
          	
                   
      

                	
                  6.6

                	
                  Payment
      of any amount due to an Employee in respect of the PSUs shall be made by
      the Company as promptly as practicable or shall be deferred to such other
      time or times as the Compensation Committee shall determine, and may be
      made in cash, by issuance of Common Shares, or partly in cash and partly
      by issuance of Common Shares as determined by the Compensation
      Committee.  The amount of cash, if any, to be paid in lieu of
      issuance of Common Shares shall be determined based on the market price
      per Common Share as of the close of trading on the date on which an
      Employee becomes entitled to payment, whether or not such payment is
      deferred.  Such deferred payments may be made by undertaking to
      pay cash in the future, together with such additional amounts as may
      accrue thereon until the date or dates of payment, as determined by the
      Compensation Committee in its sole discretion.  In the case of
      issuance of Common Shares to an Employee, such Employee's services
      rendered to the Company shall be deemed to constitute full payment to the
      Company of the par value of such Common
Shares.

                

        

         

        
          	
                  7

                	
                  DISABILITY

                

        

         

        For the
purposes of this Plan, an Employee shall be deemed to be disabled if the
Compensation Committee shall determine that the physical or mental condition of
the Employee is such as would entitle him to payment of monthly disability
benefits under any disability plan of the Company or a Subsidiary in which he is
a participant.

         

        
          	
                  8

                	
                  RELATED
  EMPLOYMENT

                

        

         

        For the
purposes of this Plan, Related Employment shall mean the employment of an
Employee by an employer which is neither the Company nor a Subsidiary provided:
(i) such employment is undertaken by the individual and continued at the request
of the Company or a Subsidiary; (ii) immediately prior to undertaking such
employment, the individual was an officer or employee of the Company or a
Subsidiary, or was engaged in Related Employment as herein defined; and (iii)
such employment is recognized by the Compensation Committee, in its sole
discretion, as Related Employment for the purposes of this paragraph
8.  The death or disability of an individual during a period of
Related Employment as herein defined shall be treated, for purposes of this
Plan, as if the death or onset of disability had occurred while the individual
was an officer or employee of the Company.

         

        
          	
                  9

                	
                  CHANGE IN
CONTROL

                

        

         

        For purposes
of this Plan, a “Change in Control of the Company” shall occur if:

         

        
          	
                   
      

                	
                  9.1

                	
                  Any
      person or group (within the meaning of Section 13(d) and 14(d)(2) of the
      Exchange Act), excluding the initial subscribers to the Company, becomes
      the beneficial owner (within the meaning of Rule 13d-3 under the Exchange
      Act) of fifty percent (50%) or more of the Company’s then outstanding
      shares; or

                

        

         

         

        
          
            
            

          

          
            Page 7 of
13

            
              

            

          

          
            
            

          

        

         

         

        
          	
                   
      

                	
                  9.2

                	
                  the
      business of the Company for which the participant’s services are
      principally performed is disposed of by the Company pursuant to a sale or
      other disposition of all or substantially all of the business or business
      related assets of the Company (including shares of a Subsidiary of the
      Company).

                

        

         

        
          	
                  10

                	
                  TERMINATION WITHOUT
  CAUSE

                

        

         

        For purposes
of this Plan, “Termination Without Cause” shall mean a termination of the
Employee's employment with the Company or a Subsidiary by the Company or the
Subsidiary other than for (i) disability as described in paragraph 7 or (ii)
Cause.  “Cause” shall mean (a) a material breach by the Employee of
any contract between the Employee and the Company or a Subsidiary; (b) the
willful and continued failure or refusal by the Employee to perform any duties
reasonably required by the Company or a Subsidiary, after notification by the
Company or the Subsidiary of such failure or refusal, and failing to correct
such behaviour within 20 days of such notification; (c) commission by the
Employee of a criminal offence or other offence of moral turpitude; (d)
perpetration by the Employee of a dishonest act or common law fraud against the
Company or a Subsidiary or a client of either; or (e) the Employee willfully
engaging in misconduct which is materially injurious to the Company or a
Subsidiary, including without limitation, the disclosure of any trade secrets,
financial models, or computer software to persons outside the Company or a
Subsidiary without the consent of the Company or a
Subsidiary.  Notwithstanding anything herein to the contrary, if the
Employee's employment with the Company or a Subsidiary shall terminate due to a
Change in Control of the Company as described in paragraph 9, where the
purchaser, as described in such paragraph, formally assumes the Company’s
obligations under this Plan or places the Employee in a similar or like plan
with no diminution of the value of the grants, such termination shall not be
deemed to be a “Termination Without Cause.”

         

        
          	
                  11

                	
                  CONSTRUCTIVE
  TERMINATION

                

        

         

        For purposes
of this plan, a “Constructive Termination” shall mean a termination of
employment with the Company or a Subsidiary at the initiative of the Employee
that the Employee declares by prior written notice delivered to the Secretary of
the Company to be a Constructive Termination by the Company or a Subsidiary and
which follows (a) a material decrease in his salary or (b) a material diminution
in the authority, duties or responsibilities of his position with the result
that the Employee 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.  Notwithstanding
anything herein to the contrary, Constructive Termination shall not occur within
the meaning of this paragraph 11 until and unless 30 days have elapsed from the
date the Company receives such written notice without the Company curing or
causing to be cured the circumstance or circumstances described in this
paragraph 11 on the basis of which the declaration of Constructive Termination
is given.

         

        
          	
                  12

                	
                  ADVERSE CHANGE IN THE
  PLAN

                

        

         

        For purposes
of this plan, an “Adverse Change in the Plan” shall mean:

         

        
          	
                   
      

                	
                  12.1

                	
                  termination
      of the Plan pursuant to subparagraph
18(a);

                

        

         

        
          	
                   
      

                	
                  12.2

                	
                  amendment
      of the Plan pursuant to paragraph 17 that materially diminishes the value
      of PSU grants, either to individual Employees or in the aggregate, unless
      there is substituted concurrently authority to grant PSUs of comparable
      value to individual Employees in the Plan or in the aggregate, as the case
      may be; or,

                

        

         

         

        
          
            
            

          

          
            Page 8 of
13

            
              

            

          

          
            
            

          

        

         

         

        
          	
                   
      

                	
                  12.3

                	
                  in
      respect of any holder of a PSU a material diminution in his rights held
      under such PSU (except as may occur under the terms of the PSU as
      originally granted) unless there is substituted concurrently a PSU grant
      with a value at least comparable to the loss in value attributable to such
      diminution in rights.

                

        

         

        
          	
                  13

                	
                  HOSTILE TAKEOVER
  TERMINATION

                

        

         

        For purposes
of this plan, a “Hostile Takeover Termination” shall mean an Adverse Change in
the Plan as described in paragraph 12 or any termination (including, but not
limited to, a Termination Without Cause as described in paragraph 10 or a
Constructive Termination as described in paragraph 11) of an Employee’s
employment with the Company or a Subsidiary of the Company at any time following
a Change in Control of the Company, as described in paragraph 9, that was
opposed by the two Board members nominated by Haverford (Bermuda)
Ltd.

         

        
          	
                  14

                	
                  DILUTION AND OTHER
    ADJUSTMENTS

                

        

         

        
          	
                   
      

                	
                  14.1

                	
                  In the
      event of any change in the issued and outstanding Common Shares of the
      Company by reason of any share split, share dividend, recapitalization,
      merger, consolidation, reorganization, amalgamation, combination or
      exchange of Common Shares or other similar event, and if the Compensation
      Committee shall determine, in its sole discretion, that such change
      equitably requires an adjustment in the number or kind of Common Shares
      that may be issued pursuant to PSUs under the Plan pursuant to paragraph 6
      or in any measure of performance, then such adjustment shall be made by
      the Compensation Committee and shall be conclusive and binding for all
      purposes of the Plan.

                

        

         

        
          	
                   
      

                	
                  14.2

                	
                  Upon
      the declaration by the Board of Directors of the Company of a dividend in
      specie or in kind in favor of the holders of Common Shares in the Company,
      the Compensation Committee shall determine, in its sole discretion, if
      such dividend equitably requires an adjustment in the number or kind of
      PSUs that may be issued to an Employee under the Plan in lieu of a
      dividend payment.

                

        

         

        
          	
                  15

                	
                  DESIGNATION OF BENEFICIARY/INTER VIVOS DESIGNEE BY
      EMPLOYEE

                

        

         

        
          	
                   
      

                	
                  15.1

                	
                  An
      Employee may name in writing to the Compensation Committee, or such other
      person as the Compensation Committee may designate from time to time to
      receive such instructions, a beneficiary to receive any payment to which
      he may be entitled in respect of PSUs under the Plan in the event of his
      death.  An Employee may change his beneficiary from time to time
      in the same manner.  If no designated beneficiary is living on
      the date on which any amount becomes payable to an Employee's executors or
      administrators, the term “beneficiary” as used in the Plan shall include
      such person or persons.

                

        

         

        
          	
                   
      

                	
                  15.2

                	
                  An
      Employee may name in writing to the Compensation Committee, or such other
      person as the Compensation Committee may designate from time to time such
      instructions, one or more Inter Vivos Designees and successor Inter Vivos
      Designees who shall be given the rights to all past, present and future
      grants or series of PSUs or to one or more specific grants or series of
      PSUs.  An Employee may change the designation of any Inter Vivos
      Designee in the same manner and such designation shall revoke and
      supersede all earlier designations.  In the event an Employee
      does not notify the Compensation Committee designating one or more Inter
      Vivos Designees, or no Inter Vivos Designee survives the Employee, the
      PSUs and any payment of shares in place of cash shall be given to the
      Employee.

                

        

         

         

        
          
            
            

          

          
            Page 9 of
13

            
              

            

          

          
            
            

          

        

         

         

        
          	
                  16

                	
                  MISCELLANEOUS
  PROVISIONS

                

        

         

        
          	
                   
      

                	
                  16.1

                	
                  No
      employee or other person shall have any claim or right to receive a grant
      of PSUs under the Plan.  Neither the Plan nor any action taken
      hereunder shall be construed as giving an employee any right to be
      retained in the employ of the Company or any
  Subsidiary.

                

        

         

        
          	
                   
      

                	
                  16.2

                	
                  An
      Employee’s rights and interest under the Plan may not be assigned or
      transferred in whole or in part either directly or by operation of law or
      otherwise (except in the event of an Employee’s death), including but not
      limited to, execution, levy, garnishment, attachment, pledge, bankruptcy
      or in any other manner and no such right or interest of any Employee in
      the Plan shall be subject to any obligation or liability or such
      Employee.

                

        

         

        
          	
                   
      

                	
                  16.3

                	
                  No
      Common Shares shall be issued hereunder unless counsel for the Company
      shall be satisfied that such issuance will be in compliance with
      applicable laws and Bermuda law.

                

        

         

        
          	
                   
      

                	
                  16.4

                	
                  The
      Company and its subsidiaries shall have the right to deduct from any
      payment made under the Plan any taxes required by law to be withheld with
      respect to such payment.  It shall be a condition to the
      obligation of the Company to issue Common Shares upon payment of a PSU
      that the Employee pay to the Company, upon its demand, such amount as may
      be required by the Company for the purpose of satisfying any liability to
      withhold taxes.  If the amount requested is not paid, the
      Company may refuse to issue Common
Shares.

                

        

         

        
          	
                   
      

                	
                  16.5

                	
                  The
      Company reserves the right to withhold shares or deduct from the Employee
      payroll any taxes or social benefit costs to the Employee or the Company
      associated with the vesting or fulfillment of the
  PSUs.

                

        

         

        
          	
                   
      

                	
                  16.6

                	
                  The
      expenses of the Plan shall be borne by the Company.  However, if
      a grant of PSUs is made to an employee of a
  Subsidiary:

                

        

         

        
          	
                   
      

                	
                  16.6.1

                	
                  if
      such grant results in payment of cash to the Employee, such Subsidiary
      shall pay to the Company an amount equal to such cash payment;
      and

                

        

         

        
          	
                   
      

                	
                  16.6.2

                	
                  if the
      grant results in the issuance to the Employee of Common Shares, such
      Subsidiary shall pay to the Company an amount equal to fair market value
      thereof, as determined by the Compensation Committee, on the date such
      Common Shares are issued.

                

        

         

        
          	
                   
      

                	
                  16.7

                	
                  The
      Plan shall be unfunded.  The Company shall not be required to
      establish any special or separate fund or to make any other segregation of
      assets to assure any payment under the
Plan.

                

        

         

        
          	
                   
      

                	
                  16.8

                	
                  By
      accepting any grant or other benefit under the Plan, each Employee and
      each person claiming under or through him shall be conclusively deemed to
      have indicated his acceptance and ratification of, and consent to, any
      action taken under the Plan by the Company, the Board or the Compensation
      Committee.

                

        

         

         

        
          
            
            

          

          
            Page 10 of
13

            
              

            

          

          
            
            

          

        

         

         

        
          	
                  17

                	
                  AMENDMENT

                

        

         

        The Plan may
be amended at any time and from time to time by the Board in accordance with the
bye-laws of the Company, but no amendment which increases the aggregate number
of Common Shares which may be issued pursuant to the Plan or the class of
employees eligible to participate shall be effective unless and until the same
is approved by the shareholders of the Company.  For the avoidance of
doubt, any action taken by the Compensation Committee pursuant to paragraph 14
does not require shareholder approval.  No amendment of the Plan shall
adversely affect any right of any Employee with respect to any previous grant
without such Employee’s written consent.

         

        
          	
                  18

                	
                  TERMINATION

                

        

         

        This Plan
shall terminate upon the earlier of the following dates or events to
occur:

         

        
          	
                   
      

                	
                  18.1

                	
                  the
      adoption of a resolution of the Board terminating the Plan;
    or

                

        

         

        
          	
                   
      

                	
                  18.2

                	
                  ten
      years from the date the Plan is initially or subsequently approved and
      adopted by the shareholders of the Company in accordance with paragraph 18
      hereof.

                

        

         

        No
termination of the Plan shall alter or impair any of the rights or obligations
of any person, without his consent, under any previous grant under the
Plan.

         

        
          	
                  19

                	
                  SHAREHOLDER
  ADOPTION

                

        

         

        The Plan
shall be submitted to the shareholders of the Company for their approval or
adoption.  The Plan shall not be effective and no grant shall be made
hereunder unless and until the Plan has been so approved and adopted by the
shareholders in the manner required by the laws of Bermuda.

         

        
          	
                  20

                	
                  GOVERNING
LAW

                

        

         

        The Plan shall be governed by and
construed and interpreted in accordance with the laws of Bermuda.

         

        

        

        

        
          
            
            

          

          
            Page 11 of
13

            
              

            

          

          
            
            

          

        

        

        

        Schedule of
Amendments

         

        

        
          	
                  Clause

                	 
      	
                  Amendment

                	 
      	
                  Approved

                
	 
      	 
      	 
      	 
      	 
      
	
                  Schedule
      of Amendments

                	 
      	
                  New
      Schedule of Amendments included

                	 
      	
                  Board
      of Directors meeting held on 7 April, 2006.

                
	 	 	 	 	 
	
                  Definition
      of “Performance Period(s)”

                	 
      	
                  Language
      added to clarify that any such period must end on December
    31.

                	 
      	
                  Board
      meeting held on 16 November, 2006.

                
	 	 	 	 	 
	
                  Clause
      2.8

                	 
      	
                  Definition
      of “Employee” changed to delete David Brown as an excluded
      party.

                	 
      	
                  Board
      of Directors meeting held on 7 April, 2006.

                
	 	 	 	 	 
	
                  Clause
      4.2

                	 
      	
                  Increase
      maximum number of  PSUs to 2.8 million and increase aggregate
      Maximum Awards to 5.6 million Common Shares.

                	 
      	
                  Board
      meeting held on 16 November, 2006.

                  Shareholders’
      meeting held on 16 November, 2006.

                
	 	 	 	 	 
	
                  Clause
      6.5

                	 
      	
                  Compensation
      Committee given the option to pay the Maximum Award either in cash or by
      issuance of Common Shares in the event of a Hostile Takeover
      Termination.  Cash value of Common Shares based on market value
      rather than net asset value as of the date of a Hostile Takeover
      Termination.

                	 
      	
                  Board
      of Directors meeting held on 16 November, 2006.

                
	 	 	 	 	 
	
                  Clause
      6.6

                	 
      	
                  Cash
      value of Common Shares based on market value rather than net asset value
      as of the date employee becomes entitled to payment.

                	 
      	
                  Board
      of Directors meeting held on 16 November,
2006.

                

        

         

         

        
          
            
            

          

          
            Page
12 of 13

            
              

            

          

          
            
            

          

        

         

         

         

        
          	 	 	 	 	 
	
                  Clause 17

                	 
      	
                  Language
      added to clarify that Compensation Committee action taken pursuant to
      Paragraph 14 does not require shareholder approval.

                	 
      	
                  Board
      of Directors meeting held on 16 November , 2006.

                
	 	 	 	 	 
	
                  Clause
      15

                	 
      	
                  Language
      added regarding notification procedure of beneficiary or Designee and
      ability for such designations retroactively effect prior PSU
      grants

                	 
      	
                  Board
      of Directors meeting held May 15, 2008

                
	 	 	 	 	 
	
                  Clause
      4.2

                	 
      	
                  Incorporation
      of increase in number of PSUs available for grant and Maximum Award
      available

                	 
      	
                  Shareholder’s
      meeting held May 16, 2008

                
	 	 	 	 	 
	
                  Clause
      16.4

                	 
      	
                  Incorporation
      of tax provisions

                	 
      	
                  Board
      of Directors meeting held May 15,
2008

                

        

        

        

         

        

        

         

        DOCUMENT  REVISION
HISTORY

         

        

        

        
          	
                  Version

                	
                  Date

                	
                  Summary
      of Changes

                	
                  Section

                	
                  Approved
      by

                
	
                  Amendment
      1

                	
                  7/4/06

                	
                  Conforming
      Amendments

                	
                  Various

                	
                  Board
      of Directors

                
	
                  Amendment
      2

                	
                  16/11/06

                	
                  Various
      technical changes

                	
                  Various

                	
                  Board
      of Directors

                
	
                  Amendment
      3

                	
                  16/11/06

                	
                  Amended
      & Restated

                	
                  Various

                	
                  Shareholders

                
	
                  Amendment
      4

                	
                  20/07/07

                	
                  Amended
      & Restated

                	
                  Various

                	
                  Board
      of Directors

                
	
                  Amendment
      5

                	
                  16/05/08

                	
                  Amended
      & Restated

                	
                  Various

                	
                  Board
      of Directors and Shareholders

                

        

        
 

         

         

         Page 13 of 13

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