Exhibit 10.2
ACE LIMITED 1995
OUTSIDE DIRECTORS PLAN
(As Amended Through the Fourth Amendment)
GENERAL
1.1. Purpose. The ACE Limited 1995 Outside Directors Plan (the
"Plan") has been established by ACE Limited (the "Company") to
promote the interests of the Company and its shareholders by
enhancing the Company's ability to attract and retain the services
of experienced and knowledgeable directors and by encouraging such
directors to acquire an increased proprietary interest in the
Company.
1.2. Operation and Administration. The operation and administration
of the Plan shall be subject to the provisions of Section 4.
Capitalized terms in the Plan shall be defined as set forth in
Section 7 or elsewhere in the Plan.
SECTION 2
---------
RETAINER AWARDS
---------------
2.1. General.
-------
(a) For each Plan Year, each Director who is an Eligible Director on
the first day of that Plan Year shall be granted a "Retainer
Award" for the year, which shall be in the form of shares of Stock
having a Fair Market Value of $35,000. Except as otherwise
provided in this subsection 2.1, the Retainer Award for any Plan
Year shall be made as of the first business day of that Plan Year
(the "Award Date" for that Retainer Award), and the Fair Market
Value of the Stock so awarded shall be determined as of that date.
Notwithstanding the foregoing, for the Plan Year beginning in 1999
(the "1999 Plan Year"), the Retainer Award for such Plan Year
shall include an additional award (the "1999 Additional Award"),
in the form of shares having a Fair Market Value of $8,750 (and
for the 1999 Plan Year, reference in the Plan to the "Retainer
Award" shall include reference to such 1999 Additional Award).
Except as otherwise provided in this subsection 2.1, the 1999
Additional Award shall be made as of the first business day
following the adoption of the Second Amendment of the Plan (the
"1999 Additional Award Date"), and the Fair Market Value of the
Stock so awarded shall be determined as of that date.
(b) If a Director becomes an Eligible Director during a Plan Year,
on a date other than the first day of the Plan Year, he shall be
granted a Retainer Award for the year, which shall be in the form
of shares of Stock having a Fair Market Value equal to $35,000,
subject to a pro-rata reduction to reflect the portion of the Plan
Year prior to the date on which he becomes an Eligible Director;
provided, however, that with respect to the 1999 Plan Year, such
Retainer Award subject to pro rata reduction shall include the
1999 Additional Award. A Director's Retainer Award under this
paragraph (b) shall be made on the first business day on which he
is an Eligible Director (the "Award Date" for that Retainer
Award), and the Fair Market Value of the Stock so awarded shall be
determined as of that date; provided, however, that if a Director
becomes eligible for a Retainer Award under this Paragraph (b) on
a date before the 1999 Additional Award Date, then that portion of
the 1999 Additional Award to which he becomes entitled shall be
made as of the 1999 Additional Award Date, and the Fair Market
Value of the Stock so awarded shall be determined as of that date.
(c) The shares awarded under this subsection 2.1 shall be subject to the
vesting provision set forth in subsection 2.3.
(d) A Participant may elect to defer receipt of his Retainer Awards in
accordance with Supplement A of the Plan.
2.2. Fractional Shares. If the Retainer Award that would otherwise be made
to a Participant as of any Award Date under paragraph 2.1 is not a
whole number, then the number of shares otherwise awardable shall be
reduced to the next lowest whole number and, instead, the Fair Market
Value (determined as of the Award Date) of the shares subject to the
reduction shall be paid to the Participant in cash as soon as
practicable after the Award Date.
2.3. Vesting. A Participant who ceases to be a Director shall forfeit the
Retainer Award which is not vested on his Date of Termination;
provided, however, that (i) if a Participant ceases to be a Director
by reason of his death or Disability, any portion of the Retainer
Award that is not then vested shall vest on his Date of Termination;
and (ii) any portion of the Retainer Award that is held by an
individual serving as a Director on the date of a Change in Control
that is not then vested shall vest on the date of the Change of
Control. Except as otherwise provided in this subsection 2.3, a
Participant shall become vested in 100% of the Retainer Award shares
for any Plan Year on the last day of that Plan Year; provided that a
Participant shall become vested in the Retainer Award shares for the
Plan Year only if such Participant's Date of Termination does not
occur prior to the last day of that year.
2.4. Limit on Stock. Stock granted as a Retainer Award shall be subject
to the following:
(a) Such Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered prior to the date it is vested.
(b) Each certificate issued in respect of such Stock shall be
registered in the name of the Participant and deposited,
together with a stock power endorsed in blank, with the
Company.
(c) Except as otherwise provided by the Plan, the Participant as
owner of shares of Stock granted to him as a Retainer Award shall
have all the rights of a shareholder, including but not limited to
the right to vote such shares and the right to receive all
dividends paid on such shares; provided, however, that no
dividends shall be payable to or for the benefit of a Participant
with respect to record dates for such dividends occurring on or
after the date, if any, on which the Participant has forfeited the
Stock.
2
SECTION 3
---------
COMMITTEE CHAIRMAN AWARDS
-------------------------
(a) Each Eligible Director who serves as the chairman of any
committee of the Board (a "Committee Chairman") during any Plan
Year Quarter shall be granted a Committee Chairman Award as of the
first business day of the next following Plan Year Quarter, which
shall be the "Award Date" for such award.
(b) The amount of the Committee Chairman Award shall be the number
of shares of Stock having a Fair Market Value (determined as of
the Award Date) of $1,250 per quarter. If an individual serves as
a Committee Chairman for less than a full Plan Year Quarter, then
the size of the Committee Chairman Award shall be subject to a
pro-rata reduction to reflect the portion of the Plan Year Quarter
during which he was not Committee Chairman.
(c) The shares granted as a Committee Chairman Award under this Section 3
shall be fully vested at the time of award.
(d) A Participant may elect to defer receipt of his Committee Chairman
Awards in accordance with Supplement A of the Plan.
(e) A Participant may elect to receive his Committee Chairman Award in
cash.
SECTION 3A
----------
MEETING AWARDS
--------------
(a) Each Eligible Director who is otherwise eligible to receive cash
compensation for attendance at a meeting of the Board or for
attendance at a meeting of any committee of the Board, may in lieu
of such cash compensation, elect to receive to such compensation
in Stock, and such compensation payable in Stock shall be
considered the grant of a "Meeting Award." An election to receive
a Meeting Award in lieu of cash compensation must be made in
accordance with the requirements of paragraph (c) of this Section
3A. A Meeting Award shall be granted as of the first business day
coincident with or next following the date of the Board or
committee meeting to which it relates, which shall be the "Award
Date" for such award.
(b) The amount of the Meeting Award for attendance at a Board
meeting shall be the number of shares of Stock having a Fair
Market Value (determined as of the Award Date) of $3,000 per
meeting. The amount of the Meeting Award for attendance at a
committee meeting shall be the number of shares of Stock having a
Fair Market Value (determined as of the Award Date) of $1,000 per
meeting.
3
(c) Except as otherwise provided in this paragraph (c), an election
to receive a Meeting Award in lieu of cash compensation for
attendance at Board and committee meetings shall be filed prior to
the first day of the Plan Year in which such meetings occur. An
individual who becomes an Eligible Director on a date other than
the first day of the Plan Year may elect to receive a Meeting
Award in lieu of cash compensation for the remainder of the year
by filing a Meeting Award election prior to the date on which he
becomes an Eligible Director. With respect to meetings occurring
in the 1999 Plan Year but after August 6, 1999, an Eligible
Director may elect to receive a Meeting Award in lieu of cash
compensation by filing an election no later than September 6,
1999; provided, however, that such election shall be effective
only with respect to compensation for meetings occurring after the
date such election is filed. An election to receive a Meeting
Award rather than cash compensation shall apply to all Board and
committee meetings in the Plan Year for which the election is
made.
(d) The shares granted as a Meeting Award under this Section 3A shall be
fully vested at the time of award.
(e) A Participant may elect to defer receipt of his Meeting Awards in
accordance with Supplement A of the Plan.
(f) If a Participant has made no election under this Section 3A with
respect to the form of payment of compensation for his attendance
at Board or committee meetings, then such compensation shall be
paid in cash.
SECTION 3B
----------
OPTION AWARDS
-------------
3B.1. General.
-------
(g) For each Plan Year, each Director who is an Eligible Director on
the first day of that Plan Year shall be granted an "Option Award"
which shall entitle the Eligible Director to purchase shares of
Stock. The number of shares subject to the Option Award with
respect to the Option Award granted in the Plan Year beginning in
2001 (the "2001/2002 Plan Year") and in each Plan Year thereafter
shall be 4,000, unless and until the number of shares underlying
an Option Award in any subsequent Plan Year is modified by the
Board. Except as otherwise provided in this subsection 3B.1, the
Option Award for any Plan Year shall be granted as of the first
business day of that Plan Year (the "Award Date" for that Option
Award).
(h) If a Director becomes an Eligible Director during a Plan Year,
on a date other than the first day of the Plan Year, he shall be
granted an Option Award which shall entitle the Eligible Director
to purchase shares of Stock. The number of shares of Stock subject
to the Option Award shall be the number which would have been
subject to the Option if he had become an Eligible Director on the
first day of the Plan Year, except that such number of shares
shall be subject to a pro rata reduction to reflect the portion of
the Plan Year prior to the date on which he becomes an Eligible
Director. In no event shall an Option Award be granted with
respect to a fractional share, and the amount of any pro-rata
reduction shall be rounded to the nearest whole share. An Option
Award made under this paragraph (b) shall be granted on the first
business day on which the Director is an Eligible Director (the
"Award Date" for that Option Award).
4
(i) In addition to any Option Award granted in accordance with
paragraphs (b) or (c) of this subsection 3B.1, an individual who
is an Eligible Director on the first day of the 2001/2002 Plan
Year shall be granted an Option Award, entitling him to purchase
2,000 shares of Stock. Such Option Award shall be granted as the
first business day of the 2001/2002 Plan Year (the "Award Date"
for that Option Award).
3B.2. Terms of Option Awards.
----------------------
(j) An Option Award shall entitle the Director to purchase shares of
Stock at a per-share price equal to the greater of: (i) 100% of
the Fair Market Value of a share of Stock as of the Award Date; or
(ii) the par value of a share of Stock.
(k) The full purchase price of each share of Stock purchased upon
the exercise of any Option Award shall be paid at the time of such
exercise and, as soon as practicable thereafter, a certificate
representing the shares so purchased shall be delivered to the
person entitled thereto.
(l) The Option Award purchase price shall be payable in cash or in
shares of Stock (valued at Fair Market Value as of the day of
exercise), or in any combination thereof. A Director may elect to
pay the purchase price upon the exercise of an Option Award
granted pursuant to this Section 3B through a cashless exercise
procedure established by the Company.
(m) The Option Award granted to an Eligible Director shall become
exercisable with respect to one-third of the shares covered by
the Option Award on the last day of the Plan Year for which it was
granted; with respect to an additional one-third of the shares
covered by the Option Award on the last day of the Plan Year next
following the Plan Year for which it was granted; and with respect
to the remaining one-third of the shares covered by the Option
Award on the last day of the next following Plan Year; provided,
however, that such portion of the Option Award shall become
exercisable only if such Director's Date of Termination does not
occur on or prior to the last day of the applicable Plan Year.
Notwithstanding any provision of the Plan to the contrary, the
foregoing vesting schedule shall be subject to acceleration, to
the extent permitted by the Committee, in the event of the
Participant's death, Disability, retirement, or involuntary
termination or in the event of a Change in Control.
(n) An Option Award shall expire on the earlier of: (i) the ten-year
anniversary of the Award Date or (ii) the one-year anniversary of
the Director's Date of Termination. Notwithstanding the foregoing,
the Committee may provide that, following a Director's Date of
Termination, an Option Award shall expire on any date later than
the one-year anniversary of the Director's Date of Termination,
provided that such date of expiration may not be later than the
ten-year anniversary of the date on which the Option Award was
granted. No Option shall be exercisable following a Director's
Date of Termination except to the extent that the Option is
exercisable prior to, or becomes exercisable as of, such Date of
Termination.
5
SECTION 4
---------
OPERATION AND ADMINISTRATION
----------------------------
4.1. Effective Date. Subject to the approval of the shareholders of the
Company at the Company's 1996 annual meeting of its
shareholders, the Plan shall be effective as of the Effective
Date; provided, however, that to the extent that Awards are made
under the Plan prior to its approval by shareholders, they shall
be contingent on approval of the Plan by the shareholders of the
Company. The Plan shall be unlimited in duration and, in the event
of Plan termination, shall remain in effect as long as any shares
of Stock awarded under it are outstanding and not fully vested, or
any Option Awards granted under it are outstanding and not
exercised; provided, however, that no new Awards shall be made
under the Plan after the tenth anniversary of the Effective Date.
With respect to any individual who is an Eligible Director on the
Effective Date, receipt of Awards under the Plan shall be
contingent on the Director relinquishing, as of the Effective
Date, and subject to this Plan being approved by the shareholders
at the 1996 annual meeting, the ownership rights to any shares of
Stock awarded to him by the Company before the Effective Date, but
only with respect to the shares that had not vested on or before
February 1, 1996.
4.2. Shares Subject to Plan. The shares of Stock with respect to
which Awards may be made under the Plan shall be shares currently
authorized but unissued shares, or shares purchased in the open
market by a direct or indirect wholly owned subsidiary of the
Company (as determined by the Chairman or any Executive Vice
President of the Company). The Company may contribute to the
subsidiary an amount sufficient to accomplish the purchase in the
open market of the shares of Stock to be so acquired (as
determined by the Chairman or any Executive Vice President of the
Company). The number of shares of Stock available for Awards under
the Plan during any fiscal year of the Company shall equal:
(a) 0.5% of the adjusted average of the outstanding Stock, as that
number is determined by the Company to calculate fully diluted
earnings per share for the preceding fiscal year;
REDUCED BY
(b) any shares of Stock granted pursuant to Awards under the Plan, and
any shares of Stock subject to any outstanding award under the Plan;
provided however, that no reduction shall be made in the number of
shares otherwise available under paragraph 4.2(a) for any shares of Stock
subject to an Award under the Plan to the extent that such shares are not
issued by reason of a lapse, forfeiture, expiration or termination of the
Award for any reason without issuance of shares (whether or not cash or
other consideration is paid to a Participant in respect of such shares).
4.3. Fractional Shares. No fractional shares of Stock shall be distributed
under the Plan and, instead, the Fair Market Value of such
fractional share shall be distributed in cash, with the Fair
Market Value determined as of the date the fractional share would
otherwise have been distributable.
6
4.4. Adjustments to Shares.
---------------------
(a) If the Company shall effect any subdivision or consolidation of
shares of Stock or other capital readjustment, payment of stock
dividend, stock split, combination of shares or recapitalization
or other increase or reduction of the number of shares of Stock
outstanding without receiving compensation therefor in money,
services or property, then the Committee shall adjust (i) the
number of shares of Stock available under the Plan; (ii) the
number of shares available under any limits; (iii) the number of
shares of Stock subject to outstanding (non-vested) Awards and to
deferred Stock Awards; (iv) the number of shares of Stock subject
to future grants; and (v) the per-share price under any
outstanding Option Award.
(b) If the Company is reorganized, merged or consolidated or is party to
a plan of exchange with another corporation, pursuant to which
reorganization, merger, consolidation or plan of exchange the
shareholders of the Company receive any shares of stock or other
securities or property, or the Company shall distribute securities
of another corporation to its shareholders, there shall be
substituted for the shares subject to outstanding (non-vested)
Awards and to deferred Stock Awards an appropriate number of
shares of each class of stock or amount of other securities or
property which were distributed to the shareholders of the Company
in respect of such shares; provided that, upon the occurrence of a
reorganization of the Company or any other event described in this
paragraph (b), any successor to the Company shall be substituted
for the Company.
(c) The existence of this Plan and the Awards granted hereunder
shall not affect in any way the right or power of the Company or
its shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, any merger or
consolidation of the Company, any issue of bonds, debentures,
preferred or prior preference stocks ahead of or affecting the
Company's Stock or the rights thereof, the dissolution or
liquidation of the Company, any sale or transfer of all or any
part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
(d) Except as expressly provided by the terms of this Plan, the
issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash
or property or for labor or services, either upon direct sale,
upon the exercise of rights or warrants to subscribe therefor or
upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with
respect to Awards then outstanding hereunder.
7
4.5. Limit on Distribution. Distribution of shares of Stock or other
amounts under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall
have no liability to issue any shares of Stock under the Plan or
make any other distribution of benefits under the Plan unless such
delivery or distribution would comply with all applicable laws and
the applicable requirements of any securities exchange or similar
entity.
(b) The Committee shall add such conditions and limitations to any Award
to any Participant who is subject to Section 16(a) and 16(b) of
the Securities Exchange Act of 1934, as is necessary to comply
with Section 16(a) or 16(b) and the rules and regulations
thereunder or to obtain any exemption therefrom.
(c) To the extent that the Plan provides for issuance of certificates to
reflect the transfer of shares of Stock, the transfer of such
shares may, at the direction of the Committee, be effected on a
non-certificated basis, to the extent not prohibited by the
provisions of Rule 16b-3, applicable local law, the applicable
rules of any stock exchange, or any other applicable rules.
4.6. Taxes. All Awards and other payments under the Plan are subject to
all applicable taxes.
4.7. Distributions to Disabled Persons. Notwithstanding any other
provision of the Plan, if, in the Committee's opinion, a
Participant or other person entitled to benefits under the Plan is
under a legal disability or is in any way incapacitated so as to
be unable to manage his financial affairs, the Committee may
direct that payment be made to a relative or friend of such person
for his benefit until claim is made by a conservator or other
person legally charged with the care of his person or his estate,
and such payment or distribution shall be in lieu of any such
payment to such Participant or other person. Thereafter, any
benefits under the Plan to which such Participant or other person
is entitled shall be paid to such conservator or other person
legally charged with the care of his person or his estate.
4.8. Transferability. Awards under the Plan are not transferable except
as designated by the Participant by will or by the laws of descent
and distribution.
4.9. Administration. The authority to control and manage the operation and
administration of the Plan shall be vested in a committee (the
"Committee") in accordance with Section 5.
4.10. Form and Time of Elections. Any election required or permitted
under the Plan shall be in writing, and shall be deemed to be filed
when delivered to the Secretary of the Company. Any deferral
election made under Supplement A shall be irrevocable after it
is filed.
4.11. Agreement With Company. Each Award of Stock granted under
Sections 2 and 3 shall be evidenced by an Agreement (an
"Agreement") duly executed on behalf of the Company and by the
Participant to whom such Award is granted and dated as of the
applicable date of grant. Each Agreement shall comply with and be
subject to the terms of the Plan.
8
4.12. Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the
person acting on it considers pertinent and reliable, and signed,
made or presented by the proper party or parties.
4.13. Action by Company. Any action required or permitted to be
taken by the Company shall be by resolution of the Board,
or by action of one or more members of the Board
(including a committee of the Board) who are duly
authorized to act for the board, by a duly authorized
officer of the Board, or (except to the extent prohibited
by the provisions of Rule 16b-3, applicable local law,
the applicable rules of any stock exchange, or any other
applicable rules) by a duly authorized officer of the
Company.
4.14. Gender and Number. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include
the plural and the plural shall include the singular.
SECTION 5
---------
COMMITTEE
---------
5.1. Selection of Committee. The Committee shall be selected by the
Board, and shall consist of not less than two members of the Board.
5.2. Powers of Committee. The authority to manage and control the
operation and administration of the Plan shall be vested in the
Committee. The Committee will have the authority to establish,
amend, and rescind any rules and regulations relating to the Plan,
to determine the terms and provisions of any agreements made
pursuant to the Plan, and to make all other determinations that
may be necessary or advisable for the administration of the Plan.
5.3. Information to be Furnished to Committee. The Company shall
furnish the Committee with such data and information as may be
required for it to discharge its duties. The records of the
Company as to the period of a Director's service shall be
conclusive on all persons unless determined to be incorrect.
Participants and other persons entitled to benefits under the Plan
must furnish the Committee such evidence, data or information as
the Committee considers desirable to carry out the terms of the
Plan.
9
5.4. Liability and Indemnification of Committee. No member or
authorized delegate of the Committee shall be liable to any person
for any action taken or omitted in connection with the
administration of the Plan unless attributable to his own fraud or
willful misconduct; nor shall the Company be liable to any person
for any such action unless attributable to fraud or willful
misconduct on the part of a director or employee of the Company.
The Committee, the individual members thereof, and persons acting
as the authorized delegates of the Committee under the Plan, shall
be indemnified by the Company, to the fullest extent permitted by
law, against any and all liabilities, losses, costs and expenses
(including legal fees and expenses) of whatsoever kind and nature
which may be imposed on, incurred by or asserted against the
Committee or its members or authorized delegates by reason of the
performance of a Committee function if the Committee or its
members or authorized delegates did not act dishonestly or in
willful violation of the law or regulation under which such
liability, loss, cost or expense arises. This indemnification
shall not duplicate but may supplement any coverage available
under any applicable insurance.
SECTION 6
---------
AMENDMENT AND TERMINATION
-------------------------
The Board may, at any time, amend or terminate the Plan, provided
that, subject to subsection 4.4 (relating to certain adjustments to
shares), no amendment or termination may adversely affect the rights of any
Participant or beneficiary under any Award made under the Plan prior to the
date such amendment is adopted by the Board. Notwithstanding the provisions
of this Section 6, in no event shall the provisions of the Plan relating to
Awards under the Plan be amended more than once every six months, other
than to comport with changes in the Code, the Employee Retirement Income
Security Act, or the rules thereunder; provided, however, that the
limitation set forth in this sentence shall be applied only to the extent
required under SEC Rule 16b-3(c)(2)(ii)(B) or any successor provision
thereof.
SECTION 7
---------
DEFINED TERMS
-------------
For purposes of the Plan, the terms listed below shall be defined
as follows:
(a) Award. The term "Award" shall mean the Retainer Award,
the Option Award, the Committee Chairman Award, and the
Meeting Award granted to any person under the Plan.
(b) Board. The term "Board" shall mean the Board of Directors of the
Company.
(c) Change in Control. The term "Change in Control" shall mean the
occurrence of any one of the following events:
10
o any "person," as such term is used in Sections 3(a)(9) and 13(d)
of the Securities Exchange Act of 1934, becomes a "beneficial
owner," as such term is used in Rule 13d-3 promulgated under that
act, of 50% or more of the Voting Stock (as defined below) of the
Company;
o the majority of the Board consists of individuals other than
Incumbent Directors, which term means the members of the Board on
the date of this Agreement; provided that any person becoming a
director subsequent to such date whose election or nomination for
election was supported by three-quarters of the directors who then
comprised the Incumbent Directors shall be considered to be an
Incumbent Director;
o the Company adopts any plan of liquidation providing for the distribution
of all or substantially all of its assets;
o all or substantially all of the assets or business of the Company
is disposed of pursuant to a merger, consolidation or other
transaction (unless the shareholders of the Company immediately
prior to such merger, consolidation or other transaction
beneficially own, directly or indirectly, in substantially the
same proportion as they owned the Voting Stock of the Company, all
of the Voting Stock or other ownership interests of the entity or
entities, if any, that succeed to the business of the Company); or
o the Company combines with another company and is the surviving
corporation but, immediately after the combination, the
shareholders of the Company immediately prior to the combination
hold, directly or indirectly, 50% or less of the Voting Stock of
the combined company (there being excluded from the number of
shares held by such shareholders, but not from the Voting Stock of
the combined company, any shares received by Affiliates (as
defined below) of such other company in exchange for stock of such
other company).
For the purpose of this definition of "Change in Control", (I) an
"Affiliate" of a person or other entity shall mean a person or other entity
that directly or indirectly controls, is controlled by, or is under common
control with the person or other entity specified and (II) "Voting Stock"
shall mean capital stock of any class or classes having general voting
power under ordinary circumstances, in the absence of contingencies, to
elect the directors of a corporation.
(d) Date of Termination. A Participant's "Date of Termination" shall
be the day following the last day on which he serves as a Director.
(e) Director. The term "Director" means a member of the Board.
(f) Disability. A Participant shall be considered to have a
"Disability" during the period in which he is unable, by
reason of a medically determinable physical or mental
impairment, to engage in any substantial gainful
activity, which condition, in the opinion of a physician
selected by the Committee, is expected to have a duration
of not less than 120 days.
11
(g) Dollars. As used in the Plan, the term "dollars" or numbers preceded
by the symbol "$" shall mean amounts in United States Dollars.
(h) Effective Date. The "Effective Date" means the date on which
Directors begin their yearly term of office on the Board following
their election at the Company's 1996 annual shareholders meeting.
(i) Eligible Director. Each Director who is not an employee of the
Company or any Related Company shall be an "Eligible Director".
(j) Fair Market Value. The "Fair Market Value" of a share of
Stock of the Company as of any date shall be the closing
market composite price for such Stock as reported for the
New York Stock Exchange - Composite Transactions on that
date or, if Stock is not traded on that date, on the next
preceding date on which Stock was traded.
(k) Participant. A "Participant" is any person who has received an Award
under the Plan.
(l) Plan Year. The term "Plan Year" means the period (i) beginning
on the date on which members of the Board begin their yearly term
as Board members following the election of Directors at the
Company's annual shareholders meeting and (ii) ending on the day
immediately prior the first day of the following Plan Year. The
first Plan Year shall begin on the Effective Date.
(m) Plan Year Quarter. For any Plan Year, the first Plan Year Quarter
shall begin on the first day of the plan year, and shall end on
the 90th day of the Plan Year; the second Plan Year Quarter shall
begin on the 91st day of the Plan Year, and shall end on the 180th
day of the Plan Year; the third Plan Year Quarter shall begin on
the 181st day of the Plan Year, and shall end on the 270th day of
the Plan Year; and the fourth Plan Year Quarter shall begin on the
271st day of the Plan Year, and shall end on the last day of the
Plan Year. Notwithstanding the foregoing, with respect to only the
1999 Plan Year, there shall be an additional Plan Year Quarter, so
that the fourth Plan Year Quarter shall begin on the 271st day of
the Plan Year, and shall end on the 360th day of the Plan Year;
and the fifth Plan Year Quarter shall begin on the 361st day of
the Plan Year, and shall end on the last day of the Plan Year.
(n) Related Companies. The term "Related Company" means any company
during any period in which it is a "subsidiary corporation"
(as that term is defined in Code section 424(f)) with respect to
the Company.
(o) SEC. "SEC" shall mean the Securities and Exchange Commission.
(p) Stock. The term "Stock" shall mean shares of common stock of the
Company.
12
SUPPLEMENT A
------------
ELECTIVE DEFERRAL
-----------------
SECTION A-1
-----------
DEFERRAL ELECTION
-----------------
A-1-1. General. An individual who is otherwise entitled to receive a
Retainer Award or a Committee Chairman Award, or who is
otherwise eligible to receive cash payment for services provided
as a Director ("Cash Compensation"), may elect to defer delivery
of all or a portion of such shares of Stock and such cash, subject
to the following terms of this Section A-1.
A-1-2. Stock Deferral Election.
(a) An election to defer the receipt of Stock awarded as the
Retainer Award for any Plan Year, to defer receipt of
Stock awarded as the Meeting Award for any Plan Year, or
to defer the receipt of Stock awarded as a Committee
Chairman Award for any quarter of a Plan Year, shall be
filed prior to the first day of that year.
(b) An individual who becomes an Eligible Director on a date
other than the first day of a Plan Year may elect to
defer all or a portion of the Retainer Award for the
remainder of the year by filing a deferral election prior
to the date on which he becomes an Eligible Director.
(c) An individual who becomes a Committee Chairman on a date
other than the first day of a Plan Year may elect to
defer all or a portion of the Committee Chairman Award
for the remainder of the year by filing a deferral
election prior to the date on which he becomes Committee
Chairman; and, by filing a deferral election within 30
days after becoming a Committee Chairman, he may defer
receipt of the portion of the Committee Chairman Award
for the portion of the Plan Year following the 30-day
period.
(d) An individual who becomes an Eligible Director on a date
other than the first day of a Plan Year may elect to
defer all or a portion of the Meeting Award for the
remainder of the year by filing a deferral election prior
to the date on which he becomes an Eligible Director.
A-1-3. Deferral Election.
(a) An election to defer the receipt of Cash Compensation for any Plan
Year shall be filed prior to the first day of that year.
(b) An individual who becomes an Eligible Director on a date
other than the first day of a Plan Year may elect to
defer all or a portion of the Cash Compensation for the
remainder of the year by filing a deferral election prior
to the date on which he becomes an Eligible Director.
13
SECTION A-2
-----------
ACCOUNTS
--------
A-2-1. Stock Account. A Stock Account shall be maintained on behalf
of each Participant who elects to defer the distribution of
shares of Stock under this Supplement A, for the period during
which delivery of shares of Stock is deferred. A Participant's
Stock Account shall be subject to the following adjustments:
(a) The Stock Account will be credited with Share Units equal
to the number of shares of Stock as to which the
Participant has elected deferred receipt, with such Share
Units to be credited as of the date on which the shares
would otherwise have been delivered to him in the absence
of the deferral.
(b) As of each dividend record date for the Stock following the date
any Share Units are credited to the Participant's Stock Account,
and prior to the date of distribution of shares of Stock with
respect to those Share Units, the Participant's Stock Account
shall be credited with additional Share Units (including
fractional Share Units) equal to (i) the amount of the dividend
that would be payable with respect to the number of shares of
Stock equal to the number of Share Units credited to the
Participant's Stock Account on the dividend record date; divided
by (ii) the Fair Market Value of a share of Stock on the date of
payment of the dividend.
(c) As of the date of any distribution of shares of Stock
with respect to a Participant's Stock Account under
Section A-3, the Share Units credited to a Participant's
Stock Account shall be reduced by the number of Shares so
distributed to the Participant.
A-2-2. Cash Account. A Cash Account shall be maintained on behalf of
each Participant who elects to defer the distribution of cash
under this Supplement A, for the period during which delivery
of cash is deferred. A Participant's Cash Account shall be
credited with interest, with the applicable interest rate for
any calendar year equal to the prime rate as of the first
business day of that calendar year, as reported in The Wall
Street Journal. As of the date of any distribution with
respect to a Participant's Account under Section A-3, the
balance credited to a Participant's Account shall be reduced
by the amount of the distribution to the Participant.
A-2-3. Statement of Accounts. As soon as practicable after the end
of each Plan Year, the Company shall provide each Participant
having one or more Accounts under the Plan with a statement
of the transactions in his Accounts during that year and his
Account balances as of the end of the year.
14
SECTION A-3
-----------
DISTRIBUTIONS
-------------
A-3-1. General.
(a) Subject to the terms of this Section A-3, a Participant shall
specify, as part of his deferral election with respect to Stock
Awards, and as part of his deferral election with respect to Cash
Compensation, the time of distribution of the amounts deferred
pursuant to such election; provided, however, that distribution of
shares of Stock, and of Cash Compensation, shall be made in a lump
sum not later than the first anniversary of the date on which the
individual ceases to be a Director; and further provided that a
Participant may elect only a single date for distribution of all
of his deferred Stock Awards and only a single date for
distribution of all of his deferred Cash Compensation under the
Plan, provided that the distribution date for the Participant's
deferred Stock Awards and for deferred Cash Compensation may
differ.
(b) At the time of distribution of deferred shares in accordance
with the Participant's election, the Participant shall receive a
distribution of shares of Stock equal to the number of share units
credited to his Account immediately prior to such distribution. If
the scheduled distribution date would otherwise occur after a
dividend record date but before the payment of the dividend,
distribution shall be deferred (not more than 30 days) until the
dividend is paid.
(c) At the time of distribution of Cash Compensation in accordance
with the Participant's election, the Participant shall receive the
amount then credited to the Participant's Cash Account as of the
date of distribution.
(d) In determining a Participant's right to distributions of stock
under this Section A-3, the vesting provisions of subsection 2.3
of the Plan shall apply to the share units credited to the
Participant's Stock Account as though each unit represented one
share of Stock, and with all units attributable to payment of
dividends being fully vested as of the date they are credited to
the Participant's Stock Account.
(e) Notwithstanding the foregoing provisions of this Section A-3, if
any share units are credited to a Participant's Stock Account as
of the date of a Change in Control, the Participant shall receive
a distribution of shares of Stock equal to the number of such
share units. Such distribution shall be in settlement of the
Participant's rights to distribution under this Section A-3,
provided that if the record date for a dividend is prior to a
Change in Control, but the dividend payment is to occur after such
Change in Control, the additional shares attributable to such
dividends shall be distributed as soon as practicable thereafter.
A-3-2. Limitation of Implied Rights. Neither the Participant nor any
other person shall, by reason of deferral of shares of Stock or
the deferral of Cash Compensation, under this Supplement A,
acquire any right in or title to any assets, funds or property of
the Company whatsoever prior to the date such shares are
distributed. A Participant shall have only a contractual right to
the shares and cash, if any, distributable under the Plan,
unsecured by any assets of the Company. Nothing contained in the
Plan shall constitute a guarantee by the Company that the assets
of the Company shall be sufficient to provide any benefits to any
person.
15