1
EXHIBIT
10.1 The General Re Corporation 1989 Long Term Compensation Plan
2
GENERAL RE CORPORATION
1989 LONG-TERM COMPENSATION PLAN
AS AMENDED
THROUGH DECEMBER 7, 1993
INCLUDES AMENDMENTS MADE:
12/12/89
11/14/90
12/11/90
5/29/92
12/7/93
3
GENERAL RE CORPORATION
1989 LONG-TERM COMPENSATION PLAN
1. Purpose. There is hereby established the Long-Term Compensation Plan (the
"Plan") of General Re Corporation, a Delaware corporation (the "Company").
The Plan is intended as an incentive and to encourage stock ownership by
certain key executive and managerial employees of the Company or any other
corporation of which at least 50% of the voting stock is owned, directly or
indirectly, by the Company ("Subsidiary"), and to encourage such employees
to remain in the employ of the Company or its Subsidiaries and to have a
proprietary interest in the success of the Company. The Plan permits
granting of Incentive Stock Options, Nonqualified Stock Options, Approved
Stock Options, Rights, Annual Incentive Bonuses, Performance Bonuses and
Restricted Stock, each as hereinafter defined.
2. Definitions. For the purposes of this Plan:
(a) The term "Incentive Stock Option" shall mean an option granted
pursuant to the provisions of this Plan which meets the requirements of Section
422A of the Internal Revenue Code of 1986, as amended ("Section 422A").
(b) The term "Nonqualified Stock Option" shall mean any option granted
pursuant to the provisions of this Plan which is neither an Incentive Stock
Option nor an Approved Stock Option.
(c) The term "Approved Stock Option" shall mean any option granted
pursuant to the provisions of the United Kingdom Sub-Plan of this Plan. Such
options shall not be subject to the provisions of Section 6 of the Plan.
(d) The term "Right" shall mean any stock appreciation right granted
pursuant to the provisions of the Plan.
(e) The term "Annual Incentive Bonus" shall mean an annual bonus
payable in accordance with Section 8.
(f) The term "Performance Bonus" shall mean a bonus contingent upon the
achievement of performance objectives established by the Committee in accordance
with Section 8.
(g) The term "Restricted Stock" means stock delivered subject to the
restrictions described in Section 9.
(h) The term "Grantee" shall mean any person to whom an option, Right,
Restricted Stock, Annual Incentive Bonus or Performance Bonus hereunder has been
granted.
(i) The term "Fair Market Value" shall be deemed to be, on a per share
basis, the mean between the opening and closing sales price of the Company's
Common Stock on the Composite Tape for New York Stock Exchange-Listed Stocks on
the date as of which the determination is being made or, if no
4
sales were reported on such date, on the next preceding day on which there were
sales of the Common Stock so reported.
(j) The term "Grant Date" shall mean the date on which the Incentive
Stock Option, Nonqualified Stock Option, Approved Stock Option, Restricted Stock
or Right is authorized by the Committee (as hereinafter defined) or such later
date as may be specified by the Committee in such authorization.
(k) The term "Non-Employee Director" shall mean each member of the
Board of Directors of the Company who is not also an employee of the Company.
3. Administration.
(a) The Plan shall be administered by the Compensation Committee of the
Board of Directors of the Company (the "Committee"). The Committee shall consist
of not less than three members of the Company's Board of Directors who shall be
ineligible to receive Incentive Stock Options, Nonqualified Stock Options,
Approved Stock Options, Rights, Restricted Stock, Annual Incentive Bonus or
Performance Bonuses pursuant to the Plan or stock options or rights under any
other plan of the Company or any of its Subsidiaries (unless the Board of
Directors determines that such options or rights can be granted pursuant to the
Plan or under another plan without adversely affecting the Committee's status as
"disinterested" for purposes of Rule 16(b)-3 of the Rules of the Securities
Exchange Commission). The Committee shall from time to time at its discretion
select employees eligible for Incentive Stock Options, Nonqualified Stock
Options, or Approved Stock Options and determine whether the stock option shall
be an Incentive Stock Option, Nonqualified Stock Option, or Approved Stock
Option, the number of shares subject to such option, the term of such options
and whether such option shall be related to Rights and the number of such
Rights, and other matters specifically delegated to it under this Plan.
(b) The Committee shall in its discretion select employees eligible for
an Annual Incentive Bonus and/or a Performance Bonus opportunity under the
provisions of Section 8(c). The Committee shall also, in its discretion, select
employees eligible for Restricted Stock under the provisions of Section 9. The
Committee shall determine the amount of Restricted Stock to be awarded to an
employee based on the Committee's assessment of the value of the services the
employee has rendered to the Company.
(a) The Committee shall have the final authority to interpret and
construe the terms of the Plan and of any Incentive Stock Option, Nonqualified
Stock Option, Approved Stock Option, Right, Restricted Stock, Annual Incentive
Bonus or Performance Bonus, and any agreements relating thereto. No member of
the Committee shall be liable for any action, interpretation or construction
made in good faith with respect to the Plan or any Incentive Stock Option,
Nonqualified Stock Option, Approved Stock Option, Right, Restricted Stock,
Annual Incentive Bonus or Performance Bonus. The Committee may prescribe, amend
and rescind rules and regulations relating to the Plan and shall make all other
determinations necessary or advisable for administration of the Plan.
(a) The Board of Directors may fill any Committee vacancy and may
remove any member of the Committee at any time with or without cause.
3
5
4. Eligibility.
(a) Key executive and managerial employees (including officers, whether
or not they are directors) of the Company or of any Subsidiary, which by action
of its Board of Directors, shall have elected to participate, shall be eligible
to receive Incentive Stock Options, Nonqualified Stock Options, Rights,
Restricted Stock, Annual Incentive Bonus or Performance Bonuses. An eligible
employee holding Incentive Stock Options may be granted Nonqualified Stock
Options and/or additional Incentive Stock Options and an eligible employee
holding Nonqualified Stock Options may be granted Incentive Stock Options and
additional Nonqualified Stock Options.
(b) Incentive Stock Options may not be granted to any employee who at
the time such Incentive Stock Option is granted owns more than 10 percent of the
total combined voting power of all classes of stock of the Company unless the
purchase price of such shares of common stock issuable upon exercise is not less
than 110 percent of the fair market value of such shares on the date such option
is granted, and such option is not exercisable after the expiration of five
years from the date such option is granted.
(c) Employees described in subsection (a) whose remuneration is liable
to income tax in the United Kingdom under Schedule E (i.e., employees who are
resident and ordinarily resident in the United Kingdom and whose duties are
performed there) shall also be eligible to receive Approved Stock Options.
(d) Each Non-Employee Director will automatically receive a
Nonqualified Stock Option to acquire 500 Shares of Common Stock of the Company
on the first business day of each calendar year during which such Non-Employee
Director shall serve on the Company's Board of Directors.
5. Stock.
(a) The stock subject to Incentive Stock Options, Nonqualified Stock
Options, Approved Stock Options, Rights, Units and Restricted Stock shall be
shares of the Company's Common Stock. Stock issued as Restricted Stock or issued
pursuant to the exercise of options or rights may be authorized but unissued
Common Stock or Common Stock held in the Company's treasury. The total number of
shares of Common Stock with respect to which Incentive Stock Options,
Nonqualified Stock Options, Approved Stock Options, and Restricted Stock may be
granted and the maximum number of shares of Common Stock that may be issued
under the Plan in payment of Rights, Units or Annual Incentive or Performance
Bonuses may equal but shall not exceed in the aggregate 4.0 million shares;
provided, however, that from the aggregate limit of 4.0 million shares, the
maximum number of shares of Common Stock with respect to which Nonqualified
Stock Options may be granted to Non-Employee Directors shall not exceed 40,000
shares. Such number of shares shall be adjusted in accordance with the
provisions of Section 6(g) of the Plan.
(b) For purposes of determining the number of shares of Common Stock
remaining available under the Plan, the exercise of a Right related to an option
shall be equivalent to the exercise of the related Incentive Stock Option,
Nonqualified Stock Option, or approved Stock Option. If Incentive Stock Options,
Nonqualified Stock Options, or Approved Stock Options expire or are terminated,
the corresponding shares of Common Stock may again be subject to either
Incentive Stock Options, Nonqualified Stock Options or Approved Stock Options.
An outstanding related Right shall not be taken into account in determining the
aggregate number of shares with respect to which Incentive Stock Options,
Nonqualified Stock Options, and Approved Stock Options may thereafter be
granted.
4
6
6. Terms and Conditions of Incentive Stock Options, Nonqualified Stock Options
and Rights. Incentive Stock Options, Nonqualified Stock Options and Rights
granted pursuant to the Plan by the Committee shall be evidenced by agreements
in such form as the Committee shall from time to time determine, which
agreements shall comply with and be subject to the following terms and
conditions:
(a) Incentive Stock Options, Nonqualified Stock Options and Rights:
(1) Each Incentive Stock Option shall state the Number of
Shares to which it pertains. The aggregate Fair Market Value (determined at the
time the Incentive Stock Option is granted) of the stock with respect to which
Incentive Stock Options first become exercisable during any calendar year under
the terms of this Plan for any Grantee may not exceed $100,000. For purposes of
this $100,000 limit, the Grantee's Incentive Stock Options under this Plan and
all plans maintained by the Grantee's employer corporation and its parent and
subsidiary corporations shall be aggregated.
(2) Each Nonqualified Stock Option shall state the number of
shares to which it pertains. Each related Right shall state the number of shares
to which it pertains. The total number of shares of Common Stock with respect to
which Nonqualified Stock Options or Rights may be granted to any one individual
under the Plan through December 31, 1994 may equal but shall not exceed ten
percent (10%) of the aggregate number of shares of Common Stock that may be
issued under the Plan, as stated in Section 5(a).
(b) Exercise Price:
Each Incentive Stock Option, Nonqualified Stock Option, and related
Right shall state the price at which it may be exercised ("Exercise Price"). The
Exercise Price shall be the Fair Market Value of the Common Stock of the Company
on the date of the grant of the stock option. The Exercise Price of a Right
related to an option, regardless of when issued, shall be the same as the
Exercise Price of the Incentive Stock Option or Nonqualified Stock Option to
which it relates.
(c) Medium and Time of Payment:
The Exercise Price with respect to options generally shall be payable
in United States dollars upon exercise of the Incentive Stock Option or
Nonqualified Stock Option and may be paid in cash or by certified check, bank
draft or postal or express money order. The Committee shall have the power to
accept payment of the Exercise Price from residents of a foreign country in
currency of that country. The Company may, at the request of a Grantee, arrange
short-term outside financing for the purpose of financing the Exercise Price of
the Option. The Committee may also, at the request of a Grantee, approve and
comply with any procedures necessary to allow a broker to sell and remit to the
Company the sales proceeds of the portion of the shares to be acquired upon
exercise with a Fair Market Value equal to the sum of the Exercise Price and any
tax withholding required by subsection (i). The Committee may, in its
discretion, at the request of a Grantee, accept prior acquired shares of Common
Stock in partial or full payment of the Exercise Price. Common Stock so accepted
shall be valued at its Fair Market Value on the day prior to the date the
Incentive Stock Option or Nonqualified Stock Option is exercised.
5
7
(d) Term and Exercise of Incentive Stock Options, Nonqualified Stock
Options and Rights:
(1) No stock option or Right issued under this Plan shall be
exercisable either in whole or in part prior to approval of the Plan by
stockholders of the Company and prior to compliance with all requirements of law
governing the issuance of such shares and exercise of stock options and Rights.
After such approval and compliance, each Incentive Stock Option, Nonqualified
Stock Option or Right shall be exercisable in whole or in part at such time or
times as the Committee in its sole discretion may determine; provided; however,
Non-qualified Stock Options issued to Non-Employee Directors shall provide that
such Options shall be exercisable (or become vested) immediately as of the date
of grant. Further, no Incentive Stock Option granted to an employee described in
Section 4(b) shall be exercisable after the expiration of five years from the
Grant Date. No Incentive Stock Option granted to any other employee and no
Nonqualified Stock Option or Right shall be exercisable after the expiration of
ten years from the Grant Date. No less than 100 shares may be purchased at any
one time under an option or Right unless the number purchased is the total
number at the time purchasable under such option or Right. During the lifetime
of a Grantee, an Incentive Stock Option, Nonqualified Stock Option or Right
shall be exercisable only by the Grantee and shall not be assignable or
transferable, other than by will or by the laws of descent or distribution, by
the Grantee and no other persons shall otherwise acquire any rights therein. A
Right related to an option, regardless of when granted, may be exercised at the
same time and under the same conditions as the Incentive Stock Option or
Nonqualified Stock Option to which it relates, provided that no such Right may
be exercised during the first six months of its term.
(e) Acceleration of Date on Which an Incentive Stock Option,
Nonqualified Stock Option or Right May Be Exercised:
(1) The Committee may advance the date on which all or any
portion of any option or Right may be exercised, provided that no option or
Right held by a Grantee who would be subject to Section 16(b) of the Securities
Exchange Act of 1934 with respect to such option shall be exercised during the
first six months of its term.
(2) Notwithstanding any other provision to the contrary, all
Incentive Stock Options, Nonqualified Stock Options and Rights shall become
immediately and fully exercisable (in whole or in part in the discretion of the
holder thereof) if (i) any person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, shall become the beneficial
owner of shares of the Company with respect to which 20% or more of the total
number of votes for the election of the Board of Directors of the Company may be
the case; (ii) as a result of, or in connection with, any cash tender offer,
exchange offer, merger or other business combination, sale of assets or
contested election or combination of the foregoing, the persons who were prior
to the institution thereof directors of the Company shall cease to constitute a
majority of the Board of Directors of the Company; or (iii) stockholders of the
Company shall approve an agreement pursuant to which the Company will cease to
be an independent publicly-owned corporation or for a sale or other disposition
of all or substantially all of the assets of the Company.
(f) Termination of Employment, Termination of Board Service or Death:
(1) In the event a Grantee's employment or Board Service shall
terminate on account of death, disability or retirement, the Grantee may
exercise all Nonqualified Stock Options, Rights or Incentive Stock Options that
are exercisable through the date of termination. Said Nonqualified Stock
6
8
Options and Rights must be exercised within the earlier of (i) five years of
such date or (ii) the expiration date of the Nonqualified Stock Option or Right,
and Incentive Stock Options must be exercised within the earlier of (i) three
months of such date (or one year if terminated on account of death or
disability) or (ii) the expiration date of the Incentive Stock Option.
(2) In the event a Grantee's employment or Board Service shall
terminate on account of resignation, discharge not for causes or expiration of
elected term, the Grantee may exercise all Nonqualified Stock Options, Rights
and Incentive Stock Options that are exercisable through the date of termination
or, in the case of Employee Nonqualified Stock Options, such later date as the
Committee may in its sole discretion specify. Said Nonqualified Stock Options,
Rights, and Incentive Stock Options must be exercised prior to their respective
expiration dates and also within the later of (i) three months following the
date of termination or, (ii) in the case of Employee Nonqualified Stock Options,
such later date as the Committee may in its sole discretion specify. If a
Grantee's employment shall terminate on account of discharge for cause, no
exercise period shall exist and the Grantee shall forfeit all Nonqualified Stock
Options, Rights or Incentive Stock Options as of the date of termination.
(3) For this purpose, discharge for cause shall mean
termination of employment by the Employer which the Committee, in its
discretion, determines to be for cause.
(4) To the extent not then exercisable in accordance with this
Section, the Incentive Stock Options, Nonqualified Stock Options, or Right of a
Grantee who resigns or whose employment terminates shall, except as set forth in
Section 6(g), terminate on the date his employment terminates.
(5) Termination of employment shall be considered to occur
when an employee is no longer an employee of the Company or any Subsidiary.
Whether an authorized leave of absence or absence on military or government
service shall constitute termination of employment for purposes of this Plan
shall be determined by the Committee. Retirement shall be considered to mean
retirement pursuant to any applicable retirement plan of the Company or any of
its Subsidiaries. Any Incentive Stock Option or Nonqualified Stock Option
exercisable after death may be exercised by the decedent's personal
representatives.
(6) A parental leave shall not constitute termination of
employment for purposes of this Plan provided that the employee returns to
active employment with the Company or any subsidiary within twelve (12)
consecutive months of the date the parental leave began. In the event that an
employee does not return to active employment on or before the twelve (12) month
anniversary date of the date the parental leave began, the employee shall have
three (3) months following the anniversary date of the parental leave within
which to exercise all Non--qualified Stock Options and Rights and Incentive
Options that are exercisable through the employee's date of termination. For
purposes of the Plan, "parental leave"means the absence of an employee from
active employment, due to the birth of a child, placement of a child with the
employee in connection with adoption of such child by the employee, or caring
for a child immediately following such birth or placement for adoption, provided
that the absence from employment does not exceed twelve (12) consecutive months,
excluding the period of absence in which the employee is physically disabled due
to pregnancy.
7
9
(g) Recapitalization, Merger, Consolidation and Similar Transactions:
(1) Subject to any required action by stockholders, the
aggregate number of shares of Common Stock on which Incentive Stock Options or
Nonqualified Stock Options may be granted hereunder, the number of shares
thereof covered by each outstanding Incentive Stock Option, Nonqualified Stock
Option and Right and the Exercise Price of each Incentive Stock Option,
Nonqualified Stock Option or Right shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock of the
Company resulting from a subdivision or consolidation of shares or the payment
of a stock dividend on the Common Stock other than a stock dividend that is a
substitute for a cash dividend or any other increase in the number of such
shares effected without receipt of consideration by the Company provided no
such adjustment in Exercise Price may reduce the Exercise Price to an amount
per share which is less than the par value of such share.
(2) Subject to any required action by stockholders, if the
Company shall be the surviving corporation in any merger or consolidation
(except a merger or consolidation in which the Company is the surviving
corporation but the holders of Common Stock receive securities of another
corporation), any Incentive Stock Option, Nonqualified Stock Option or Right
granted hereunder shall pertain to and apply to the securities to which a holder
of the number of shares of Common Stock equal to the number of shares subject to
the Incentive Stock Option, Nonqualified Stock Option or Right would have been
entitled. In the event of the dissolution or liquidation of the Company, a
merger of Company, a merger or consolidation in which the Company is not the
surviving corporation or a merger or consolidation in which the Company is the
surviving corporation but the holders of Common Stock receive securities of
another corporation, the Committee shall, in its discretion, have the power,
prior to such event, (i) to cancel any or all Incentive Stock Options,
Nonqualified Stock Options, and Rights which are then exercisable and, in
consideration of such cancellation, pay to each Grantee an amount in cash with
respect to each share of Common Stock as to which an Incentive Stock Option,
Nonqualified Stock Option or Right is then exercisable equal to the difference
between the value per share of the consideration, as determined by the Committee
in its discretion, received by holders of Common Stock as a result of such
dissolution, liquidation, merger or consolidation and the Exercise Price, and to
terminate without consideration all Incentive Stock Options, Nonqualified Stock
Options and Rights not then exercisable; or (ii) if the holders of Common Stock
receive property other than cash as a result of such dissolution, liquidation,
merger or consolidation, to provide for the exchange of an Incentive Stock
Option, Nonqualified Stock Option or Right which is then exercisable for an
Incentive Stock Option or Right on some or all of such property and, incident
thereto, make an equitable adjustment, as determined by the Committee, in the
Exercise Price of each affected Incentive Stock Option, Nonqualified Stock
Option or Right, the number of shares or other property subject to the Incentive
Stock Option, Nonqualified Stock Option or Right and, if appropriate, provide
for a cash payment to the optionees in partial consideration for the exchange
for their Incentive Stock Option, Nonqualified Stock Option or Right and to
terminate without consideration all Incentive Stock Options, Nonqualified Stock
Options or Rights not then exercisable. The foregoing adjustment shall be made
by the Committee, whose determination in that respect shall be final, binding
and conclusive.
(3) If changes in capitalization of the Company other than
those referred to above shall occur, the Committee may, but need not, make such
adjustments in the number and class of shares for which Incentive Stock Options,
Nonqualified Stock Options or Rights may thereafter be granted or in the
8
10
number and class of shares remaining subject to Incentive Stock Options,
Nonqualified Stock Options and Rights then outstanding and in the Exercise Price
as the Committee may consider appropriate to prevent dilution or enlargement of
rights.
(4) Except as provided in this Section 6(g) and Section
6(e)(2), the Grantee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any stock dividend
or any other increase or decrease in the number of shares of stock of any class,
any dissolution, liquidation, merger, consolidation or change in control or any
issue by the Company of shares of stock of any class, or securities convertible
into shares of stock of any class and no adjustment by reason thereof shall be
made with respect to the Exercise Price or number of shares of Common Stock
subject to an Incentive Stock Option, Nonqualified Stock Option or Right.
(h) Rights of a Stockholder:
A Grantee or a transferee of an Incentive Stock Option, Nonqualified
Stock Option or Right shall have no rights as a stockholder with respect to any
shares covered by his or her option or right until the date as of which stock is
issued following exercise of such option or right. Except as herein provided, no
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or any other distributions for which the
record date is prior to the date as of which such stock is issued.
(i) Withholding of Taxes:
No Incentive Stock Option, Nonqualified Stock Option or Right may be
exercised unless the Grantee has paid or has made provision satisfactory to the
Committee for payment of, federal, state and local income taxes, or any other
taxes (other than stock transfer taxes) which the Company may be obligated to
collect as a result of the issue or transfer of Common Stock upon such exercise
of an Incentive Stock Option or Nonqualified Stock Option or the exercise of any
Right satisfied wholly or partly in Common Stock. In its sole discretion, and at
the request of a Grantee, the Committee may permit a Grantee (including the
Company's officers and directors who are in compliance with Rule 16b- 3e(3)) to
satisfy the obligation imposed by this Section, in whole or in part, by
instructing the Company to withhold up to that number of shares otherwise
issuable to the Grantee with a Fair Market Value equal to the amount of tax to
be withheld.
(j) Other Provisions:
The Committee may, as a condition precedent to the exercise of any
Incentive Stock Option, Nonqualified Stock Option or Right, require the Grantee
of the Incentive Stock Option, Nonqualified Stock Option or Right (including, in
the event of the Grantee's death, his legal representatives, legatees or
distributees) to enter into such agreement or to make such representations as
may be required to make lawful the exercise of the Incentive Stock Option,
Nonqualified Stock Option or Right and the ultimate disposition of the shares
acquired by such exercise. The agreements authorized under the Plan pursuant to
which Incentive Stock Options, Nonqualified Stock Option, or Rights are granted
shall contain such other provisions, consistent with the Plan, as the Committee
shall deem advisable.
9
11
(k) Reload Options
(1) In the event a Grantee exercises a Nonqualified Stock
Option by using shares of Common Stock, which the Grantee has owned for at least
six (6) months, in partial or full payment of the Exercise Price, the Grantee
shall automatically be granted a new Nonqualified Stock Option to purchase a
number of shares of Common Stock equal to the number of shares of Common Stock
used in payment of the Exercise Price (the "Reload Option").
(2) Notwithstanding any provision of this Plan to the
contrary, (a) the Reload Option shall be exercisable (or become vested) one year
after the date of grant provided that as of that date, the Grantee owns shares
of common stock acquired as a result of the exercise of the original
Nonqualified Option equal to the excess of the shares received on exercise of
the original Nonqualified Option less the sum of the exercise price of the
original Nonqualified Option plus any income tax due as a result of the exercise
of the original Nonqualified Option, and (b) the Reload Option shall expire on
the same date that the original Nonqualified Option (with respect to which the
Reload Option was granted) would have expired by its terms. All other provisions
of this Plan pertaining to Nonqualified Options shall apply to Reload Options.
7. Grant and Exercise of Rights
(a) Granting of Rights Related to Options:
(1) Rights may be granted by the Committee with respect to any
Incentive Stock Option or Nonqualified Stock Option granted pursuant to the
Plan. Such Rights may be granted at the time of the grant of the related option
or at any time during the term of such option prior to the exercise thereof.
Each such related Right shall be subject to the same terms and conditions (and
any such additional terms and conditions as the Committee may deem appropriate)
as the option to which it relates, subject to the requirement of Article 6(d)
that no related Right may be exercised during the first six months of its term,
and further that no related Right may be exercised with respect to less than 100
shares unless it is exercised with respect to all shares then exercisable. On
the exercise of all or a portion of a related Right, all or such portion of the
option related to the Right which has been exercised shall terminate. On the
exercise of all or a portion of an option which is related to a Right, all or
such portion of the Right which is related to the option which has been
exercised shall terminate.
(2) With respect to Rights related to an Incentive Stock
Option, the following conditions shall apply to such related Right:
(i) The Right shall expire no later than the
underlying Incentive Stock Option;
(ii) The Right shall be for no more than 100% of the
difference between the Exercise Price of the underlying Incentive Stock Option
and the Fair Market Value of the stock subject to the underlying Incentive Stock
at the time the Right is exercised;
(iii) The Right shall be transferable only when the
underlying Incentive Stock Option is transferable, and under the same
conditions;
10
12
(iv) The Right may be exercised only when the
underlying Incentive Stock Option is eligible to be exercised and only when
the Fair Market Value of the stock subject to the underlying Incentive
Stock Option exceeds the Exercise Price.
(b) Exercise of Rights:
Upon exercise of a Right, unless subject to Section 7(c), the Grantee
shall be entitled to receive an amount equal to the product of:
(1) the amount by which the Fair Market Value of the Common
Stock of the Company on the date of exercise of the Right exceeds the Exercise
Price per share specified in the Right, multiplied by
(2) the number of shares of Common Stock in respect of which
the Right shall have been exercised.
(c) Form and Time of Payment of Related Rights:
(1) The amount to which a Grantee is entitled on exercise of a
related Right may be satisfied in Common Stock, in cash or in a combination of
both, as determined by the Committee, in its discretion. If the Committee
determines to satisfy all or part of the amount due the Grantee in Common Stock,
the number of shares of Common Stock to which the Grantee is entitled shall be
the largest whole number obtained by dividing the dollar amount to be satisfied
in Common Stock pursuant to the exercise of the related Right by the Fair Market
Value of the Common Stock, on the date of exercise. No fractional shares shall
be distributed on exercise of any related Right.
(2) The cash and/or Common Stock to which a Grantee is
entitled on exercise of a related Right shall be paid to such Grantee
immediately on exercise of such related Right.
8. Annual Incentive Bonuses; Performance Bonuses.
(a) Annual Incentive Bonuses:
The Committee shall determine an annual incentive goal for the Company
and its subsidiaries for each Award Period, comprised of a fiscal year, and
shall select from among the employees those individuals eligible to receive
Annual Incentive Bonuses and shall determine the dollar amount of each such
employee's Annual Incentive Bonus based upon such criteria as shall be developed
by the Committee in its sole discretion.
(b) Performance Bonuses:
(1) The Committee shall designate Award Periods of not less
than three nor more than five consecutive fiscal years, the first Award Period
to commence January 1, 1989, with respect to which Performance Bonuses shall be
awarded. Prior to the commencement of each Award Period, the Committee shall
determine for each Grantee or group of Grantees a Performance Objective. The
Performance Objective shall be expressed on a before-tax or after-tax basis in
earnings per share, net
11
13
earnings, return on invested capital, or return on equity investment or in such
other manner as the Committee deems an appropriate measure of performance. Also
prior to the commencement of an Award Period the Committee shall determine the
employees eligible to receive Performance Bonus opportunities for such Award
Period, the amount of the Performance Bonus opportunity for each Grantee, and
the distributable percentage to be applied to the Performance Bonus opportunity
in the event the Performance Objective for the Award Period is not fully
achieved. In the case of an Award Period consisting of five consecutive fiscal
years, during the first three such years the Committee may in its discretion
select additional employees to receive a Performance Bonus, determine for each
such Grantee a Performance Objective based on his entry into the Plan as of
January 1 of the year following his selection and the amount of his Performance
Bonus opportunity, and determine the distributable percentage to be applied to
the Performance Bonus opportunity in the event the Performance Objective for the
shorter Award Period is not achieved. The Committee shall cause each Grantee to
be notified in writing of his Performance Objective and Performance Bonus
opportunity as soon as practicable after such grant.
(c) Termination of Employment:
If a Grantee's employment by the Company or a subsidiary terminates for
any of the reasons stated below prior to the end of an Award Period for which he
was (a) eligible for an Annual Incentive Bonus, or (b) awarded a Performance
Bonus opportunity, the amount of his Bonus shall be determined as follows:
(1) If the Grantee retires pursuant to any applicable
retirement plan of the Company or any of its subsidiaries, or if the Grantee
dies, is disabled, or his employment is involuntarily terminated not for cause
or in such other circumstances as the Committee may in its sole discretion
determine, such Grantee shall receive the proportion of his Bonus (upon
determination by the Committee of the degree of success in achieving the
objective) which the number of full months of active service of the Grantee
during the Award Period bears to the total number of months in such Award
Period, with "disability" being defined as physical or mental condition that
renders the Grantee incapable of performing the work for which the Grantee was
employed or similar work and that qualifies the Grantee for benefits under a
Company-sponsored or subsidiary-sponsored long-term disability plan;
(2) If the Grantee resigns or is discharged he will forfeit
his Bonus, provided, however, that if said Grantee's employment terminates in
the last year in a Performance Bonus Award Period, such Grantee shall receive
whatever portion of his Performance Bonus as the Committee in its sole
discretion shall determine. Whether an authorized leave of absence or absence on
military or government leave shall constitute termination of employment for
purposes of the Plan shall be determined by the Committee.
(d) Crediting and Payment of Bonuses:
(1) The Committee shall determine, in its sole discretion, to
credit, award or pay Annual Incentive Bonuses and Performance Bonuses in cash,
stock, Units or Nonqualified Stock Options, or some combination thereof, and
may, in its sole discretion, offer a Grantee the opportunity to select among
such alternatives for some or all of his Annual Incentive Bonus or Performance
Bonus, provided that in the case where a Grantee is offered a selection between
Units and/or Nonqualified Stock Options and cash or stock, such selection must
be made, in the case of the Annual Incentive Bonus - before the beginning
12
14
of the applicable Award Period, and in the case of the Performance Bonus -
before the beginning of the last year in the Award Period.
(2) A "Unit" is an accounting entry maintained by the Company
for the purpose of reflecting the Company's unsecured and unfunded promise to
deliver one share of stock to the Grantee upon the fifth anniversary of the date
of grant, or earlier in the event of the Grantee's death, disability, retirement
on or after age 60, a "Change-in-Control", as defined in Section 9(d) hereof, or
as otherwise determined by the Committee in its sole discretion. In converting a
Bonus to Units the Committee shall determine, in its sole discretion, the value
of the Units to be credited to a Grantee's account by taking into account the
illiquidity of the Units, the five-year investment risk, the absence of voting
rights and the risk of forfeiture, provided that the value shall in any event
never be less than 75% of the Fair Market Value of Common Stock on the date of
grant. Additional Units shall be credited to the Grantee's account to reflect
cash dividends, as determined by the Committee in its sole discretion. Also, in
the event of any change in the outstanding shares of Common Stock by reason of
the issuance of additional shares, recapitalization, reclassification,
reorganization, stock split, reverse stock split, combination of shares, stock
dividend or similar transaction, the Committee shall proportionately adjust, in
an equitable manner, the number of Units credited to a Grantee's account. Any
new Units credited with respect to an original grant of Units shall be treated
as if credited as of such original grant date. Units may not be transferred,
assigned, pledged or hypothecated in any manner. Until such time as Common Stock
is deliverable to the Grantee, he will have none of the rights of a shareholder
but only as a general creditor of the Company. If during the time Units are
outstanding a Grantee's employment is terminated for cause or the Grantee
engages in the unauthorized use of proprietary information, both of which
conditions shall be determined by the Committee in its sole discretion, the
Grantee shall forfeit all Units credited to his account. No Common Stock shall
be issued with respect to a Unit unless the Grantee has paid or made provision
satisfactory to the Committee for payment of federal, state and local income
taxes or any other taxes (other than stock transfer taxes) which the Company may
be obligated to collect as a result of the issue or transfer of such Common
Stock. In its sole discretion, and at the request of a Grantee, the Committee
may permit a Grantee (including the Company's officers and directors who are in
compliance with Rule 16b-3e(3)) to satisfy the tax obligation, in whole or in
part, by instructing the Company to withhold up to that number of shares
otherwise issuable to the Grantee with a Fair Market Value equal to the amount
of tax to be withheld.
(e) If (i) any person, including a "group" as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, shall become the beneficial
owner of shares of the Company with respect to which 20% or more of the total
number of votes for the election of the Board of Directors of the Company may be
cast; (ii) as a result of, or in connection with, any cash tender offer,
exchange offer, merger or other business combination, sale of assets or
contested election or combination of the foregoing, the persons who were prior
to the institution thereof directors of the Company shall cease to constitute a
majority of the Board of Directors of the Company; or (iii) stockholders of the
Company shall approve an agreement pursuant to which the Company will cease to
be an independent publicly-owned corporation or for a sale or other disposition
of all or substantially all of the assets of the Company, then upon the date of
any such occurrence all Performance Bonuses if any shall become fully payable or
creditable, where applicable, to the extent the Committee in its sole discretion
determines that the Performance objectives have been met, but in no event for an
amount greater than the proportion of the Performance Bonus which the number of
months served during the Award Period prior to such occurrence bears to the
total number of months in the Award Period.
13
15
9. Restricted Stock
(a) Transfer of Restricted Stock. As soon as practicable following
the Grant Date, the Committee shall transfer to the name of each Grantee any
and all awarded shares of Restricted Stock.
(b) Rights and Obligations With Respect to Restricted Stock. A
certificate or certificates for all shares of Restricted Stock registered in the
name of a Grantee shall be promptly drawn and held for the Grantee by the
Company. The Grantee shall thereupon be a stockholder and have all the rights of
a stockholder with respect to such shares, including the right to vote and
receive all dividends or other distributions made or paid with respect to such
shares. As the restrictions are released, a certificate (without the legend
mentioned below) for the number of shares with respect to which restrictions
have been released will be delivered to the Grantee as soon as practicable.
Such Restricted Stock, and any new, additional or different securities,
cash or other property, the Grantee may become entitled to receive with respect
to such Restricted Stock by virtue of the events described in Section 9(e) shall
be subject to the restrictions described in Section 9(c). In order to enforce
such restrictions, the Committee shall cause a legend or legends to make
specific reference to such restrictions on all certificates for Restricted
Stock.
(c) Specific Restrictions and Release of Restrictions. Prior to their
release as provided below, all shares of Restricted Stock held by a Grantee
shall be subject to the following restrictions:
(1) In addition to such other restrictions that the Committee
may deem advisable in its sole discretion, the Restricted Stock may not be sold,
exchanged, transferred, pledged, hypothecated, or otherwise disposed of by the
Grantee until their release as provided below;
(2) The above restrictions on the shares of Restricted Stock
shall be released with respect to the percentage of shares as of such date (or
such dates), as determined by the Committee in its sole discretion;
(3) In the event of the Grantee's termination of employment
with the Company due to (i) disability or (ii) retirement on or after Normal
Retirement Date under the Company's Retirement Plan, all restrictions on the
shares of such Restricted Stock held by the Grantee shall lapse;
(4) In the event of the Grantee's termination of employment
due to the Grantee's death, all restrictions on the shares of such Restricted
Stock held by the Grantee shall lapse and such shares shall be delivered to the
Grantee's Beneficiary. Each Grantee shall file with the Committee a written
designation of one or more persons as the Beneficiary who shall be entitled to
receive the shares, if any, payable under the Plan upon the Grantee's death. A
Grantee may, from time to time, revoke or change his Beneficiary designation
without the consent of any prior Beneficiary by filing a new designation with
the Committee. The last such designation received by the Committee shall be
controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Committee prior to the
Participant's death, and in no event shall it be effective as of the date prior
to such receipt;
(5) In the event of the Grantee's termination of employment
after the Grant Date for reasons other than those stated in Sections 9(c)(3) and
9(c)(4) above and Section 9(d) below, the
14
16
provisions of Section 9(c)(2) shall determine the percentage of shares with
respect to which restrictions are released, and the Grantee shall forfeit all
shares of Restricted Stock on which restrictions still apply; provided, however,
that the Committee may, at its sole discretion, determine that, as to the
Grantee, all restrictions on shares of such Restricted Stock held by the Grantee
shall lapse.
(d) Change in Control. If a Change in Control occurs and the
Grantee's employment with the Company terminates (other than by reason of death,
disability, retirement on or after Normal Retirement Date under the Company's
Retirement Plan, termination for cause or voluntary termination by the Grantee
except for Good Reason) within two years thereafter, then upon the date of any
such occurrence, all restrictions on the date of any such occurrence, all
restrictions on all shares of Restricted Stock (or cash, securities or other
property) held by the Grantee under the Plan shall be released. Notwithstanding
the foregoing, if a Change in Control occurs, the Committee may, at its sole
discretion, determine that all or some percentage of the restrictions shall
lapse as to the shares of such Restricted Stock held by the Grantee. A "Change
in Control" shall occur if (i) any person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, shall become the
beneficial owner of shares of the Company with respect to which 20% or more of
the total number of votes for the election of the Board of Directors of the
company may be cast; (ii) as a result of, or in connection with, any cash tender
offer, exchange offer, merger or other business combination, sale of assets or
contested election or combination of the foregoing, the persons who were prior
to the institution thereof directors of the Company shall cease to constitute a
majority of the Board of Directors of the Company; or (iii) stockholders of the
Company shall approve an agreement pursuant to which the Company will cease to
be an independent publicly-owned corporation or for a sale or other disposition
of all or substantially all of the assets of the Company. "Termination for
Cause" means any separation from service by the Grantee from his employer which
is effected by reason of fraud, deceit, or other gross misconduct by the Grantee
performed within the scope of his employment. "Termination for Good Reason"
means any separation from service because of the involuntary assignment of the
Grantee to duties materially different from his position prior to such Change in
Control or a reduction of the Grantee's salary which is greater than ten percent
of the Grantee's salary at the annual rate in effect at the time of the Change
in Control.
(e) Recapitalization, Merger, Consolidation and Similar
Transactions.
(1) Subject to any required action by stockholders,
the aggregate number of shares of Common Stock from which Restricted Stock may
be granted hereunder shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock of the Company resulting
from a subdivision or consolidation of shares or the payment of a stock dividend
on the Common Stock, other than a stock dividend that is a substitute for a cash
dividend, or any other increase in the number of such shares effected without
receipt of consideration by Company.
(2) Subject to any required action by stockholders,
in the event of the dissolution or liquidation of the Company, a merger or
consolidation of the Company, a merger or consolidation in which the Company is
not the surviving corporation, or a merger or consolidation in which the Company
is the surviving corporation but the holders of Common Stock receive securities
of another corporation; any Restricted Stock granted hereunder shall pertain to
and apply to the securities, cash or other property (subject to adjustment by
cash payment in lieu of fractional interests) to which a holder of the number of
shares of Common Stock equal to the number of shares of Restricted Stock would
have been entitled.
15
17
(3) If changes in capitalization of the Company other
than those referred to above shall occur, the Committee may, but need not, make
such adjustments in the number and class of shares of Restricted Stock that may
thereafter be granted or in the number and class of shares of Restricted Stock
then outstanding as the Committee may consider appropriate to prevent dilution
or enlargement of rights.
(f) Withholding of Taxes. Prior to the registration of any shares of
Restricted Stock in the name of a Grantee or the delivery of any shares with
respect to which restrictions have been released, the Grantee shall pay or make
provisions satisfactory to the Committee for the payment of all federal, state,
and local income taxes, or any other taxes (other than stock transfer taxes)
that the Company may be obligated to collect as a result of the issuance of such
shares. In its sole discretion, and at the request of a Grantee, the Committee
may permit a Grantee (including the Company's officers, directors, and 10
percent shareholders who are in compliance with Rule 16b-3e(3)) to satisfy the
obligation imposed by this Section, in whole or in part, by instructing the
Company to withhold up to that number of unrestricted shares otherwise
deliverable to the Grantee with a Fair Market Value equal to the amount of tax
to be withheld.
10. Term of Plan. Subject to Section 10, the Plan shall remain in effect until
December 31, 1998 or until the exercise, expiration or termination of all
Incentive Stock Options, Options and Rights under the Plan, whichever is later;
provided that no grant of an Incentive Stock Option, Option, Right or
Performance Bonus shall be made under the Plan after December 31, 1994.
11. Indemnification of Committee. The Company shall indemnify, to the full
extent permitted by law, each person made or threatened to be made a party to
any civil or criminal action or proceeding by reason of the fact that he, or his
testator or intestate, is or was a member of the Committee.
12. Amendment of the Plan. The Board of Directors of the Company may from time
to time and in the event of a change in control as defined in Section 6(e)(2)
suspend or discontinue the Plan or revise or amend it in any respect whatsoever
except that, without approval of the stockholders, no such revision or amendment
shall increase the number of shares subject to the plan, decrease the price at
which options or rights may be granted, increase the amount to be received on
exercise of a right or option, materially increase the benefits accruing to
participants under the Plan, or materially modify the requirements as to
eligibility for participation in the Plan; and no such suspension,
discontinuance, revision or amendment shall in any manner affect any option or
right theretofore granted without the consent of the Grantee or the transferee
of the option or right. Any Plan amendment shall be effected by action of the
Committee.
13. Application of Funds. Any cash proceeds received by the Company from the
issuance of Common Stock pursuant to exercise options will be used for general
corporate purposes.
14. No Obligation to Exercise Incentive Stock Option, Nonqualified Stock Option
or Right. The granting of an option or right shall impose no obligation upon the
Grantee to exercise such optionor right.
15. Compliance with Certain Laws.
(a) The Company intends that issuances and exercise of options and
rights under the Plan comply with the requirements of Rule 16(b)-3 ("Rule
16b-3") under the Securities Exchange Act of 1934 during the term of the Plan
and that issuances and exercises of Incentive Stock Options comply with Section
422A of the Internal Revenue Code of 1986, as amended. Should any provision of
the Plan not be
16
18
necessary to comply so with the requirements of Rule 16b-3 or Section 422A
or should any additional provision be necessary for the Plan and grants
and exercises thereunder to so comply, the Board of Directors of the
Company or Committee may amend the Plan to add or modify provisions of
the Plan accordingly.
(b) Should any option or portion thereof designated or granted by the
Committee as an Incentive Stock Option fail to meet the requirements of Section
422A, for any reason whatsoever upon the issuance, exercise, sale of shares
received on the exercise or otherwise, then, in such event, the Grantee shall be
deemed for all purposes of this Plan to have been granted a Nonqualified Stock
Option covering the same number of shares, at the same price, with the same
duration and exercisable on the same terms as the Incentive Stock Option or
portion thereof which failed to meet the requirements of Section 422A.
17
19
GENERAL RE CORPORATION
1989 LONG TERM COMPENSATION PLAN
UK APPROVED STOCK OPTION PLAN
SPECIAL ADDENDUM FOR THE UK STOCK OPTION PLAN
This Addendum is supplemental to the 1989 Long Term Compensation Plan of General
Re Corporation dated January 1, 1989, and all or any variations or amendments
thereto (hereinafter together referred to as "the Main Plan") and shall apply
for the purposes of granting Options to any Employee (as hereinafter defined)
whose remuneration is liable to income tax under Schedule E in the United
Kingdom. This Addendum shall apply in relation to all Options granted or to be
granted to any such Employee, other than options specifically designated as not
being granted under this Addendum. For the purposes of this Addendum, words and
phrases herein mentioned shall have the meanings ascribed to them in Section 11
hereof.
1. Purpose
The Purpose of the U.K. Plan ("this Plan") is to provide a means by which
certain directors, officers and employees of General Reinsurance Limited ("Gen
Re Ltd."), a United Kingdom company, and its Subsidiaries may be given an Option
to purchase Common Stock of General Re Corporation, a Delaware, U.S.A.
corporation ("the Company"), under a Plan approved by the Board of Inland
Revenue under ICTA 1988 Schedule 9. This Plan is intended to advance the
interests of Gen Re Ltd. and its Subsidiaries (hereinafter collectively referred
to as "the Group") by encouraging stock ownership on the part of certain
directors, officers and employees of companies within the Group ("Employees") by
enabling the Group to secure and retain the services of such Employees, and by
providing such Individuals with an additional incentive to advance the success
of the Group. This Plan shall be available for the grant of Options to different
Employees and groups of Employees and in different jurisdictions in such amounts
to such Employees and on such terms as the Committee (as hereafter defined)
shall in their absolute discretion at any time and from time to time determine
this Plan in any way that they think fit to provide benefits to Employees in any
way and to comply with the local tax laws of any jurisdiction; provided that any
such variation shall not extend the terms of this Plan or the number of shares
over which Options may be granted or otherwise in the opinion of the Committee
(whose decision thereupon shall be conclusive) go outside the bounds, limits,
and intent of this Plan.
The Committee may set out such varied Plan in an addendum to the Main Plan or in
any separate document or set of documents and such plan shall have effect
provided that it is expressed to be supplemental to the Main Plan.
2. SHARES SUBJECT TO OPTION
Subject to adjustment as provided in Section 4 hereof and to the provisions of
ICTA 1988, Options may be granted pursuant to the Main Plan (including grants
pursuant to this Plan) by the Company from time to time to purchase up to an
aggregate of 3.0 million shares of its Common Stock. Common Stock that is no
longer subject to purchase pursuant to an Option granted under the Main Plan or
this Plan, by
20
reason of the expiration of an Option or otherwise, may be re-optioned under the
Main Plan or this Plan. The Company shall not be required upon the exercise of
any Option, to issue or deliver any Common Stock prior to the completion of such
registration or other qualification of such Common Stock under any national,
state or federal law, rule or regulation as the Compensation Committee shall
determine to be necessary or desirable.
In the event of any recapitalization, merger, consolidation or similar
transaction, the number of shares of Common Stock shall be adjusted in
accordance with the provisions of Section 6(g) of the Main Plan; provided,
however, that they shall first obtain the agreement of the Board of the Inland
Revenue in writing and that the Auditors shall have confirmed in writing that in
their opinion such adjustment is fair and reasonable and that any Option so
adjusted is capable of being exercised after such adjustment as well as prior to
such adjustment in respect of the same proportion of the equity capital of the
Company and provided that no such adjustment shall result in the issue of Common
Stock in consequence of the exercise of an Option at a price per share which is
less than the nominal value thereof. Notice of any such adjustment shall be
given to the Optionee by the Compensation Committee, who may call in Option
Certificates for endorsement.
Provided that in the period of 10 years commencing at the Adoption Date or such
shorter period as shall be determined by the Main Plan, the aggregate number of
shares of Common Stock over which Options may be granted under the Main Plan
(including grants under this Plan) or the Company or any other plan that is
adopted by the Company shall not exceed 10 percent of the total ordinary share
capital of the Company in issue at the Date of Grant.
3. PARTICIPANTS
Persons eligible to be granted Options under this Plan shall be limited to such
Employees selected by the Committee, provided, however, that no Offer of an
Option shall be made to any Employee if the Date of Grant is less than 2 years
before the normal retirement date under the contract of employment by virtue of
which he is eligible to participate in this Plan.
Participation in this Plan by an Employee is a matter entirely separate from any
pension right or entitlement he may have and from his terms or conditions of
employment and participation in this Plan shall in no respects whatever affect
in any way an Employee's pension rights or entitlement or terms or conditions of
employment and in particular (but without limiting the generality of the
foregoing words) no Employee who ceases to be a director, officer, employee of
the Group shall be entitled to any compensation for any loss of any right or
benefit or prospective right or benefit under this Plan, which he might
otherwise have enjoyed whether such compensation is claimed by way of damages
for wrongful dismissal or other breach of contract or by way of compensation for
loss of office or otherwise howsoever and notwithstanding that he may have been
dismissed wrongfully or unfairly within the meaning of the Employment Protection
(Consolidation) Act 1978.
If there shall be application for Options for more shares of Common Stock than
are available under the Main Plan or any segmented part thereof or then the
Committee shall have decided to grant at any point in time, the Committee shall
scale down the applications or select amongst the applicants as they shall in
their absolute discretion think fit to ensure that no such limit shall be
exceeded.
2
21
4. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to this Plan shall be evidenced by agreements in such
forms, not inconsistent with this Plan, as the Committee shall from time to time
approve, and shall contain such terms and conditions as the Committee in its
sole discretion shall determine (including, but not limited to, provisions as to
the Option Price, Option Term, sequence to exercise, manner of exercise,
assignability, and provision for death, disability, and termination of
employment, provided that any conditions relating to a performance target to be
satisfied prior to the exercise of an Option shall require the prior approval of
the Inland Revenue) and the following provisions shall apply:
(a) Option Price and Material Interests
The Option Price shall be determined on grant by the Committee and
shall be not less than the greater of (i) Fair Market Value and (ii)
the nominal value of a share of Common Stock on the Grant Date.
(b) Term of Option
Each Option under this Plan shall expire one day prior to the end of
ten years from the date the Option is granted or the date the Plan is
terminated, except that under the circumstances described in Section
4(e), Options may expire and terminate at an earlier date.
Except as otherwise provided in this Plan, each Option shall be
exercisable at any time or from the time after the third anniversary of
the Date of Grant and prior to termination of the Option unless the
Committee shall in their absolute discretion waive this condition.
(c) Time of Granting Options
The Grant of an Option shall occur only if, within 30 days of the Date
of Grant, an Option Certificate, together with a cheque for such sum
(not exceeding US $1 or its equivalent in any other currency) as the
Committee may prescribe made payable to the Company in consideration of
the grant of the Option, shall have been duly executed and delivered by
or on behalf of the company and the Employee to whom such Option shall
be granted. Options may be granted at any time hereunder provided that
no Option shall be granted hereunder which grant would result or be
likely to result in a breach by the Committee or the Directors or any
of them of any provision of the "Model Code for Securities Transactions
by Directors of Listed Companies" or any similar code adopted by the
Company.
(d) Limitation on Amount of Option
No Option shall be granted to an Employee if immediately following such
grant he would hold Subsisting Options over Common Stock with an
aggregate Subscription Price exceeding the greater of L100,000 or four
times the amount of the Employee's Relevant Emoluments for the current
or preceding year of assessment (whichever of those years gives the
greater amount) or, if there were no Relevant Emoluments for the
preceding Year of Assessment, four times the amount of the Relevant
Emoluments for the period of twelve months beginning with the first day
during the current Year of Assessment in respect of which there are
Relevant Emoluments.
3
22
For the purposes of this Section, Options shall include all options
granted under this Plan and all options granted under any other plan
approved under Schedule 9 and established by the Company or any member
of the Group.
For the purpose of calculating the limits on aggregate Subscription
Price specified in Section 4(d) hereof, the Option Price of each Option
expressed in US dollars shall be converted into pounds sterling at the
middle spot rate of exchange quoted in New York by any recognized bank,
selected by the Committee, at the close of business on the Date of
Grant of each such Option granted to an Employee, and the sum of such
sterling amounts shall be aggregated to give the aggregate sterling
Option Price.
(e) Death or Cessation of Employment of Optionee
(i) If an Optionee dies, his legal personal representatives
may exercise the Option within but not later than 12 months after the
date of his death. To the extent that any Option so exercisable is not
exercised within such period it shall forthwith cease and determine.
(ii) If an Optionee ceases to be an Employee by reason of
injury, sickness, disability (evidenced to the satisfaction of the
Committee) or redundancy within the meaning of the Employment
Protection (Consolidation) Act 1978, he may exercise all or any of his
Options within the later of the periods of:
(A) 12 months from such cessation; or
(B) 42 months from the Date of Grant.
To the extent that any Option so exercisable is not exercised within
such period it shall forthwith cease and determine.
(iii) If an Optionee ceases to be an Employee due to
retirement at retirement age under his contract of employment he shall
be entitled to (or where he retires before reaching the retirement age
under his contract of employment, he may at the absolute discretion of
the Committee) exercise all or any of his Options within the later of
the periods of:
(A) 12 months from such cessation; or
(B) 42 months from the Date of Grant.
To the extent that any Option so exercisable is not exercised within
such period it shall forthwith cease and determine.
(iv) If an Optionee ceases to be an Employee for any reason
other than as set out in Section 4(e)(i),(ii), and (iii), he may
exercise all or any of his Options only at the absolute discretion of
the Committee and where such exercise is permitted it shall be within
such period as may be specified by the Committee.
4
23
(f) Acceleration of Options upon Change of Control
If an event described in Section 6(e)(2) of the Main Plan occurs, all
Options shall become immediately exercisable.
(g) Technical Loss of Employment
If an Optionee ceases to be an Employee by reason only that his office
or employment either is with a company which ceases to be an Affiliate
or relates to a business or part of a business which is transferred
to a person who is neither an Affiliate nor an associated company
of the Company he may exercise any Option in whole or in part within 3
months of his so ceasing (subject always to any other applicable
overall period for exercise of the Option). To the extent that any
Option so exercisable is not exercised within such period, it shall
cease and determine.
(h) Assignment
No Option nor any right thereunder shall be capable of being
transferred, assigned, charged or otherwise alienated, save that on the
death of an Optionee, an Option amy pass to his personal
representative.
(i) Exercise of Options
(i) Options may be exercised in whole or in part.
(ii) In order to exercise an Option in whole or in part, the
Optionee (or as the case may be, his personal representative(s)) must
deliver to the Committee a notice in writing specifying the number of
shares of Common Stock in respect of which the Option is being
exercised accompanied by payment in full for the Common Stock in
respect of which the Option is exercised. Such notice shall take effect
on the day it is delivered and such day shall constitute, for all
purposes, the date of exercise of such Option. Such notice shall be
given only in such form as the Committee may from time to time
prescribe. In the event of an Option being exercised in part only, the
balance of the Option not thereby exercised shall continue to be
exercisable in accordance with this Section 4 and the provisions of
this rule until such time as it shall lapse in accordance with and
subject to the rules of this Plan. The Option Certificate shall also be
lodged with the Committee on the exercise of any Option or any part
thereof.
(iii) As soon as practicable and in any event not less than
thirty days after receipt by the Committee of such notice, Option
Certificate and payment, Common Stock in respect of which the Option
has been exercised shall be issued by the Committee upon definitive
Stock Certificates. If, under the terms of a resolution passed or an
announcement made by the Company prior to the date of exercise of an
Option, a dividend is to be paid or is proposed to be paid to the
holders of the Common Stock on the register of members in respect of a
record date prior to such date of exercise, the Common Stock to be
allotted upon such exercise will not rank for such dividend. Subject as
aforesaid the Common Stock so to be allotted shall be identical and
rank pari passu in all respects with the fully paid Common Stock of the
same class in issue on the date of such exercise.
5
24
(iv) No Option may be exercised by an individual at any time
when he is precluded by paragraph 8 of Schedule 9 from participating in
this Plan.
5. Administration
(a) This Plan shall be administered by the Committee in accordance
with the terms of the Main Plan.
(b) Subject to the provisions of this Plan, the Committee shall have
full power to grant Options under this Plan, to construe or interpret
this Plan, to prescribe, amend and rescind rules and regulations
relating to it and to make all other determinations necessary or
advisable for its administration. Provided that no such construction,
interpretation, prescription, amendment, recision, or determination
shall either reduce the value of any Option or shares of Common Stock
purchased pursuant to such an Option or take effect if such action
would result in the loss, cancellation, or withdrawal of any relief or
exemption from taxation previously applicable thereto.
(c) Subject to the provisions of Sections 3 and 4 hereof, the Committee
may, from time to time, determine which Employees shall be granted
Options under this Plan, the number of shares of Common Stock subject
to each Option, and the time or times at which Options shall be granted
or exercised, and to grant such Options under this Plan.
(d) No member of the Board of Directors or of the Committee shall be
liable for any action or determination made in good faith with respect
to this Plan or to any Option and service on the Committee shall
constitute service as a director, entitling such Committee member to
indemnification and reimbursement for such service to the same extent
as for service rendered as a director.
(e) All allotments and issues of Common Stock shall be subject to any
necessary consents of HM Treasury or other authorities in the United
States, the United Kingdom or elsewhere under enactments or regulations
for the time being in force and it shall be the responsibility and at
the expense of the Company to comply with any requirements to be
fulfilled in order to obtain or obviate the necessity for any such
consent.
(f) The Company shall at all times keep available for allotment
authorized and unissued or treasury Common Stock of the Company at
least sufficient to satisfy all subsisting Options.
(g) Any notice or other document required to be given hereunder to any
Optionee shall be delivered to him or sent by post to him at his home
address according to the records of the Company or such other address
as may appear to the Company to be appropriate. Any notice or other
document required to be given to the Company shall be delivered or sent
by post to the relevant registered office or offices. Notices sent by
post shall be deemed to have been given on the day but one following
the date of posting.
(h) Optionees not otherwise entitled thereto shall be sent copies of
all notices and other documents sent by the Company to its ordinary
shareholders generally.
6
25
(i) The decision of the Compensation Committee in any dispute or
question relating to any Option shall be final and conclusive subject
to the terms of this Plan.
6. Adoption Date and Termination
(a) The Adoption Date of this Plan is January 1, 1989.
(b) This Plan shall terminate on December 31, 1988, but the Committee
may terminate this Plan at any time prior to ten years from the
Adoption Date of this Plan. Termination of this Plan shall not alter or
impair, without the consent of the Optionee, any of the rights or
obligations and any Option theretofore granted under this Plan.
7. Use of Proceeds
The proceeds from the sale of shares of Common Stock pursuant to the exercise of
the Options will be used for the Company's general corporate purpose.
8. Amendments
(1) The Committee may, with the prior written approval of the Board of
Inland Revenue, from time to time, alter, amend, suspend, or discontinue this
Plan, or alter or amend any and all Option agreements granted thereunder;
provided, however, that no such action of the Compensation Committee may alter
the provisions of this Plan so as to:
(a) Decrease the minimum Option Price;
(b) Extend the term of this Plan beyond ten years or the maximum term
of the Options granted beyond ten years;
(c) Withdraw the administration of the Plan from the Compensation
Committee;
(d) Permit any member of the Compensation Committee to be eligible to
receive or hold an Option under this Plan;
(e) Alter any outstanding Option Agreement to the detriment of the
Optionee without his consent;
(f) Decrease, directly or indirectly (by cancellation and substitution
of Options or otherwise), the Option Price applicable to any Option
granted under this Plan.
(2)(a) Notwithstanding the provisions of this Section 8(2), the
Compensation Committee may at any time make such alterations (including
additions) to this Plan as are necessary to secure that this Plan
receives initial approval from the Board of Inland Revenue under
Schedule 9.
(b) Subject to Section 8(2)(d) the Directors may, from time to time at
their absolute discretion, amend, waive, or replace any of the
provisions of this Plan provided that, except with the prior approval
of the Company's shareholders,
7
26
(i) no amendment, waiver, or replacement to the advantage of
Optionees shall be made to Sections 1 and 2 or this Section
8(2)(b) or 8(2)(d) of the Plan or to the definitions of
Employee, Common Stock, Option Price, Date of Grant, Market
Value or Relevant Emoluments; and
(ii) the effect of Sections 3, 4 and 5 of this Plan shall not
be altered.
(c) No amendment, waiver, or replacement to this Plan shall be made
which would have the effect of abrogating or altering adversely any of
the subsisting rights of Optionees except with consent on their part.
(d) No amendment to this Plan shall be made without the prior approval
of the Board of Inland Revenue in writing.
(e) Written notice of any amendment made or to be made in accordance
with this Section B shall be given to all Optionees.
9. Governing Law
This Plan shall (notwithstanding the law applicable to any other contract with
an Employee) be construed according to the laws of England.
10. Inland Revenue Requirements
The Company shall provide to the Inland Revenue, within such time as the Inland
Revenue may direct, information requested by the Inland Revenue under paragraph
6 of Schedule 9 and an Optionee shall:
(i) provide to the Company in timely fashion such information
as the Company shall reasonably request; and
(ii) consent to the Company providing information concerning
him to the Inland Revenue,
for the purpose of complying with such a request from the Inland Revenue.
11. Definitions
For the purpose of interpreting and construing this Plan (except where the
context otherwise requires), the following expressions shall have the meaning
ascribed to them as set out below:
Adoption Date - The date on which the U.K. Plan is approved by the resolution
of the shareholders of the Company;
Auditors - The Auditors for the time being of the Company;
Affiliates - A company which is controlled by the Company within the meaning of
Section 804 of ICTA 1988;
8
27
Balance Option Certificates - The certificates issued to an Optionee in
accordance with Section 3;
The Capital Gains Tax Act 1979 - The Capital Gains Tax Act 1979 of the United
Kingdom;
Close Company - A company which is a Close Company within the meaning of the
Income and Corporation Taxes Act 1988 as amended for the purpose of Schedule 9;
The Committee - The Compensation Committee of the Board of Directors of the
Company as described in Section 3(a) of the Main Plan;
Companies Act 1985 - The Companies Act 1985 of the United Kingdom;
Date of Grant - The date on which the Committee resolves to grant an Option;
The Directors - The Board of Directors of the Company or a duly authorized
committee thereof;
Employee - An employee (other than a director) of a company which is a member of
the Group whose hours of work for such member of the Group exceeds 20 hours per
week or a full time director of a company which is a member of the Group whose
hours of work for such member of the Group exceed 25 hours per week in both
cases exclusive of meal breaks, and is not precluded by paragraph 8 of Schedule
9 from participating in this Plan;
Fair Market Value - The Market Value of a share of Common Stock subject to the
Option Agreement on the dated Grant or such earlier date or dates as may be
agreed in writing with the Board of Inland Revenue of the United Kingdom;
The Group - General Reinsurance Limited or any Affiliate for the time being
designated by the Committee as a member of the Group for the purposes of this
Plan or, where the context so permits, any one or more of them;
ICTA 1988 - The Income and Corporation Taxes Act 1988 of the United Kingdom;
Market Value - On any day the market value of a share of Common Stock determined
in accordance with the provisions of Part VIII of the Capital Gains Tax Act 1979
and as agreed with the Board of Inland Revenue on or before that day;
Option - A right to subscribe for Common Stock at the Option Price granted to an
Employee under the provisions of this Plan and for the time being subsisting;
Optionee - Any person who holds an Option or (where the context admits) his
legal personal representatives;
Option Certificate - A certificate issued to an Optionee in accordance with
Section 4;
Option Price - The price per share of common stock of General Re Corporation,
par value $.50 per share which satisfies the conditions specified in paragraphs
10-14 inclusive of Schedule 9;
9
28
This Plan - The Main Plan as varied by this Addendum;
Relevant Emoluments - Emoluments of an Employee of the office or employment by
virtue of which he is eligible to participate in the U.K. Plan as are liable to
be paid under deduction of tax pursuant to Section 203 of the Income and
Corporation Taxes Act 1988 after deducting therefrom amounts included by virtue
of Chapter ii of Part V of the Income and Corporation Taxes Act of 1988;
Schedule 9 - Schedule 9 to the Income and Corporation Taxes Act of 1988;
Subscription Price - The amount payable in relation to the exercise of an
Option, being the amount after any adjustment pursuant to Section 2 of the
relevant Option price multiplied by the number of Shares of Common Stock in
respect of which the Option is exercised;
Subsidiaries - Any subsidiary corporation of General Reinsurance Limited within
the meaning of Section 736 of the Companies Act of 1985;
Subsisting Option - An Option which has neither lapsed nor been exercised;
Year of Assessment - a fiscal year from April 6th to April 5th;
For the purposes of this Plan:
(a) where words denote the masculine gender they shall for the
purposes of interpretation include the feminine and neuter
genders and vice versa;
(b) where words denote the singular they shall for the purposes
of interpretation include the plural and vice versa;
(c) unless the context otherwise require words have the same
meanings as in Schedule 9 of Sections 185 and 187 of ICTA
1988;
(d) when referring to any enactment being construed as a
reference to that enactment as for the time being amended
or re-enacted;
(e) when referring to Sections throughout this Plan be taken to
refer to the Sections of this Plan.
10