1
Exhibit 10.2
FIRST AMENDED AND RESTATED
W. R. BERKLEY CORPORATION
1992 STOCK OPTION PLAN
* * * * * *
ARTICLE I.
PURPOSE
This First Amended and Restated W. R. Berkley Corporation 1992 Stock Option
Plan (the "Plan") is intended as an incentive and to encourage stock ownership
by certain employees of W. R. Berkley Corporation (the "Company") and of its
subsidiaries and affiliates in order to increase their proprietary interest in
the Company's success. The Plan is the first amendment and restatement of the
Company's 1992 Stock Option Plan, and the provisions of the Plan, as so amended
and restated, shall apply to all currently outstanding options under the Plan,
as well as options granted prospectively under the Plan.
The word "Company" when used in the Plan with reference to employment shall
include subsidiaries of the Company. The word "subsidiary" when used in the Plan
shall mean any subsidiary of the Company within the meaning of Section 424(f) of
the Internal Revenue Code of 1986, as amended ("Code"). The word "affiliate"
when used in the Plan shall mean any entity in which the Company has a direct or
indirect controlling interest.
2
ARTICLE II.
ADMINISTRATION
The Plan shall be administered by a committee (the "Committee") appointed
by the Board of Directors of the Company (the "Board") from among its members,
which shall consist of not less than two members thereof, provided that the full
Board may, in its discretion, from time to time exercise the power and authority
of the Committee under the Plan.
Subject to the provisions of the Plan, the Committee shall have authority,
in its discretion: (a) to determine which of the eligible employees of the
Company and its subsidiaries and affiliates shall be granted options; (b) to
authorize the granting of options and designate whether such options shall be
"incentive stock options" under Section 422 of the Code or "non-statutory stock
options"; (c) to determine the times when options shall be granted and the
number of shares subject to such options; (d) to determine the option price of
the shares subject to each option, which price shall be not less than the
minimum specified in ARTICLE VI; (e) to determine the time or times when each
option becomes exercisable, and the duration of the exercise period; (f) to
accelerate the vesting and/or exercisability of any outstanding options; (g) to
prescribe the form or forms of the option agreements under the Plan (which forms
shall be consistent with the Plan but need not be identical); (h) to adopt,
amend, and rescind such rules and regulations as, in its opinion, may be
advisable in the administration of the Plan; and (i) to construe and interpret
the Plan, the rules and regulations
-2-
3
and the option agreements under the Plan and to make all other determinations
deemed necessary or advisable for the administration of the Plan. All decisions,
determinations and interpretations of the Committee shall be final and binding
on all Optionees.
ARTICLE III.
STOCK
The stock to be optioned under the Plan shall be shares of authorized but
unissued Common Stock of the Company, par value $.20 per share, or previously
issued shares of Common Stock reacquired by the Company (the "Stock"). The total
number of shares of Stock which may be purchased pursuant to options granted
under the Plan shall not exceed, in the aggregate, 4,750,000 shares, except as
such number of shares shall be adjusted in accordance with the provisions of
ARTICLE X hereof. The maximum number of shares of Stock with respect to which
options may be granted under the Plan to any single optionee during any calendar
year shall not exceed 1,000,000 shares, except as such number shall be adjusted
in accordance with the provisions of ARTICLE X hereof.
In the event that any outstanding option under the Plan for any reason
expires or is terminated prior to the end of the period during which options may
be granted, the shares of Stock subject to the unexercised portion of such
option may again be subject to options granted under the Plan.
-3-
4
ARTICLE IV.
ELIGIBILITY OF PARTICIPANTS;
LIMITATION ON GRANTS OF OPTIONS
(a) Officers and key employees of the Company or any of its subsidiaries
(including directors who are also employees of the foregoing) are eligible for
grants of incentive stock options which meet the requirements of Section 422 of
the Code.
(b) Officers, key employees and directors (including directors who are not
employees) of the Company or any of its subsidiaries or affiliates are eligible
for grants of non-statutory stock options. For purposes of the Plan, a
"non-statutory stock option" means an option which, at the time of grant, is not
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
(c) With respect to incentive stock options, if the aggregate fair market
value (determined as of the time the option is granted) of the Stock with
respect to which any incentive stock option becomes exercisable for the first
time by an optionee in any calendar year (under the Plan or any other stock
option plan of the Company or any parent or subsidiary thereof) exceeds
$100,000, such options shall be treated as non-statutory stock options to the
extent of such excess.
-4-
5
ARTICLE V.
OPTIONS
Options granted pursuant to the Plan shall be evidenced by agreements in
such form as the Committee shall from time to time approve, which agreements
need not contain uniform terms and conditions but shall comply with and be
subject to all the terms and conditions of the Plan and the applicable
provisions of the Code. More than one option may be granted to any optionee.
ARTICLE VI.
OPTION PRICE
In the case of each option granted under the Plan, the option price shall
be not less than the fair market value of the Stock on the date of grant of such
option, such fair market value to be determined by the Committee in its
discretion; provided, however that in the case of an incentive stock option
granted to an individual who owns, at the time the option is granted, stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or any parent or subsidiary thereof (a "Ten
Percent Shareholder"), the option price shall not be less than 110% of such fair
market value. In no event, however, shall the option price be less than an
amount equal to the par value of the Stock.
-5-
6
ARTICLE VII.
EXERCISE AND TERM OF OPTIONS
The option agreement may specify periods of time during which options may
not be exercised in whole or in part. Except as may be so specified, any option
may be exercised in whole at any time or in part from time to time during the
applicable option period. The Committee, in its discretion, may accelerate the
vesting and/or exercisability of any outstanding option. Unless otherwise
determined by the Committee at the time of grant, the vesting and exercisability
of an optionee's outstanding options shall accelerate upon a termination of
employment by reason of the optionee's death or disability. The Committee shall
have the authority to define the term "disability" for this purpose and/or to
determine whether an optionee's employment has terminated by reason of
disability.
Any other provision of the Plan to the contrary notwithstanding, no option
may be exercised after the date ten years from the date of grant of such option
or, in the case of an incentive stock option granted to a Ten Percent
Shareholder, five years from the date of grant of such option.
The Committee, in its discretion, may, with the consent of any optionee,
cancel any outstanding option.
-6-
7
ARTICLE VIII.
PAYMENT FOR SHARES
Except as provided in the next succeeding paragraph, payment for shares of
Stock purchased upon exercise of an option granted hereunder shall be made in
full (i) in cash or cash equivalents, (ii) in shares of Stock which have been
held by the optionee for at least six months prior to the date of such exercise,
or (iii) in any combination of these two methods. In addition, the Committee
may, in its discretion, allow for the exercise of options in accordance with
broker-loan procedures adopted by the Committee from time to time.
If the Committee shall so determine and at the election of the optionee,
payment for shares of Stock purchased upon exercise of an option granted
hereunder shall be made in installments, as shall be provided in the applicable
option agreement. If payment is made in installments, the optionee shall deliver
to the Company his promissory note payable to the Company for an amount equal to
the difference between the full purchase price of the shares then being
purchased and the amount of any down payment. The optionee shall pay the balance
of the purchase price, together with interest thereon (if the Committee shall
provide in the applicable option agreement for the payment of interest thereon)
as provided by the Committee in the applicable option agreement; provided,
however, that in any event the entire amount of the purchase price shall be due
and payable by the end of five years from the date of purchase. Dividends on
partly paid shares issued to such optionee (other than dividends
-7-
8
in Stock) shall be declared and paid only upon the basis of the percentage of
the purchase price actually received thereon by the Company, and, if so provided
in the option agreement, any such dividends paid prior to final payment for the
shares shall be applied by the Company against installments of the purchase
price in the order of their maturity. The optionee shall not have the right to
exercise any voting rights with respect to the shares until such time as the
purchase price therefor is fully paid. Certificates for partly paid shares
shall, immediately upon issue, be delivered to the Company, endorsed in blank by
the optionee or accompanied by a separate stock power so endorsed, in pledge as
security for the payment of the unpaid balance of the purchase price. The
certificates issued to represent partly paid shares shall state thereon the
total amount of the consideration to be paid therefor and the amount paid
thereon.
At the time of exercise of any option, the Committee shall require the
optionee to pay to the Company an amount sufficient to pay all federal, state
and local withholding taxes applicable, in the Committee's judgment, to the
exercise of such option, and the optionee's right to exercise shall be
contingent upon such payment. Such payment to the Company may be effected
through (a) payment by the optionee to the Company of the aggregate withholding
taxes in cash or cash equivalents; (b) at the discretion of the Committee, the
Company's withholding from the number of shares of Stock that would otherwise be
delivered to the optionee upon exercise of the option, a number of shares of
Stock with an aggregate fair market value on the date of
-8-
9
exercise (as determined by the Committee) equal to the aggregate amount of
withholding taxes; or (c) at the discretion of the Committee, any combination of
these two methods.
ARTICLE IX.
NON-TRANSFERABILITY OF OPTION RIGHTS
(a) Except as provided in paragraph (b) below, an option granted under the
Plan may not be transferred except by will or the laws of descent and
distribution and, during the lifetime of the optionee, may be exercised only by
the optionee.
(b) Notwithstanding paragraph (a) above, at the discretion of the
Committee, an option, other than an incentive stock option, may be transferred
by the optionee to one or more members of the optionee's immediate family, or to
a trust or a partnership established for the benefit of one or more members of
the optionee's immediate family. For the purposes of this paragraph (b),
"immediate family" means an optionee's spouse, children and grandchildren,
whether natural or adopted.
ARTICLE X.
ADJUSTMENT FOR RECAPITALIZATION, MERGER, ETC.
The aggregate number of shares of Stock which may be purchased pursuant to
options granted hereunder, the maximum number of shares of Stock with respect to
which options may be granted to any single optionee during any calendar year,
the number of shares of Stock covered by each outstanding option and the price
per share thereof shall be appropriately adjusted for any increase or decrease
in the number of outstanding shares of
-9-
10
Stock resulting from a stock split or other subdivision or consolidation of
shares of Stock, or for other capital adjustments or payments of stock dividends
or distributions or other increases or decreases in the outstanding shares of
Stock effected without receipt of consideration by the Company.
If the Company shall be sold, reorganized, consolidated, or merged with
another corporation, or if all or substantially all of the assets of the Company
shall be sold or exchanged (a "Corporate Event"), (i) each optionee shall, at
the time of such Corporate Event, be entitled to receive upon the exercise of
his option the same number and kind of shares of common stock or the same amount
of property, cash or other securities as he would have been entitled to receive
upon the occurrence of such Corporate Event as if he had been, immediately prior
to such event, the holder of the number of shares of Stock covered by his
option, and (ii) if the Company is not the surviving corporation in such
Corporate Event, the Company shall require the successor corporation or parent
thereof to assume such outstanding options; provided, however, that the
Committee may, in its discretion and in lieu of requiring such assumption,
provide that all outstanding options shall terminate as of the consummation of
such Corporate Event, and accelerate the exercisability of all outstanding
options to any date prior to the date of such Corporate Event.
The foregoing adjustments and the manner of application of the foregoing
provisions shall be determined by the Committee
-10-
11
in its sole discretion. Any such adjustment may provide for the elimination of
any fractional share which might otherwise become subject to an option.
ARTICLE XI.
CHANGE OF CONTROL
In the event of a Change of Control, each outstanding option under the Plan
(including options granted prior to this first amendment and restatement) shall
vest and become immediately exercisable in full as of the date immediately
preceding the date of such Change of Control, or such other date, not later than
the date of such Change of Control, as shall be established by the Committee in
its discretion.
For purposes of the Plan, a "Change of Control" shall mean:
(a) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of Stock (the "Outstanding Company
Stock") or (ii) the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however, that
for purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition directly from the Company,
-11-
12
(ii) any acquisition by the Company, (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company, (iv) any
acquisition by William R. Berkley or any entity directly or indirectly
controlled by William R. Berkley, (v) any acquisition by any corporation
pursuant to a transaction which complies with clauses (i), (ii), and (iii) of
subsection (c) of this ARTICLE XI or (vi) any acquisition that is approved in
advance by the Board at a time when the Incumbent Board (as hereinafter defined)
constitutes at least a majority of the Board (an "Approved Acquisition"); or
(b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) Consummation of a Corporate Event, unless, following such Corporate
Event, (i) all or substantially all of
-12-
13
the individuals and entities who were the beneficial owners, respectively, of
the Outstanding Company Stock and Outstanding Company Voting Securities
immediately prior to such Corporate Event beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation resulting from such Corporate Event (including,
without limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Corporate Event, of the Outstanding Company
Stock and Outstanding Company Voting Securities, as the case may be, (ii) no
Person other than (1) William R. Berkley or any entity directly or indirectly
controlled by William R. Berkley, (2) any corporation resulting from such
Corporate Event, or (3) any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Corporate Event, beneficially
owns, directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Corporate Event or
the combined voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
Corporate Event, or was acquired pursuant to an Approved Acquisition and (iii)
at least a majority of the members of the board of directors of the
-13-
14
corporation resulting from such Corporate Event were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the action of
the Board, providing for such Corporate Event; or
(d) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.
ARTICLE XII.
NO OBLIGATION TO EXERCISE OPTION
Granting of an option shall impose no obligation on the recipient to
exercise such option.
ARTICLE XIII.
USE OF PROCEEDS
The proceeds received from the sale of Stock pursuant to the Plan shall be
used for general corporate purposes.
ARTICLE XIV.
RIGHTS AS A STOCKHOLDER
An optionee or a transferee of an option shall have no rights as a
stockholder with respect to any shares covered by his option until he shall have
become the holder of record of such shares, and he shall not be entitled to any
dividends or distributions or other rights in respect of such shares for which
the record date is prior to the date on which he shall have become the holder of
record thereof.
-14-
15
ARTICLE XV.
COMPLIANCE WITH THE LAW
The Company shall have no liability for failure to (or delay in) issue or
transfer any shares of Stock subject to options under the Plan resulting from
its inability to obtain (or any delay in obtaining) all requisite regulatory
authority, if counsel for the Company deems such authority necessary for lawful
issuance or transfer of any such shares. Appropriate legends may be placed on
the Stock certificates evidencing shares issued upon exercise of options to
reflect such transfer restrictions.
ARTICLE XVI.
GRANT LIMITATION FOR INCENTIVE STOCK OPTIONS
No incentive stock option shall be granted hereunder after the date which
is ten years from the earlier of (i) the date the Plan, as amended and restated,
is adopted by the Board, and (ii) the date the Plan, as amended and restated, is
approved by the Company's stockholders.
ARTICLE XVII.
AMENDMENT OR DISCONTINUANCE OF PLAN
The Board may, without the consent of the optionees, at any time terminate
the Plan entirely and at any time or from time to time amend or modify the Plan,
provided that no such action shall adversely affect any option theretofore
granted hereunder without the consent of the applicable optionee, and provided
further that no such action by the Board, without approval of the stockholders,
may (a) increase the total number of shares of
-15-
16
Stock which may be purchased pursuant to options granted under the Plan, except
as contemplated in ARTICLE X; or (b) change the class of employees eligible to
receive incentive stock options under the Plan.
* * *
As amended as of May 14, 1997
-16-