EXHIBIT 10.54
ACE LIMITED
1999 REPLACEMENT STOCK PLAN
ARTICLE 1
GENERAL
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1.1 Purpose. The ACE Limited 1999 Replacement Stock Plan (the "Plan") has
been established by ACE Limited (the "Company") for the purpose of (i) amending,
restating, combining into a single plan, and continuing the Capital Re
Corporation Director's Stock Option Plan, the Capital Re Corporation 1992 Stock
Option Plan, the Capital Re Corporation 1997 Employee Stock Option Plan and the
Capital Re Corporation Performance Share Plan, as in effect immediately prior to
the Transaction Date (as described below) (collectively, the "CapRe Plans");
(ii) permitting the grant of Awards to selected individuals in connection with
the closing of the transaction (the "Transaction") pursuant to and as of the
date (the "Transaction Date") contemplated by the Amended and Restated Agreement
and Plan of Merger among the Capital Re Corporation ("CapRe"), the Company and
CapRe Acquisition Corporation, dated as of October 26, 1999 (the "Merger
Agreement"), including the granting of Replacement Awards in satisfaction of the
Company's obligations under Section 6.12 of the Merger Agreement; and (iii)
permitting the granting of compensation that is based on the Company's ordinary
shares of stock.
1.2 Participation. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, from among the
Eligible Individuals, those persons who will be granted one or more Awards
(including, without limitation, Replacement Awards described in Section 2) under
the Plan, and thereby become "Participants" in the Plan. In the discretion of
the Committee, a Participant may be granted any Award permitted under the
provisions of the Plan, and more than one Award may be granted to a Participant.
Awards may be granted as alternatives to or replacement of awards granted or
outstanding under the Plan, or any other plan or arrangement of the Company or a
Subsidiary (including a plan or arrangement of a business or entity, all or a
portion of which is acquired by the Company or a Subsidiary).
1.3 Operation, Administration, and Definitions. The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 5 (relating to operation and
administration). Capitalized terms in the Plan (excluding any exhibits to the
Plan) shall be defined as set forth in the Plan (without regard to such
exhibits).
ARTICLE 2
REPLACEMENT AWARDS
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The Committee may grant awards under this Plan in replacement of awards
granted prior to Transaction Date under any of the CapRe Plans (the "Replacement
Awards"). To the extent provided by the Committee, or required by the terms of
the Merger Agreement, the Replacement Awards shall be subject to the applicable
terms of the CapRe Plans.
SECTION 3
OPTIONS AND SARS
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3.1 Definitions.
(a) The grant of an "Option" entitles the Participant to purchase shares of
Stock at an Exercise Price established by the Committee. Any Option granted
under this Section 3 shall be a non-qualified option (an "NQO"), as
determined in the discretion of the Committee. An "NQO" is an Option that
is not intended to be an "incentive stock option" as that term is described
in section 422(b) of the Code.
(b) A stock appreciation right (an "SAR") entitles the Participant to receive,
in cash or Stock (as determined in accordance with subsection 4.5), value
equal to (or otherwise based on) the excess of: (a) the Fair Market Value
of a specified number of shares of Stock at the time of exercise; over (b)
an Exercise Price established by the Committee.
3.2 Exercise Price. The "Exercise Price" of each Option and SAR granted
under this Section 3 shall be established by the Committee or shall be
determined by a method established by the Committee at the time the Option or
SAR is granted; except that the Exercise Price shall not be less than 100% of
the Fair Market Value of a share of Stock on the date of grant (or, if greater,
the par value of a share of Stock).
3.3 Exercise. An Option and an SAR shall be exercisable in accordance with
such terms and conditions and during such periods as may be established by the
Committee.
3.4 Payment of Option Exercise Price. The payment of the Exercise Price of
an Option granted under this Section 3 shall be subject to the following:
(a) Subject to the following provisions of this subsection 3.4, the full
Exercise Price for shares of Stock purchased upon the exercise of any
Option shall be paid at the time of such exercise (except that, in the case
of an exercise arrangement approved by the Committee and described in
paragraph 3.4(c), payment may be made as soon as practicable after the
exercise).
(b) The Exercise Price shall be payable in cash or by tendering, by either
actual delivery of shares or by attestation, shares of Stock acceptable to
the Committee, and valued at Fair Market Value as of the day of exercise,
or in any combination thereof, as determined by the Committee.
(c) The Committee may permit a Participant to elect to pay the Exercise Price
upon the exercise of an Option by irrevocably authorizing a third party to
sell shares of Stock (or a sufficient portion of the shares) acquired upon
exercise of the Option and remit to the Company a sufficient portion of the
sale proceeds to pay the entire Exercise Price and any tax withholding
resulting from such exercise.
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3.5 Settlement of Award. Shares of Stock delivered pursuant to the exercise
of an Option or SAR shall be subject to such conditions, restrictions and
contingencies as the Committee may establish in the applicable Award Agreement.
Settlement of SARs may be made in shares of Stock (valued at their Fair Market
Value at the time of exercise), in cash, or in a combination thereof, as
determined in the discretion of the Committee. The Committee, in its discretion,
may impose such conditions, restrictions and contingencies with respect to
shares of Stock acquired pursuant to the exercise of an Option or an SAR as the
Committee determines to be desirable.
SECTION 4
OTHER STOCK AWARDS
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4.1 Definitions.
(a) A "Stock Unit" Award is the grant of a right to receive shares of Stock in
the future.
(b) A "Performance Share" Award is a grant of a right to receive shares of
Stock or Stock Units which is contingent on the achievement of performance
or other objectives during a specified period.
(c) A "Performance Unit" Award is a grant of a right to receive a designated
dollar value amount of Stock which is contingent on the achievement of
performance or other objectives during a specified period.
(d) A "Restricted Stock" Award is a grant of shares of Stock, and a "Restricted
Stock Unit" Award is the grant of a right to receive shares of Stock in the
future, with such shares of Stock or right to future delivery of such
shares of Stock subject to a risk of forfeiture or other restrictions that
will lapse upon the achievement of one or more goals relating to completion
of service by the Participant, or achievement of performance or other
objectives, as determined by the Committee.
4.2 Restrictions on Awards. Each Stock Unit Award, Restricted Stock Award,
Restricted Stock Unit Award, Performance Share Award and Performance Unit Award
shall be subject to such conditions, restrictions and contingencies as the
Committee shall determine.
SECTION 5
OPERATION AND ADMINISTRATION
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5.1 Effective Date. This amendment and restatement is effective as of the
Closing Date as that term is used in the Merger Agreement (the "Effective
Date"). The Plan shall be unlimited in duration and, in the event of Plan
termination, shall remain in effect as long as any Awards under it are
outstanding; provided, however, that no Awards may be granted under the Plan
after the ten-year anniversary of the Effective Date.
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5.2 Shares Subject to Plan. The shares of Stock for which Awards may be
granted under the Plan shall be subject to the following:
(a) The shares of Stock with respect to which Awards may be made under the Plan
shall be currently authorized but unissued shares, or shares purchased in
the open market by a direct or indirect wholly-owned subsidiary of the
Company (as determined by the Chairman or any Executive Vice President of
the Company). The Company may contribute to the subsidiary an amount
sufficient to accomplish the purchase in the open market of the shares of
Stock to be so acquired (as determined by the Chairman or any Executive
Vice President of the Company).
(b) Subject to this subsection 5.2, the number of shares of Stock available for
Awards under the Plan shall be equal to the number of ACE Limited ordinary
shares into which the total number of Available Capital Re Corporation
Shares would be converted pursuant to the terms of the Merger Agreement if
the number of Available Capital Re Corporation Shares were outstanding
immediately prior to Transaction Date. For purposes of this paragraph (b),
the number of "Available Capital Re Corporation Shares" shall be equal to
the aggregate number of shares of Cap Re Corporation stock available for
awards under the Cap Re Plans immediately prior to the Transaction Date
plus the number of shares of Cap Re Corporation stock under all awards
under the Cap Re Plans that were canceled as of that date.
(c) To the extent provided by the Committee, any Award may be settled in cash
rather than Stock. To the extent any shares of Stock covered by an Award
are not delivered to a Participant or beneficiary because the Award is
forfeited or canceled, or the shares of Stock are not delivered because the
Award is settled in cash or used to satisfy the applicable tax withholding
obligation, such shares shall not be deemed to have been delivered for
purposes of determining the maximum number of shares of Stock available for
delivery under the Plan.
(d) If the exercise price of any Option granted under the Plan is satisfied by
tendering shares of Stock to the Company (by either actual delivery or by
attestation), only the number of shares of Stock issued net of the shares
of Stock tendered shall be deemed delivered for purposes of determining the
maximum number of shares of Stock available for delivery under the Plan.
(e) In the event of a corporate transaction involving the Company (including,
without limitation, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-
up, spin-off, combination or exchange of shares), the Committee may adjust
Awards to preserve the benefits or potential benefits of the Awards. Action
by the Committee may include: (i) adjustment of the number and kind of
shares which may be delivered under the Plan; (ii) adjustment of the number
and kind of shares subject to outstanding Awards; (iii) adjustment of the
Exercise Price of
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outstanding Options and SARs; and (iv) any other adjustments that the
Committee determines to be equitable.
5.3 General Restrictions. Delivery of shares of Stock or other amounts
under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Company shall have no
liability to deliver any shares of Stock under the Plan or make any other
distribution of benefits under the Plan unless such delivery or
distribution would comply with all applicable laws (including, without
limitation, the requirements of the United States Securities Act of 1933),
and the applicable requirements of any securities exchange or similar
entity.
(b) To the extent that the Plan provides for issuance of stock certificates to
reflect the issuance of shares of Stock, the issuance may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or
the applicable rules of any stock exchange.
5.4 Tax Withholding. All distributions under the Plan are subject to
withholding of all applicable taxes, and the Committee may condition the
delivery of any shares or other benefits under the Plan on satisfaction of the
applicable withholding obligations. The Committee, in its discretion, and
subject to such requirements as the Committee may impose prior to the occurrence
of such withholding, may permit such withholding obligations to be satisfied
through cash payment by the Participant, through the surrender of shares of
Stock which the Participant already owns, or through the surrender of shares of
Stock to which the Participant is otherwise entitled under the Plan.
5.5 Use of Shares. Subject to the overall limitation on the number of
shares of Stock that may be delivered under the Plan, the Committee may use
available shares of Stock as the form of payment for compensation, grants or
rights earned or due under any other compensation plans or arrangements of the
Company or a Subsidiary, including the plans and arrangements of the Company or
a Subsidiary assumed in business combinations.
5.6 Dividends and Dividend Equivalents. An Award (including without
limitation an Option or SAR Award) may provide the Participant with the right to
receive dividend payments or dividend equivalent payments with respect to Stock
subject to the Award (both before and after the Stock subject to the Award is
earned, vested, or acquired), which payments may be either made currently or
credited to an account for the Participant, and may be settled in cash or Stock
as determined by the Committee. Any such settlements, and any such crediting of
dividends or dividend equivalents or reinvestment in shares of Stock, may be
subject to such conditions, restrictions and contingencies as the Committee
shall establish, including the reinvestment of such credited amounts in Stock
equivalents.
5.7 Payments. Awards may be settled through cash payments, the delivery of
shares of Stock, the granting of replacement Awards, or combination thereof as
the Committee shall determine. Any Award settlement, including payment
deferrals, may be subject to such
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conditions, restrictions and contingencies as the Committee shall determine. The
Committee may permit or require the deferral of any Award payment, subject to
such rules and procedures as it may establish, which may include provisions for
the payment or crediting of interest, or dividend equivalents, including
converting such credits into deferred Stock equivalents. Each Subsidiary shall
be liable for payment of cash due under the Plan with respect to any Participant
to the extent that such benefits are attributable to the services rendered for
that Subsidiary by the Participant. Any disputes relating to liability of a
Subsidiary for cash payments shall be resolved by the Committee.
5.8 Transferability. Except as otherwise provided by the Committee, Awards
under the Plan are not transferable except as designated by the Participant by
will or by the laws of descent and distribution.
5.9 Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.
5.10 Agreement With Company. An Award under the Plan shall be subject to
such terms and conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and conditions of any Award
to any Participant shall be reflected in such form of written document as is
determined by the Committee. A copy of such document shall be provided to the
Participant, and the Committee may, but need not require that the Participant
sign a copy of such document. Such document is referred to in the Plan as an
"Award Agreement" regardless of whether any Participant signature is required.
5.11 Action by Company or Subsidiary. Any action required or permitted to
be taken by the Company or any Subsidiary shall be by resolution of its board of
directors, or by action of one or more members of the board (including a
committee of the board) who are duly authorized to act for the board, or (except
to the extent prohibited by applicable law or applicable rules of any stock
exchange) by a duly authorized officer of such company.
5.12 Gender and Number. Where the context admits, words in any gender shall
include any other gender, words in the singular shall include the plural and the
plural shall include the singular.
5.13 Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by reason of
participation in the Plan, acquire any right in or title to any assets,
funds or property of the Company or any Subsidiary whatsoever, including,
without limitation, any specific funds, assets, or other property which the
Company or any Subsidiary, in their sole discretion, may set aside in
anticipation of a liability under the Plan. A Participant shall have only a
contractual right
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to the Stock or amounts, if any, payable under the Plan, unsecured by any
assets of the Company or any Subsidiary, and nothing contained in the Plan
shall constitute a guarantee that the assets of the Company or any
Subsidiary shall be sufficient to pay any benefits to any person.
(b) The Plan does not constitute a contract of employment, and selection as a
Participant will not give any participating employee or other individual
the right to be retained in the employ of the Company or any Subsidiary or
the right to continue to provide services to the Company or any Subsidiary,
nor any right or claim to any benefit under the Plan, unless such right or
claim has specifically accrued under the terms of the Plan. Except as
otherwise provided in the Plan, no Award under the Plan shall confer upon
the holder thereof any rights as a shareholder of the Company prior to the
date on which the individual fulfills all conditions for receipt of such
rights.
5.14 Benefits Under Qualified Retirement Plans. Except as otherwise
provided by the Committee, Awards to a Participant (including the grant and the
receipt of benefits) under the Plan shall be disregarded for purposes of
determining the Participant's benefits under any Qualified Retirement Plan and
other plans maintained by the Participant's employer. The term "Qualified
Retirement Plan" means any plan of the Company or a Subsidiary that is intended
to be qualified under section 401(a) of the Code.
5.15 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
SECTION 6
CHANGE IN CONTROL
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Subject to the provisions of paragraph 5.2(e) (relating to the adjustment
of shares), and except as otherwise provided in the Plan or the Award Agreement
reflecting the applicable Award, upon the occurrence of a Change in Control:
(a) All outstanding Options (regardless of whether in tandem with SARs) shall
become fully exercisable.
(b) All outstanding SARs (regardless of whether in tandem with Options) shall
become fully exercisable.
(c) All Stock Units, Restricted Stock, Restricted Stock Units, Performance
Shares, and Performance Units shall become fully vested.
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SECTION 7
COMMITTEE
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7.1 Administration. The authority to control and manage the operation and
administration of the Plan shall be vested in a committee (the "Committee") in
accordance with this Section 6. The Compensation Committee of the Board shall
serve as the "Committee" under the Plan, except as otherwise determined by the
Board. If the Committee does not exist, or for any other reason determined by
the Board, the Board may take any action under the Plan that would otherwise be
the responsibility of the Committee.
7.2 Powers of Committee. The Committee's administration of the Plan shall
be subject to the following:
(a) Subject to the provisions of the Plan, the Committee will have the
authority and discretion to select from among the Eligible Individuals
those persons who shall receive Awards, to determine the time or times of
receipt, to determine the types of Awards and the number of shares covered
by the Awards, to establish the terms, conditions, performance criteria,
restrictions, and other provisions of such Awards, and (subject to the
restrictions imposed by Section 8) to cancel or suspend Awards.
(b) To the extent that the Committee determines that the restrictions imposed
by the Plan preclude the achievement of the material purposes of the Awards
in jurisdictions outside the United States, the Cayman Islands, and
Bermuda, the Committee will have the authority and discretion to modify
those restrictions as the Committee determines to be necessary or
appropriate to conform to applicable requirements or practices of
jurisdictions outside of the United States, the Cayman Islands, and
Bermuda.
(c) The Committee will have the authority and discretion to interpret the Plan,
to establish, amend, and rescind any rules and regulations relating to the
Plan, to determine the terms and provisions of any Award Agreement made
pursuant to the Plan, and to make all other determinations that may be
necessary or advisable for the administration of the Plan.
(d) Any interpretation of the Plan by the Committee and any decision made by it
under the Plan is final and binding on all persons.
(e) In controlling and managing the operation and administration of the Plan,
the Committee shall take action in a manner that conforms to the Memorandum
and Articles of Association of the Company, and applicable corporate law.
7.3 Delegation by Committee. Except to the extent prohibited by applicable
law or the applicable rules of a stock exchange, the Committee may allocate all
or any portion of its responsibilities and powers to any one or more of its
members and may delegate all or any part
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of its responsibilities and powers to any person or persons selected by it. Any
such allocation or delegation may be revoked by the Committee at any time.
7.4 Information to be Furnished to Committee. The Company and Subsidiaries
shall furnish the Committee with such data and information as it determines may
be required for it to discharge its duties. The records of the Company and
Subsidiaries as to an employee's or Participant's employment (or other provision
of services), termination of employment (or cessation of the provision of
services), leave of absence, reemployment and compensation shall be conclusive
on all persons unless determined to be incorrect. Participants and other persons
entitled to benefits under the Plan must furnish the Committee such evidence,
data or information as the Committee considers desirable to carry out the terms
of the Plan.
SECTION 8
AMENDMENT AND TERMINATION
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The Board may, at any time, amend or terminate the Plan, provided that no
amendment or termination may, in the absence of written consent to the change by
the affected Participant (or, if the Participant is not then living, the
affected beneficiary), adversely affect the rights of any Participant or
beneficiary under any Award granted under the Plan prior to the date such
amendment is adopted by the Board; provided that adjustments pursuant to subject
to paragraph 5.2(e) shall not be subject to the foregoing limitations of this
Section 8.
SECTION 9
DEFINED TERMS
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In addition to the other definitions contained herein, the following
definitions shall apply:
(a) Award. The term "Award" shall mean any award or benefit granted under the
Plan, including, without limitation, the grant of Replacement Awards,
Options, SARs, Stock Unit Awards, Restricted Stock Awards, Restricted Stock
Unit Awards, Performance Share Awards, and Performance Unit Awards.
(b) Board. The term "Board" shall mean the Board of Directors of the Company.
(c) Change in Control. The term "Change in Control" shall mean the occurrence
of any one of the following events:
(i) any "person," as such term is used in Sections 3(a)(9) and 13(d) of the
United States Securities Exchange Act of 1934, becomes a "beneficial
owner," as such term is used in Rule 13d-3 promulgated under that act, of
50% or more of the Voting Stock (as defined below) of the Company;
(ii) the majority of the Board consists of individuals other than Incumbent
Directors, which term means the members of the Board on the Effective Date;
provided that any
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person becoming a director subsequent to such date whose election or
nomination for election was supported by three-quarters of the directors
who then comprised the Incumbent Directors shall be considered to be an
Incumbent Director;
(iii) the Company adopts any plan of liquidation providing for the
distribution of all or substantially all of its assets;
(iv) all or substantially all of the assets or business of the Company is
disposed of pursuant to a merger, consolidation or other transaction
(unless the shareholders of the Company immediately prior to such merger,
consolidation or other transaction beneficially own, directly or
indirectly, in substantially the same proportion as they owned the Voting
Stock of the Company, all of the Voting Stock or other ownership interests
of the entity or entities, if any, that succeed to the business of the
Company); or
(v) the Company combines with another company and is the surviving
corporation but, immediately after the combination, the shareholders of the
Company immediately prior to the combination hold, directly or indirectly,
50% or less of the Voting Stock of the combined company (there being
excluded from the number of shares held by such shareholders, but not from
the Voting Stock of the combined company, any shares received by Affiliates
(as defined below) of such other company in exchange for stock of such
other company).
For the purpose of this definition of "Change in Control," (I) an
"Affiliate" of a person or other entity shall mean a person or other entity
that directly or indirectly controls, is controlled by, or is under common
control with the person or other entity specified and (II) "Voting Stock"
shall mean capital stock of any class or classes having general voting
power under ordinary circumstances, in the absence of contingencies, to
elect the directors of a corporation.
(d) Code. The term "Code" means the United States Internal Revenue Code of
1986, as amended. A reference to any provision of the Code shall include
reference to any successor provision of the Code.
(e) Dollars. As used in the Plan, the term "dollars" or numbers preceded by the
symbol "$" shall mean amounts in United States dollars.
(f) Eligible Individual. For purposes of the Plan, the term "Eligible
Individual" shall mean any employee of the Company or a Subsidiary, and any
consultant, director, or other person providing services to the Company or
a Subsidiary. An Award may be granted to an employee or other individual
providing services, in connection with hiring, retention or otherwise,
prior to the date the employee or service provider first performs services
for the Company or the Subsidiaries, provided that such Awards shall not
become vested prior to the date the employee or service provider first
performs such services.
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(g) Fair Market Value. Except as otherwise provided by the Committee, the "Fair
Market Value" of a share of Stock as of any date shall be the closing
market composite price for such Stock as reported for the New York Stock
Exchange - Composite Transactions on that date or, if Stock is not traded
on that date, on the next preceding date on which Stock was traded.
(h) Subsidiaries. For purposes of the Plan, the term "Subsidiary" means any
corporation, partnership, joint venture or other entity during any period
in which at least a fifty percent voting or profits interest is owned,
directly or indirectly, by the Company (or by any entity that is a
successor to the Company), and any other business venture designated by the
Committee in which the Company (or any entity that is a successor to the
Company) has a significant interest, as determined in the discretion of the
Committee.
(i) Stock. The term "Stock" shall mean ordinary shares of stock of the Company.
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