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Exhibit 10.10
FOLKSAMERICA HOLDING COMPANY, INC.
LONG-TERM INCENTIVE PLAN - 2003 AND PRIOR
1. PURPOSE
The purpose of the Folksamerica Holding Company, Inc. Long-Term Incentive
Plan (the "Plan") is to advance the interests of Folksamerica Holding
Company, Inc. (the "Company") and its stockholders by providing long-term
incentives to certain key executives of the Company and of its
subsidiaries.
2. ADMINISTRATION
The Plan shall be administered by the Human Resources Committee ( the
"Committee") of the Board of Directors (the "Board") of the Company. No
member of the Committee shall be an employee of the Company or a subsidiary
of the Company or shall have been eligible within one year prior to his
appointment to receive awards under the Plan ("Awards") or to receive
awards under any other plan of the Company or its subsidiaries under which
participants are entitled to acquire stock, stock options or stock
appreciation rights of the Company or any of its subsidiaries.
The Committee shall have exclusive authority to select the employees to be
granted Awards, to determine the type, size and terms of the Awards and to
prescribe the form of the instruments embodying Awards. The Committee shall
be authorized to interpret the Plan and the Awards granted under the Plan,
to establish, amend and rescind any rules and regulations relating to the
Plan and to make any other determinations which it believes necessary or
advisable for the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or
in any Award in the manner and to the extent the Committee deems desirable
to carry it into effect. Any decision of the Committee in the
administration of the Plan, as described herein, shall be final and
conclusive. The Committee may act only by a majority of its members in
office, except that the members thereof may authorize any one or more of
their number or any officer of the Company to execute and deliver documents
on behalf of the Committee. No member of the Company shall be liable for
anything done or omitted to be done by him or by any other member of the
Committee in connection with the Plan, except for his own willful
misconduct or as expressly provided by statute.
3. PARTICIPATING SUBSIDIARIES
If a subsidiary of the Company wishes to participate in the Plan and its
participation shall have been approved by the Board, the Board of Directors
of the subsidiary shall adopt a resolution in form and substance
satisfactory to the Committee authorizing participation by the subsidiary
in the Plan. As used herein, "subsidiary" shall mean a "subsidiary
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corporation" as defined in Section 424(f) of the Internal Revenue Code of
1986, as amended (the "Code").
A subsidiary may cease to participate in the Plan at any time by action of
the Board or by action of the Board of Directors of such subsidiary, which
latter action shall be effective not earlier than the date of delivery to
the Secretary of the Company of a certified copy of a resolution of the
subsidiary's Board of Directors taking such action. Termination of
participation in the Plan shall not relieve a subsidiary of any obligations
theretofore incurred by it pursuant to the Plan.
4. AWARDS
(a) TYPE OF AWARDS. Awards shall be limited to the following four types:
(i) "Stock Options," (ii) "Stock Appreciation Rights", (iii)
"Restricted Stock" and (iv) "Performance Shares." Stock Options, which
include "Incentive Stock Options" and other stock options or
combinations thereof, are rights to purchase shares of Common Stock of
the Company having a par value of $.01 per share ("Shares"). A Stock
Appreciation Right is a right to receive, without payment to the
Company, cash and/or Shares in lieu of the purchase of Shares under
the Stock Option to which the Stock Appreciation Right relates.
(b) MAXIMUM NUMBER OF SHARES THAT MAY BE ISSUED. A maximum of 1,000,000
Shares, subject to adjustment as provided in paragraph 14, may be
issued under the Plan. For purposes of the foregoing, the exercise of
a Stock Appreciation Right shall constitute the issuance of Shares
equal to the Shares covered by the related Stock Option. Shares issued
pursuant to the Plan may be either authorized but unissued Shares or
reacquired Shares, or both. If any Shares issued as Restricted Stock
shall be repurchased pursuant to the Company's option described in
paragraph 6 below, or if any Shares issued under the Plan shall be
reacquired pursuant to restrictions imposed at the time of issuance,
such Shares may again be issued under the Plan.
(c) RIGHTS WITH RESPECT TO SHARES.
(i) An employee to whom Restricted Stock has been issued shall have
prior to the expiration of the Restricted Period or the earlier
repurchase of such Shares as herein provided, ownership of such
Shares, including the right to vote the same and to receive
dividends thereon, subject, however, to the options,
restrictions and limitations imposed thereon pursuant hereto.
(ii) An employee to whom Stock Options, Stock Appreciation Rights or
Performance Shares are granted (and any person succeeding to
such employee's rights pursuant to the Plan) shall have no
rights as a shareholder with respect to any Shares issuable
pursuant thereto until the date of the issuance of a stock
certificate (whether or not delivered) therefor. Except as
provided in paragraph 14, no adjustment shall be made
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for dividends, distributions or other rights (whether ordinary
or extraordinary, and whether in cash, securities or other
property) the record date for which is prior to the date such
stock certificate is issued.
(iii) The Company, in its discretion, may hold custody during the
Restricted Period of any Shares of Restricted Stock.
(d) MARKET VALUE OF SHARES. "Market value of Share(s)" on any day means
(i) if Shares are listed on the New York Stock Exchange, the last sale
price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction
reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if Shares are not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on
which Shares are listed or admitted to trading or, if Shares are not
listed or admitted to trading on any national securities exchange, the
last quoted sale price or, if not so quoted, the average of the high
bid and the low asked prices in the over-the-counter market, as
reported by NASDAQ or such other system then in use, or, if on any
such date Shares are not quoted by any such organization, the average
of the closing bid and asked prices as furnished by one or more
professional market makers making a market in Shares and (ii) if
Shares are not publicly held or so listed or publicly traded, the
fully diluted book value per Share as determined by the Committee in
accordance with United States generally accepted accounting
principles.
5. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The Committee may grant Stock Options (including, in its discretion, Stock
Appreciation Rights) either alone or, as provided in paragraph 7, in
conjunction with Performance Shares. A maximum of 10,000 Stock Options and
Stock Appreciation Rights (not including Stock Appreciation Rights attached
to Stock Options) may be issued in one year to an employee. Each Stock
Option shall comply with the following terms and conditions:
(a) The exercise price shall not be less than the greater of (i) the
fair market value of the Shares subject to such Stock Option at the
time of grant, as determined in good faith by the Committee, or (ii)
the par value of such Shares. However, the exercise price of an
Incentive Stock Option granted to an employee who owns stock
representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or of a subsidiary (a "Ten Percent
Employee") shall not be less than the greater of 110 % of such fair
market value, or the par value of such Shares.
(b) The Committee shall initially determine the number of Shares to be
subject to each Stock Option. The number of Shares subject to a Stock
Option will
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subsequently be reduced (i) on a share-for-share basis to the extent
that Shares under such Stock Option are used to calculate the cash
and/or Shares received pursuant to exercise of a Stock Appreciation
Right attached to such Stock Option, and (ii) on a one-for-one basis
to the extent that any Performance Shares granted in conjunction with
such Stock Option pursuant to subparagraph 7(a) are paid, such
reduction to be made in accordance with the provisions of subparagraph
7(e)(ii).
(c) The Stock Option shall not be transferable by the optionee otherwise
than by will or the laws of descent and distribution, and shall be
exercisable during his lifetime only by him.
(d) The Stock Option shall not be exercisable:
(i) in case of any Incentive Stock Option as defined in Section 422
(b) of the Code, after the expiration of ten years from the
date it is granted, and in the case of any other Stock Option,
after the expiration of ten years from the date it is granted.
Any Stock Option may be exercised during such period only at
such time or times as the Committee may establish;
(ii) unless payment in full is made for the Shares being acquired
thereunder at the time of exercise (including any federal,
state or local income or other taxes which the Committee
determines are required to be withheld in respect of such
shares); such payment shall be made (A) in United States
dollars by cash or check, or (B) by tendering to the Company
Shares owned by the person exercising the Stock Option and
having a fair market value equal to the cash exercise price
thereof, such fair market value to be determined in such
reasonable manner as may be provided for from time to time by
the Committee or as may be required in order to comply with or
to conform to the requirements of any applicable or relevant
laws or regulations, or (C) by a combination of United States
dollars and Shares as aforesaid;
(iii) unless the person exercising the Stock Option has been, at all
times during the period beginning with the date of grant of the
Stock Option and ending on the date three months prior to such
exercise, an officer or employee of the Company or a
subsidiary, or of a corporation, or a parent or subsidiary of a
corporation, issuing or assuming the Stock Option in a
transaction to which Section 424 (a) of the Code is applicable,
except that:
(A) if such person shall cease to be an officer or employee of
the Company or one of its subsidiary corporations solely
by reason of a period of Related Employment as defined in
paragraph 9, he may, during such period of Related
Employment (but in no event after the Stock Option has
expired under the provisions of
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subparagraph 5(d)(i) hereof), exercise such Stock Option
as if he continued to be such an officer or employee; or
(B) if an optionee shall become disabled as defined in
paragraph 8 he may, at any time within three years of the
date he becomes disabled (but in no event after the Stock
Option has expired under the provisions of subparagraph
5(d)(i) hereof), exercise the Stock Option with respect to
(i) any Shares as to which he could have exercised the
Stock Option on the date he became disabled and (ii) if
the Stock Option is not fully exercisable on the date he
becomes disabled, the number of additional Shares as to
which the Stock Option would have become exercisable had
he remained an employee through the next two dates on
which additional Shares were scheduled to become
exercisable under the Stock Option; or
(C) if an optionee shall die while holding a Stock Option, his
executors, administrators, heirs or distributees, as the
case may be, at any time within one year after the date of
such death (but in no event after the Stock Option has
expired under the provisions of subparagraph 5(d)(i)
hereof), may exercise the Stock Option with respect to (i)
any Shares as to which the decedent could have exercised
the Stock Option at the time of his death, and (ii) if the
Stock Option is not fully exercisable on the date of his
death, the number of additional Shares as to which the
Stock Option would have become exercisable had he remained
an employee through the next two dates on which additional
Shares were scheduled to become exercisable under the
Stock Option provided, however, that if death occurs
during the three-year period following a disability as
described in subparagraph 5(d)(iv)(B) hereof, the
three-year period following a retirement as described in
subparagraph 5(d)(iv)(D) hereof or any period following a
voluntary termination in respect of which death, the
number of additional Shares as to which the Stock Option
would have become exercisable had he remained an employee
through the next date or, if applicable, two dates on
which additional Shares were scheduled to become
exercisable under the Stock Option provided, however, that
if death occurs during the three-year period following a
disability as described in subparagraph 5(d)(iv)(B)
hereof, the three-year period following a retirement as
described in subparagraph 5(d)(iv)(D) hereof or any period
following a voluntary termination in respect of which the
Board has exercised its discretion to grant continuing
exercise rights as provided in subparagraph 5(d)(iv)(E)
hereof, the Stock Option shall not become exercisable as
to any Shares in addition to those as to
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which the decedent could have exercised the Stock Option
at the time of his death; or
(D) if such person shall retire under an approved retirement
program of the Company or a subsidiary (or such other plan
as may be approved by the Committee, in its sole
discretion, for this purpose) while holding a Stock Option
which has not expired and has not been fully exercised,
such person, at any time within three years after his
retirement (but in no event after the Stock Option has
expired under the provisions of subparagraph 5(d)(i)
hereof), may exercise the Stock Option with respect to any
Shares as to which he could have exercised the Stock
Option on the date he retired; or
(E) it such person shall voluntarily terminate his employment
with the Company, the Board may determine that the
optionee may exercise the Stock Option with respect to
some or all of the Shares subject to the Stock Option as
to which it would not otherwise be exercisable on the date
of his voluntary termination provided, however, that in no
event may such exercise take place after the Stock Option
has expired under the provisions of subparagraph 5(d)(i)
hereof.
(e) The aggregate fair market value of Shares (determined at the time of
grant of the Stock Option pursuant to subparagraph 5(a) of the Plan)
with respect to which Incentive Stock Options granted to any employee
under the Plan are exercisable, for the first time, by such employee
during any calendar year may not exceed $100,000.
(f) If the Committee, in its discretion, so determines, there may be
related to the Stock Option, either at the time of grant or by
amendment, a Stock Appreciation Right which shall be subject to such
terms and conditions, not inconsistent with the Plan, as the Committee
shall impose, including the following:
(i) A Stock Appreciation Right may be exercised only:
(A) to the extent that the Stock Option to which it relates is
at the time exercisable, and
(B) if:
(1) in the case of a Stock Option other than an Incentive
Stock Option only, such Stock Option will expire by
its terms within 30 days (90 days if the optionee is
at the time an officer of the Company who is required
to file reports pursuant to Section 16(a) of the
Securities and Exchange Act of 1934, as amended (the
"Exchange Act"));
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(2) the optionee has become disabled or ceased to be an
officer or employee by reason of his retirement under
an approved retirement program of the Company or a
subsidiary (or such other plan as may be approved by
the Committee, in its sole discretion, for this
purpose); or
(3) the optionee has died.
However, if the Stock Option to which the Stock
Appreciation Right relates is exercisable and if the
optionee is at the time an officer of the Company who
is required to file reports pursuant to Section 16(a)
of the Exchange Act, the Stock Appreciation Right
may, subject to the approval of the Committee, be
exercised during such periods, as may be specified by
the Committee;
(ii) A Stock Appreciation Right shall entitle the optionee (or any
person entitled to act under the provisions of subparagraph
5(d)(iv)(C) hereof) to surrender unexercised the related Stock
Option (or any portion of such Option) to the Company and to
receive from the Company in exchange therefor that number of
Shares having an aggregate value equal to the excess of the
value of one Share over the Stock Option price per share, times
the number of Shares subject to the Stock Option, or portion
thereof, which is so surrendered. The Committee shall be
entitled to elect to settle the obligation arising out of the
exercise of a Stock Appreciation Right by the payment or cash
equal to the aggregate value of the Shares it would otherwise
be obligated to deliver or partly by the payment of cash and
partly by the delivery of Shares. Any such election shall be
made within 15 business days after the receipt by the Committee
of written notice of the exercise of the Stock Appreciation
Right. The value of a Share for this purpose shall be the fair
market value thereof on the last business day preceding the
date of the election to exercise the Stock Appreciation Right,
provided that if notice of such election is received by the
Committee more than three business days after the date of such
election (as such date of election is stated in the notice of
election), the Committee may, but need not, determine the value
of a Share as of the day preceding the date on which the notice
of election is received;
(iii) No fractional Shares shall be delivered under this subparagraph
5(f), but in lieu thereof a cash adjustment shall be made; and
(iv) in the case of a Stock Appreciation Right attached to an
Incentive Stock Option, such Stock Appreciation Right shall
only be transferable when such Incentive Stock Option is
transferable pursuant to Section 5 (c) hereof.
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(g) Notwithstanding anything herein to the contrary:
(i) in the event an Unfriendly Change in Control of the Company, as
defined in subparagraph 10(b), occurs, then as of the
Acceleration Date, as defined in subparagraph 10(b), each Stock
Option granted hereunder shall be exercisable in full;
provided, however, that in the case of an officer subject to
Section 16(b) of the Exchange Act, no Stock Option shall become
exercisable until the expiration of the period ending six
months after the date of grant of the Stock Option hereunder;
and
(ii) in the event a Change in Control as defined in subparagraph
10(a) occurs and within 24 months thereafter: (A) there is a
Termination Without Cause, as defined in paragraph 11, of an
optionee's employment; or (B) there is a Constructive
Termination as defined in paragraph 12, of an optionee's
employment; or (C) there occurs an Adverse Change in the Plan,
as defined in paragraph 13, in respect of an optionee affecting
any Award held by such optionee and if the optionee then holds
a Stock Option,
(1) In the case of a Termination Without Cause or a
Constructive Termination, the optionee may exercise
the entire Stock Option, at any time within 30 days
of such Termination Without Cause or such
Constructive Termination (but in no event after the
option has expired under the provisions of
subparagraphs (5)(d)(i)), and
(2) in the case of an Adverse Change in the Plan, the
optionee may exercise the entire Stock Option at any
time after such Adverse Change in the Plan in respect
of him and prior to the date 30 days following his
termination of employment as a result of a
Termination Without Cause or a Constructive
Termination (but in no event after the option has
expired under the provisions of subparagraph
5(d)(i)). Notwithstanding anything in this
subparagraph 5(g) to the contrary, (x) in the case of
an officer subject to Section 16(b) of the Exchange
Act, no Stock Option shall become exercisable until
the expiration of the period ending six months after
the date of grant of the Stock Option hereunder.
6. RESTRICTED STOCK
Each Award of Restricted Stock shall comply with the following terms and
conditions:
(a) The Committee shall determine the number of Shares to be issued to a
participant pursuant to the Award.
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(b) Shares issued may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by will or the laws of
descent and distribution, for such period from the date on which the
Award is granted (the "Restricted Period") as the Committee shall
determine. The Company shall have the option to repurchase the Shares
subject to the Award at such price as the Committee shall have fixed,
in its sole discretion, when the Award was made, which option will be
exercisable if the participant's continuous employment with the
Company or a subsidiary shall terminate for any reason, except solely
by reason of an event described in paragraph 6(c), prior to the
expiration of the Restricted Period or the earlier lapse of the
option. Such option shall be exercisable on such terms, in such manner
and during such period as shall be determined by the Committee when
the Award is made. Certificates for Shares issued pursuant to
Restricted Stock Awards shall bear an appropriate legend referring to
the foregoing option and other restrictions. Any attempt to dispose of
any such Shares in contravention of the foregoing option and other
restrictions shall be null and void and without effect. If Shares
issued pursuant to a Restricted Stock Award shall be repurchased
pursuant to the option described above, the participant to whom the
Award was granted, or in the event of his death after such option
become exercisable, his executor or administrator, shall forthwith
deliver to the Secretary of the Company any certificates for the
Shares awarded to the participant, accompanied by such instruments of
transfer, if any, as may reasonably be required by the Secretary of
the Company. If the option described above is not exercised by the
Company, such option and the restriction imposed pursuant to the first
sentence of this subparagraph 6(b) shall terminate and be of no
further force and effect. Notwithstanding anything to the contrary in
this paragraph 6 (b), neither any Restricted Period nor any option
shall lapse to the extent the Company or any subsidiary would be
unable to take a deduction with respect to such lapse by reason of
Section 162 (m) of the Code.
(c) If a participant who has been in the continuous employment of the
Company or of a subsidiary shall,
(i) die or become disabled (as defined in paragraph 8) during the
Restricted Period, the option of the Company to repurchase (and
any and all other restrictions on) all Shares awarded to him
under such Award shall lapse and cease to be effective as of
the date on which his death or disability occurs, or
(ii) voluntarily terminate his employment with the Company or retire
under an approved retirement plan of the Company or of a
subsidiary (or such other retirement plan as may be approved by
the Committee, in its sole discretion, for this purpose) during
the Restricted Period, the Board may determine that the option
to repurchase and any and all other restrictions on some or all
of the Shares awarded to him under such Award, if such option
and other restrictions are still in effect, shall lapse and
cease to be
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effective as the date on which such voluntary termination or
retirement occurs.
(d) In the event within 24 months after a Change in Control as defined in
subparagraph 10(a) and during the Restricted Period:
(i) there is a Termination Without Cause, as defined in paragraph
11, of the employment of a participant;
(ii) there is a Constructive Termination, as defined in paragraph
12, of the employment of a participant; or
(iii) there occurs an Adverse Change in the Plan, as defined in
paragraph 13, in respect of a participant, the option to
repurchase (and any and all other restrictions on) all Shares
awarded to him under his Award shall lapse and cease to be
effective as of the date on which such event occurs.
7. PERFORMANCE SHARES
The Award of Performance Shares to a participant will entitle him to
receive, without payment to the Company, all or part of a specified amount
(the "Actual Value") determined by the Committee, if the terms and
conditions specified herein and in the Award are satisfied. Payment in
respect of an Award shall be made as provided in subparagraph 7(e). Each
Award of Performance Shares shall be subject to the following terms and
conditions:
(a) The Committee shall determine the number of Performance Shares to be
granted to each participant and whether or not such Performance Shares
are granted in conjunction with a Stock Option (the "Associated Stock
Option"). The "Maximum Value" of each Performance Share shall be the
market value per Share on the date the award is paid or becomes
payable to participants. Performance Shares may be issued in different
classes or series having different terms and conditions. In the case
of any Performance Shares granted in conjunction with an Associated
Stock Option, the number of Performance Shares shall initially be
equal to the number of Shares which are subject to the Associated
Stock Option, but the number of such performance Shares shall be
reduced on a one for one basis to the extent that (A) Shares are
purchased upon exercise of the Associated Stock Option, or (B) Shares
may no longer be purchased under the Associated Stock Option because
the Associated Stock Option or a part thereof has been surrendered
unexercised pursuant to exercise of a Stock Appreciation Right
attached to such Associated Stock Option.
(b) The award period ("Award Period") in respect of any Award of
Performance Shares shall be such period as the Committee shall
determine commencing as of the beginning of the fiscal year of the
Company in which such Award is made. An Award Period may contain a
number of performance periods; each performance
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period shall commence on or after the first day of the Award Period
and shall end no later than the last day of the Award Period. At the
time each Award is made, the Committee shall establish performance
objectives to be attained within the performance periods as the means
of determining the Actual Value. The performance objectives shall be
based on the Company's growth in intrinsic business value, as outlined
below, for each of the fiscal years comprising the performance
period(s). The Actual Value of a Performance Share shall be equal to
its Maximum Value only if the performance objectives are attained in
full, but the Committee shall specify the manner in which the Actual
Value of a Performance Share shall be a portion of such Maximum Value
if the performance objectives are met in part. In determining Actual
Value, the Committee may either (i) multiply the total number of
Shares available for payout at that time with respect to the
participant by the Actual Value of each individual Share or (ii)
multiply the Maximum Value of each individual Share by a number of
Shares equal to or less than the total number of Shares available for
payout, provided that products obtained in (i) and (ii) are the same.
The Company's growth in intrinsic business value for any performance
period shall be measured individually or as a combination of the
following measurement factors: (i) the sum of the Company's return on
equity (computed in accordance with generally accepted accounting
principles ("GAAP")) for any fiscal years in the performance period
divided by the number of fiscal years in the performance period, (ii)
the growth in market value per Share for any fiscal years in the
performance period divided by the number of fiscal years in the
performance period, or (iii) the sum of the Company's economic return
on equity (computed as the Company's GAAP return on equity adjusted
for changes in the intrinsic value of assets whose value differs from
their GAAP carrying value) for any fiscal years in the performance
period divided by the number of fiscal years in the performance
period. The Committee shall determine, no later than the award date
and prior to the commencement of the performance period of such award,
which of the above measurement factor(s) will be the relevant
performance objectives for each award.
(c) Performance Shares shall be canceled if the participant's continuous
employment with the Company or any of its subsidiaries shall terminate
for any reason prior to the end of the Award Period (in which event
the Associated Stock Option, if any, shall continue in effect in
accordance with its terms), except solely by reason of a period of
Related Employment as defined in paragraph 9, and except as otherwise
specified in this subparagraph 7(c) or in subparagraph 7(d).
Notwithstanding the foregoing and without regard to subparagraph 7(b),
if a participant shall:
(i) while in such employment, die or become disabled as described
in paragraph 8 prior to the end of the Award Period, the
Performance Shares shall be canceled at the end of the next
ending performance period and he, or his legal representative,
as the case may be, shall receive payment in respect of such
Shares which he would have received had he been in continuous
employment with the Company through the end of that period
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and had the individual performance objectives, if any, that
were imposed been achieved; provided, however, that no such
continuation shall be deemed to have occurred for purposes of
applying subparagraph 7(d) in the event of an Adverse Change in
the Plan in respect of the participant following a Change in
Control; or
(ii) retire under an approved retirement program of the Company or a
subsidiary (or such other plan as may be approved by the
Committee, in its sole discretion, for this purpose) prior to
the end of the Award Period, and
(A) at the time of his retirement, the participant is 65 years
old or older, the Performance Shares shall be canceled at
the end of the next ending performance period, and he
shall receive the Maximum Value in respect to such Shares,
at the date of cancellation,
(B) at the time of his retirement the participant is less than
65 years old and his retirement occurs prior to the end of
the first performance period, and before 24 months have
elapsed since the first day of the Award Period, the
participant shall receive payment with respect to the
Actual Value of one-ninth of the Performance Shares
awarded to him under the Award, and
(C) at the time of his retirement the participant is less than
65 years old and his retirement occurs prior to the end of
the first performance period and after at least 24 months
have elapsed since the first day of the Award Period, the
participant shall receive payment with respect to the
Actual Value of two-ninths of the Performance Shares
awarded to him under the Award.
(d) If within 24 months after a Change in Control of the Company as
defined in subparagraph 10(a) and prior to the end of an Award Period:
(i) there is a Termination Without Cause, as defined in paragraph
11, of the employment of a participant;
(ii) there is a Constructive Termination, as defined in paragraph
12, of the employment of a participant; or
(iii) there occurs an Adverse Change in the Plan, as defined in
paragraph 13, in respect of a participant, then:
(A) the participant shall receive the Maximum Value of:
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(1) that number of Performance Shares which is in the
same proportion to the total number of Performance
Shares awarded to the participant under such Award as
(x) the number of full months which have elapsed
since the first day of the Award Period to the
end of the first month in which occurs one of
the events described in clauses (i), (ii) or
(iii) of subparagraph 7(d) is to
(y) the total number of months in the Award Period,
less
(2) the number of Performance Shares awarded to the
participant under the Award in respect of which
payment has already been made to the participant, and
(B) if the number of Performance Shares determined pursuant to
subclause (1) of clause (A) is less than the number of
Performance Shares subject to the particular Award, the
participant shall receive the Actual Value of the
remaining Performance Shares. The Actual Value of the
remaining Performance Shares shall be determined as
follows:
(x) if the Board shall have determined, prior to the
Change in Control and based on the most recent
performance status reports, that the performance
objectives for the particular Award were being met at
the date of the determination, the Actual Value of
the remaining Performance Shares subject to the
particular Award shall be equal to their Maximum
Value, and
(y) it the determination of the Board was that the
performance objectives for the particular Award were
not being met at the date of the determination, the
Actual Value of the remaining Performance Shares
subject to the particular Award shall be such amount
as shall have been determined by the Board as
provided above in this subparagraph 7(d), but in no
event shall Actual Value be less than fifty percent
(50%) of Maximum Value. Payment of any amount in
respect of Performance Shares as described above in
this subparagraph 7(d) shall be made as promptly as
possible after the occurrence of one of the events
described in clauses 7(d)(i) through 7(d)(iii).
Notwithstanding anything herein to the contrary, if,
following a Change in Control of the Company as
defined in subparagraph 10(a), a
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participant's employment remains continuous through
the end of a performance period, then the participant
shall be paid with respect to those Performance
Shares for which he would have been paid had there
not been a Change in Control and the Actual Value of
those Shares shall be determined in accordance with
subparagraph 7(e).
(e) Except as otherwise provided in subparagraph 7(d), as soon as
practicable after the end of the performance period or such earlier
date as the Committee in its sole discretion may designate, the
Committee shall determine whether the conditions of subparagraphs 7(b)
and/or 7(c) hereof have been met and, if so, shall certify such fact
to the Board of Directors and shall ascertain the Actual Value of the
Performance Shares. If the Performance Shares:
(i) were not awarded in conjunction with an Associated Stock
Option, the Committee shall cause an amount equal to the Actual
Value of the Performance Shares earned by the participant to be
paid to him or his beneficiary; or
(ii) were awarded in conjunction with an Associated Stock Option,
the Committee shall determine, in accordance with criteria
specified by the Committee when the Award was made, (A) to
cancel the Performance Shares, in which event no amount in
respect thereof shall be paid to the participant or his
beneficiary, and the Associated Stock Option shall continue in
effect in accordance with its terms, (B) to pay the Actual
Value of the Performance Shares to the participant or his
beneficiary, in which event the Associated Stock Option shall
be canceled, or (C) to pay to the participant or his
beneficiary the Actual Value of only a portion of the
Performance Shares, in which event (1) all such Performance
Shares shall be canceled and (2) the Associated Stock Option
shall be canceled only as to a number of Shares equal to the
number of Performance Shares so paid. Such determination by the
Committee shall, if practicable, be made during the three-month
period following the end of the performance period, or during
such earlier period as shall be designated by the Committee and
shall be made pursuant to criteria, specified by the Committee,
which shall be uniform for all Awards having the same
performance period.
Payment of any amount in respect of the Performance Shares
shall be made by the Company as promptly as practicable or
shall be deferred to such other time or times as the Committee
shall determine, and may be made in cash, in Shares, or partly
in cash and partly in Shares as determined by the Committee.
Such deferred payments may be made by undertaking to pay cash
in the future, together with such additional
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amounts as may accrue thereon until the date or dates of
payment, as determined by the Committee in its discretion.
8. DISABILITY
For the purposes of this Plan, a participant shall be deemed to be disabled
if the Committee shall determine that (i) the physical or mental condition
of the participant is such as would entitle him to payment of monthly
disability benefits under any disability plan of the Company or a
subsidiary in which he is a participant or (ii) he is not a participant in
any such plan but his physical or mental condition would entitle him to
benefits under any disability plan of the Company if he were a participant
therein.
9. RELATED EMPLOYMENT
For the purposes of this Plan, Related Employment shall mean the employment
of an individual by an employer which is neither the Company nor a
subsidiary provided: (i) such employment is undertaken by the individual
and continued at the request of the Company or a subsidiary; (ii)
immediately prior to undertaking such employment, the individual was an
officer or employee of the Company or a subsidiary, or was engaged in
Related Employment as herein defined; and (iii) such employment is
recognized by the Committee, in its sole discretion, as Related Employment
for the purposes of this paragraph 9. The death or disability of an
individual during a period of Related Employment as herein defined shall be
treated, for purposes of this Plan, as if the death or onset of disability
had occurred while the individual was an officer or employee of the
Company.
10. CHANGE IN CONTROL
(a) For purposes of this Plan, a "Change in Control of the Company" within
the meaning of this subparagraph 10(a) shall occur if:
(i) any person or group (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act), other than Fund American
Enterprises Holdings, Inc. (through its affiliate White
Mountains Holdings, Inc.), Folksam Mutual General Insurance
Company, Wiener Staedtische Allgemeine Versicherung, P & V
Assurances S.C., Forsikringsaktieselskapet Samvirke or the
Company, becomes the beneficial owner (within the meaning of
Rule 13d-3 under the exchange Act) of more than fifty percent
(50%) of the Company's then outstanding Shares;
(ii) the Continuing Directors, as defined in subparagraph 10(c),
cease for any reason to constitute a majority of the Board of
the Company; or
(iii) the business of the Company for which the participant's
services are principally performed is disposed of by the
Company pursuant to a sale or other disposition of all or
substantially all of the business or business
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related assets of the Company (including stock of a subsidiary
of the Company). A Change in Control of the Company within the
meaning of this subparagraph 10(a) also may constitute an
Unfriendly Change in Control of the Company within the meaning
of this subparagraph 10(b).
(b) A Change in Control of the Company shall be deemed an "Unfriendly
Change in Control of the Company" if:
(i) any person or group (within the meaning of Section 13(d) and
14(d)(2) of the Exchange Act), other than Fund American
Enterprises Holdings, Inc. (through its affiliate White
Mountains Holdings, Inc.), Folksam Mutual General Insurance
Company, Wiener Staedtische Allgemeine Versicherung, P & V
Assurances S.C., Forsikringsaktieselskapet Samvirke or the
Company, becomes the beneficial owner (within the meaning of
Rule 13d-3 under the Exchange Act) of more than fifty percent
(50%) of the Company's then outstanding Shares through a
transaction that is opposed by the Company's Chairman and Chief
Executive Officer, and
(ii) a majority of the Company's Continuing Directors, as defined in
subparagraph 10(c), by resolution adopted within 30 days
following the date the Company becomes aware that subparagraph
10(b)(i) has been satisfied, determines that a Change in
Control has occurred.
For purposes of subparagraph 5(g), "Acceleration Date" shall mean the date
on which a majority of the Company's Continuing Directors adopts a
resolution (or takes other action) making the determination that a Change
in Control of the Company has occurred.
(c) For the purposes of this Plan, "Continuing Director" shall mean a
member of the Board (A) who is not an employee of the Company or its
subsidiaries or of a holder of, or an employee or an affiliate of an
entity or group that holds, more than fifty percent (50 %) of the
Company's Shares and (B) who either was a member of the Board on
January 1, 1997, or who subsequently became a director of the Company
and whose election, or nomination for election, by the Company's
shareholders was approved by a vote of a majority of the Continuing
Directors then on the Board (which term, for purposes of this
definition, shall mean the whole Board and not any committee thereof).
Any action, approval of which shall require the approval of a majority
of the Continuing Directors, may be authorized by one Continuing
Director, if he is the only Continuing Director on the Board, but no
such action may be taken if there are not Continuing Directors on the
Board.
11. TERMINATION WITHOUT CAUSE
For purposes of this Plan, "Termination Without Cause" shall mean a
termination of the participant's employment with the Company or a
subsidiary by the Company or the subsidiary other than (i) for disability
as described in paragraph 8 or (ii) for Cause.
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"Cause" shall mean (a) an act or omission by the participant that
constitutes a felony or any crime involving moral turpitude or (b) willful
gross negligence or willful gross misconduct by the participant in
connection with his employment by the Company or by a subsidiary which
causes, or is likely to cause, material loss or damage to the Company.
12. CONSTRUCTIVE TERMINATION
"Constructive Termination" shall mean a termination of employment with the
Company or a subsidiary at the initiative of the participant that the
participant declares by prior written notice delivered to the Secretary of
the Company to be a Constructive Termination by the Company or a subsidiary
and which follows (a) a material decrease in his salary or (b) a material
diminution in the authority, duties or responsibilities of his position
with the result that the participant makes a determination in good faith
that he cannot continue to carry out his job in substantially the same
manner as it was intended to be carried out immediately before such
diminution. Notwithstanding anything herein to the contrary, Constructive
Termination shall not occur within the meaning of this paragraph 12 until
and unless 30 days have elapsed from the date the Company receives such
written notice without the Company curing or causing to be cured the
circumstance or circumstances described in this paragraph 12 on the basis
of which the declaration of Constructive Termination is given,
13. ADVERSE CHANGE IN THE PLAN
An "Adverse Change in the Plan" shall mean:
(a) termination of the Plan pursuant to subparagraph 19(a);
(b) amendment of the Plan pursuant to paragraph 18 that materially
diminishes the value of Awards that maybe granted under the Plan,
either to individual participants or in the aggregate, unless there is
substituted concurrently authority to grant long-term incentive awards
of comparable value to individual participants in the Plan or in the
aggregate, as the case may be; or
(c) in respect of any holder of an Award a material diminution in his
rights held under such Award (except as may occur under the terms of
the Award as originally granted) unless there is substituted
concurrently a long-term incentive award with a value at least
comparable to the loss in value attributable to such diminution in
rights.
14. DILUTION AND OTHER ADJUSTMENTS
In the event of any change in the Outstanding Shares of the Company by
reason of any stock split, stock dividend, recapitalization, merger,
consolidation, reorganization, combination or exchange of Shares or other
similar event, and if the Committee shall determine, in its sole
discretion, that such change equitably requires an adjustment in the number
or kind of Shares that may be issued under the Plan pursuant to
subparagraph
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4(b), in the number or kind of Shares subject to, or the Stock Option price
per share under, any outstanding Stock Option, in the number or kind of
Shares which have been awarded as Restricted Stock or in the repurchase
option price per share relating thereto, in the Maximum Value or Actual
Value of Performance Shares which have been awarded to any participant, or
in any measure of performance, then such adjustment shall be made by the
Committee and shall be conclusive and binding for all purposes of the Plan.
15. DESIGNATION OF BENEFICIARY BY PARTICIPANT
A participant may name a beneficiary to receive any payment to which he
maybe entitled in respect of Performance Shares under the Plan in the event
of his death, on a form to be provided by the Committee. A participant may
change his beneficiary from time to time in the same manner. If no
designated beneficiary is living on the date on which any amount becomes
payable to a participant's executors or administrators, the term
"beneficiary" as used in the Plan shall include such person or persons.
16. FINANCIAL ASSISTANCE
If those members of the Board who are ineligible to receive Awards under
the Plan determine that such action is advisable, the Company may assist
any person to whom an Award has been granted in obtaining financing from
the Company under a program of the Company or a subsidiary approved
pursuant to applicable law or regulation, or from a bank or other third
party, in such amount as is required to permit the payment of taxes in
respect of such Award (or, in the case of an Award of a Stock Option, to
permit the exercise thereof and/or the payment of any taxes in respect
thereof) to the extent that such taxes (and Stock Option price) exceed the
cash portion, it any, of the Award. Such assistance may take any form that
the Committee deems appropriate, including but not limited to a direct loan
from the Company or a subsidiary, a guarantee of the obligation by the
Company or a subsidiary, or the maintenance by the Company or a subsidiary
of deposits with such bank or third party.
17. MISCELLANEOUS PROVISIONS
(a) No employee or other person shall have any claim or right to be
granted an Award under the Plan. Neither the Plan nor any action taken
hereunder shall be construed as giving an employee any right to be
retained in the employ of the Company or any subsidiary.
(b) A participant's rights and interest under the Plan may not be assigned
or transferred in whole or in part either directly or by operation of
law or otherwise (except in the event of a participant's death),
including but not limited to, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner and no such
right or interest of any participant in the Plan shall be subject to
any obligation or liability of such participant.
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(c) No Shares shall be issued hereunder unless counsel for the Company
shall be satisfied that such issuance will be in compliance with
applicable Federal and state securities laws.
(d) The Company and its subsidiaries shall have the right to deduct from
any payment made under the Plan any federal, state or local income or
other taxes required by law to be withheld with respect to such
payment. It shall be a condition to the obligation of the Company to
issue Shares upon exercise of a Stock Option, upon settlement of a
Stock Appreciation Right, or upon payment of a Performance Share that
the participant (or any beneficiary or person entitled to payment
under subparagraph 5(d)(iii)(C) hereof) pay to the Company, upon its
demand, such amount as may be required by the Company for the purpose
of satisfying any liability to withhold federal, state or local income
or other taxes. If the amount requested is not paid, the Company may
refuse to issue Shares.
(e) The expenses of the Plan shall be borne by the Company. However, if an
Award is made to an employee of a subsidiary:
(i) if such Award results in payment of cash to the participant,
such subsidiary shall pay to the Company an amount equal to
such cash payment; and
(ii) if the Award results in the issuance to the participant of
Shares, such subsidiary shall pay to the Company an amount
equal to fair market value thereof, as determined by the
Committee, on the date such Shares are issued (or, in the case
of issuance of Restricted Stock or of Shares subject to
transfer and forfeiture conditions, equal to the fair market
value thereof on the date on which such Shares are no longer
subject to applicable restriction), minus the amount, if any
received by the Company in exchange for such Shares.
(f) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Award under the
Plan.
(g) By accepting any Award or other benefit under the Plan, each
participant and each person claiming under or through him shall be
conclusively deemed to have indicated his acceptance and ratification
of, and consent to, any action taken under the Plan by the Company,
the Board or the Committee.
18. AMENDMENT
The Plan may be amended at any time and from time to time by the Board, but
no amendment which increases the aggregate number of Shares which may be
issued pursuant to the Plan or the class of employees eligible to
participate shall be effective unless and until the same is approved by the
shareholders of the Company. No
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amendment of the Plan shall adversely affect any right of any participant
with respect to any Award previously granted without such participant's
written consent.
19. TERMINATION
This Plan shall terminate upon the earlier of the following dates or events
to occur:
(a) the adoption of a resolution of the Board terminating the Plan; or
(b) ten years from the date the Plan is initially or subsequently approved
and adopted by the shareholders of the Company in accordance with
paragraph 20 hereof.
No termination of the Plan shall alter or impair any of the rights or
obligations of any person, without his consent, under any Award previously
granted under the Plan.
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