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