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Platinum Underwriters Holdings Ltd – ‘10-K’ for 12/31/02 – EX-10.2

On:  Monday, 3/31/03, at 12:46pm ET   ·   For:  12/31/02   ·   Accession #:  950123-3-3615   ·   File #:  1-31341

Previous ‘10-K’:  None   ·   Next:  ‘10-K’ on 3/15/04 for 12/31/03   ·   Latest:  ‘10-K’ on 2/11/15 for 12/31/14

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 3/31/03  Platinum Underwriters Holdin… Ltd 10-K       12/31/02   70:6.9M                                   RR Donnelley/FA

Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Platinum Underwriters Holdings, Ltd.                 138    768K 
 2: EX-2.1      Formation and Separation Agreement                   301   1.41M 
 3: EX-3.2      Restated Bye-Laws                                     54    170K 
 4: EX-4.1      Form of Certificate of Common Shares                   2     20K 
 5: EX-4.2      Indenture                                             75    361K 
 6: EX-4.3      Indenture Supplement                                  20     83K 
 7: EX-4.4      Purchase Contract Agreement                          125    487K 
 8: EX-4.5      Pledge Agreement                                      43    179K 
 9: EX-4.6      Form of Senior Note                                   13     58K 
10: EX-4.7      Form of Guarantee                                      3     25K 
11: EX-4.8      Form of Normal Unit                                   17     74K 
12: EX-4.9      Form of Stripped Unit                                 16     65K 
13: EX-10.1     Share Unit Plan for Non-Employee Directors             6     34K 
16: EX-10.15    Letter Agreement                                       3     26K 
17: EX-10.16    364-Day Credit Agreement                              53    237K 
18: EX-10.17    Letter Amendment #1 to 364-Day Credit Agreement        3     25K 
19: EX-10.18    Letter Amendment #2 to 364-Day Credit Agreement        5     28K 
20: EX-10.19    Capital Support Agreement                             10     45K 
14: EX-10.2     2002 Share Incentive Plan                             13     67K 
21: EX-10.20    Capital Support Agreement                              4     25K 
22: EX-10.21    Registration Rights Agreement                         17     89K 
23: EX-10.22    Option Agreement                                      14     70K 
24: EX-10.23    Option Agreement                                      15     72K 
25: EX-10.24    Option Agreement                                      14     71K 
26: EX-10.25    Employee Benefits & Compensation Matters Agreement    29     79K 
27: EX-10.26    Master Services Agreement                             13     57K 
28: EX-10.27    U.K. Master Services Agreement                        18     64K 
29: EX-10.28    Runoff Services Agreement                             23    125K 
30: EX-10.29    U.K. Runoff Services Agreement                        18     65K 
15: EX-10.3     Capital Accumulation Plan                             11     57K 
31: EX-10.30    Underwriting Management Agreement                      9     31K 
32: EX-10.31    U.K. Underwriting Agency & Management Agreement       21     62K 
33: EX-10.32    U.K. Business Transfer Agreement                      59    163K 
34: EX-10.33    Intra-Group Asset Transfer Agreement                   6     24K 
35: EX-10.34    Transitional Trademark License Agreement              10     42K 
36: EX-10.35    Investment Agreement                                 325   1.50M 
37: EX-10.36    1st Amendment to Investment Agreement                  4     27K 
38: EX-10.37    Transfer Restrictions Reg. Righst & Standstill Agr    23    109K 
39: EX-10.38    Option Agreement                                      14     69K 
40: EX-10.39    Services & Capacity Reservation Agreement              8     40K 
41: EX-10.40    100% Quota Share Retrocession Agreement              110    618K 
42: EX-10.41    100% Quota Share Retrocession Agreement               41    149K 
43: EX-10.42    100% Quota Share Retrocession Agreement               44    157K 
44: EX-10.43    100% Quota Share Retrocession Agreement               42    151K 
45: EX-10.44    100% Quota Share Retrocession Agreement               42    154K 
46: EX-10.45    100% Quota Share Retrocession Agreement               42    153K 
47: EX-10.46    100% Quota Share Retrocession Agreement               36    131K 
48: EX-10.47    100% Quota Share Retrocession Agreement               41    152K 
49: EX-10.48    100% Quota Share Retrocession Agreement               43    171K 
50: EX-10.49    100% Quota Share Retrocession Agreement               41    153K 
51: EX-10.50    100% Quota Share Retrocession Agreement               41    153K 
52: EX-10.51    100% Quota Share Retrocession Agreement               43    157K 
53: EX-10.52    Uk 100% Quota Share Retrocession Agreement            85    397K 
54: EX-10.53    Uk 100% Quota Share Retrocession Agreement            42    156K 
55: EX-10.54    Uk 100% Quota Share Retrocession Agreement            42    159K 
56: EX-10.55    100% Quota Share Retrocession Agreement              114    387K 
57: EX-10.56    Security Agreement                                    20     79K 
58: EX-10.57    Control Agreement                                     31    111K 
59: EX-10.58    Discretionary Investment Advisory Agreement           14     57K 
60: EX-10.59    Revised & Amended Trust Agreement                     28     79K 
61: EX-10.60    Discretionary Investment Advisory Agreement           18     76K 
62: EX-10.61    Revised and Amended Trust Agreement                   26     73K 
63: EX-10.62    Discretionary Investment Advisory Agreement           18     77K 
64: EX-10.63    Letter Amend. to Revised & Amended Trust Agreement     2     22K 
65: EX-10.64    Quota Share Retrocession Agreement                   100    331K 
66: EX-10.65    Security Agreement                                    22     86K 
67: EX-10.66    Control Agreement                                     34    125K 
68: EX-10.67    Discretionary Investment Advisory Agreement           15     61K 
69: EX-99.1     Certification of CEO                                   1     17K 
70: EX-99.2     Certification of CFO                                   1     18K 


EX-10.2   —   2002 Share Incentive Plan

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EXHIBIT 10.2 PLATINUM UNDERWRITERS HOLDINGS, LTD. 2002 SHARE INCENTIVE PLAN 1. PURPOSE OF THE PLAN The purpose of the Platinum 2002 Share Incentive Plan (the "Plan") is to advance the interests of the Company and its shareholders by attracting, retaining and motivating key personnel upon whose judgment, initiative and effort the successful conduct of the Company's operations is largely dependent. The Plan is also intended to further align the interests of employees, officers and directors with those of the shareholders by promoting the ownership of Common Shares by these individuals. 2. DEFINITIONS Wherever the following capitalized terms are used in this Plan, they shall have the meanings specified below: (a) "Award" means an award of an Option, Restricted Shares Award, Share Appreciation Right or Share Unit Award granted under the Plan. (b) "Award Agreement" means an agreement entered into between the Company and a Participant setting forth the terms and conditions of an Award granted to a Participant. (c) "Board" means the Board of Directors of the Company. (d) "Change in Control" shall have the meaning specified in Section 10 hereof. (e) "Code" means the Internal Revenue Code of 1986, as amended. (f) "Committee" means the Compensation Committee of the Board or any other committee of the Board appointed by the Board to administer the Plan from time to time. (g) "Common Shares" means the common shares of the Company, par value $0.01 per share. (h) "Company" means Platinum Underwriters Holdings, Ltd., a Bermuda corporation. (i) "Date of Grant" means the date on which an Award under the Plan is made by the Committee, or such later date as the Committee may specify to be the effective date of the Award. (j) "Dividend Equivalent Right" means the right of a Participant to receive cash payments or Common Shares, as determined by the Committee, with respect to dividends declared on a specified number of Common Shares during the term of a Share Appreciation Right or a Share Unit Award.
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(k) "Effective Date" means the Effective Date of this Plan, as described to Section 13.1 hereof, (l) "Eligible Person" means any person who is an employee, officer, director, agent, consultant or advisor of flue Company or any Subsidiary, as determined by the Committee, or any person who is determined by the Committee to be a prospective employee, officer, director, insurance agent, consultant or advisor of the Company or any subsidiary. (m) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (n) "Fair Market Value" of Common Shares as of a given date means the closing sales price of Common Shares on the New York Stock Exchange or other exchange or securities market as reflected on the composite index on the trading day immediately preceding the date as of which FAIR Market Value is to be determined, or in the absence of any reported sales of Common Shares on such date on the first preceding date on which any such sale shall have been reported. IF pie Common Shares are not listed on the New York Stock Exchange or other exchange or securities market on me date as of which Fair Market Value is to be determined, the Board shell determine in good faith the Fair Market Value in whatever manner it considers appropriate With respect to Options granted upon completion of the initial public offering of the Common Shares, Fair Market Value shall mean die public offering price per share. (o) 'Incentive Option" means an option to purchase Common Shares that is intended to qualify as an "incentive stock option" under Section 422 of the Code and the Treasury Regulations thereunder. (p) "Nonqualified Option" means an option to purchase Common Shares that is not an Incentive Option. (q) "Option" means an Incentive Option or a Nonqualified Option granted under Section 6 hereof. (r) "Participant" means any Eligible Person who holds an outstanding Award under the Plan. (s)"Plan" means the Platinum 2002 Share Incentive Plan as set forth herein, as it may be amended from time to time. (t) "Restricted Share Award" means an Award under Section 8 hereof entitling a Participant to Common Shares that are nontransferable and subject to forfeiture until specific conditions established by the Committee are satisfied. (u) "Share Appreciation Right" or "SAR" means an Award under Section 7 hereof entitling a Participant to receive an amount, representing the difference between the base price per share of the right and the Fair Market Value of a Common Share on the date of exercise. (v) "Share Unit Award" means an Award under Section 9 hereof entitling a Participant to a payment & the end of a vesting period of a unit value based on the Fair Market Value of a Common Share. 2
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(w) "Subsidiary" means an entity (whether or not a corporation) that is wholly or majority owned or controlled, directly or indirectly, by the Company, or any other affiliate of the Company that is so designated, from time to time, by the Committee; provided, however, that with respect to Incentive Options, the term "Subsidiary" shall include only an entity that qualifies under Section 424(f) of the Code as a "subsidiary corporation" with respect to the Company. 3. COMMON SHARES SUBJECT TO THE PLAN 3.1. Number of Shares. Subject to the following provisions of this Section 3, the aggregate number of Common Shares that may be issued pursuant to all Awards under the Plan is 6,000,000 Common Shares. The Common Shares to be delivered under the Plan will be made available from authorized but unissued Common Shares or from reacquired shares. To the extent that any Award payable in Common Shares is forfeited, cancelled, returned to the Company for failure to satisfy vesting requirements or upon the occurrence of other forfeiture events, or otherwise terminates without payment being made thereunder, the Common Shares covered thereby will no longer be charged against the foregoing maximum share limitations and may again be made subject to Awards under the Plan pursuant to such limitations. In addition, any Common Shares exchanged by an Optionee as full or partial payment to the Company of the exercise price or tax withholding upon exercise of an Option shall be added to the number of Common Shares available for issuance under the Plan from time to time. The number of Common Shares that may be issued and sold under Incentive Options shall be limited to 6,000,000 shares, without giving effect to the immediately preceding sentence. 3.2. Adjustments. If there shall occur any recapitalization, reclassification, share dividend, share split, reverse share split, or other distribution with respect to the Common Shares, or other change in corporate structure affecting the Common Shares, the Committee may, in the manner and to the extent that it deems appropriate and equitable to the Participants and consistent with the terms of this Plan, cause an adjustment to be made in (i) the maximum number and kind of shares provided in Section 3.1 hereof, (ii) the maximum number and kind of shares set forth in Sections 6.1, 7.1 and 8.1 hereof, (iii) the number and kind of shares of Common Shares, share units, or other rights subject to then outstanding Awards, (iv) the price for each share or unit or other right subject to then outstanding Awards, or (v) any other terms of an Award that are affected by the event. Notwithstanding the foregoing, in the case of Incentive Options, any such adjustments shall be made in a manner consistent with the requirements of Section 424(a) of the Code. In the event of any merger, consolidation, reorganization, amalgamation or similar corporate event in which Common Shares are to be exchanged for payment of cash (the "Cash Consideration"), the Committee may, in its discretion, (i) make equitable adjustments as provided above, or (ii) cancel any outstanding Award in exchange for payment in cash, if any, equal to the excess of the Cash Consideration for the shares underlying such Award over the exercise, base or purchase price for such shares. 4. ADMINISTRATION OF THE PLAN 4.1. Committee Members. The Plan shall be administered by a Committee comprised of no fewer than two members of the Board. Solely to the extent deemed necessary or advisable by the Board, each Committee member shall meet the definition of a "nonemployee director" for purposes of such Rule 16b-3 under the Exchange Act and of an "outside director" under Section 3
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162(m) of the Code. The Board shall also have the authority to exercise the powers and duties of the Committee under the Plan. The Committee shall have such powers and authority as may be necessary or appropriate for the Committee to carry out its functions as described in the Plan. No member of the Committee shall be liable for any action or determination made in good faith by the Committee with respect to the Plan or any Award thereunder. 4.2. Discretionary Authority. Subject to the express limitations of the Plan, the Committee shall have authority in its discretion to determine the Eligible Persons to whom, and the time or times at which, Awards may be granted, the number of shares, units or other rights subject to each Award, the exercise, base or purchase price of an Award (if any), the time or times at which an Award will become vested, exercisable or payable, the performance criteria, performance goals and other conditions of an Award, the duration of the Award, and all other terms of the Award. The Committee shall also have discretionary authority to interpret the Plan, to make all factual determinations under the Plan, and to make all other determinations necessary or advisable for Plan administration. The Committee may prescribe, amend, and rescind rules and regulations relating to the Plan. All interpretations, determinations, and actions by the Committee shall be final, conclusive, and binding upon all parties. 4.3. Delegation of Authority. The Committee shall have the right, from time to time, to delegate to one or more officers of the Company the authority of the Committee to grant and determine the terms and conditions of Awards awarded under the Plan, subject to such limitations as the Committee shall determine; provided, however, that no such authority may be delegated with respect to Awards awarded to any member of the Board or any Participant who the Committee determines may be covered by Rule 16b under the Exchange Act or Section 162(m)of the Code. 4.4. Grants to Nonemployee Directors. Awards to nonemployee directors under the Plan shall be approved by the Board. With respect to awards to such directors, all rights, powers and authorities vested in the Committee under the Plan shall instead be exercised by the Board, and all provisions of the Plan relating to the Committee shall be interpreted in a manner consistent with the foregoing by treating any such reference as a reference to the Board for such purpose. 5. ELIGIBILITY AND AWARDS All Eligible Persons are eligible to be designated by the Committee to receive an Award under the Plan. The Committee has authority, in its sole discretion, to determine and designate from time to time those Eligible Persons who are to be granted Awards, the types of Awards to be granted and the number of shares or units subject to the Awards that are granted under the Plan. Each Award will be evidenced by an Award Agreement as described in Section 11.1 hereof. 6. SHARE OPTIONS 6.1. Grant of Option. An Option may be granted to any Eligible Person selected by the Committee. Subject to the applicable provisions of Section 422 of the Code, each Option shall be designated, in the discretion of the Committee, as an Incentive Option or a Nonqualified Option. The maximum number of Common Shares that may be granted under Options to any 4
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Participant during any calendar year shall be limited to 1,000,000 shares (subject to adjustment as provided in Section 3.2 hereof). 6.2. Exercise Price. The exercise price under any Option shall be determined by the Committee; provided, however, that the exercise price per share under an Option shall not be less than 100 percent of the Fair Market Value per share of the Common Shares on the Date of Grant. 6.3. Vesting; Term of Option. The Committee, in its sole discretion, shall prescribe the time or times at which, or the conditions upon which, an Option or portion thereof shall become vested and exercisable, and may accelerate the exercisability of any Option at any time. The period during which a vested Option may be exercised shall be ten years from the Date of Grant, unless a shorter exercise period is specified by the Committee in an Award, subject to such limitations as may apply under an Award relating to the termination of a Participant's employment or other service with the Company or any Subsidiary or any other cancellation of an Option in accordance with this Plan or an Award Agreement. 6.4. Option Exercise; Withholding. Subject to such terms and conditions as shall be specified in an Award, an Option may be exercised in whole or in part at any time during the term thereof by written notice to the Company, together with payment of the aggregate exercise price therefor. Payment of the exercise price shall be made, at the discretion of the Committee as specified in the Award Agreement, by (i) payment in cash or cash equivalent acceptable to the Committee, (ii) payment in Common Shares that have been held by the Participant for at least six months (or such other period as the Committee may deem appropriate for purposes of applicable accounting rules), valued at the Fair Market Value of such shares on the date of exercise, (iii) a broker-assisted "cashless exercise," (iv) a combination of the methods described above, or (v) such other method as may be approved by the Committee and set forth in the Award Agreement. In addition to and at the time of payment of the exercise price, the Participant shall pay to the Company the full amount of any and all applicable income tax and employment tax amounts required to be withheld in connection with such exercise, payable under such of the methods described above for the payment of the exercise price of the Options as may be approved by the Committee. 6.5. Authorization of Reload Options. The Committee may provide in an Award Agreement for any Option for the grant of a reload option upon the Participant's tendering of Common Shares upon exercise (and payment of withholding tax) of the underlying Option pursuant to Section 6.4 hereof (the "Reload Option"). The Reload Option shall be for a number of Common Shares equal to the number of Common Shares tendered by the Participant pursuant to Section 6.4 hereof with respect to the underlying Option and shall have such other terms and conditions as determined by the Committee and set forth in the Award Agreement. 6.6. Limited Transferability of Nonqualified Options. All Options shall be nontransferable except (i) upon the Participant's death, by the Participant's will or the laws of descent and distribution or (ii) in the case Nonqualified Options only, on a case-by-case basis as may be approved by the Committee in its discretion, in accordance with the terms provided below. An award for a Nonqualified Option may provide that the Participant shall be permitted to, during his or her lifetime and subject to the prior approval of the Committee at the time of proposed transfer, transfer all or part of the Option to the Participant's family member (as defined 5
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in the Award Agreement in a manner consistent with the requirements for the Form S-8 registration statement, if applicable). The transfer of a Nonqualified Option may be subject to such other terms and conditions as the Committee may in its discretion impose from time to time. Subsequent transfers of an Option shall be prohibited other than by will or the laws of descent and distribution upon the death of the transferee. 6.7. Additional Rules for Incentive Options. (a) Eligibility. An Incentive Option may only be granted to an Eligible Person who is considered an employee of the Company or any Subsidiary for purposes of Treasury Regulations Section 1.421-7(h). (b) Annual Limits. No Incentive Option shall be granted to a Participant as a result of which the aggregate Fair Market Value (determined as of the Date of Grant) of the share with respect to which Incentive Options are exercisable for the first time in any calendar year under the Plan and any other share option plans of the Company, any Subsidiary, or any parent Company, would exceed $100,000, determined in accordance with Section 422(d) of the Code. This limitation shall be applied by taking Options into account in the order in which granted. (c) Termination of Employment. An Award of an Incentive Option may provide that such Option may be exercised not later than 3 months following termination of employment of the Participant with the Company and all Subsidiaries, or not later than one year following death and disability, as and to the extent determined by the Committee to be consistent with the requirements of Section 422 of the Code and Treasury Regulations thereunder. (d) Other Terms and Conditions; Nontransferability. Any Incentive Option granted hereunder shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as are deemed necessary or desirable by the Committee, which terms, together with the terms of this Plan, shall be intended and interpreted to cause such Incentive Option to qualify as an incentive stock option under Section 422 of the Code. Such terms shall include, if applicable, limitations on Incentive Options granted to ten-percent owners of the Company. An Award Agreement for an Incentive Option may provide that such Option shall be treated as a Nonqualified Option to the extent that certain requirements applicable to incentive options under the Code shall not be satisfied. An Incentive Option shall by its terms be nontransferable otherwise than by will or by the laws of descent and distribution, and shall be exercisable during the lifetime of a Participant only by such Participant. (e) Disqualifying Dispositions. If Common Shares acquired by exercise of an Incentive Option are disposed of within two years following the Date of Grant or one year following the issuance of such shares to the Participant upon exercise, the Participant shall, promptly following such disposition, notify the Company in writing of the date and terms of such disposition and provide such other information regarding the disposition as the Committee may reasonably require. 7. SHARE APPRECIATION RIGHTS 7.1. Grant of SARs. A Share Appreciation Right granted to a Participant is an Award in the form of a right to receive, upon surrender of the right but without other payment, an 6
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amount based on appreciation in the Fair Market Value of Common Shares over a base price established for the Award, exercisable at such time or times and upon conditions as may be approved by the Committee. The maximum number of shares of Common Shares that may be subject to SARs granted to any Participant during any calendar year shall be limited to 1,000,000 shares (subject to adjustment as provided in Section 3.2 hereof). An SAR may be granted, at the discretion of the Committee, together with a Dividend Equivalent Right with respect to the same number of Common Shares. 7.2. Freestanding SARs. A Share Appreciation Right may be granted without any related Option, and in such case, will be exercisable as determined by the Committee, but in no event after 10 years from the Date of Grant. The base price of an SAR granted without any related Option shall be determined by the Committee in its sole discretion; provided, however, that the base price per share of any such freestanding SAR shall not be less than 100 percent of the Fair Market Value of the Common Shares on the Date of Grant. 7.3. Tandem SARs. A Share Appreciation Right may be granted in connection with an Option, either at the time of grant or at any time thereafter during the term of the Option. An SAR granted in connection with an Option will entitle the holder, upon exercise, to surrender such Option or any portion thereof to the extent unexercised, with respect to the number of shares as to which such SAR is exercised, and to receive payment of an amount computed as described in Section 7.4 hereof. Such Option will, to the extent and when surrendered, cease to be exercisable. An SAR granted in connection with an Option hereunder will have a base price per share equal to the per share exercise price of the Option, will be exercisable at such time or times, and only to the extent, that a related Option is exercisable, and will expire no later than the related Option expires. 7.4. Payment of SARs. An SAR will entitle the holder, upon exercise of the SAR, to receive payment of an amount determined by multiplying: (i) the excess of the Fair Market Value of a the Common Shares on the date of exercise of the SAR over the base price of such SAR, by (ii) the number of shares as to which such SAR is exercised. Payment of the amount determined under the foregoing may be made, in the discretion of the Committee, in cash, in Common Shares valued at their Fair Market Value on the date of exercise, or in a combination of cash and Common Shares. 8. RESTRICTED SHARE AWARD 8.1. Grant of Restricted Share Awards. A Restricted Share Award to a Participant represents Common Shares that are issued subject to such restrictions on transfer and other incidents of ownership and such forfeiture conditions as the Committee may determine. The Committee may, in connection with any Restricted Share Award, require the payment of a specified purchase price. The maximum number of Common Shares that may be subject to Restricted Share Awards granted to all Participants during the term of the Plan shall be limited to 1,000,000 shares (subject to adjustment as provided in Section 3.2 hereof). 8.2. Vesting Requirements. The restrictions imposed on shares granted under a Restricted Share Award shall lapse in accordance with the vesting requirements specified by the Committee in the Award Agreement. Such vesting requirements may be based on the continued 7
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employment of the Participant with the Company or its Subsidiaries for a specified time period or periods, and may also be based on the attainment of specified business goals or measures established by the Committee in its sole discretion. 8.3. Restrictions. Shares granted under any Restricted Share Award may not be transferred, assigned or subject to any encumbrance, pledge, or charge until all applicable restrictions are removed or have expired, unless otherwise allowed by the Committee. The Committee may require the Participant to enter into an escrow agreement providing that the certificates representing the shares granted or sold under a Restricted Share Award will remain in the physical custody of an escrow holder until all restrictions are removed or have expired. Failure to satisfy any applicable restrictions shall result in the subject shares of the Restricted Share Award being forfeited and returned to the Company, with any purchase price paid by the Participant to be refunded, unless otherwise provided by the Committee. The Committee may require that certificates representing the shares granted under a Restricted Share Award bear a legend making appropriate reference to the restrictions imposed. 8.4. Rights as Shareholder. Subject to the foregoing provisions of this Section 8 and the applicable Award Agreement, the Participant will have all rights of a shareholder with respect to the shares granted to him under a Restricted Share Award, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto, unless the Committee determines otherwise at the time the Restricted Share Award is granted. 8.5. Section 83(b) Election. The Committee may provide in an Award Agreement that the Restricted Share Award is conditioned upon the Participant's refraining from making an election with respect to the Award under Section 83(b) of the Code. Irrespective of whether an Award is so conditioned, if a Participant makes an election pursuant to Section 83(b) of the Code with respect to a Restricted Share Award, the Participant shall be required to promptly file a copy of such election with the Company. 9. SHARE UNIT AWARD 9.1. Grant of Share Unit Awards. A Share Unit Award is an Award to a Participant of a number of hypothetical share units with respect to Common Shares, with an initial value based on the Fair Market Value of the Common Shares on the Date of Grant. Such vesting requirements may be based on the continued employment of the Participant with the Company or its Subsidiaries for a specified time period or periods, and may also be based on the attainment of specified business goals or measures established by the Committee in its sole discretion. On the Date of Grant, the Committee shall determine, in its sole discretion, the installment or other vesting period of the Share Unit Award and the maximum value of the Share Unit Award, if any. No vesting period shall exceed 10 years from the Date of Grant. A Share Unit Award may be granted, at the discretion of the Committee, together with a Dividend Equivalent Right with respect to the same number of Common Shares. 9.2. Payment of Share Unit Awards. Upon the vesting date or dates applicable to the Share Unit Award granted to a Participant, an amount equal to the Fair Market Value of one Common Share upon such vesting dates (subject to any applicable maximum value) shall be paid with respect to each Share Unit Award unit granted to the Participant. Payment may be made, at 8
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the discretion of the Committee, in cash or in Common Shares valued at their Fair Market Value on the applicable vesting dates, or in a combination thereof. 10. CHANGE IN CONTROL 10.1. Effect of Change in Control. The Committee may, in an Award Agreement, provide for the effect of a "Change in Control" of the Company (as defined below) on an Award. Such provisions may include any one or more of the following: (i) the acceleration or extension of time periods for purposes of exercising, vesting in, or realizing gain from any Award, (ii) the elimination or modification of performance or other conditions related to the payment or other rights under an Award, (iii) provision for the cash settlement of an Award for an equivalent cash value, as determined by the Committee, or (iv) such other modification or adjustment to an Award as the Committee deems appropriate to maintain and protect the rights and interests of Participants upon or following a Change in Control. Unless otherwise provided by the Committee and set forth in the Award Agreement, upon a Change in Control (i) each outstanding Option, to the extent that it shall not otherwise have become vested and exercisable, shall automatically become fully and immediately vested and exercisable, without regard to any otherwise applicable vesting requirement and (ii) any restricted period in effect shall automatically terminate as to all Common Shares awarded pursuant to a Restricted Share Award. 10.2. Definition of Change in Control. For purposes hereof, a "Change in Control" of the Company shall mean: (i) an acquisition subsequent to the Effective Date hereof by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of fifty percent (50%) or more of either (A) the then outstanding Common Shares or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; excluding, however, the following: (1) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (2) any acquisition by the Company and (3) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary; (ii) during any period of two (2) consecutive years (not including any period prior to the Effective Date), individuals who at the beginning of such period constitute the Board (and any new directors whose election by the Board or nomination for election by the Company's shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was so approved) cease for any reason (except for death, disability or voluntary retirement) to constitute a majority thereof; (iii) the consummation of a merger, consolidation, reorganization, amalgamation or similar corporate transaction which has been approved by the shareholders of the Company, whether or not the Company is the surviving Company in such transaction, other than a merger, consolidation, reorganization or amalgamation that 9
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would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the combined voting power of the voting securities of the Company (or such surviving entity) outstanding immediately after such merger, consolidation, reorganization, amalgamation or similar corporate transaction; (iv) the approval by the shareholders of the Company of (A) the sale or other disposition of all or substantially all of the assets of the Company or (B) a complete liquidation or dissolution of the Company; or (v) adoption by the Board of a resolution to the effect that any person has acquired effective control of the business and affairs of the Company. 11. AWARD AGREEMENTS 11.1. Form of Agreement. Each Award under this Plan shall be evidenced by an Award Agreement in a form approved by the Committee setting forth the number of Common Shares, units or other rights (as applicable) subject to the Award, the exercise, base, or purchase price (if any) of the Award, the time or times at which an Award will become vested, exercisable or payable and the duration of the Award. The Award Agreement shall also set forth other material terms and conditions applicable to the Award as determined by the Committee consistent with the limitations of this Plan. Award Agreements evidencing Incentive Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code. 11.2. Forfeiture Events. The Committee may specify in an Award that the Participant's rights, payments and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events shall include, but shall not be limited to, termination of employment for cause, violation of material Company policies, breach of noncompetition, confidentiality or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company. 12. GENERAL PROVISIONS 12.1. No Assignment or Transfer; Beneficiaries. Except as provided in Section 6.5 hereof, Awards under the Plan shall not be assignable or transferable, except by will or by the laws of descent and distribution, and during the lifetime of a Participant, the Award shall be exercised only by such Participant or by his guardian or legal representative. Notwithstanding the foregoing, the Committee may provide in the terms of an Award Agreement that the Participant shall have the right to designate a beneficiary or beneficiaries who shall be entitled to any rights, payments or other specified under an Award following the Participant's death. 12.2. Deferrals of Payment. Notwithstanding any other provisions of the Plan, the Committee may permit a Participant to defer the receipt of payment of cash or delivery of 10
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Common Shares that would otherwise be due to the Participant by virtue of the exercise of a right or the satisfaction of vesting or other conditions with respect to an Award. If any such deferral is to be permitted by the Committee, the Committee shall establish the rules and procedures relating to such deferral, including, without limitation, the period of time in advance of payment when an election to defer may be made, the time period of the deferral and the events that would result in payment of the deferred amount, the interest or other earnings attributable to the deferral and the method of funding, if any, attributable to the deferred amount. 12.3. Rights as Shareholder. A Participant shall have no rights as a holder of Common Shares with respect to any unissued securities covered by an Award until the date the Participant becomes the holder of record of such securities. Except as provided in Section 3.2 hereof, no adjustment or other provision shall be made for dividends or other shareholder rights, except to the extent that the Award Agreement provides for a Dividend Equivalent Right, or otherwise provides for dividend payments or similar economic benefits. 12.4. Employment or Service. Nothing in the Plan, in the grant of any Award or in any Award Agreement shall confer upon any Eligible Person the right to continue in the capacity in which he is employed by, or otherwise serves, the Company or any Subsidiary. 12.5. Securities Laws. No Common Shares will be issued or transferred pursuant to an Award unless and until all then applicable requirements imposed by federal and state securities and other laws, rules and regulations and by any regulatory agencies having jurisdiction, and by any exchanges upon which the Common Shares may be listed, have been fully met. As a condition precedent to the issuance of shares pursuant to the grant or exercise of an Award, the Company may require the Participant to take any reasonable action to meet such requirements. The Committee may impose such conditions on any Common Shares issuable under the Plan as it may deem advisable, including, without limitation, restrictions under the Securities Act of 1933, as amended, under the requirements of any exchange upon which such shares of the same class are then listed, and under any blue sky or other securities laws applicable to such shares. 12.6. Tax Withholding. The Participant shall be responsible for payment of any taxes or similar charges required by law to be withheld from an Award or an amount paid in satisfaction of an Award, which shall be paid by the Participant on or prior to the payment or other event that results in taxable income in respect of an Award. The Award Agreement shall specify the manner in which the withholding obligation shall be satisfied with respect to the particular type of Award. 12.7. Unfunded Plan. The adoption of this Plan and any setting aside of cash amounts or Common Shares by the Company with which to discharge its obligations hereunder shall not be deemed to create a trust or other funded arrangement. The benefits provided under this Plan shall be a general, unsecured obligation of the Company payable solely from the general assets of the Company, and neither a Participant nor the Participant's permitted transferees or estate shall have any interest in any assets of the Company by virtue of this Plan, except as a general unsecured creditor of the Company. Notwithstanding the foregoing, the Company shall have the right to implement or set aside funds in a grantor trust, subject to the claims of the Company's creditors, to discharge its obligations under the Plan. 11
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12.8. Other Compensation and Benefit Plans. The adoption of the Plan shall not affect any other share incentive or other compensation plans in effect for the Company or any Subsidiary, nor shall the Plan preclude the Company from establishing any other forms of share incentive or other compensation for employees of the Company or any Subsidiary. The amount of any compensation deemed to be received by a Participant pursuant to an Award shall not constitute compensation with respect to which any other employee benefits of such Participant are determined, including, without limitation, benefits under any bonus, pension, profit sharing, life insurance or salary continuation plan, except as otherwise specifically provided by the terms of such plan. 12.9. Plan Binding on Transferees. The Plan shall be binding upon the Company, its transferees and assigns, and the Participant, his executor, administrator and permitted transferees and beneficiaries. 12.10. Construction and Interpretation. Whenever used herein, nouns in the singular shall include the plural, and the masculine pronoun shall include the feminine gender. Headings of Sections hereof are inserted for convenience and reference and constitute no part of the Plan. 12.11. Severability. If any provision of the Plan or any Award Agreement shall be determined to be illegal or unenforceable by any court of law in any jurisdiction, the remaining provisions hereof and thereof shall be severable and enforceable in accordance with their terms, and all provisions shall remain enforceable in any other jurisdiction. 12.12. Fractional Shares. No fractional shares shall be issued or delivered pursuant to this Pan or any Award. The Committee shall determine whether cash, Common Shares, Share Options or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated. 12.13. Foreign Jurisdictions. The Committee may adopt, amend and terminate such arrangements and grant such Awards, not inconsistent with the intent of the Plan, as it may deem necessary or desirable to comply with or take advantage of tax, securities, regulatory or other laws of foreign jurisdictions with respect to Participants who are subject to such laws. The terms and conditions of such Awards may vary from the terms and conditions that would otherwise be required by the Plan. 12.14. Governing Law. The Plan and all rights hereunder shall be subject to and interpreted in accordance with the laws of the State of New York, without reference to the principles of conflicts of laws, and to applicable federal securities laws. 13. EFFECTIVE DATE, TERMINATION AND AMENDMENT 13.1. Effective Date; Shareholder Approval. The Plan shall become effective on the date of its adoption by the Board and approval by the Company's shareholders. At the sole discretion of the Committee, in order to comply with the requirements of Section 162(m) of the Code for certain types of Awards under the Plan, the Plan shall be submitted again for approval by the shareholders of the Company at the first meeting of the shareholders that occurs more than 12 months after the Company's initial public offering. 12
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13.2. Amendment. The Board may at any time and from time to time and in any respect, amend or modify the Plan; provided, however, that no amendment or modification of the Plan shall be effective without the consent of the Company's shareholders that would (i) change the class of Eligible Persons under the Plan, (ii) increase the number of Common Shares reserved for issuance under the Plan in accordance with Section 3.1 hereof or the maximum numbers of Common Shares that may be subject to certain types of Awards under the Plan, or (iii) allow the grant of Options at an exercise price below Fair Market Value. In addition, the Board may seek the approval of any amendment or modification by the Company's shareholders to the extent it deems necessary or advisable in its sole discretion for purposes of compliance with Section 162(m) or Section 422 of the Code, the listing requirements of the New York Stock Exchange or other exchange or securities market or for any other purpose. No amendment or modification of the Plan shall adversely affect any Award theretofore granted without the consent of the Participant or the permitted transferee of the Award. 13.3. Termination. The Plan shall terminate on the date immediately preceding the tenth anniversary of the date the Plan is adopted by the Board. The Board may, in its sole discretion and at any earlier date, terminate the Plan. Notwithstanding the foregoing, no termination of the Plan shall adversely affect any Award theretofore granted without the consent of the Participant or the permitted transferee of the Award. 13
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