Exhibit 10.31

 

Conformed Copy

 

ACE LIMITED 1998

LONG-TERM INCENTIVE PLAN

 

(As Amended Through the Third Amendment)

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

          Page

--------------------------------------------------------------------------------

SECTION 1        GENERAL    1

1.1.

   Purpose    1

1.2.

   Participation    1

1.3.

   Operation, Administration, and Definitions    1 SECTION 2        OPTIONS AND
SARS    1

2.1.

   Definitions    1

2.2.

   Exercise Price    2

2.3.

   Exercise    2

2.4.

   Payment of Option Exercise Price    2

2.5.

   Settlement of Award    2 SECTION 3        OTHER STOCK AWARDS    3

3.1.

   Definitions    3

3.2.

   Restrictions on Awards    3 SECTION 4        OPERATION AND ADMINISTRATION   
4

4.1.

   Effective Date    4

4.2.

   Shares Subject to Plan    4

4.3.

   General Restrictions    6

4.4.

   Tax Withholding    6

4.5.

   Use of Shares    6

4.6.

   Dividends and Dividend Equivalents    6

4.7.

   Payments    6

4.8.

   Transferability    7

4.9.

   Form and Time of Elections    7

4.10.

   Agreement With Company    7

4.11.

   Action by Company or Subsidiary    7

4.12.

   Gender and Number    7

4.13.

   Limitation of Implied Rights    7

4.14.

   Benefits Under Qualified Retirement Plans    8

4.15.

   Evidence    8 SECTION 5        CHANGE IN CONTROL    8

 

-i-

--------------------------------------------------------------------------------

TABLE OF CONTENTS

(continued)

 

          Page

--------------------------------------------------------------------------------

SECTION 6

       COMMITTEE    8

6.1.

   Administration    8

6.2.

   Powers of Committee    8

6.3.

   Delegation by Committee    9

6.4.

   Information to be Furnished to Committee    9

SECTION 7

       AMENDMENT AND TERMINATION    9

SECTION 8

       DEFINED TERMS    10

 

-ii-

--------------------------------------------------------------------------------

ACE LIMITED 1998

LONG-TERM INCENTIVE PLAN

 

(As Amended Through the Third Amendment)

 

SECTION 1

 

GENERAL

 

1.1. Purpose. The ACE Limited Long-Term Incentive Plan (the “Plan”) has been
established by ACE Limited (the “Company”) to (i) attract and retain persons
eligible to participate in the Plan; (ii) motivate Participants, by means of
appropriate incentives, to achieve long-range goals; (iii) provide incentive
compensation opportunities that are competitive with those of other similar
companies; and (iv) further identify Participants’ interests with those of the
Company’s other shareholders through compensation that is based on the Company’s
ordinary shares of stock; and thereby promote the long-term financial interest
of the Company and the Subsidiaries, including the growth in value of the
Company’s equity and enhancement of long-term shareholder return.

 

1.2. Participation. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, from among the
Eligible Individuals (including transferees of Eligible Individuals to the
extent the transfer is permitted by the Plan and the applicable Award
Agreement), those persons who will be granted one or more Awards under the Plan,
and thereby become “Participants” in the Plan. In the discretion of the
Committee, a Participant may be granted any Award permitted under the provisions
of the Plan, and more than one Award may be granted to a Participant. Awards may
be granted as alternatives to or replacement of awards granted or outstanding
under the Plan, or any other plan or arrangement of the Company or a Subsidiary
(including a plan or arrangement of a business or entity, all or a portion of
which is acquired by the Company or a Subsidiary).

 

1.3. Operation, Administration, and Definitions. The operation and
administration of the Plan, including the Awards made under the Plan, shall be
subject to the provisions of Section 4 (relating to operation and
administration). Capitalized terms in the Plan shall be defined as set forth in
the Plan (including the definition provisions of Section 8 of the Plan).

 

SECTION 2

 

OPTIONS AND SARS

 

2.1. Definitions.

 

(a) The grant of an “Option” entitles the Participant to purchase shares of
Stock at an Exercise Price established by the Committee. Any Option granted
under this Section 2 may be either an incentive stock option (an “ISO”) or a
non-qualified option (an “NQO”), as determined in the discretion of the
Committee. An “ISO” is an Option that is intended to satisfy the requirements
applicable to an “incentive stock option” described in section 422(b) of the
Code. An “NQO” is an Option that is not intended to be an “incentive stock
option” as that term is described in section 422(b) of the Code.

--------------------------------------------------------------------------------

(b) A stock appreciation right (an “SAR”) entitles the Participant to receive,
in cash or Stock (as determined in accordance with subsection 2.5), value equal
to (or otherwise based on) the excess of: (a) the Fair Market Value of a
specified number of shares of Stock at the time of exercise; over (b) an
Exercise Price established by the Committee.

 

2.2. Exercise Price. The “Exercise Price” of each Option and SAR granted under
this Section 2 shall be established by the Committee or shall be determined by a
method established by the Committee at the time the Option or SAR is granted;
except that the Exercise Price shall not be less than 100% of the Fair Market
Value of a share of Stock on the date of grant (or, if greater, the par value of
a share of Stock).

 

2.3. Exercise. An Option and an SAR shall be exercisable in accordance with such
terms and conditions and during such periods as may be established by the
Committee.

 

2.4. Payment of Option Exercise Price. The payment of the Exercise Price of an
Option granted under this Section 2 shall be subject to the following:

 

(a) Subject to the following provisions of this subsection 2.4, the full
Exercise Price for shares of Stock purchased upon the exercise of any Option
shall be paid at the time of such exercise (except that, in the case of an
exercise arrangement approved by the Committee and described in paragraph
2.4(c), payment may be made as soon as practicable after the exercise).

 

(b) The Exercise Price shall be payable in cash or by tendering, by either
actual delivery of shares or by attestation, shares of Stock acceptable to the
Committee, and valued at Fair Market Value as of the day of exercise, or in any
combination thereof, as determined by the Committee.

 

(c) The Committee may permit a Participant to elect to pay the Exercise Price
upon the exercise of an Option by irrevocably authorizing a third party to sell
shares of Stock (or a sufficient portion of the shares) acquired upon exercise
of the Option and remit to the Company a sufficient portion of the sale proceeds
to pay the entire Exercise Price and any tax withholding resulting from such
exercise.

 

2.5. Settlement of Award. Shares of Stock delivered pursuant to the exercise of
an Option or SAR shall be subject to such conditions, restrictions and
contingencies as the Committee may establish in the applicable Award Agreement.
Settlement of SARs may be made in shares of Stock (valued at their Fair Market
Value at the time of exercise), in cash, or in a combination thereof, as
determined in the discretion of the Committee. The Committee, in its discretion,
may impose such conditions, restrictions and contingencies with respect to
shares of Stock acquired pursuant to the exercise of an Option or an SAR as the
Committee determines to be desirable.

 

2

--------------------------------------------------------------------------------

SECTION 3

 

OTHER STOCK AWARDS

 

3.1. Definitions.

 

(a) A “Stock Unit” Award is the grant of a right to receive shares of Stock in
the future.

 

(b) A “Performance Share” Award is a grant of a right to receive shares of Stock
or Stock Units which is contingent on the achievement of performance or other
objectives during a specified period.

 

(c) A “Performance Unit” Award is a grant of a right to receive a designated
dollar value amount of Stock which is contingent on the achievement of
performance or other objectives during a specified period.

 

(d) A “Restricted Stock” Award is a grant of shares of Stock, and a “Restricted
Stock Unit” Award is the grant of a right to receive shares of Stock in the
future, with such shares of Stock or right to future delivery of such shares of
Stock subject to a risk of forfeiture or other restrictions that will lapse upon
the achievement of one or more goals relating to completion of service by the
Participant, or achievement of performance or other objectives, as determined by
the Committee.

 

3.2. Restrictions on Awards. Each Stock Unit Award, Restricted Stock Award,
Restricted Stock Unit Award, Performance Share Award and Performance Unit Award
shall be subject to the following:

 

(a) Any such Award shall be subject to such conditions, restrictions and
contingencies as the Committee shall determine.

 

(b)

The Committee may designate whether any such Award being granted to any
Participant is intended to be “performance-based compensation” as that term is
used in section 162(m) of the Code. Any such Awards designated as intended to be
“performance-based compensation” shall be conditioned on the achievement of one
or more Performance Measures, to the extent required by Code section 162(m). The
Performance Measures that may be used by the Committee for such Awards shall be
based on any one or more of the following Company, Subsidiary, operating unit or
division performance measures, as selected by the Committee: gross premiums
written; net premiums written; net premiums earned; net investment income;
losses and loss expenses; underwriting and administrative expenses; operating
expenses; cash flow(s); operating income; earnings before interest and taxes;
net income; stock price; dividends; strategic business objectives, consisting of
one or more objectives based on meeting specified cost targets, business
expansion goals, and goals relating to acquisitions or divestitures; or any
combination thereof. Each goal may be expressed on an absolute and/or relative
basis, may be based on or otherwise employ comparisons based on internal
targets, the past performance of the Company and/or the past or current
performance of other companies, and in the case of earnings-based measures, may
use or employ comparisons relating to capital, shareholders’ equity and/or
shares outstanding, investments or to assets or net assets. For Awards under
this

 

3

--------------------------------------------------------------------------------

 

Section 3 intended to be “performance-based compensation,” the grant of the
Awards and the establishment of the Performance Measures shall be made during
the period required under Code section 162(m).

 

(c) If the right to become vested in a Restricted Stock Award or Restricted
Stock Unit Award granted under this Section 3 is conditioned on the completion
of a specified period of service with the Company or the Subsidiaries, without
achievement of Performance Measures or other performance objectives being
required as a condition of vesting, and without it being granted in lieu of
other compensation, then the required period of service for full vesting shall
be not less than three years (subject to acceleration of vesting, to the extent
permitted by the Committee, in the event of the Participant’s death, disability,
retirement, change in control or involuntary termination).

 

SECTION 4

 

OPERATION AND ADMINISTRATION

 

4.1. Effective Date. Subject to the approval of the shareholders of the Company
at the Company’s 1999 annual meeting of its shareholders, the Plan shall be
effective as of November 13, 1998 (the “Effective Date”); provided, however,
that to the extent that Awards are granted under the Plan prior to its approval
by shareholders, the Awards shall be contingent on approval of the Plan by the
shareholders of the Company at such annual meeting. The Plan shall be unlimited
in duration and, in the event of Plan termination, shall remain in effect as
long as any Awards under it are outstanding; provided, however, that no Awards
may be granted under the Plan after the ten-year anniversary of the Effective
Date.

 

4.2. Shares Subject to Plan. The shares of Stock for which Awards may be granted
under the Plan shall be subject to the following:

 

(a) The shares of Stock with respect to which Awards may be made under the Plan
shall be currently authorized but unissued shares, or shares purchased in the
open market by a direct or indirect wholly-owned subsidiary of the Company (as
determined by the Chairman or any Executive Vice President of the Company). The
Company may contribute to the subsidiary an amount sufficient to accomplish the
purchase in the open market of the shares of Stock to be so acquired (as
determined by the Chairman or any Executive Vice President of the Company).

 

(b) Subject to this subsection 4.2, the number of shares of Stock available for
Awards under the Plan shall be 21,252,007.

 

(c) To the extent provided by the Committee, any Award may be settled in cash
rather than Stock. To the extent any shares of Stock covered by an Award are not
delivered to a Participant or beneficiary because the Award is forfeited or
canceled, or the shares of Stock are not delivered because the Award is settled
in cash or used to satisfy the applicable tax withholding obligation, such
shares shall not be deemed to have been delivered for purposes of determining
the maximum number of shares of Stock available for delivery under the Plan.

 

4

--------------------------------------------------------------------------------

(d) If the exercise price of any Option granted under the Plan is satisfied by
tendering shares of Stock to the Company (by either actual delivery or by
attestation), only the number of shares of Stock issued net of the shares of
Stock tendered shall be deemed delivered for purposes of determining the maximum
number of shares of Stock available for delivery under the Plan.

 

(e) Subject to paragraph 4.2(f), the following additional maximums are imposed
under the Plan:

 

(i) The maximum number of shares of Stock that may be issued by Options intended
to be ISOs shall be 8,000,000 shares.

 

(ii) The maximum number of shares that may be covered by Awards granted to any
one individual pursuant to Section 2 (relating to Options and SARs) shall be
6,000,000 shares during any one-calendar-year period.

 

(iii) The maximum number of shares of Stock that may be issued in conjunction
with Awards granted pursuant to Section 3 (relating to Other Stock Awards) shall
equal the sum of 2,500,000 shares plus the number of shares of Stock subject to
Awards granted in replacement of awards given up by persons who became employed
by the Company and the Subsidiaries in connection with the acquisition described
in the acquisition agreement dated as of January 11, 1999 by and among the
Company, CIGNA Corporation, and CIGNA Holdings, Inc.

 

(iv) For Stock Unit Awards, Restricted Stock Awards, Restricted Stock Unit
Awards and Performance Share Awards that are intended to be “performance-based
compensation” (as that term is used for purposes of Code section 162(m)), no
more than 2,000,000 shares of Stock may be subject to such Awards granted to any
one individual during any one-calendar-year period (regardless of when such
shares are deliverable).

 

(v) For Performance Unit Awards that are intended to be “performance-based
compensation” (as that term is used for purposes of Code section 162(m)), no
more than $5,000,000 may be subject to such Awards granted to any one individual
during any one-calendar-year period (regardless of when such amounts are
deliverable).

 

(f) In the event of a corporate transaction involving the Company (including,
without limitation, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination or exchange of shares), the Committee may adjust Awards to
preserve the benefits or potential benefits of the Awards. Action by the
Committee may include: (i) adjustment of the number and kind of shares which may
be delivered under the Plan; (ii) adjustment of the number and kind of shares
subject to outstanding Awards; (iii) adjustment of the Exercise Price of
outstanding Options and SARs; and (iv) any other adjustments that the Committee
determines to be equitable.

 

5

--------------------------------------------------------------------------------

4.3. General Restrictions. Delivery of shares of Stock or other amounts under
the Plan shall be subject to the following:

 

(a) Notwithstanding any other provision of the Plan, the Company shall have no
liability to deliver any shares of Stock under the Plan or make any other
distribution of benefits under the Plan unless such delivery or distribution
would comply with all applicable laws (including, without limitation, the
requirements of the United States Securities Act of 1933), and the applicable
requirements of any securities exchange or similar entity.

 

(b) To the extent that the Plan provides for issuance of stock certificates to
reflect the issuance of shares of Stock, the issuance may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or the
applicable rules of any stock exchange.

 

4.4. Tax Withholding. All distributions under the Plan are subject to
withholding of all applicable taxes, and the Committee may condition the
delivery of any shares or other benefits under the Plan on satisfaction of the
applicable withholding obligations. Except as otherwise provided by the
Committee, such withholding obligations may be satisfied (i) through cash
payment by the Participant, (ii) through the surrender of shares of Stock which
the Participant already owns, or (iii) through the surrender of shares of Stock
to which the Participant is otherwise entitled under the Plan; provided,
however, that such shares under this clause (iii) may be used to satisfy not
more than the Company’s minimum statutory withholding obligation (based on
minimum statutory withholding rates for Federal and state tax purposes,
including payroll taxes, that are applicable to such supplemental taxable
income).

 

4.5. Use of Shares. Subject to the overall limitation on the number of shares of
Stock that may be delivered under the Plan, the Committee may use available
shares of Stock as the form of payment for compensation, grants or rights earned
or due under any other compensation plans or arrangements of the Company or a
Subsidiary, including the plans and arrangements of the Company or a Subsidiary
assumed in business combinations.

 

4.6. Dividends and Dividend Equivalents. An Award (including without limitation
an Option or SAR Award) may provide the Participant with the right to receive
dividend payments or dividend equivalent payments with respect to Stock subject
to the Award (both before and after the Stock subject to the Award is earned,
vested, or acquired), which payments may be either made currently or credited to
an account for the Participant, and may be settled in cash or Stock as
determined by the Committee. Any such settlements, and any such crediting of
dividends or dividend equivalents or reinvestment in shares of Stock, may be
subject to such conditions, restrictions and contingencies as the Committee
shall establish, including the reinvestment of such credited amounts in Stock
equivalents.

 

4.7. Payments. Awards may be settled through cash payments, the delivery of
shares of Stock, the granting of replacement Awards, or combination thereof as
the Committee shall determine. Any Award settlement, including payment
deferrals, may be subject to such conditions, restrictions and contingencies as
the Committee shall determine. The Committee may permit or require the deferral
of any Award payment, subject to such rules and procedures as it may establish,
which may include provisions for the payment or crediting of interest, or
dividend equivalents, including converting such credits into deferred Stock
equivalents. Each Subsidiary shall be liable for payment of cash due under the
Plan with respect to any Participant to the extent that such benefits are
attributable to the services rendered for that Subsidiary by the Participant.
Any disputes relating to liability of a Subsidiary for cash payments shall be
resolved by the Committee.

 

6

--------------------------------------------------------------------------------

4.8. Transferability. Except as otherwise provided by the Committee, Awards
under the Plan are not transferable except as designated by the Participant by
will or by the laws of descent and distribution.

 

4.9. Form and Time of Elections. Unless otherwise specified herein, each
election required or permitted to be made by any Participant or other person
entitled to benefits under the Plan, and any permitted modification, or
revocation thereof, shall be in writing filed with the Committee at such times,
in such form, and subject to such restrictions and limitations, not inconsistent
with the terms of the Plan, as the Committee shall require.

 

4.10. Agreement With Company. An Award under the Plan shall be subject to such
terms and conditions, not inconsistent with the Plan, as the Committee shall, in
its sole discretion, prescribe. The terms and conditions of any Award to any
Participant shall be reflected in such form of written document as is determined
by the Committee. A copy of such document shall be provided to the Participant,
and the Committee may, but need not require that the Participant sign a copy of
such document. Such document is referred to in the Plan as an “Award Agreement”
regardless of whether any Participant signature is required.

 

4.11. Action by Company or Subsidiary. Any action required or permitted to be
taken by the Company or any Subsidiary shall be by resolution of its board of
directors, or by action of one or more members of the board (including a
committee of the board) who are duly authorized to act for the board, or (except
to the extent prohibited by applicable law or applicable rules of any stock
exchange) by a duly authorized officer of such company.

 

4.12. Gender and Number. Where the context admits, words in any gender shall
include any other gender, words in the singular shall include the plural and the
plural shall include the singular.

 

4.13. Limitation of Implied Rights.

 

(a) Neither a Participant nor any other person shall, by reason of participation
in the Plan, acquire any right in or title to any assets, funds or property of
the Company or any Subsidiary whatsoever, including, without limitation, any
specific funds, assets, or other property which the Company or any Subsidiary,
in their sole discretion, may set aside in anticipation of a liability under the
Plan. A Participant shall have only a contractual right to the Stock or amounts,
if any, payable under the Plan, unsecured by any assets of the Company or any
Subsidiary, and nothing contained in the Plan shall constitute a guarantee that
the assets of the Company or any Subsidiary shall be sufficient to pay any
benefits to any person.

 

(b)

The Plan does not constitute a contract of employment, and selection as a
Participant will not give any participating employee or other individual the
right to be retained in the employ of the Company or any Subsidiary or the right
to continue to provide services to the Company or any Subsidiary, nor any right
or claim to any benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan. Except as

 

7

--------------------------------------------------------------------------------

 

otherwise provided in the Plan, no Award under the Plan shall confer upon the
holder thereof any rights as a shareholder of the Company prior to the date on
which the individual fulfills all conditions for receipt of such rights.

 

4.14. Benefits Under Qualified Retirement Plans. Except as otherwise provided by
the Committee, Awards to a Participant (including the grant and the receipt of
benefits) under the Plan shall be disregarded for purposes of determining the
Participant’s benefits under any Qualified Retirement Plan and other plans
maintained by the Participant’s employer. The term “Qualified Retirement Plan”
means any plan of the Company or a Subsidiary that is intended to be qualified
under section 401(a) of the Code.

 

4.15. Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.

 

SECTION 5

 

CHANGE IN CONTROL

 

Subject to the provisions of paragraph 4.2(f) (relating to the adjustment of
shares), and except as otherwise provided in the Plan or the Award Agreement
reflecting the applicable Award, upon the occurrence of a Change in Control:

 

(a) All outstanding Options (regardless of whether in tandem with SARs) shall
become fully exercisable.

 

(b) All outstanding SARs (regardless of whether in tandem with Options) shall
become fully exercisable.

 

(c) All Stock Units, Restricted Stock, Restricted Stock Units, Performance
Shares, and Performance Units shall become fully vested.

 

SECTION 6

 

COMMITTEE

 

6.1. Administration. The authority to control and manage the operation and
administration of the Plan shall be vested in a committee (the “Committee”) in
accordance with this Section 6. The Compensation Committee of the Board shall
serve as the “Committee” under the Plan, except as otherwise determined by the
Board. If the Committee does not exist, or for any other reason determined by
the Board, the Board may take any action under the Plan that would otherwise be
the responsibility of the Committee.

 

6.2. Powers of Committee. The Committee’s administration of the Plan shall be
subject to the following:

 

(a)

Subject to the provisions of the Plan, the Committee will have the authority and
discretion to select from among the Eligible Individuals those persons who shall
receive

 

8

--------------------------------------------------------------------------------

 

Awards, to determine the time or times of receipt, to determine the types of
Awards and the number of shares covered by the Awards, to establish the terms,
conditions, performance criteria, restrictions, and other provisions of such
Awards, and (subject to the restrictions imposed by Section 7) to cancel or
suspend Awards.

 

(b) To the extent that the Committee determines that the restrictions imposed by
the Plan preclude the achievement of the material purposes of the Awards in
jurisdictions outside the United States, the Cayman Islands, and Bermuda, the
Committee will have the authority and discretion to modify those restrictions as
the Committee determines to be necessary or appropriate to conform to applicable
requirements or practices of jurisdictions outside of the United States, the
Cayman Islands, and Bermuda.

 

(c) The Committee will have the authority and discretion to interpret the Plan,
to establish, amend, and rescind any rules and regulations relating to the Plan,
to determine the terms and provisions of any Award Agreement made pursuant to
the Plan, and to make all other determinations that may be necessary or
advisable for the administration of the Plan.

 

(d) Any interpretation of the Plan by the Committee and any decision made by it
under the Plan is final and binding on all persons.

 

(e) In controlling and managing the operation and administration of the Plan,
the Committee shall take action in a manner that conforms to the Memorandum and
Articles of Association of the Company, and applicable corporate law.

 

6.3. Delegation by Committee. Except to the extent prohibited by applicable law
or the applicable rules of a stock exchange, the Committee may allocate all or
any portion of its responsibilities and powers to any one or more of its members
and may delegate all or any part of its responsibilities and powers to any
person or persons selected by it. Any such allocation or delegation may be
revoked by the Committee at any time.

 

6.4. Information to be Furnished to Committee. The Company and Subsidiaries
shall furnish the Committee with such data and information as it determines may
be required for it to discharge its duties. The records of the Company and
Subsidiaries as to an employee’s or Participant’s employment (or other provision
of services), termination of employment (or cessation of the provision of
services), leave of absence, reemployment and compensation shall be conclusive
on all persons unless determined to be incorrect. Participants and other persons
entitled to benefits under the Plan must furnish the Committee such evidence,
data or information as the Committee considers desirable to carry out the terms
of the Plan.

 

SECTION 7

 

AMENDMENT AND TERMINATION

 

The Board may, at any time, amend or terminate the Plan, provided that no
amendment or termination may, in the absence of written consent to the change by
the affected Participant (or, if the Participant is not then living, the
affected beneficiary), adversely affect the rights of any Participant or
beneficiary under any Award granted under the Plan prior to the date such
amendment is adopted by the Board; provided that adjustments pursuant to subject
to paragraph 4.2(f) shall not be subject to the foregoing limitations of this
Section 7.

 

9

--------------------------------------------------------------------------------

SECTION 8

 

DEFINED TERMS

 

In addition to the other definitions contained herein, the following definitions
shall apply:

 

(a) Award. The term “Award” shall mean any award or benefit granted under the
Plan, including, without limitation, the grant of Options, SARs, Stock Unit
Awards, Restricted Stock Awards, Restricted Stock Unit Awards, Performance Share
Awards, and Performance Unit Awards.

 

(b) Board. The term “Board” shall mean the Board of Directors of the Company.

 

(c) Change in Control. The term “Change in Control” shall mean the occurrence of
any one of the following events:

 

(i) any “person,” as such term is used in Sections 3(a)(9) and 13(d) of the
United States Securities Exchange Act of 1934, becomes a “beneficial owner,” as
such term is used in Rule 13d-3 promulgated under that act, of 50% or more of
the Voting Stock (as defined below) of the Company;

 

(ii) the majority of the Board consists of individuals other than Incumbent
Directors, which term means the members of the Board on the Effective Date;
provided that any 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).

 

10

--------------------------------------------------------------------------------

For the purpose of this definition of “Change in Control,” (I) an “Affiliate” of
a person or other entity shall mean a person or other entity that directly or
indirectly controls, is controlled by, or is under common control with the
person or other entity specified and (II) “Voting Stock” shall mean capital
stock of any class or classes having general voting power under ordinary
circumstances, in the absence of contingencies, to elect the directors of a
corporation.

 

(d) Code. The term “Code” means the United States Internal Revenue Code of 1986,
as amended. A reference to any provision of the Code shall include reference to
any successor provision of the Code.

 

(e) Dollars. As used in the Plan, the term “dollars” or numbers preceded by the
symbol “$” shall mean amounts in United States dollars.

 

(f) Eligible Individual. For purposes of the Plan, the term “Eligible
Individual” shall mean any employee of the Company or a Subsidiary, and any
consultant, director, or other person providing services to the Company or a
Subsidiary. An Award may be granted to an employee or other individual providing
services, in connection with hiring, retention or otherwise, prior to the date
the employee or service provider first performs services for the Company or the
Subsidiaries, provided that such Awards shall not become vested prior to the
date the employee or service provider first performs such services.

 

(g) Fair Market Value. Except as otherwise provided by the Committee, the “Fair
Market Value” of a share of Stock as of any date shall be the closing market
composite price for such Stock as reported for the New York Stock Exchange -
Composite Transactions on that date or, if Stock is not traded on that date, on
the next preceding date on which Stock was traded.

 

(h) Subsidiaries. For purposes of the Plan, the term “Subsidiary” means any
corporation, partnership, joint venture or other entity during any period in
which at least a fifty percent voting or profits interest is owned, directly or
indirectly, by the Company (or by any entity that is a successor to the
Company), and any other business venture designated by the Committee in which
the Company (or any entity that is a successor to the Company) has a significant
interest, as determined in the discretion of the Committee.

 

(i) Stock. The term “Stock” shall mean ordinary shares of stock of the Company.

 

11