EX-10.9



 





EXHIBIT 10.9




DARWIN PROFESSIONAL UNDERWRITERS, INC.

STOCK AND UNIT PLAN

FOR NONEMPL0YEE DIRECTORS

(as amended effective January 25, 2007)




1. Introduction



This Darwin Professional Underwriters, Inc. Stock and Unit Plan for
Nonemployee Directors (the “Plan”) is intended to advance the interests of the Company and its
shareholders by paying part or all of the compensation of the Company’s nonemployee directors in
the form of an economic equivalent of an equity interest in the Company. The Plan provides for the
conversion of at least 50 percent and up to 100 percent of the Director Fees otherwise payable each
year to a director into units of measurement relating to the value of the Company’s Common Stock,
and for payment to the director of the value of such units after five calendar years (or upon
termination from service on the Board,
if earlier), so that a director will normally receive payment under the Plan each successive year
in respect of the fees originally converted into units in the year preceding the fifth calendar
year prior to the year of payment. The Plan also provides for a one-time grant of Restricted Stock
to each nonemployee director serving on the Board at the time the Plan is adopted. The Plan shall
become effective with respect to Director Fees earned in 2006.




2. Definitions



(a) “Annual Meeting” means the Company’s annual meeting of
shareholders.



(b) “Board” means the Board of Directors of the Company.



(c) “Common Stock” means the shares of common stock of the Company,
par value $0.01.



(d) “Company” means Darwin Professional Underwriters, Inc., a
Delaware corporation.



(e) “Conversion Date” means the first business day following the
conclusion of an Annual Meeting; provided that the initial Conversion Date under the Plan shall be
the first business day following the date the Plan is adopted.



(f) “Director Fees” means the annual retainer fee or fees earned by
the Participant for his service on the Board.



(g) “Fair Market Value” of Common Stock as of a given date means the
mean of the high and low sales prices of the Common Stock on the relevant date as reported on the
stock exchange or market on which the Common Stock are primarily traded, or, if no sale is made on
such date, then Fair Market Value is the weighted average of the mean of the high and low sales
prices of the Common Stock on the next preceding day and the next succeeding day on which such
sales were made as reported on the stock exchange or market on which the Common Stock are primarily
traded; provided, however, that the Fair Market Value for the award of Restricted Stock or the
conversion into Share Units following the adoption of the Plan shall be based upon the offering
price for Common Stock in the Company’s initial public offering.



(h) “Mandatory Conversion” means the required conversion of 50
percent of a Participant’s Director Fees into a Share Unit Award pursuant to Section 6 hereof.





 









 







(i) “Participant” means a member of the Board who is not an employee of the Company, any of its
affiliates or Alleghany Corporation.



(j) “Realization Date” means, with respect to each Share Unit
allocated to a Participant’s Share Unit Account, the first business day
following the earlier of (i) the first business day of the sixth calendar year after such Share
Unit is awarded to the Participant, or (ii) either upon the date the Participant ceases to be a
member of the Board or upon a change in control.



(k) “Restricted Stock” means Common Stock which are subject to
potential forfeiture and restrictions on transfer as provided in Section 5 hereof.



(l) “Share Unit” means a non-voting unit of measurement based on the
value of a whole or a fraction of a share of Common Stock, which entitles a participant to receive
payment in accordance with the terms of the Plan.



(m) “Share Unit Account” means a book account maintained by the
Company reflecting the Share Units allocated to a Participant pursuant to Section 6 hereof as a
result of the Participant’s Mandatory Conversions and Voluntary Conversions and such additional
Share Units as shall be credited thereto in respect of dividends paid on Common Stock.



(n) “Share Unit Award” means an award under Section 6 hereof of
Share Units.



(o) “Voluntary Conversion” means the conversion based on the
election of the Participant of all or part of a Participant’s Director Fees otherwise payable to
the Participant in cash into a Share Unit Award pursuant to Section 6 hereof.



3. Common Stock Subject to the Plan



(a) Number of Shares



Subject to the following provisions of this Section 3, the aggregate
number of Common Stock that may be issued under the Plan is 130,000 shares of Common Stock. The
Common Stock to be delivered under the Plan will be made available from authorized but unissued
Common Stock or from reacquired shares.



To the extent that any Share Unit Award or award of Restricted Stock is
forfeited or terminated for any reason or is not paid in Common
Stock, the number of Common Stock covered thereby shall not be charged against the foregoing
maximum share limitation.



(b) Adjustments



If there shall occur any recapitalization, reclassification, share
dividend, share split, reverse share split, or other distribution with respect to the Common Stock,
or other change in corporate structure affecting the Common Stock, the Board may, in the manner and
to the extent that it deems appropriate and equitable and consistent with the terms of this Plan,
cause an adjustment to be made in (i) the maximum number and kind of shares available for issuance
pursuant to Section 3(a) hereof and (ii) the Share Units allocated to Participants’ Share Unit
Accounts in accordance with Section 6(e) hereof.




4. Administration



The Plan shall be administered by the Board. The Board shall have




 









 







full and final authority to administer the Plan, including the discretionary authority to interpret
and construe all provisions of the Plan, to resolve all questions of fact arising under the Plan,
and to adopt and amend such rules and regulations for administering the Plan as it may deem
necessary or appropriate.




Decisions of the Board shall be final and binding on all parties. The Board may delegate
administrative responsibilities under the Plan to appropriate officers or employees of the Company.
All expenses of the Plan shall be borne by the Company.



5. Restricted Share Awards



Each Participant on the date the Plan is adopted (the “Grant Date”),
shall receive an award of Restricted Stock equal to that number of whole shares of Common Stock
(rounded up to the next whole share) as could be acquired with $40,000, based upon the Fair Market
Value of Common Stock. Awards of Restricted Stock shall be subject to the terms of the Plan and
otherwise evidenced by an award agreement.



(a) Each grant of Restricted Stock shall be issued for no consideration but shall be
forfeited to the Company if such Participant resigns from the Board prior to the first
Annual Meeting next following the Grant Date (other than (i) in connection with a change of
control, as such term is defined in the applicable award agreement, or (ii) in connection
with a mutually agreed upon resignation, in which case the Board may accelerate vesting of
all or a portion of the Restricted Stock in its sole discretion). In addition, Restricted
Stock shall not be sold, assigned, pledged or transferred to any person until the third
anniversary of the Grant Date; provided that the Restricted Stock shall automatically cease
to be subject to the foregoing restrictions on sale, assignment, pledge or transfer upon the
Participant’s death or a change in control (as such term is defined in the applicable award
agreement) prior to such first Annual Meeting or, subsequent to such first Annual Meeting, upon the
date the Participant ceases to be a director for any reason.



(b) The Participant to whom Restricted Stock are issued will have
the customary rights of a shareholder with respect to such Restricted Stock, including the right to
vote the Restricted Stock and to receive cash dividends paid thereon. Prior to the date the
Restricted Stock ceases to be subject to the restrictions on sale, assignment,
pledge or transfer in Section 5(a), dividends paid on such Common Stock in the form of additional
Common Stock or as securities or other non-cash property shall be subject to the same risk of
forfeiture and other restrictions as the underlying Common Stock with respect to which the dividend
was paid.



(c) Any Restricted Stock issued under the Plan may be evidenced in
such manner as the Board in its sole discretion shall deem appropriate,
including, without limitation, book-entry registration or by the issuance of a stock certificate or
certificates. In the event any stock certificate is issued in respect of Restricted Stock, such
certificate shall be registered in the name of the Participant, and shall bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock.




 









 







6. Crediting of Share Units



(a) Mandatory Conversions



Effective as of each Conversion Date occurring while the Plan is in
effect, 50 percent of the aggregate dollar amount of a Participant’s Director Fees otherwise
payable on such Conversion Date shall be converted into a Share Unit Award pursuant to Section 6©
hereof.



(b) Voluntary Conversions



Effective as of each Conversion Date occurring while the Plan is in
effect, a Participant may elect to convert all or any portion of his Director Fees otherwise
payable on such Conversion Date (in addition to those required to be converted under Section 6(a)
hereof) into a Share Unit Award pursuant to Section 6© hereof. Each Voluntary Conversion shall be
made on the basis of a Participant’s written election stating the amount of such Director Fees in
excess of those required to be converted under Section 6(a) hereof which shall be converted to a
Share Unit Award. Each such election shall be made in the form required by the Board, shall be
delivered to the Company no later than the December 31 of the calendar year immediately preceding
the calendar year in
which such Directors Fees would otherwise be payable; provided, however, that in the year the Plan
is adopted, such election shall be delivered to the Company no later than the close of business on
the date the Plan is adopted and in the case of a member of the Board who first becomes a
Participant during a year, the election for such year must be made no later than the close of
business on the date on which the Participant is elected to the Board.



(c) Share Unit Awards



On each Conversion Date, a Participant shall receive a Share Unit
Award in respect of his Mandatory Conversion and any Voluntary Conversion applicable to the
Directors Fees which would otherwise be payable to the Participant on such Conversion Date. Such
Share Unit Award shall equal the number of the Share Units determined by dividing (A) the aggregate
dollar amount of the Participant’s Director Fees that are to be converted into a Share Unit Award,
including the Mandatory Conversion and any Voluntary Conversion, by (B) the Fair Market Value of
the Common Stock on the applicable Conversion Date.



(d) Dividend Equivalents



As of any date that cash dividends are paid with respect to the
Common Stock from time to time, each Participant’s Share Unit Account shall be credited with an
additional number of Share Units determined by dividing (A) the aggregate dollar amount of the cash
dividends that would have been paid on the Share Units credited to the Participant’s Share Unit
Account as of the record date for such dividend had such Share Units been actual Common Stock by
(B) the Fair Market Value of the Common Stock on the dividend payment date.



7. Distributions of Share Unit Awards



(a) Valuation and Payment of Units



Subject to Section 8 hereof, a Participant shall be entitled to a benefit under the Plan with
respect to each Share Unit Award upon the Realization Date for such Share Unit Award. Such benefit
shall be equal to the amount determined by multiplying (A) the number of Share Units credited to
the Participant’s Share Unit Account in respect of the Share Unit Award for which the Realization
Date has occurred and (B) the Fair Market




 









 







Value of the Common Stock on the Realization Date. Each such amount shall be paid within 30 days
after the applicable Realization Date in Common Stock.



(b) Payment of Additional Dividends



Subject to Section 8 hereof, if, pursuant to Section 6(d) hereof,
additional Share Units are required to be credited to a Participant’s Share Unit Account in respect
of Share Units that were held in the Participant’s Share Unit Account as of the record date for
cash dividends paid on the Common Stock that are paid after the payment to the Participant of a
benefit in respect of such Share Units, the Company shall pay to the Participant a cash amount in
respect
of such dividends equal to the dollar amount of such dividends. Such amount shall be paid to the
Participant within 30 days after the dividend payment date.



8. Forfeiture of Share Unit Awards



Each Participant’s Share Unit Account hereunder shall be nonforfeitable, except that a Participant
shall forfeit all rights to all benefits hereunder in respect of Mandatory Conversions, Voluntary
Conversions and Share Units credited to the Participant’s Share Unit Account if the Participant’s
status as a director of the Company is terminated for “Cause,” as determined by the Board in its
sole discretion.



9. Certain Adjustments



If there shall occur any recapitalization, reclassification, share
dividend, share split, reverse share split, or other distribution with respect to the Common Stock,
or other change in corporate structure affecting the Common
Stock, the Board 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 to the
number and kind of shares that may be issued under the Plan and to the Participants’ Restricted
Stock and Share Unit Accounts. It is intended that in making such adjustments to Share Unit
Accounts, the Board will seek to treat each Participant as if he were a shareholder of the Common
Stock of the number of Share Units credited to his Share Unit Account (but without duplication of
any benefits that may be provided under Section 6(d)hereof). Except as is expressly provided in
this Section, Participants shall have no rights as a result of any such change in the Common Stock
or other event.



10. Beneficiaries



Any payment required to be made to a Participant hereunder that
cannot be made to the Participant because of his death shall be made to the Participant’s
beneficiary or beneficiaries, subject to applicable law. Each Participant shall have the right to
designate in writing from time to time a beneficiary or beneficiaries by filing a written notice of
such designation with the Board. In the event a beneficiary designated by the Participant does not
survive the Participant and no successor beneficiary is selected, or in the event no valid
designation has been made, such Participant’s beneficiary shall be such Participant’s estate.



11. Unfunded Status



The Plan shall be unfunded, and Mandatory Conversions, Voluntary
Conversions, Share Units credited to each Participant’s Share Unit Account and all benefits payable
to Participants under the Plan represent merely unfunded, unsecured promises of the Company to pay
a sum of money to the Participant in the future.



12. Transfers Prohibited




 









 







No transfer (other than pursuant to Section 10 hereof) by a
Participant of any right to any payment hereunder, whether voluntary or
involuntary, by operation of law or otherwise, and whether by means of
alienation by anticipation, sale, transfer, assignment, bankruptcy, pledge, attachment, charge, or
encumbrance of any kind, shall vest the transferee with any interest or right, and any attempt to
so alienate, sell, transfer, assign, pledge, attach, charge, or otherwise encumber any such amount,
whether presently or thereafter payable, shall be void and of no force or effect.



13. Limitation of Rights



Except as provided in Section 5 hereof, nothing contained in the
Plan shall confer upon any Participant any right as a shareholder of the Company. In addition,
nothing contained herein shall be deemed to create any obligation on the part of the Board to
nominate any director for re-election by the Company’s shareholders or to limit the rights of the
shareholders to remove any director.



14. Termination and Amendment



The Plan may be terminated at any time by the Board. The Plan may be
amended by the Board from time to time in any respect; provided, however, that no such termination
or amendment may reduce the number or the value of Share Units theretofore credited or creditable
to a Participant’s Share Unit Account or materially and adversely affect any rights or obligations
with respect to any Restricted Stock award made pursuant to Section 5 hereof without the affected
Participant’s prior written consent.



15. Choice of Law



The Plan and all rights hereunder shall be subject to and
interpreted in accordance with the laws of the State of Delaware without giving effect to
principles of conflict of laws.