Exhibit 10.9
Form of Non-Management Directors' Compensation and Option Plan
ESG Re Limited Non-Management
Directors' Compensation and Option Plan
Stock Option Agreement
STOCK OPTION AGREEMENT, dated as of December 12, 1997, between ESG Re
Limited (the "Company"), and [Optionee] (the "Optionee"), a non-employee
director of the Company.
The ESG Re Limited Non-Management Directors' Compensation and Option Plan
(the "Plan") provides for awards of options to directors of the Company who are
not full time employees of the Company and for such awards to be evidenced by an
individual agreement ("Agreement") with such terms and provisions not
inconsistent with the Plan as the Board of Directors (the "Board") shall
provide. Capitalized terms defined in the Plan and not otherwise defined herein
shall have the meaning given such terms in the Plan.
In consideration of the foregoing and of the mutual undertakings set forth
in this Agreement, the Company and the Optionee agree as follows:
SECTION 1. Grant of Option.
In accordance with Section 6 of the Plan, the Company hereby grants to the
Optionee an option (the "Option") to purchase a total of ___________ shares of
Common Stock, at an exercise price equal to $20.00 per share, on the terms and
conditions provided in the Plan and in this Agreement. The Company urges you to
consult with your own advisor as to the tax and other consequences of the
Option.
SECTION 2. Vesting and Exercisability.
2.1 The Option shall be 100% vested and exercisable the date of grant.
2.2 The Option may at any time and from time to time be exercised in whole
or in part for the shares of Common Stock subject thereto, within the
limitations on exercisability set forth herein.
2.3 Unless terminated earlier, the unexercised portion of the Option shall
automatically and without notice terminate and become null and void on the
expiration of 10 years from the date on which such Option was granted.
SECTION 3. Method of Exercise.
3.1 An Option granted under the Plan shall be deemed exercised when the
person entitled to exercise the option:
(i) delivers written notice to the Company, in the form attached as
Exhibit A hereto, at its principal business office, directed to the attention of
the Chairman of the Board, of the decision to exercise; and
(ii) concurrently tenders to the Company full payment for the shares
to be purchased pursuant to such exercise.
3.2 Payment for shares with respect to which an Option is exercised may be
made in any combination of the following: (i) by certified or official bank
check payable to the Company (or the equivalent thereof acceptable to the
Board); (ii) with the consent of the Board in its sole discretion, by personal
check (subject to collection) and which may in the Board's discretion be deemed
conditional; and (iii) by delivery of previously-acquired shares of Common Stock
owned by the grantee for at least six months (or such longer or shorter period
as the Board of Directors may prescribe) having a fair market value (determined
as of the option exercise date) equal to the portion of the option exercise
price being paid thereby. In addition, subject to such rules as may be
established by the Board, payment may be deemed to be satisfied by delivery to
the Company of an assignment of a sufficient amount of the proceeds from the
sale of Common Stock acquired upon exercise to pay for all of the Common Stock
acquired upon exercise and an authorization to the broker or selling agent to
pay that amount to the Company, which sale shall be made at the Optionee's
direction at the time of exercise.
3.3 Options shall be granted to permit a Participant to reacquire any
Shares such Participant delivered to the Company as payment of the exercise
price in connection with the exercise of the Option hereunder or to reacquire
any Shares retained by the Company to satisfy the Participant's withholding
obligation in connection with the exercise of the Option hereunder (a "Reload
Option"). The terms of such Option shall be identical in all material respects
to the terms of this Option, provided, however, that the exercise price for each
Share granted under the Reload Option shall be the Fair Market Value of a Share
at the time such Reload Option is granted.
SECTION 4. Transferability.
(i) Subject to subsection (ii) below, each Option shall be
exercisable only by the Optionee during the Optionee's lifetime, or, if
permissible under applicable law, by the Optionee's legal guardian or
representative. No Option may be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by an Optionee otherwise than by will or by
the laws of descent and distribution and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company; provided that the designation of a
beneficiary shall not constitute an assignment, alienation, pledge, attachment,
sale, transfer or encumbrance.
(ii) Notwithstanding the foregoing, the Option may be transferred by
the Optionee without consideration, subject to such rules as the Board may adopt
to preserve the purposes of the Plan, to:
(A) the Optionee's spouse, children or grandchildren (including
adopted and stepchildren and grandchildren) (collectively, the
"Immediate Family");
(B) a trust solely for the benefit of the Optionee and his or her
Immediate Family; or
(C) a partnership, corporation or limited liability company whose
only partners, shareholders or members are the Optionee and
his or her Immediate Family members;
(each transferee described in clauses (A), (B) and (C) above is
hereinafter referred to as a "Permitted
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Transferee"); provided that the Optionee gives the Board advance written
notice describing the terms and conditions of the proposed transfer and
the Board notifies the grantee in writing that such a transfer would
comply with the requirements of the Plan and this Agreement.
The terms of the transferred option shall apply to the Permitted
Transferee and any reference in the Plan or this Agreement shall be deemed
to refer to the Permitted Transferee, except that (a) Permitted
Transferees shall not be entitled to transfer the Option, other than by
will or the laws of descent and distribution; (b) Permitted Transferees
shall not be entitled to exercise the transferred Option unless there
shall be in effect a registration statement on an appropriate form
covering the shares to be acquired pursuant to the exercise of such Option
if the Board determines that such a registration statement is necessary or
appropriate, and (c) the Board or the Company shall not be required to
provide any notice to a Permitted Transferee, whether or not such notice
is or would otherwise have been required to be given to the Optionee under
the Plan or this Agreement or otherwise.
SECTION 5. Right of Discharge Reserved.
Nothing in the Plan or this Agreement shall confer upon the Optionee the
right to continue in the service of the Company or affect any right that the
Company may have to terminate the service of the Optionee.
SECTION 6. No Stockholder Rights.
Neither the Optionee nor any person succeeding to the Optionee's rights
hereunder shall have any rights as a stockholder with respect to any shares
subject to the Option until the date of the issuance of a stock certificate or
certificates to him or her for such shares. Except for adjustments made pursuant
to section 7 of the Plan, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether in
cash, securities or other property) for which the record date is prior to the
date such stock certificate is issued.
SECTION 7. Plan Provisions to Prevail.
This Agreement shall be subject to all of the terms and provisions of the
Plan, which are incorporated hereby and made a part hereof, including, without
limitation, the provisions of section 8 of the Plan (generally relating to
withholding tax obligations) and section 7 of the Plan (generally relating to
adjustments to the number of shares of Common Stock subject to the Option and
the Option price, upon certain changes in capitalization). If there is any
inconsistency between any of the provisions of the Agreement and the Plan, the
provisions of the Plan shall govern.
SECTION 8. Optionee's Acknowledgments.
By entering into this Agreement the Optionee agrees and acknowledges that
(a) the Optionee has received and read a copy of the Plan, and (b) neither the
Company nor the Board and its respective shareholders, officers, directors,
employees, agents and counsel shall be liable for any action or determination
with respect to the Plan or any award thereunder or this Agreement.
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SECTION 9. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and the successors and assigns of the Company and, to the extent
set forth in Section 4, the heirs, personal representatives, conservator and
committee of the Optionee.
SECTION 10. Governing Law.
THIS AGREEMENT IS SHALL BE GOVERNED BY THE LAWS OF BERMUDA APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY THEREIN.
SECTION 11. Notices.
All notices and other communications hereunder shall be given in writing,
shall be personally delivered against receipt or sent by registered or certified
mail, return receipt requested, shall be deemed given on the date of delivery or
of mailing, and if mailed, shall be addressed (a) to the Company, at its
principal business office, Attention: Chairman, and (b) to the Optionee, at the
Optionee's principal residential address last furnished to the Company. Either
party may, by notice, change the address to which notice to such party is to be
given.
SECTION 12. Section Headings.
The Section headings contained herein are for the purposes of convenience
only and are not intended to define or limit the contents of said Sections.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
ESG Re Limited
By
----------------------------
Name:
Title:
OPTIONEE:
----------------------------
Name:
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EXHIBIT A
EXERCISE NOTICE
[To be executed upon exercise of Stock Option]
ESG Re Limited:
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the attached Stock Option Agreement ("Agreement") dated
___________, 1997, for, and to purchase thereunder, ____________ shares of
Common Stock, par value $1.00 per share, of ESG Re Limited ("Common Stock"), as
provided for in such Agreement, and tenders herewith payment of the exercise
price in full in a form permitted under Section 3.2 of the Agreement.
Payment of the option exercise price is being made in full [Check
Applicable Item]:
________ in the form of a certified or official bank check or the
equivalent thereof acceptable to the Board;
________ by delivery to the Company of an assignment of the proceeds from
the sale of Common Stock acquired upon exercise and an authorization to the
broker or selling agent to pay that amount to the Company;
________ if so permitted by the Board, by personal check (subject to
collection); or
________ by delivery of shares of Common Stock already owned by the
undersigned for at least six months prior to such delivery.
The undersigned agrees and acknowledges that he has received a copy of the
current prospectus relating to the issuance of shares under the ESG Re Limited
Non-Management Directors' Compensation and Option Plan (the "Plan").
The undersigned hereby further agrees to be bound by the provisions of the
Plan and the Agreement.
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Please issue a certificate or certificates for such shares of Common
Stock, to me at the address set forth in the Agreement, or in the name of
____________________________ at the address listed below:
(Please Print)
Name of Optionee:____________________________________
Address:_____________________________________________
Signature:____________________________
Date:_____________
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