<PAGE>
As filed with the Securities and Exchange Commission on July 7, 1995.
Registration No. 33-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ALEXANDER & ALEXANDER SERVICES INC.
(Exact name of registrant as specified in its charter)
MARYLAND 52-0969822
(State or other jurisdiction or (I.R.S. Employer Identification No.)
incorporation or organization)
1185 Avenue of the Americas, New York, New York 10036
(Address of Principal Executive Offices) (Zip Code)
ALEXANDER & ALEXANDER SERVICES INC.
1995 LONG-TERM INCENTIVE PLAN
(Full title of the plan)
ALBERT A. SKWIERTZ, JR., ESQ.
Vice President and General Counsel
Alexander & Alexander Services Inc.
1185 Avenue of the Americas
New York, New York 10036
(212) 840-8500
(Name, address, telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
Title of Proposed Proposed
Securities to Amount Maximum Maximum Amount of
Be Registered: to be Offering Price Aggregate Registration
Common Stock Registered: Per Share (2): Offering Price: Fee:
($1.00 Par Value)(1)4,700,000 shs.$23.69 $111,343,000 $38,395
(1)Includes the preferred share purchase rights associated with the Common
Stock.
(2)Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(h). The proposed maximum offering price
per share is based upon the average of the high and low prices for the
stock on the New York Stock Exchange on July 3, 1995.<PAGE>
PART I. INFORMATION REQUIRED IN THE
SECTION 10(a) PROSPECTUS
The information required by Part I is
included in documents that will be sent or given to
participants in the Alexander & Alexander Services Inc.
1995 Long-Term Incentive Plan, (the "1995 Plan")
pursuant to Rule 428(b)(1). Such documents are not
being filed with the Securities and Exchange Commission
(the "Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements
pursuant to Rule 424.
PART II. INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3.Incorporation of Documents by
Reference.
Incorporated by reference in this
Registration Statement are the following documents
heretofore filed by Alexander & Alexander Services Inc.
(the "Company") with the Securities and Exchange
Commission (the "Commission") pursuant to the
Securities Act of 1933, as amended (the "Securities Act")
and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"):
(a) The Company's latest annual
report filed pursuant to
Sections 13(a) or 15(d) of the
Exchange Act;
(b) All other reports filed
pursuant to Section 13 or
15(d) of the Securities
Exchange Act of 1934 since
the end of the last fiscal year
for which financial statements
were included in the report
referred to in (a) above; and
(c) The description of the
Company's Common Stock,
$1.00 par value and the
description of the Rights to
Purchase Series A Junior
Participating Preferred Stock,
$1.00 par value, each
contained in a registration
statement filed under the
Exchange Act, and any
amendment or report filed for
the purpose of updating such
description.
All documents filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, prior to
the filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or which
deregisters all securities remaining unsold, shall be
deemed to be incorporated by reference herein and to be
a part hereof from the date of the filing of such
documents.
Item 4.Description of Securities.
Not Applicable.
Item 5.Interests of Named Experts and
Counsel.
Albert A. Skwiertz, Jr., Esq., whose
opinion with respect to the validity of the securities being
registered is an exhibit to this Registration Statement, is
Vice President and General Counsel of the Company.
Mr. Skwiertz will be a participant in the 1995 Plan.
Mr. Skwiertz owns no shares directly or indirectly of the
Company's Common Stock and holds options for 28,500
shares of Common Stock. In addition, 1,342 shares of
Common Stock are attributed to Mr. Skwiertz's account
under the Thrift Plan.
Item 6.Indemnification of Directors and
Officers.
Section 2-418 of the Maryland General
Corporation Law establishes provisions whereby a
Maryland corporation may indemnify any director or
officer made party to an action or proceeding by reason
of service in that capacity, against judgments, penalties,
fines, settlements and reasonable expenses incurred in
connection with such action or proceeding unless it is
proved that the director or officer (i) acted in bad faith or
with active and deliberate dishonesty; (ii) actually
received an improper personal benefit in money, property
or services; or (iii) in the case of a criminal proceeding
had reasonable cause to believe that his act was unlawful.
However, if the proceeding is a derivative suit in favor of
the corporation, indemnification may not be made if the
individual is adjudged to be liable to the corporation. In
no case may indemnification be made until a
determination has been reached that the director or officer
has met the applicable standard of conduct.
Indemnification for reasonable expenses is mandatory if
the director or officer has been successful on the merits
or otherwise in the defense of any action or proceeding
covered by the indemnification statute. The statute also
provides for indemnification of directors and officers by
court order. The indemnification provided or authorized
in the indemnification statute does not preclude a
corporation from extending other rights (indemnification
or otherwise) to directors and officers.
The Company's Bylaws provide for
indemnification of any person who is serving or has
served as a director or officer of the Company, against
all liabilities and expenses incurred in connection with
any action, suit or proceeding arising out of such service
to the full extent permitted under Maryland law.
The Company currently maintains
policies of insurance under which the Company and the
directors and officers of the Company are insured, within
the limits of the policies, against certain expenses in
connection with the defense of actions, suits or
proceedings, and certain liabilities which might be
imposed as a result of such actions, suits or proceedings,
to which directors and officers of the Company are
parties by reason of being or having been such directors
or officers.
Item 7.Exemption from Registration Claimed.
Not Applicable.
Item 8.Exhibits.
Exhibit
Number Exhibit Title
4.1 Amended and
Restated Articles of
Incorporation of the
Company
(incorporated herein
by reference to the
Company's Annual
Report on Form 10-K
for the year ended
December 31, 1991).
4.2 Articles of
Amendment, dated
July 15, 1994, to the
Articles of
Incorporation of the
Company
(incorporated herein
by reference to the
Company's Report on
Form 10-Q for the
quarter ended June
30, 1994).
4.3 Articles
Supplementary of the
Company, dated
March 18, 1993
relating to the $3.625
Series A Convertible
Preferred Stock
(incorporated herein
by reference to the
Company's Annual
Report on Form 10-K
for the year ended
December 31, 1992).
4.4 Articles
Supplementary of the
Company, dated July
15, 1994 relating to
the 8% Series B
Cumulative
Convertible Preferred
Stock (incorporated
herein by reference
to the Company's
Report on Form 10-Q
for the quarter ended
June 30, 1994).
4.5 Articles
Supplementary of the
Company, dated July
15, 1994 relating to
the Series A Junior
Participating
Preferred Stock
(incorporated herein
by reference to the
Company's Report on
Form 10-Q for the
quarter ended June
30, 1994).
4.6 Amended and
Restated Bylaws of
the Company, dated
as of January 14,
1994 (incorporated
herein by reference
to the Company's
Annual Report on
Form 10-K for the
year ended December
31, 1993).
4.7 Amendment No. 1 to
By-Laws of the
Company, dated
March 21, 1995
(incorporated herein
by reference to the
Company's Annual
Report on Form 10-K
for the year ended
December 31, 1994).
4.8 Rights Agreement
dated as of June 11,
1987, amended and
restated as of March
27, 1990, between
the Company and
First Chicago Trust
Company of New
York, formerly
Morgan Shareholder
Services Trust
Company, as Rights
Agent (incorporated
herein by reference
to the Company's
Registration
Statement on Form 8
filed with the
Commission on June
19, 1987, as
amended by
Amendment No. 1 on
Form 8 filed on
March 28, 1990.
Amendment No. 2 on
Form 8-A filed on
April 23, 1992,
Amendment No. 3 on
Form 8-A/A filed on
December 1, 1993
and Amendment No.
4 on Form 8-A/A
filed on July
15, 1994).
4.9 Form of Trust
Agreement dated as
of June 11, 1987,
amended and restated
as of March 28,
1990, between the
Company and
Montreal Trust
Company of Canada,
as successor to The
Canada Trust
Company
(incorporated herein
by reference to
Registration
Statement on Form 8-
A filed with the
Commission on June
19, 1987 as amended
by Amendment No. 1
on Form 8 filed on
March 28, 1990).
4.10 Alexander &
Alexander Services
Inc. 1995 Long-Term
Incentive Plan,
effective as of May
18, 1995.
4.11 Alexander &
Alexander Services
Inc. Performance
Bonus Plan for
Executive Officers,
effective as of
January 1, 1995.
4.12 Form of Limited
Stock Appreciation
Rights Agreement.
4.13 Form of Restricted
Stock Award
Agreement.
4.14 Form of Stock
Option Award
Agreement.
5.1 Opinion of Albert A.
Skwiertz, Jr., Esq.,
Vice President and
General Counsel of
the Company, as to
the legality of the
securities registered
hereunder.
23.1 Independent
Auditors' Consent.
23.2 Consent of Albert A.
Skwiertz, Jr., Esq.,
Vice President and
General Counsel of
the Company
(incorporated by
reference to
Exhibit 5).
24.1 Power of Attorney is
included in the
Signature Page
contained in Part II
of this Registration
Statement.
Item 9.Undertakings.
(a) The undersigned registrant
hereby undertakes:
(1) That, for the purpose
of determining any liability under the Securities Act of
1933, each post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
(2) To remove from
registration by means of a post-effective amendment any
of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant
hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of
the Securities Exchange Act of 1934) that is incorporated
by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on
the 7th day of July, 1995.
ALEXANDER & ALEXANDER SERVICES INC.
By: /s/ Frank G. Zarb
Frank G. Zarb, Chairman of the Board,
Chief Executive
Officer, President and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Frank G. Zarb and
Albert A. Skwiertz, Jr., and each of them, his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including pre-effective and
post-effective amendments) to this registration statement, and to file the
same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them acting singly, full power
and authority to do and perform each and every act and thing
necessary and requisite to be done, as fully and to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or any of them may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Frank G. Zarb Chairman of the Board, July 7, 1995
Frank G. Zarb Chief Executive Officer,
President and Director
(Principal Executive Officer)
/s/ Edward F. Kosnik Director, Executive Vice July 7, 1995
Edward F. Kosnik President and Chief Financial
Officer (Principal Financial
Officer)
/s/ Richard P. Sneeder, Jr. Controller (Principal July 7, 1995
Richard P. Sneeder, Jr. Accounting Officer)
[SIGNATURES CONTINUED]<PAGE>
[SIGNATURES CONTINUED]
/s/ Robert E. Boni Director July 7, 1995
Robert E. Boni
/s/ W. Peter Cooke Director July 7, 1995
W. Peter Cooke
/s/ E. Gerald Corrigan Director July 7, 1995
E. Gerald Corrigan
/s/ Joseph L. Dionne Director July 7, 1995
Joseph L. Dionne
/s/ Gerald R. Ford Director July 7, 1995
Gerald R. Ford
/s/ Peter C. Godsoe Director July 7, 1995
Peter C. Godsoe
/s/ Angus M.M. Grossart Director July 7, 1995
Angus M.M. Grossart
/s/ Maurice H. Hartigan II Director July 7, 1995
Maurice H. Hartigan II
/s/ James Bickford Hurlock Director July 7, 1995
James Bickford Hurlock
/s/ Ronald A. Iles Director July 7, 1995
Ronald A. Iles
Director
Vincent R. McLean
/s/ James D. Robinson III Director July 7, 1995
James D. Robinson III
<PAGE>
EXHIBIT INDEX
Page Number in
Regulation S-K Sequentially
Numbered
Exhibit Number Description of Document Copy
Exhibit 4.10 Alexander & Alexander Services Inc. 1995
Long-Term Incentive Plan, effective as of
May 18, 1995
Exhibit 4.11 Alexander & Alexander Services Inc.
Performance Bonus Plan for Executive
Officers, effective as of January 1, 1995
Exhibit 4.12 Form of Limited Stock Appreciation Rights
Agreement
Exhibit 4.13 Form of Restricted Stock Award Agreement
Exhibit 4.14 Form of Stock Option Award Agreement
Exhibit 5.1 Opinion of Albert A. Skwiertz, Jr., Esq.,
Vice President and General Counsel of the
Company, as to the legality of the securities
to be registered
Exhibit 23.1 Independent Auditors' Consent
Exhibit 23.2 Consent of Albert A. Skwiertz, Jr., Esq.
(included in Exhibit 5.1)
ht:Z:WP:FORMS8:/95PLAN
Alexander & Alexander Services Inc.
1995 Long-Term Incentive Plan
Section 1. Purpose
The purpose of the 1995 Long-Term Incentive Plan (the "Plan")
is to promote the success of Alexander & Alexander Services Inc.
(the "Company") by providing incentives for certain key employees
which will link their personal interest to both the long term financial
success of the Company and the growth of stockholder value. The
Plan is intended to enhance the Company's ability to attract, retain
and motivate qualified personnel upon whom, in large measure, the
progress, growth and profitability of the Company depends. The
various types of long-term incentive awards provided under the Plan
will enable the Company to respond to changes in compensation
practices, tax laws, accounting regulations, and the size and
diversity of its businesses.
Section 2. Definitions
For purposes of the Plan, the following terms shall have the
meanings indicated below unless the context clearly indicates
otherwise:
(a) "Award" shall mean any grant of Stock, or of a right to
receive either Stock or an amount of cash calculated by
reference to the value of Stock, made under the Plan.
(b) "Award Agreement" shall mean an agreement between
a Participant and the Company covering the specific
terms and conditions of an Award.
(c) "Board of Directors" shall mean the Board of Directors
of the Company.
(d) "Bonus Equity Plan" shall mean the program described
in Section 6.4 of the Plan.
(e) "Code" shall mean the Internal Revenue Code of 1986,
as it may be amended from time to time.
(f) "Committee" shall mean the committee appointed by
the Board of Directors to administer the Plan pursuant
to Section 4.
(g) "Company" shall mean Alexander & Alexander
Services Inc. and its Subsidiaries.
(h) "Disability" shall mean permanent disability within the
meaning of Section 22(e)(3) of the Code.
(i) "Incentive Stock Option" shall mean an option to
purchase Stock granted under Section 6.1 of the Plan
which is designated as an Incentive Stock Option and is
intended to meet the requirements of Section 422 of the
Code.
(j) "Nonqualified Stock Option" shall mean an option to
purchase Stock granted under Section 6.1 of the Plan
which is not intended to be an Incentive Stock Option.
(k) "Option" shall mean an Incentive Stock Option or a
Nonqualified Stock Option.
(l) "Option Period" shall mean the period from the date of
the grant of an Option to the date when the Option
expires as stated in the terms of the Award Agreement.
(m) "Optionee" shall mean a Participant who has been
granted an option to purchase shares of Stock under the
provisions of the Plan.
(n) "Other Stock Based Awards" shall have the meaning
specified in Section 6.6 of the Plan.
(o) "Participant" shall mean an employee who has an
outstanding Award granted under the Plan.
(p) "Performance Share/Unit" shall mean the grant of
contingent shares of Stock or units under Section 6.5 of
the Plan.
(q) "Performance Award" shall mean an Award granted
under the conditions specified in Section 7 of the Plan.
(r) "Plan" shall mean the Alexander & Alexander Services
Inc. 1995 Long-Term Incentive Plan, as it may be
amended from time to time.
(s) "Replacement Option" shall mean an Option to
purchase Stock granted under Section 6.1(f) of the Plan.
(t) "Restricted Period" shall mean the period of time from
the date of grant of Restricted Stock to the date when
the restrictions placed on the Stock in the Award
Agreement lapse.
(u) "Restricted Stock" shall mean an Award of Stock
granted under Section 6.3 or Section 6.4 of the Plan.
(v) "Retirement" shall mean termination of employment
with the Company or any of its Subsidiaries at or after
age 60 (or such earlier age as the Committee shall
determine) and pursuant to a retirement plan of the
Company or the Subsidiary.
(w) "Stock" shall mean the Company's common stock,
$1.00 par value per share.
(x) "Stock Appreciation Right" shall mean a right to
receive an amount, payable in cash or Stock or partly in
cash and partly in Stock, equal to the difference
between the fair market value of the Stock on the date
the Award is exercised and the exercise price of the
Stock Appreciation Right as stated in the Award
Agreement.
(y) "Subsidiary" shall mean any corporation which at the
time qualifies as a subsidiary of the Company under the
definition of "subsidiary corporation" in Section 424(f)
of the Code.
(a) "Termination of Employment" shall be deemed to have
occurred at the close of business on the last day on
which a Participant is carried as an active employee on
the records of the Company or any of its Subsidiaries.
Section 3. Stock Subject to the Plan
3.1 Authorized Stock
Subject to adjustment as provided in this Section 3, the
aggregate number of shares of Stock that may be delivered under
the Plan shall not exceed the sum of (a) 4,700,000 plus (b) the
number of shares remaining available for issuance on the
effective date of the Plan under the Company's 1988 Long-Term
Incentive Compensation Plan (the "Predecessor Plan") plus (c)
the lesser of (i) 2,000,000 shares of Stock or (ii) the number
of shares of Stock received by the Company after the effective
date of the Plan upon exercise of any Option, whether issued
under the Plan or the Predecessor Plan. No more than 940,000
shares shall be issued as Restricted Stock under Sections 6.3
and 6.4 of the Plan. The exercise of a Stock Appreciation
Right, whether paid in cash or Stock, shall be deemed to be an
issuance of Stock under the Plan. The payment of Performance
Share/Unit and Other Stock Based Awards shall not be deemed to
constitute an issuance of Stock under the Plan unless payment
is made in Stock, in which case only the number of shares issued
in payment of the Performance Share/Unit or Other Stock Based
Awards shall constitute an issuance of Stock under the Plan.
3.2 Effect of Expirations
Except as otherwise provided in Section 3.1, in the event that
(a) any Award granted under the Plan or (b) any Award granted
under the Predecessor Plan and outstanding on the effective date
of the Plan, shall expire or terminate for any reason, including
by reason of its reacquisition (through a purchase, exchange,
surrender or otherwise) and cancellation by the Company, or if
the amount of Stock subject to an Award or to be delivered upon
exercise of an Award is reduced for any reason whatsoever, the
Stock no longer subject to such Award shall be available to be
reawarded under the Plan.
3.3 Adjustments in Authorized Shares
In the event of any merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend,
split-up, share combination, or other change in the corporate
structure of the Company affecting the Stock, the number and
class of shares which may be delivered under the Plan, and the
number and class of and/or price of shares subject to
outstanding Awards granted under the Plan shall be adjusted in
a manner determined to be appropriate and equitable by the
Committee, in its sole discretion, to prevent dilution or
enlargement of rights; and provided that the number of shares
subject to any Award shall always be a whole number. Any
adjustment of an Incentive Stock Option under this paragraph or
paragraph 3.4 shall be made in such a manner so as not to
constitute a "modification" within the meaning of Section
424(h)(3) of the Code.
3.4 Adjustment for Purposes of Tender Offers
In the event of the offer to holders of Stock generally relating
to the acquisition of their shares, the Committee may make such
adjustment as it deems appropriate and equitable in respect of
outstanding Awards so that they may be exercisable for or
payable in the consideration payable in the acquisition
transaction. Any adjustment of an Incentive Stock Option under
this paragraph shall be made in such a manner so as not to
constitute a "modification" within the meaning of Section
424(h)(3) of the Code.
Section 4. Administration
4.1 The Committee
The Plan shall be administered by a committee (the "Committee")
consisting of not less than two directors who shall be appointed
from time to time by, and shall serve at the discretion of, the
Board of Directors. A director may serve on the Committee only
if he or she has not received an Award under the Plan or any
similar plan of the Company or any of its Subsidiaries for at
least one year before his or her appointment and otherwise
satisfies the definition of a "disinterested person" for
purposes of Rule 16b-3 under the Securities Exchange Act of
1934, as amended.
4.2 Authority of the Committee
Subject to the provisions of the Plan, the Committee shall have
full power to construe and interpret the Plan; to establish,
amend or waive rules and regulations for its administration; to
accelerate the exercisability of any Award or the end of a
performance period or the termination of any Restricted Period
under an Award; to correct errors, omissions or inconsistencies
in the Plan or in any Award Agreement, or any other instrument
relating to an Award under the Plan, and (subject to the
provisions of Section 8) to amend the terms and conditions of
any outstanding Award to the extent such terms and conditions
are within the discretion of the Committee as provided in the
Plan. The Committee's decisions and all related orders or
resolutions of the Board of Directors with respect to the
interpretation and administration of the Plan shall be final,
conclusive and binding on all persons, including the Company,
its stockholders, employees, Participants and their estates and
beneficiaries. Notwithstanding the foregoing, no action of the
Committee may, without the consent of the person or persons
entitled to exercise or receive payment of any other outstanding
Award, adversely affect the rights of such person or persons.
No member of the Committee shall be liable, in the absence of
bad faith, for any act or omission with respect to his or her
services on the Committee. Service on the Committee shall
constitute service as a director of the Company so that members
of the Committee shall be entitled to indemnification, any
limitation of liability and reimbursement as directors with
respect to their services as members of the Committee.
4.3 Selection of Participants
The Committee shall have the authority to grant Awards under the
Plan from time to time to any employee of the Company and any
of its Subsidiaries (including officers and directors who are
employees) selected by the Committee. Except as otherwise
provided in Section 6.4(b), the Committee shall select
Participants from among employees identified by the Company as
eligible to participate in the Plan.
<PAGE>
4.4 Delegation of Certain Responsibilities
The Committee may, in its sole discretion, delegate to
appropriate officers of the Company the administration of the
Plan under this Section 4; provided, however, that no such
delegation by the Committee shall be made (i) if such delegation
would not be permitted under applicable law or (ii) with respect
to the administration of the Plan as it affects executive
officers or directors of the Company, and provided further that
the Committee may not delegate its authority to correct errors,
omissions or inconsistencies in the Plan. Subject to the above
limitations, the Committee may delegate to the Chief Executive
Officer of the Company its authority under this Section 4 to
grant Awards to employees who are not executive officers or
directors of the Company. All authority delegated by the
Committee under this Section 4.4 shall be exercised in
accordance with the provisions of the Plan and any guidelines
for, conditions on, or limitations to the exercise of such
authority that may from time to time be established by the
Committee.
4.5 Award Agreements
Each Award under the Plan shall be evidenced by an Award
Agreement which shall be signed by an officer of the Company and
by the Participant, and shall contain such terms and conditions
as may be approved by the Committee, which need not be the same
in all cases. Any Award Agreement may be supplemented or
amended in writing from time to time as approved by the
Committee, provided that the terms of such agreements as amended
or supplemented, as well as the terms of the original Award
Agreement, are not inconsistent with the provisions of the Plan.
Nothing contained in the Plan or any resolutions adopted or to
be adopted by the Board of Directors or by the stockholders of
the Company shall constitute the granting of an Award under the
Plan. An employee who receives an Award under the Plan shall
not, with respect to such Award, be deemed to have become a
Participant and/or an Optionee, or to have any rights with
respect to such Award, unless and until such employee has
executed an Award Agreement or other instrument evidencing the
Award and shall have delivered an executed copy thereof to the
Company, and has otherwise complied with the applicable terms
and conditions of the Award.
Section 5. Eligibility
Except with respect to Awards under Section 6.4 (the Bonus Equity Plan),
all officers of the Company and each other employee of the Company and
its Subsidiaries who are expected to contribute substantially to the
growth and profitability of the Company and its Subsidiaries are
eligible to receive Awards under the Plan. Eligibility criteria for
participation in the Bonus Equity Plan are specified in Section 6.4(b).
Section 6. Awards Under the Plan
Any Award granted under the Plan may be made either alone or in
conjunction with any other type of Award which may be granted under the
Plan; provided that an Optionee shall not be granted Options for more
than 1,000,000 shares of Stock in any twelve month period.
6.1 Stock Option Awards
(a) Option Price - The purchase price per share of Stock
covered by an Option shall be determined by the
Committee but shall not be less than 100% of the fair
market value of such Stock on the date the Option is
granted. Such fair market value shall be determined by
the Committee, which may use any reasonable valuation
method. An Incentive Stock Option granted to any
person who, at the time the Option is granted, owns
(within the meaning of Section 424(d) of the Code)
stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or
of its parent or any Subsidiary, shall have an exercise
price which is at least 110% of the fair market value of
the Stock subject to the Option.
(b) Option Period - The Option Period shall be determined
by the Committee, but no Incentive Stock Option shall
be exercisable later than ten years from the date of grant
and no Nonqualified Stock Option shall be exercisable
later than ten years and one day from the date of grant.
Notwithstanding the foregoing, in the case of an
Optionee owning (within the meaning of Section 424(d)
of the Code), at the time an Incentive Stock Option is
granted, more than 10% of the total combined voting
power of all classes of stock of the Company or any
Subsidiary, such Incentive Stock Option shall not be
exercisable later than five years from the date of grant.
(c) Limitation on Amount of Incentive Stock Options -
Subject to the overall limitations of Section 3 (relating
to the aggregate amount of Stock subject to the Plan),
the aggregate fair market value (determined as of the
time the Option is granted) of Stock with respect to
which Incentive Stock Options are exercisable for the
first time by a Participant during any calendar year
under the Plan (and all other incentive stock option
plans of the Company, any Subsidiary or any parent
corporation) shall not exceed $100,000. In no event,
however, shall an acceleration of exercisability pursuant
to the terms of the Plan operate to reduce or limit the
number of shares which may be exercised pursuant to
such Incentive Stock Options. Shares in excess of the
$100,000 limit described herein which become
exercisable as a result of acceleration shall be treated as
shares subject to a Nonqualified Stock Option.
(d) Exercisability - An Option shall become exercisable at
such time or times as determined by the Committee at
or subsequent to grant.
(e) Method of Exercise
(i) In order to exercise an Option under the Plan, the
Optionee or other person(s) entitled to exercise the
Option shall give written notice of exercise to the
Company specifying the number of full shares to be
purchased. Such notice shall be accompanied either
by (A) payment in full (in such form as provided in
this Section 6.1(e)) for the Stock being purchased
plus, in the case of Nonqualified Stock Options, any
required withholding tax as provided in Section 9 or
(B) delivery of a properly executed notice together
with irrevocable instructions to a securities broker
to deliver promptly to the Company the amount of
sale or loan proceeds.
(ii) Unless the Committee shall in its sole
discretion determine otherwise, payment in
full or in part may be made by tendering to
the Company Stock owned by the Optionee
(or by the Optionee and his or her spouse,
jointly) and acquired more than six months
prior to such tender. The amount of Stock
tendered in payment shall have a fair
market value equal to the aggregate
purchase price of the number of full shares
covered by the Option to be purchased,
such fair market value to be determined in
any reasonable manner as may be provided
for from time to time by the Committee or
as may be required to order to comply with
or to conform to the requirements of any
applicable or relevant laws or regulations.
(iii) The Committee in its sole discretion may
also permit payment in full or in part to be
made by tendering Restricted Stock awarded
under Section 6.4 of the Plan at least six
months prior to such tender. The value of
such Restricted Stock shall be specified by
the Committee at the time it agrees to
accept it in payment; provided that, if no
value is specified by the Committee, the
value of the Restricted Stock tendered shall
be calculated in accordance with
subparagraph 6.1(e)(ii).
(iv) If the exercise price of an Option is paid by
delivery of Restricted Stock awarded under
Section 6.4, then the shares issued upon
exercise of the Option shall also be
Restricted Stock and shall remain so for the
remainder of the restricted period applicable
to the shares of Restricted Stock tendered in
payment.
(f) Replacement Options -- At the time an Option is granted
or upon the exercise of an Option granted under the
Plan, the Committee may, at its sole discretion,
authorize the issuance of or grant to the Optionee a
Replacement Option. A Replacement Option shall be
authorized or granted only if Stock or Restricted Stock
is tendered in payment of the exercise price of the
Option. The Replacement Option shall permit the
Optionee to purchase a number of shares of Stock equal
to the number of shares of Stock tendered in payment of
the exercise price of the Option, and, if applicable, in
satisfaction of any withholding taxes due upon exercise
of the Option. The exercise price of the Replacement
Option shall be equal to the fair market value of the
Stock on the date the original Option is exercised, and,
subject to the other provisions contained herein, may
contain such terms as the Committee shall determine
(including the date or dates on which the Option shall
become exercisable and the length of the Option
Period).
(g) Termination of Employment - Unless otherwise
specified by the Committee at or subsequent to the
grant, an Option may be exercised after an Optionee's
Termination of Employment only with respect to the
number of shares of Stock (subject to adjustment as
provided in Section 3.3 or 3.4) which the Optionee
could have acquired by an exercise of the Option
immediately prior to the Termination of Employment,
but in no event after the expiration date of the Option as
specified in the applicable Award Agreement. Except
to the extent otherwise provided by the Committee, an
Optionee's right to exercise any Option following
Termination of Employment shall terminate:
(i) At the expiration of three months (Incentive Stock
Options) or three years (Nonqualified Stock
Options) after the Optionee's Retirement; provided,
however, if an Incentive Stock Option is not
exercised within three months of the Optionee's
Termination of Employment, it will be treated as a
Nonqualified Stock Option for purposes of the Plan
when it is exercised; or
(ii) At the expiration of one year (Incentive
Stock Options) or three years (Nonqualified
Stock Options) following a finding that the
Optionee has a Disability; the determination
of the Committee on any question involving
disability to be conclusive and binding; or;
At the expiration of one year in the event of
the Disability of the Optionee, the
determination of the Committee on any
question involving disability shall be
conclusive and binding; or
(iii) At the expiration of one year after the
Optionee's death if the Optionee's
Termination of Employment occurs by
reason of death or if the Optionee had the
right to exercise an Option on the date of
death pursuant to subparagraph (i) of this
Section 6.1(g). Any Option exercised
under this subparagraph (iii) may be
exercised in full by the legal representative
of the estate of the Optionee or by the
person or persons who acquire the right to
exercise such Option by bequest or
inheritance; or
(iv) Thirty days following the Optionee's
Termination of Employment for any other
reason, except that, if such Termination of
Employment would constitute "discharge",
as defined in the Company's Severance
Benefit Plan (as in effect on the effective
date of the Plan), the Optionee's right to
exercise any Option shall end immediately
upon such Termination of Employment.
(h) The person or persons entitled to exercise, or who have
exercised, an Option shall not be entitled to any rights
as a stockholder of the Company with respect to any
shares subject to the Option until such person or persons
shall have become the holder of record of such shares.
6.2 Stock Appreciation Right Awards
(a) Grants - Stock Appreciation Rights may be awarded
alone or in conjunction with all or part of any Option
granted under the Plan. The Committee, in its sole
discretion, shall establish all terms of a stand-alone
Stock Appreciation Right, including its exercise price
and expiration date and any other terms the Committee
believes appropriate at the time of grant.
Awards of Stock Appreciation Rights in conjunction
with Options shall be made as follows:
(i) In the case of a Nonqualified Stock Option, such
rights may be granted either at the time the Option
is granted or at any subsequent time during the term
of the Option; and
(ii) In the case of an Incentive Stock Option,
such rights may be granted only at the time
the Option is granted.
(b) Terms and Conditions - Stock Appreciation Rights
awarded in conjunction with an Option shall be subject
to all terms and conditions of the Option. In addition,
all Stock Appreciation Rights shall be subject to the
following terms and conditions, and may contain
additional terms and conditions, not inconsistent with
the Plan, as the Committee shall determine:
(i) Price and Fair Market Value - The purchase price
per share of Stock subject to a Stock Appreciation
Right shall be determined by the Committee at the
time of grant. Both the purchase price and the fair
market value of Stock on the date of exercise of a
Stock Appreciation Right shall be determined by the
Committee in the manner specified in Section 6.1(a)
with respect to Options.
(ii) Exercisability - Stock Appreciation Rights
awarded in conjunction with an Option shall
be exercisable only to the extent that the
Option is exercisable and shall terminate
and shall no longer be exercisable upon the
expiration or exercise of the related Option.
Stock Appreciation Rights not granted in
conjunction with an Option shall be
exercisable as specified by the Committee at
or subsequent to the date of grant.
However, no Stock Appreciation Right or
any related Option may be exercised until at
least 6 months after the date of grant,
except that this limitation shall not apply in
the event of the death or Disability of the
Participant prior to the expiration of the 6-
month period.
(iii) Termination of Employment - Except as
otherwise provided by the Committee at the
time a Stock Appreciation Right is awarded,
the right to exercise a Stock Appreciation
Right shall terminate as specified in Section
6.1(g) of the Plan as if the Stock
Appreciation Right were a Non-Qualified
Stock Option.
(c) Method of Exercise - A Stock Appreciation Right
awarded in conjunction with an Option may be
exercised by the Optionee surrendering the applicable
portion of the related Option. Options which have been
so surrendered, in whole or in part, shall no longer be
exercisable to the extent the related Stock Appreciation
Right has been exercised. Upon the exercise of any
Stock Appreciation Right, a Participant shall be entitled
to receive an amount, in cash or whole shares of Stock
or partly in cash and partly in Stock (as determined by
the Committee in its sole discretion), equal to the
amount by which the fair market value of one share of
Stock (determined by the Committee as if the Stock
Appreciation Right were a Non-Qualified Option)
exceeds the exercise price per share specified in the
Award, multiplied by the number of shares in respect of
which the Stock Appreciation Right has been exercised.
Shares of Stock delivered to the Participant upon
exercise of a Stock Appreciation Right, if any, shall be
valued at their fair market value (determined as
specified in Section 6.1(a) above) on the date of
exercise.
(d) Limited Stock Appreciation Rights - Notwithstanding
anything else in this Section 6.2 to the contrary, the
Committee may grant Stock Appreciation Rights which
(i) become exercisable solely upon the occurrence of a
Change of Control as defined in Section 9.12 hereof and
which remain exercisable for a specified period of time
(not exceeding 90 days) following such Change of
Control, and (ii) provide that upon exercise, the amount
payable to the holder thereof may be based upon either
(A) the fair market value of a share of Stock
(determined as specified in Section 6.1(a) above) or (B)
the highest price per share paid in any transaction
reported on the New York Stock Exchange Composite
Index, or paid or offered in any bona fide transaction
related to a Change of Control, at any time during the
60 day period immediately preceding the occurrence of
the Change of Control, in each case as determined by
the Committee except that, in the case of any such
Stock Appreciation Right relating to an Incentive Stock
Option, the amount payable shall be based solely on the
fair market value of a share of Stock.
6.3 Restricted Stock Awards
(a) Restricted Period - Except as otherwise specified by the
Committee, the Restricted Period shall commence on
the date of grant of the Award and shall expire 3 years
thereafter. During the Restricted Period, the Participant
shall not sell, transfer, pledge, assign or otherwise
dispose of shares of Stock subject to a Restricted Stock
Award. Any attempt by the Participant to sell, transfer,
pledge, assign or otherwise dispose of such Stock shall
constitute immediate forfeiture of such Award.
(b) Rights of Participant - Except as provided in paragraph
(a) of this Section 6.3, the Participant shall have, with
respect to the shares subject to the Restricted Stock
Award, all the rights of a stockholder of the Company,
including the right to vote the shares and the right to
receive all dividends and other distributions with respect
to such shares, provided that the Participant has become
the holder of record of such shares. In the event of any
adjustment as provided in Section 3.3 or 3.4 or any
securities received as a dividend on the Award shares,
such new or additional shares or securities shall be
subject to the same terms and conditions as relate to the
original Restricted Stock Award.
(c) Lapse of Restrictions - At the conclusion of the
Restricted Period, the restrictions on the Restricted
Stock Award shall lapse, whereupon the Company shall,
subject to the provisions of Section 9.3 or 9.5, promptly
deliver to the Participant a stock certificate evidencing
those shares.
(d) Termination of Employment - Except as otherwise
provided by the Committee either at the time the
Restricted Stock Award is granted or thereafter, the
Restricted Period shall end and any other restrictions
specified in the Award Agreement shall automatically be
removed upon the Participant's Termination of
Employment by reason of death, Disability or
Retirement during the Restricted Period. In the event
of the Participant's Termination of Employment during
the Restricted Period for any other reason, the
Participant's rights to the shares subject to the
Restricted Stock Award shall be forfeited and all such
shares shall immediately be surrendered to the
Company.
6.4 Bonus Equity Plan
(a) Grants - Awards will be made in the form of Restricted
Stock, based on a percentage of the cash incentive
compensation otherwise payable to a Participant under
any incentive compensation plans, programs or
arrangements of the Company or any Subsidiary, and
will be granted at such time as the Committee may in its
sole discretion determine ("BEP Awards"). The
percentage of incentive compensation used to determine
the size of BEP Awards will be determined by a
formula or formulas approved by the Committee.
(b) Eligibility - Officers and other key employees of the
Company or any of its Subsidiaries who are entitled to
receive cash incentive compensation shall be eligible to
receive Awards under this Section 6.4. The Committee
shall, in its sole discretion, select Participants to receive
BEP Awards from among those officers and employees
who are entitled to receive cash incentive compensation
and who (i) are nominated to participate in the Bonus
Equity Plan by the Company or (ii) voluntarily elect to
participate. Participation in the Bonus Equity Plan by
Participants nominated by the Company shall be
mandatory upon approval by the Committee.
(c) Amount - The number of shares of Restricted Stock
subject to a BEP Award will be calculated by valuing
the Stock at not less than 75% of its fair market value
("BEP Value"). For purposes of this Section 6.4, the
BEP Value shall be determined by the Committee based
on the average of the Stock's closing prices on the
Composite Tape of the New York Stock Exchange for
the five trading days prior to the date of the Award.
The dollar value of each Participant's specified percent
of cash incentive compensation to be subject to a BEP
Award (determined by formulas approved by the
Committee) will be divided by the BEP Value to
determine the number of whole shares of Restricted
Stock subject to each BEP Award. The value of any
fractional shares will be paid in cash.
(d) Form - Each Participant who receives a BEP Award
may, but need not, be issued a stock certificate in
respect of such shares of Restricted Stock. A "book
entry" (i.e., a computerized or manual entry) may
instead be made in the records of the Company to
evidence a Participant's BEP Award. Such Company
records shall, absent manifest error, be binding on all
Participants.
(e) Restrictions - a BEP Award shall be subject to the following
restrictions and conditions:
(i) Except as otherwise specified by the Committee
either at the time of grant or thereafter, the
Restricted Period shall be three years from the date
a BEP Award is granted. During the Restricted
Period, except as provided in Section 6.1(e) of the
Plan, the Participant shall not sell, transfer, pledge,
assign or otherwise dispose of such shares and any
attempt by a Participant to do so shall constitute
immediate forfeiture of the BEP Award.
(ii) Unless the Committee in its sole discretion
shall determine otherwise at or prior to the
time a BEP Award is granted, during the
Restricted Period the Participant shall have
all such rights with respect to shares of
Restricted Stock granted under this Section
6.4 as are specified in Section 6.3(b) with
respect to other shares of Restricted Stock.
(f) Lapse of Restrictions - At the conclusion of the
Restricted Period, the restrictions on the BEP Award
shall lapse and the Participant shall thereafter have the
right to sell or otherwise transfer the BEP Award
Shares.
(g) Termination of Employment - Except as otherwise
provided by the Committee either at the time of grant or
thereafter, the Restricted Period shall end and any other
restrictions specified in the BEP Award Agreement shall
automatically be removed upon the Participant's
Termination of Employment by reason of death,
Disability or Retirement during the Restricted Period.
In the event of the Participant's Termination of
Employment during the Restricted Period for any other
reason, unless the Committee shall otherwise determine,
the Participant's rights to the shares subject to the BEP
Award shall be forfeited and all such shares shall
immediately be surrendered to the Company.
6.5 Performance Share/Unit Awards
(a) Grants - Performance Share/Unit Awards granted under
the Plan shall be in such form as the Committee may
from time to time approve, subject to the terms and
conditions of this Section 6.5 and may contain any
terms and conditions (which terms and conditions need
not be the same in each case), not inconsistent with the
Plan, as the Committee shall deem desirable.
(b) Performance Period - The Committee shall, at the time
of grant, establish a performance period for the Award.
Such period shall commence and end on the dates
specified by the Committee. Notwithstanding the
above, the Committee may, in its sole discretion,
accelerate the end of a performance period.
(c) Performance Criteria and Valuation - The Committee
shall, at the time of grant, establish performance criteria
with respect to the Performance Share/Unit Award.
These performance criteria may include any measures of
performance of the Company or its Subsidiaries or such
other criteria as the Committee shall select. At the end
of the performance period established by the Committee
pursuant to Section 6.5(b), the Committee shall evaluate
actual performance during such performance period
compared to the performance criteria established for the
Award, and shall determine the value, if any, of the
Performance Share/Unit Award and the amount payable
in respect thereof.
(d) Dividents and Interest - Subject to the provisions of the
Plan and the Award Agreement, a Participant who
receives a Performance Share Award under this Section
6.5 shall be entitled to receive, currently or on a
deferred basis, interest or dividends, or interest or
dividend equivalents, with respect to the number of
shares of Stock covered by the Award, as determined at
the time of the Award by the Committee in its sole
discretion, and the Committee may provide that such
amounts (if any) shall be deemed to have been
reinvested in additional Stock or otherwise been
reinvested.
<PAGE>
(e) Payment shall be made in cash or in Stock
having a fair market value on the date of payment
(determined by the Committee using any reasonable
valuation method) equal to the amount payable, or
partly in cash and partly in Stock, as determined by the
Committee. No fractional shares of Stock will be
issued.
(f) Termination of Employment
(i) If a Participant's employment terminates during the
performance period specified in the Award
Agreement by reason of death, Disability or
Retirement, any payment to the Participant, or to
the Participant's estate or to those person(s) who
acquire the right to receive such payment by bequest
or inheritance, shall be determined by the
Committee at the end of that performance period
based on the criteria established under Section
6.5(c). Any such payment shall be prorated to
reflect the period of time the Participant was
employed during the performance period.
Notwithstanding the above, the Committee, in its
sole discretion, may accelerate such payment by
taking into consideration the extent to which the
performance criteria were achieved at the time of
the Termination of Employment.
(ii) In the event the Participant's Termination of
Employment occurs prior to the end of the
specified performance period for any reason
other than those specified in Section
6.5(f)(i), the Participant's right to the
Performance Share/Unit Award shall be
forfeited as of the date of his or her
Termination of Employment, except that the
Committee may, in its sole discretion, make
provisions for payment, if any, as it deems
appropriate.
6.6 Other Stock Based Awards
(a) Grants - Awards of Stock and Awards that are valued in
whole or in part by reference to, or are otherwise based
on, Stock ("Other Stock Based Awards") may be
granted under the Plan. The provisions of Other Stock
Based Awards need not be the same in each case. The
Committee, in its sole discretion, may grant Other Stock
Based Awards as it deems appropriate (i) to take
advantage of the compensation practices or tax and
accounting regulations applicable at the time of the
grant, even if such practices or regulations are different
from those in effect on the effective date of the Plan and
(ii) to conform to and comply with tax, securities or
other law or regulations in jurisdictions outside the
United States.
(b) Terms and Conditions - Other Stock Based Awards
made pursuant to this Section 6.6 shall be subject to the
following terms and conditions:
(i) Subject to the provisions of the Plan and the Award
Agreement, a Participant who receives an Award
under this Section 6.6 shall be entitled to receive,
currently or on a deferred basis, interest or
dividends, or interest or dividend equivalents, with
respect to the number of shares of Stock covered by
the Award, as determined at the time of the Award
by the Committee in its sole discretion, and the
Committee may provide that such amounts (if any)
shall be deemed to have been reinvested in
additional Stock or otherwise been reinvested.
(ii) Any Award under this Section 6.6 and any
Stock covered by any such Award may be
forfeited to the extent so provided in the
Award Agreement as determined by the
Committee in its sole discretion.
(c) Termination of Employment - Unless otherwise
specified by the Committee, all Other Stock Based
Awards granted under this Section 6.6 will be forfeited
upon the Participant's Termination of Employment,
except that, in the event the Participant's Termination of
Employment occurs by reason of death, Retirement or
Disability, the Committee may, in its sole discretion,
waive any or all of the remaining limitations,
restrictions or requirements, if any, imposed pursuant to
the Plan or in the applicable Award Agreement.
Section 7. Performance Related Awards
7.1 Performance Objectives.
(a) Notwithstanding anything else in the Plan to the
contrary, unless the Committee otherwise determines at
the time of grant, any Award (other than an Option or
a Stock Appreciation Right) intended to qualify as
"other performance based compensation" within the
meaning of Section 162(m)(4)(C) of the Code, including
of Restricted Stock, Performance Shares, Performance
Units or Other Stock Based Awards, (other than an
award which will vest solely on the basis of the passage
of time) granted to an officer who is (i) subject to the
reporting requirements of Section 16(a) of the Securities
Exchange Act of 1934, as amended, and (ii) whose
compensation is deductible under the Code in the United
States, shall become vested, if at all, only upon the
determination by the Committee that performance
objectives established by the Committee have been
attained, in whole or in part. An Award subject to such
a determination by the Committee shall be known as a
Performance Award.
(b) Performance objectives for Performance Awards shall
be determined over a measurement period or periods
established by the Committee and shall relate to at least
one of the following criteria: (i) operating margin
(operating income divided by operating revenues); (ii)
operating income; (iii) income before income taxes and
minority interest, (iv) return on equity; and (v) earnings
per share, (as such criteria may relate to the
performance of (A) the Company, (B) a Subsidiary, (C)
a division or unit of any of the foregoing or (D) any of
the foregoing compared to that of other companies or of
each other (the "Performance Criteria").
(c) The maximum number of shares of Stock that may be
subject to any such Performance Award in any 12
month period shall not exceed 500,000 shares, as such
number may be adjusted pursuant to Section 3.
7.2 Annual Incentive Compensation.
The Committee may, in addition to the Performance Awards
described above, pay cash amounts under the Plan to any
officer of the Company or of any Subsidiary described in
Section 7.1(a) above who is subject to the reporting
requirements of Section 16(a) of the Exchange Act upon the
achievement, in whole or in part, of performance goals or
objectives established in writing by the Committee with
respect to such performance periods as the Committee shall
determine. Any such goals or objectives shall be based on
one or more of the Performance Criteria. Notwithstanding
anything else contained herein to the contrary, the maximum
amount of such cash payment to any single officer with
respect to any 12 month period shall not exceed the lesser
of (A) $3,000,000 or (B) three times the officer's annual
base salary as in effect on the last day of the fiscal year
preceding the calendar year in which such cash payment is
made.
<PAGE>
7.3 Interpretation.
Notwithstanding anything else in the Plan to the contrary, to
the extent required to qualify any Performance Award as
"other performance based compensation" within the meaning
of Section 162(m) (4) (C) of the Code, the Committee shall
not be entitled to exercise any discretion otherwise
authorized under the Plan (such as the right to accelerate
vesting without regard to the achievement of the relevant
performance objectives) with respect to such Performance
Award if the ability to exercise such discretion (as opposed
to the exercise of such discretion) would cause such award
to fail to qualify as other performance based compensation.
Section 8. Amendments and Termination
8.1 The Board of Directors may terminate, suspend, amend or
alter the Plan, but no such action may impair or adversely
affect the rights of a Participant under an Option or other
Award theretofore granted, without the Participant's
consent, other than as provided in Section 9.12. In
addition, no amendment shall become effective without the
approval of stockholders if such amendment would
(i) Increase the amount of Stock which may be issued
under the Plan (except as authorized in accordance
with Section 3 of the Plan) in a manner that would
require stockholder approval for the Plan to
continue to qualify for the exemption available
under Rule 16b-3 under the Securities Exchange Act
of 1934, as amended (the "1934 Act");
(ii) Permit the grant of Options with an exercise
price which is less than the fair market
value of the Stock on the date of grant;
(iii) Expand the class of eligible participants in
the Plan to include any member of the
Company's Board of Directors who is not
also an employee of the Company or one of
its Subsidiaries;
(iv) Extend the duration of Awards to a period
greater than that permitted under Section
9.13;
(v) Modify any provision of the Plan in a manner that
would cause compensation payable pursuant to any
Award to fail to be deductible for U.S. federal
income tax purposes if such compensation is (x)
intended to pay compensation qualifying as other
performance based compensation under Section
162(m) of the Code and (y) granted to an executive
officer who is subject to the reporting requirements
under Section 16(a) of the 1934 Act and whose
compensation is deductible by the Company or a
Subsidiary under U.S. tax law; or
(vi) Extend the period during which Awards
under the Plan may be granted past the date
specified in Section 12.
8.2 In granting an Award, the Committee may establish any
conditions that it determines are consistent with the purposes
and provisions of the Plan, including, without limitation, a
condition that the granting of an Award is subject to the
surrender for cancellation of any or all outstanding Awards
held by the Participant. Any new Award made under this
section may contain such terms and conditions as the
Committee may determine, including an exercise price that
is lower than that of any surrendered Option or Stock
Appreciation Right.
8.3 Any amendment or alteration of the Plan may be limited to,
or may exclude from its effect, particular Participants or
particular groups of Participants.
Section 9. General Provisions
9.1 Unfunded Status of Plan - The Plan is intended to constitute
an "unfunded" plan for incentive compensation, and is not
intended to be subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended. With
respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the
Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan
to deliver Stock or payments with respect to Options, Stock
Appreciation Rights and/or other Awards hereunder,
provided, however, that the existence of such trusts or other
arrangements is consistent with the unfunded status of the
Plan.
9.2 Transfers, Leaves of Absence and Other Changes in
Employment Status - For purposes of the Plan:
(a) A transfer of an employee from the Company to a
Subsidiary, or vice versa, or from one Subsidiary to
another; or
(b) A leave of absence, duly authorized in writing by the
Company, for military service or sickness, or for any
other purpose approved by the Company if the period of
such leave does not exceed ninety days; or
(c) Any leave of absence in excess of ninety days approved
by the Company, provided the employee's right to
reemployment is guaranteed either by a statute or by
contract;
shall not be deemed a Termination of Employment. The
Committee, in its sole discretion, shall determine the
disposition of all Awards made under the Plan in all cases
involving any substantial change in employment status other
than as specified herein.
<PAGE>
9.3 Distribution of Stock - The Committee may require
Participants receiving Stock in connection with any Award
under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares for
investment without a view to distribution thereof. The
certificates for such shares may include any legend which
the Committee deems appropriate to reflect any restrictions
on transfer.
9.4 Limits on Transfer - Subject to the provisions of the Plan
and the Award Agreement, and except as provided in
Section 6.1(e) with respect to BEP Awards, no Award may
be sold, transferred, pledged, assigned, encumbered or
otherwise alienated or hypothecated, other than by will, by
the laws of descent and distribution or to a member of the
Participant's family or to a trust or similar vehicle for the
benefit of such family members to whom or to which the
Committee shall permit an Award to be transferred upon
such terms and conditions as the Committee shall establish.
9.5 Stop Transfer Orders/Restrictions - All certificates for
shares of Stock delivered under the Plan pursuant to any
Restricted Stock Award, BEP Award or Other Stock Based
Award shall be subject to such stop-transfer orders and
other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange
upon which the Stock is then listed, and any applicable
Federal, state or foreign securities law, and the Committee
may cause a legend or legends to be put on any such
certificates to make appropriate reference to such
restrictions.
9.6 Payment for Restricted Stock, BEP, Performance
Share/Unit, or Other Stock Based Awards - Except as
otherwise required in the applicable Award Agreement,
recipients of Awards under the Plan (other than Options)
shall not be required to make any payment or provide
consideration for the receipt of such Awards, other than the
rendering of services.
9.7 Other Compensation Plans - Nothing contained in the Plan
shall prevent the Board of Directors from adopting other
compensation arrangements, subject to stockholder approval
if such approval is required.
9.8 Grants Under Predecessor Plan - Subject to the approval of
the Plan by stockholders at the Company's 1995 Annual
Stockholders' Meeting, the provisions of the Plan shall
apply to, and govern, existing and subsequent awards under
the Predecessor Plan (as defined in Section 3.1) and, unless
otherwise determined by the Committee, existing and
subsequent awards under the Predecessor Plan shall be
deemed to be amended to provide any additional rights
applicable to Awards hereunder, subject to the right of any
affected participant in the Predecessor Plan to refuse to
consent to such amendment.
9.9 Subsidiary Plans - The Committee may approve or adopt
incentive compensation plans under the Plan for employees
of Subsidiaries as required to meet the provisions of the tax
or securities laws or other applicable laws, rules or
regulations in the jurisdictions in which any Subsidiary
operates. Any shares of Stock issued under any such
Subsidiary plans shall be deemed to have been issued under
the Plan. The Committee, in its sole discretion, may
delegate its authority under this Section 9.9 to the Chief
Executive Officer or any other appropriate officer of the
Company, provided that no such delegation shall be made
with respect to any plan of a Subsidiary that would provide
Awards to an executive officer or a director of the
Company.
<PAGE>
9.10 Authority Limited to Committee - No person shall at any
time have any right to receive an Award hereunder and no
person shall have authority to enter into an agreement on
behalf of the Company for the granting of an Award or to
make any representation or warranty with respect thereto,
except as granted by the Committee pursuant to the Plan or
as provided in Section 4.4. Participants shall have no rights
with respect to any Award except as set forth in the Plan
and the applicable Award Agreement.
9.11 No Right to Employment - Neither the action of the
Company in establishing the Plan, nor any action taken by
it or by the Board of Directors or by the Committee under
the Plan or any Award Agreement, nor any provision of the
Plan, shall be construed as giving to any person the right to
be retained in the employ of the Company or any
Subsidiary.
9.12 Change of Control
(a) For the purposes of the Plan, a "change of control"
shall be deemed to have taken place if:
(i) Any individual, firm, corporation or other entity, or
any group (as defined in Section 13(d)(3) of the
1934 Act) becomes, directly or indirectly, the
beneficial owner (as defined in the General Rules
and Regulations of the Securities and Exchange
Commission with respect to Sections 13(d) and
13(g) of the 1934 Act) of more than 35% of the
then outstanding shares of the Company's capital
stock entitled to vote generally in the election of
directors of the Company; or
(ii) Any individual, firm, corporation or other
entity or any group (as defined in Section
13(d)(3) of the 1934 Act) commences a
tender or exchange offer subject to Section
14(d)(1) of the 1934 Act for any class of
the Company's capital stock; or
(iii) The stockholders of the Company approve
a definitive agreement for (A) the merger or
other business combination of the Company
with or into another corporation pursuant to
which the stockholders of the Company do
not own, immediately after the transaction,
more than 50% of the voting power of the
corporation that survives and is a publicly
owned corporation and not a subsidiary of
another corporation, or (B) the sale,
exchange or other disposition of all or
substantially all of the assets of the
Company; or
(iv) During any period of two years or less,
individuals who at the beginning of such
period constituted the Board of Directors of
the Company cease for any reason to
constitute at least a majority thereof unless
the election, or the nomination for the
election by the stockholders of the
Company, of each new director was
approved by a vote of at least 75% of the
directors then still in office who were
directors at the beginning of the period;
provided, however, that a "change of control" shall not
be deemed to have taken place if beneficial ownership
is acquired by, or a tender or exchange offer is
commenced or announced by, the Company or any of
its Subsidiaries, any profit-sharing, employee ownership
or other employee benefit plan of the Company or any
Subsidiary or any trustee of or fiduciary with respect to
any such plan when acting in such capacity, or any
group comprised solely of such entities
(b) In the event of a "change of control" as defined in
subsection (a) above, Awards granted under the Plan
will be subject to the following provisions:
(i) All outstanding Options and Stock Appreciation
Rights granted under the Plan shall become
exercisable in full whether or not otherwise
exercisable at such time, and any such Option or
Stock Appreciation Right shall remain exercisable in
full thereafter until it expires pursuant to its terms;
(ii) All restrictions contained in Restricted
Stock Awards and BEP Awards granted
under Sections 6.3 and 6.4, respectively, of
the Plan shall lapse, and the Participant
shall thereupon own the stock free and clear
of such restrictions;
(iii) With respect to Performance Share/Unit
Awards granted under the Plan, the
performance period established for such
Awards shall be deemed to have been
completed, and such Awards shall become
payable in an amount equal to the greater of
the amount payable upon achievement of
the performance criteria established for the
Award at the time of grant or the actual
performance achieved to the date of the
"change of control"; and
(iv) With respect to Other Stock Based Awards,
such Awards shall become fully exercisable
or payable in accordance with the terms and
conditions specified in the Award
Agreement.
9.13 Award Period - No Award granted under the Plan shall
be exercisable or payable more than 10 years from the
date of grant except for Nonqualified Stock Options,
which shall not be exercisable for more than 10 years
and one day from the date of grant.
Section 10. Taxes
10.1 Pursuant to Section 83(b) of the Code, if any Participant
properly elects (within thirty days of the date on which
property subject to a substantial risk of forfeiture and non-
transferable is transferred to such Participant pursuant to an
Award) to include in gross income for U.S. Federal income
tax purposes an amount equal to the fair market value (on
the date of such transfer) of the Stock subject to the Award
(or the difference between the fair market value and the
option price on the date of exercise of an Option), such
Participant shall make arrangements satisfactory to the
Committee to pay to the Company, at the time of such
transfer (or at the time of exercise in the case of an Option),
any U.S. Federal, state or local taxes required to be
withheld with respect to such shares. If such Participant
shall fail to make such tax payments as are required, the
Company and its Subsidiaries shall, to the extent permitted
by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the Participant.
10.2 Any Participant who does not or cannot make the election
described in Section 10.1 with respect to an Award, shall,
no later than the date as of which the value of the Award
first becomes includable in the gross income of the
Participant for income tax purposes, pay to the Company,
or make arrangements satisfactory to the Company
regarding payment of, any taxes of any kind required by
law to be withheld with respect to the Stock or other
property subject to such Award, and the Company and its
Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any
kind otherwise due to the Participant.
10.3 Unless the Committee shall in its sole discretion determine
otherwise (and subject to any limitations imposed by Section
16 of the 1934 Act, payment of any taxes required to be
withheld may be made, in whole or in part, by an election
by a Participant (in accordance with rules adopted by the
Committee from time to time): (i) to have the Company
withhold shares of Stock otherwise issuable pursuant to the
Plan having a fair market value equal to such tax liability
and/or (ii) to tender to the Company shares of Stock owned
by the Participant (or by the Participant and his or her
spouse, jointly) and acquired more than six months prior to
such tender (excluding any shares of Restricted Stock
awarded under Section 6.3 or Section 6.4 of the Plan) and
having a fair market value equal to such tax liability. The
fair market value of any Stock so tendered shall be
determined in such reasonable manner as may be required
in order to comply with or to conform to the requirements
of any applicable or relevant laws or regulations.
Section 11. Effective Date of Plan
The Plan shall be effective on the date it is approved by an
affirmative vote of the holders of a majority of the shares of voting
stock of the Company represented at the meeting at which the Plan
is adopted and entitled to vote.
Section 12. Term of Plan
Unless terminated earlier by the Board of Directors, no Award shall
be made under the Plan after December 31, 2005, except that the
foregoing shall not apply to or prevent any amendment, modification
or suspension at any time of any Award or the waiver at any time
of any terms or conditions thereof by the Committee under the
provisions of the Plan or the amendment or modification by the
Board of Directors of the Plan under Section 8.1.
ALEXANDER & ALEXANDER SERVICES INC.
PERFORMANCE BONUS PLAN FOR EXECUTIVE
OFFICERS
ARTICLE I
PURPOSE
The purpose of the Alexander & Alexander Services
Inc. Performance Bonus Plan for Executive Officers (the "Plan")
is to enable the Company to recruit and retain qualified
executive officers by paying them, upon the attainment of
performance criteria established in accordance with the Plan,
incentive compensation up to the maximum amount that may be
paid under the Plan, including that portion of the bonus paid in
the form of restricted stock under the Company's Bonus Equity
Plan.
The Plan is intended, among other things, to address
the limitations under Section 162(m) of the Internal Revenue
Code of 1986, as amended, on the deductibility of certain
compensation in excess of $1 million per year paid by the
Company to those executive officers of the Company who, on
the last day of the Company's fiscal year, are (a) the Chief
Executive Officer and (b) other executive officers covered by
Section 162(m).
ARTICLE II
DEFINITIONS
The following words and phrases shall have the
meanings indicated for purposes of the Plan, unless the context
clearly indicates otherwise:
(a)Average Total Capital shall mean the sum of (A) short-
term debt and the current portion of long-term debt, (B)
long-term debt, and (C) total stockholders' equity, such
sum to be averaged over the period beginning with the
end of the previous Bonus Year and including each of the
first three financial quarters of the current Bonus Year
and the end of the current Bonus Year, respectively, each
amount as disclosed in the Consolidated Balance Sheets in
the Company's Annual and Quarterly Reports for the
relevant periods.
(b)Average Total Stockholders' Equity shall mean the
total stockholders' equity of the Company averaged over
the period beginning with the end of the previous Bonus
Year and including each of the first three financial
quarters of the current Bonus Year and the end of the
current Bonus Year, respectively, all as disclosed in the
Consolidated Balance Sheets in the Company's Annual
and Quarterly Reports for the relevant periods.
(c)BEP shall mean the Company's Bonus Equity Plan, as
the same shall be in effect from time to time.
(d)BEP Stock Value shall mean the discounted value,
determined in accordance with the terms of the BEP, of
the shares of the Company's common stock awarded to
any Covered Employee in respect of a Bonus Award.
(e)Board shall mean the Board of Directors of the Company.
(f)Bonus Award shall mean the amount of bonus
compensation payable to any Covered Employee for each
Bonus Year, whether payable in cash or in restricted stock
under the BEP.
(g)Bonus Year shall mean a calendar year.
(h)Cash Flow shall mean the sum of (a) net cash provided
(used) by operating activities (excluding amounts, if any,
attributable to discontinued operations and changes in
accounting), and (b) net purchases of property and
equipment, all amounts as disclosed in the Consolidated
Statement of Cash Flows in the Company's Annual
Report for the Bonus Year.
(i)Chief Executive Officer shall mean the Chief Executive
Officer of the Company or the individual acting in such
capacity.
(j)Committee shall mean the Compensation, Benefits and
Nominating Committee of the Board, or any similar
committee thereof comprised of at least two Outside
Directors.
(k)Company shall mean Alexander & Alexander Services Inc.
(l)Covered Employee shall mean the Chief Executive Officer
and each of those other executive officers of the
Company who, on the last day of the Bonus Year, are
"covered employees" within the meaning of Section
162(m).
(m)Earnings per Share shall mean net income per share
available for Common Shareholders of the Company's
common stock, as disclosed in the Consolidated Statement
of Operations in the Company's Annual Report for the
Bonus Year.
(n)Income from Continuing Operations shall mean the
consolidated income from continuing operations of the
Company, as disclosed in the Consolidated Statement of
Operations in the Company's Annual Report for the
Bonus Year.
(o)Operating Income shall mean the operating income of the
Company, as disclosed in the Consolidated Statement of
Operations in the Company's Annual Report for the
Bonus Year.
(p)Specified Bonus Award shall mean the target Bonus
Award payable to each Covered Employee in the event
that certain specified Performance Goals are met.
(q)Variable Bonus Award shall mean incentive
compensation over and above the Specified Bonus Award
payable to a Covered Employee in the event that the
Performance Goals related thereto are met.
(r)Outside Director shall mean a member of the Board who
is an "outside director" as that term is defined under
Section 162(m).
(s)Performance Goals shall mean the financial
measurements of performance that must be met in order
for a Covered Employee to receive a Bonus Award.
(t)Return on Capital shall mean the earnings (loss) available
for common shareholders (as disclosed in the Consolidated
Statement of Operations in the Company's Annual Report
for the Bonus Year) divided by the Average Total Capital.
(u)Return on Equity shall mean the earnings (loss) available
for common shareholders (as disclosed in the Consolidated
Statement of Operations in the Company's Annual Report
for the Bonus Year) divided by the Average Total
Stockholders' Equity.
(v)Section 162(m) shall mean Section 162(m) of the Internal
Revenue Code of 1986, as amended, and the regulations
and rules issued thereunder.
ARTICLE III
ADMINISTRATION OF THE PLAN
Section 3.1The Plan shall be administered by
the Committee. If, however, the Committee shall fail to be
composed solely of Outside Directors, then those members of
the Committee that are Outside Directors shall act as the
Committee.
Section 3.2The Plan shall be interpreted and construed in
accordance with Section 162(m). Any specific action by the
Committee that would cause any Bonus Award to fail to be
deductible under Section 162(m) shall be void. Otherwise, the
Committee shall have full and exclusive authority, power and
discretion to construe and interpret the Plan (subject to the
advice of appropriate legal counsel with respect to any question
of law), and generally to determine any and all questions arising
under the Plan, including the sole authority to establish
Performance Goals and to determine whether any Bonus Award
is payable solely in cash or partly in cash and partly in BEP
stock. The Committee shall have the authority to reduce the
Bonus Award of any Covered Employee earned under this Plan,
or any portion thereof, even if the Performance Goals that
would provide the maximum amount of such Bonus Award have
been met. The Committee shall not, however, have any
authority hereunder to increase the amount of any Bonus Award
calculated in accordance with the Plan.
Section 3.3The Committee shall certify to the
Company in writing that any applicable Performance Goals have
been met before any amounts are paid in respect of Bonus
Awards under the Plan. If permitted under Section 162(m),
such certification may be based upon reasonably estimated
financial information available prior to the end of the Bonus
Year.
ARTICLE IV
CALCULATION OF BONUS AMOUNTS FOR COVERED
EMPLOYEES
Section 4.1Each Covered Employee shall be
eligible to receive a Specified Bonus Award under the Plan, as
more fully described in Section 4.2. In addition, each Covered
Employee who receives a Specified Bonus Award for a given
Bonus Year shall also be eligible to receive a Variable Bonus
Award, as more fully described in Section 4.3. Payment in
respect of any Bonus Award shall be made either in cash or in
a combination of cash and restricted shares of the Company's
common stock issued under the BEP, provided that in no event
shall more than 50% of any Bonus Award be paid in shares of
BEP stock. The total Bonus Award paid to any Covered
Employee in respect of a Specified Bonus Award and a Variable
Bonus Award for any Bonus Year shall not exceed the sum of
$5 million plus the excess, if any, of (a) the fair market value of
any shares of BEP stock on the date the Committee certifies
that the applicable Performance Goals have been met, over (b)
the BEP Stock Value of such shares of BEP stock. The amount
payable in respect of a Bonus Award shall be paid as soon as
practicable following the certification described in Section 3.3
above, subject to the Committee's discretion in Section 3.2 to
reduce the amount of any Bonus Award.
Section 4.2A Specified Bonus Award shall be
paid to a Covered Employee if one or both of the following
Performance Goals, established by the Committee in accordance
with Section 162(m), is achieved: (a) a specified amount of
Income from Continuing Operations as of the end of the Bonus
Year or a specified minimum increase in such income as
compared to the end of the prior Bonus Year; or (b) a specified
amount of Operating Income for the Bonus Year. Subject to the
limitations contained in Section 4.1, the maximum Specified
Bonus Award that each Covered Employee shall be entitled to
receive and the actual Performance Goals for each Bonus Year
shall be determined by the Committee in writing at the beginning
of the Bonus Year within the time required under Section
162(m).
Section 4.3The amount of any Variable Bonus
Award that may be payable to any Covered Employee for a
particular Bonus Year shall be based on such Covered
Employee's achievement of one or more additional Performance
Goals established by the Committee for such Covered Employee.
These additional Performance Goals shall relate to any one or
more of the following financial measurements as each relates to
the Company and its consolidated subsidiaries or, with respect
to 4.3(a) or (b), as such measurement relates to any one or
more of the Company's operating units: (a) Return on Capital;
(b) Return on Equity; (c) Earnings per Share; (d) Cash Flow and
(e) an increase in Operating Income above the amount specified
under Section 4.2(b). Different Variable Bonus Award
Performance Goals may be established for each Covered
Employee. The amount of each Covered Employee's Variable
Bonus Award may be expressed as a formula pursuant to which
additional amounts may be paid for incremental increases in
actual performance against a stated Performance Goal.
Section 4.4In the event that any person who
was a Covered Employee at the end of the prior Bonus Year, is
not a Covered Employee at the conclusion of the current Bonus
Year, the Specified and Variable Bonus Award Performance
Goals and maximum Bonus Award applicable to such person
shall be applicable to the executive officer who replaces him or
her as a Covered Employee for such Bonus Year. In any year in
which there is a change in more than one Covered Employee,
the determination as to which executive officer replaces which
prior Covered Employee shall be made on the basis of the salary
payable for such Bonus Year, so that the new Covered Employee
with the greatest amount of salary replaces the prior Covered
Employee having the greatest amount of salary for the prior
Bonus Year and so on, except that any new Chief Executive
Officer (who was not also a Covered Employee as of the end of
the last Bonus Year) shall replace the person who was the Chief
Executive Officer at the end of the prior Bonus Year. Nothing in
this Section 4.4 shall be construed to change the Performance
Goals and maximum Bonus Award for any Bonus Year with
respect to any person who was a Covered Employee for both
the prior and the current Bonus Years.
Section 4.5The Committee may defer to a
succeeding year payment of any portion (up to $1 million) of a
Bonus Award which may be payable to a Covered Employee for
a particular Bonus Year. Payment of such deferred award may
be conditioned upon such terms as the Committee shall
determine, including the achievement of extraordinary
performance by such Covered Employee.
ARTICLE V
CHANGE OF MEASUREMENT PERIOD
If permitted by Section 162(m), the Committee may
establish a measurement period for determining the achievement
of any Performance Goal other than the Bonus Year if the
Committee concludes that such alternative measurement period
is appropriate under the circumstances. Any such change must
be made before the new measurement period begins. In such
event, all relevant criteria will be based upon the books and
records of the Company for the specified measurement period in
a manner consistent with the terms of the Plan.
ARTICLE VI
STOCKHOLDER APPROVAL AND AMENDMENT
Section 6.1This Plan shall become effective
as of January 1, 1995, subject, however, to the approval of the
Company's stockholders at the 1995 Annual Meeting of the
Stockholders of the Company.
Section 6.2The Plan may be amended at any
time by the Committee, which shall act in accordance with
Section 3.1 of the Plan. In the event that Section 162(m) is
modified or interpreted in a manner which causes the Plan to
fail to provide for the deductibility of compensation payable
hereunder, the Committee shall retain the right to modify the
Plan for Covered Employees to the extent necessary to bring
any provisions hereof into compliance, including but not limited
to deletion of any non-conforming provisions, or to discontinue
the Plan altogether. No amendment shall be made without
approval of the stockholders of the Company if such approval is
required in order for the Plan to continue to meet the
requirements of Section 162(m).
<PAGE>
1995 Long Term Incentive Plan
Limited Stock Appreciation Right Agreement
between
Alexander & Alexander Services Inc.
and
____________________
("Employee")
Alexander & Alexander Services Inc. (the
"Company"), by action of the Compensation, Benefits
and Nominating Committee of the Board of Directors
(the "Committee") pursuant to the 1995 Long Term
Incentive Plan (the "Plan") has granted to the Employee
Limited Stock Appreciation Rights ("LSAR") with
respect to the shares of the Company's Common Stock,
$1.00 par value (the "Stock"), subject to the option (the
"Option") granted to the Employee under the Plan on
______________.
The LSAR is subject to the provisions of the
Plan, a copy of which has been furnished to the
Employee and receipt of which the Employee
acknowledges by acceptance of this Agreement. The
Plan is incorporated by reference into this Agreement.
<PAGE>
In addition to the provisions of the Plan, the
following terms, conditions and restrictions set forth in
this Agreement are applicable to the LSAR:
(a) The Employee's right to exercise
the LSAR shall begin on the date which is 6 months
from the date on which it is granted and shall terminate
on the latest of the following (i) such time as the
Employee is no longer subject to the provisions of
Section 16(b) of the Securities Exchange Act of 1934;
(ii) the occurrence of an event specified in Section
6.2(b)(iii) of the Plan; or (iii) the exercise in full of the
Option. The right of an Employee who is no longer
subject to the provisions of Section 16(b) of the Act to
exercise his Option shall continue as provided in
Section 6.1 of the Plan.
(b) The LSAR shall be exercisable only by the
Employee. Any attempt by the Employee to transfer,
assign, pledge, hypothecate or otherwise dispose of, or
any attempt to subject to execution, attachment or
similar process, any part of the LSAR, contrary to the
provisions of the Plan and this Agreement shall be void
and ineffectual, shall give no right to the purported
transferee, and shall result in the forfeiture of the
LSAR.
(c) Any question concerning Termination of
Employment, Disability, Retirement or changes in
employment status specified in Section 9.2 of the Plan,
shall be determined by the Committee, whose
determination shall be final.
(d) Nothing contained in this Agreement shall
restrict the right of the Company or any of its
subsidiary corporations to terminate the Employee's
employment at any time, with or without cause.
<PAGE>
(e) The Employee may exercise the LSAR, or
any portion thereof, in lieu of the Option. Exercise of
the LSAR shall be by written notice to the Company or
its agent and shall be subject to the terms and
conditions set forth in the Plan. Any exercise of the
LSAR shall result in the cancellation of a corresponding
portion of the underlying Option and any exercise of the
underlying Option shall result in the cancellation of a
corresponding portion of this LSAR.
(f) For a period of 30 days following the later
to occur of (i) a "change of control" as defined in
Section 9.12 of the Plan and (ii) [the date which is 6
months after the date of grant] the Employee may
surrender all or a portion of his Option in exchange for
an amount in cash equal to the product of (x) the
number of shares subject to the Option being so
surrendered times (y) (A) the excess of (1) the highest
price offered in connection with any purchase, tender
offer, merger or other transaction resulting in a "change
of control" or (2) if a "change of control" occurs by
reason of a change in the composition of the Board of
Directors, the highest average of the high and low sales
prices of a share of Stock on the New York Stock
Exchange on any date during the thirty calendar day
period ending on the date the change in the composition
of the Board occurs over (B) [the exercise price of the
Option.]
(g) The LSAR shall be deemed not to have
been exercised unless all the preceding provisions of
this Agreement shall have been complied with, and for
all purposes of the Plan, the date of the exercise with
respect to any particular shares shall be the date on
which the notice specified in paragraph (e) above has
been received by the Company or its agent.
<PAGE>
In consideration of the LSAR covered by this
Agreement, and for other good and valuable
consideration, the parties hereto indicate their
agreement by their signatures below.
ALEXANDER & ALEXANDER SERVICES INC.
_____________________________________________
Pursuant to Paragraph 4.5 of the Plan, the Employee's
right to the LSAR covered by this Agreement is subject
to execution of the Agreement. Please indicate
acceptance of the LSAR covered by this Agreement,
subject to the restrictions and upon the terms and
conditions set forth above and in the Plan, by executing
this Agreement (in duplicate) and immediately returning
the enclosed duplicate original (one copy) to
_____________ ___________________. It will be
assumed that the LSAR has been declined if acceptance
has not been received within thirty (30) days of the
receipt of this Agreement.
Accepted & Agreed to:
____________________________________
Employee's Signature Date
<PAGE>
1995 LONG-TERM INCENTIVE PLAN
RESTRICTED STOCK AWARD AGREEMENT
Between
Alexander & Alexander Services Inc.
and
__________________
("Employee")
Effective __________________ the Compensation, Benefits
and Nominating Committee (the "Committee") of the Board
of Directors of Alexander & Alexander Services Inc. (the
"Company") awarded to the Employee ______ shares (the
"Shares") of the Company's Common Stock subject to the
terms and conditions described below (the "Restricted Stock
Award").
The Restricted Stock Award is made pursuant to and is
subject in all respects, to the provisions of the 1995 Long-
Term Incentive Plan (the "Plan"), a copy of which has been
furnished to the Employee and receipt of which the
Employee acknowledges by acceptance of this Agreement.
The Plan is incorporated by reference into this Agreement.
In addition to the provisions of the Plan, the following
terms and conditions set forth in this Agreement are
applicable to the Restricted Stock Award.
The Plan will control if there is any conflict between the
Plan and this Agreement, and on such matters as are not
contained in this Agreement. Capitalized terms not defined
in this Agreement have the meanings given to them in the
Plan.
1. Restrictions on Disposition of Shares
The Employee agrees not to sell, exchange, transfer,
pledge, hypothecate or otherwise dispose of any
shares subject to the Restricted Stock Award (or any
new, additional or different Shares received pursuant
to Section 3 of the Plan), for a ______ year period
(the "Restricted Periods") ending on the following dates:<PAGE>
a) With respect to _____ of the Shares,
__________________; and
b) With respect to _____ Shares,
__________________; and
c) With respect to _____ Shares,
__________________;
provided, however, that the Restricted Periods shall
end earlier as provided in Section 6.3(d) of the Plan.
The foregoing restrictions shall be in addition to any
restriction on the Employee's ability to sell,
exchange, transfer, pledge, hypothecate or otherwise
dispose of any Shares subject to the Restricted Stock
Award under the Federal or any state securities laws.
Any attempt by the Employee to sell, transfer,
pledge assign or otherwise dispose of the Shares
subject to the Restricted Stock Award shall constitute
immediate forfeiture of such Award.
2. Issuance of Shares
Upon receipt of a signed copy of this Agreement by
the Company or its agent, the Shares shall be issued
to the Employee, who shall thereupon be a
stockholder with respect thereto. The Employee
shall have the right to vote such Shares and to
receive all dividends and distributions paid with
respect to such Shares, but the right to sell or
otherwise dispose of them shall be subject to the
restrictions specified in Paragraph 1 of this
Agreement.
3. Lapse of Restrictions
The restrictions imposed in Paragraph 1 of this
Agreement shall lapse upon the expiration of each
relevant Restricted Period and the shares shall
thereupon be free and clear of the restrictions
imposed in Paragraph 1 of this Agreement.
<PAGE>
4. Change of Control
Notwithstanding Paragraph 3 of this Agreement, the
restrictions imposed in Paragraph 1 of this
Agreement shall lapse commencing on the date of a
"change of control" of the Company under the terms
and conditions specified in Section 9.12 of the Plan.
5. Investment Representations
The Employee consents and agrees that he or she
will make no distribution of the Shares in violation
of the Securities Act of 1933, as amended, or any
other federal or state securities statutes, rules or
regulations.
6. Non-Competition Agreement
In consideration of the Restricted Stock Award and
the Employee's employment with the Company, the
Employee agrees to the terms of the Non-
Competition Agreement set forth as Exhibit A of this
Agreement. Any agreements on the same or similar
subject matter heretofore entered into between the
Employee and the Company or any of its
Subsidiaries are hereby confirmed, shall remain in
full force and effect and shall not be terminated,
amended or otherwise modified as a result of the
Employee's agreement to the terms of Exhibit A or
as a result of any invalidity or unenforceability in
whole or in part of any of the terms of Exhibit A.
7. Interpretation, etc.
The Plan and this Agreement shall be administered
by the Committee in accordance with the applicable
provisions of the Plan. All determinations by the
Committee as to any matter, including matters of
interpretation of this Agreement and the Plan and
questions concerning Termination of Employment,
Disability, Retirement or changes in employment
status specified in Section 9.2 of the Plan shall be
conclusive and binding upon the Employee.
<PAGE>
8. Income Tax Withholding
To the extent necessary, the Employee hereby
authorizes the Company to withhold from his or her
salary any withholding tax resulting from the
Restricted Stock Award as may be required by
Federal or state tax law.
9. Miscellaneous
This Agreement and the Plan embody the entire
agreement and understanding between the Company
and the Employee with respect to the Restricted
Stock Award and the other matters referred to herein
and may not be changed, modified or terminated
orally but only by a written instrument executed by
the Employee and the Company. This Agreement
shall be construed and enforced in accordance with,
and governed by, the laws of the State of Maryland.
The provisions of this Agreement are intended to be
separate and divisible and if, for any reason, any one
or more of such provisions should be held to be
invalid and unenforceable in whole or in part, the
Employee agrees that the same shall not be held to
affect the validity or enforceability of any other
provision of this Agreement. Nothing contained in
this Agreement or in the Plan shall restrict the right
of the Company or any of its Subsidiaries to
terminate the Employee's employment at any time,
with or without cause. The Termination of
Employment, whether by the Company or any of its
Subsidiaries or otherwise, regardless of the reason
therefore, shall have the results provided for in
Section 6.3(d) of the Plan.
<PAGE>
ALEXANDER & ALEXANDER SERVICES INC.
By:_______________________________
Pursuant to Sections 4.5 and 9.5 of the Plan, the
Employee's right to the Restricted Stock Award covered by
this Agreement is subject to execution of this Agreement
and of the Non-Competition Agreement.
To indicate your acceptance of the Restricted Stock Award
granted by this Agreement upon the terms and conditions set
forth above and in the Plan, please execute and return,
within 30 days of receipt of this Agreement:
one original copy of this Agreement
one original Non-Competition Agreement
(Exhibit A)
Personal Data Form
to:
__________________________________________________
.
If all the above are not received within the 30 day period,
the Restricted Stock Award granted under this Agreement
shall be forfeited.
ACCEPTED AND AGREED TO:
_______________________________________
Employee's Signature Date
<PAGE>
1995 Long Term Incentive Plan
Stock Option Award Agreement
between
Alexander & Alexander Services Inc.
and
___________________________
("Employee")
Alexander & Alexander Services Inc. (the
"Company"), by action of the Compensation, Benefits and
Nominating Committee of its Board of Directors (the
"Committee") pursuant to the 1995 Long Term Incentive Plan
(the "Plan") has granted to the Employee, as of __________,
an option (the "Option") to purchase _______ shares of the
Common Stock, $1 par value (the "Stock"), of the Company
at $________ per share, which price is the closing price of the
Stock on the New York Stock Exchange on the date of grant.
The Option is intended to be a "non qualified option" within
the meaning of Section 2(j) of the Plan. The terms of this
Agreement shall pertain to the Option except as otherwise
provided.
The Option is subject in all respects to the provisions
of the Plan, a copy of which has been furnished to the
Employee and receipt of which the Employee acknowledges by
acceptance of this Agreement. The Plan is incorporated by
reference into this Agreement. In addition to the
provisions of the Plan, the following terms, conditions and
restrictions are applicable to the Option:<PAGE>
(a) Neither the Option nor any part thereof may be
exercised unless and until any Stock to be received upon
exercise of the Option shall be listed or approved for listing on
the New York Stock Exchange and registered under the
Securities Act of 1933, unless the issuance of the Stock shall,
in the opinion of counsel to the Company, be exempt from
registration.
(b) Subject to the provisions of subparagraph (a) of
this Agreement, the Option shall be exercisable as to an initial
installment of not more than ____% of the total number of
shares covered hereby on and after________, and additional
installments of ____%, ____% and ____% on or after
____________, ____________, and ____________. Each
installment shall remain exercisable until _____________ (the
"Expiration Date"), a date 10 years from the date of grant, or
such earlier date as (1) all shares covered by the Option shall
have been purchased or (2) the Option shall have expired as
provided in Section 6.1(g) of the Plan. To the extent not
exercised, installments shall accumulate, provided that the
Option shall expire in any event on the Expiration Date. To
the extent that any installment or part of any installment of the
Option may not be exercised as provided for above because
shares of Stock are not registered under the Securities Act of
1933 or the issuance of Stock, in the opinion of counsel to the
Company, is not exempt from registration, then such
installment or part of such installment shall become
exercisable when shares of Stock first become registered or
the issuance of shares of Stock may be exempt, but in no
event prior to the times set forth above or after the Expiration
Date.
(c) Notwithstanding paragraph (b) of this Agreement,
the Option shall become exercisable commencing on the date
of a "change of control" of the Company under the terms and
conditions specified in Section 9.12 of the Plan.
<PAGE>
(d) The Option shall not be transferable by the
Employee otherwise than by will and the laws of descent and
distribution. During the Employee's lifetime, the Option shall
be exercisable only by the Employee. Any attempt by the
Employee to transfer, assign, pledge, hypothecate or otherwise
dispose of, or any attempt to subject to execution, attachment
or similar process, any part of the Option, contrary to the
provisions of the Plan and this Agreement shall be void and
ineffectual, shall give no right to the purported transferee, and
shall result in the forfeiture of the Option.
(e) Any question concerning Termination of
Employment, Disability, Retirement, or changes in
employment status specified in Section 9.2 of the Plan, shall
be determined by the Committee, whose determination shall be
final.
(f) Nothing contained in this Agreement shall restrict
the right of the Company or any of its Subsidiary corporations
to terminate the Employee's employment at any time, with or
without cause. Termination of Employment, whether by the
Company or any of its Subsidiary corporations or otherwise,
and regardless of the reason therefore, shall have the results
provided for in the relevant sections of the Plan and this
Agreement.
(g) Subject to the terms and conditions set forth in this
Agreement and in the Plan, the Option shall be exercised by
notice to the Plan administrator as designated from time to
time by the Company. Information concerning the procedures
and requirements for exercising the Option shall be made
available to the Employee on or before the first date on which
any portion of the Option becomes exercisable.
(h) The date of the exercise of the Option with respect
to any particular shares shall be the date on which the notice
and payment, as specified by the Plan administrator, shall be
received by the Company or its agent.
<PAGE>
[(i) In the event that the Employee tenders Stock in
full or partial payment for the exercise of the Option, a
Replacement Option to purchase that number of shares of
Stock equal to the number of shares tendered shall
immediately and automatically be issued to the Employee. If
the Employee has tendered Stock in payment of any
withholding tax obligation incurred upon exercise of the
Option, the number of shares subject to the Replacement
Option shall be increased by the number of shares of Stock
tendered in payment of such tax. The purchase price of the
stock subject to the Replacement Option shall be equal to the
closing price of the Stock on the New York Stock Exchange
on the date the Option is exercised, as specified in paragraph
(h) of this Agreement. The Replacement Option shall be
exercisable with respect to ____% of the shares on
___________________ and additional installments of ____%,
and ____% on _________________ and ________________.
Each installment shall remain exercisable until the Expiration
Date.]
(j) In addition to the terms and conditions of this
Agreement and the provisions of the Plan, the Option is
subject to execution by the Employee of the attached Non-
Competition Agreement which is hereby incorporated into this
Agreement by reference.
<PAGE>
In consideration of the Option covered by this Agreement, and
for other good and valuable consideration, the parties hereto
indicate their agreement by their signatures below.
ALEXANDER & ALEXANDER SERVICES INC.
_____________________________________________
Pursuant to Section 4.5 of the Plan, the Employee's right to
the Option covered by this Agreement is subject to execution
of the Agreement. Please indicate acceptance of the Option
covered by this Agreement, subject to the restrictions and
upon the terms and conditions set forth above and in the Plan,
by executing this Agreement and the attached Non-
Competition Agreement (in duplicate) and immediately
returning to ________________________________ the
enclosed duplicate originals (one copy). It will be assumed
that the Option has been declined if acceptance has not been
received within thirty (30) days of the receipt of this
Agreement.
Accepted & Agreed to:
___________________________________________
Employee's Signature Date
Exhibit 5.1
[LETTERHEAD OF A&A]
July 7, 1995
Board of Directors
Alexander & Alexander Services Inc.
1185 Avenue of the Americas
New York, NY 10036
Re: Alexander & Alexander Services Inc.
1995 Long-Term Incentive Plan
Gentlemen:
I am General Counsel of Alexander & Alexander Services
Inc., a Maryland corporation (the "Company"), and have acted
as counsel for the Company in connection with the
Registration Statement on Form S-8 (the "Registration
Statement") to be filed under the Securities Act of 1933, to
register 4,700,000 shares of the Company's Common Stock,
$1.00 par value per share (the "Shares"), to be issued from
time to time by the Company pursuant to the 1995 Long-Term
Incentive Plan, (the "1995 Plan").
In connection with the foregoing, I have examined the
originals or copies of such corporate records, documents,
certificates and other instruments as I have deemed necessary
or appropriate for the purposes of rendering this opinion.
Based on the foregoing, it is my opinion that the Shares, when
issued and delivered as contemplated by the 1995 Plan, will be
validly issued, fully paid and non-assessable.
<PAGE>
The foregoing opinions are limited to the laws of the state of
Maryland and I do not express any opinion herein concerning
any other law. I hereby consent to the filing of this opinion
as an exhibit to the Registration Statement. In giving this
consent, I do not thereby admit that I am within the category
of persons whose consent is required under Section 7 of the
Securities Act of 1933.
Very truly yours,
/s/ Albert A. Skwiertz, Jr.
Albert A. Skwiertz, Jr.
Vice President
and General Counsel
ht:Z:WP:FORMS8/95PLAN
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We hereby consent to the incorporation by reference in
this Registration Statement of Alexander & Alexander
Services Inc on Form S-8 of our report dated February
15, 1995 (February 28, March 16 and 27, 1995 with
respect to certain information in Notes 2,5,8 and 14),
appearing in the Annual Report on Form 10-K/A of
Alexander & Alexander Services Inc. for the year ended
December 31, 1994.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Baltimore, Maryland
July 7, 1995
