Exhibit 10.2
[Form of Option Agreement]
ALLEGHANY CORPORATION
DIRECTOR'S STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of April __, 200_, between Alleghany
Corporation, a Delaware corporation ("Alleghany"), and ________________, a
non-employee member of Alleghany's Board of Directors (the "Director").
WHEREAS, in order to encourage increased stock ownership by the
non-employee directors of Alleghany, Alleghany has adopted the Alleghany
Corporation 2005 Directors' Stock Plan (the "Plan").
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the parties hereto hereby agree as follows:
1. Grant. Alleghany hereby grants to the Director an option (the
"Option") to purchase 500 shares (the "Option Shares") of Alleghany
common stock, par value $1.00 per share ("Alleghany Common Stock"),
at $_____ per share (the "Option Price").
2. Manner of Exercise. Subject to the provisions of the Plan, the
Option may be exercised at any time during the period hereinafter
permitted by written notice to Alleghany stating the number of
shares with respect to which it is being exercised and accompanied
by payment of the Option Price (a) in United States dollars by cash
or check, or (b) by tendering to Alleghany shares of Alleghany
Common Stock owned by the Director and having a Fair Market Value
(as defined in the Plan) equal to the cash exercise price applicable
to the Option, or (c) directing Alleghany to withhold the number of
shares issuable upon exercise having a Fair Market Value equal to
the Option Price, or (d) by a combination of United States dollars,
owned shares of Alleghany Common Stock and shares issuable upon
exercise as aforesaid. It shall be a condition to the obligation of
Alleghany to issue shares of Alleghany Common Stock upon exercise of
the Option that the Director (or any other person entitled to
exercise the Option as provided in Paragraph 4 hereof) pay to
Alleghany, upon demand by Alleghany, such amount as may be
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requested by Alleghany for the purpose of satisfying any liability
to withhold federal, state, local or foreign income or other taxes,
and if the amount requested is not paid Alleghany may refuse to
issue shares of Alleghany Common Stock.
3. Timing of Exercise; Term. The Option shall not be exercisable
before the expiration of one year from the date hereof or after the
expiration of ten years from the date hereof and may be exercised
during such period as follows: one-third (33-1/3 percent) of the
total number of shares of Common Stock covered by the Option shall
become exercisable each year beginning with the first anniversary of
the date hereof; provided that the Option shall automatically become
immediately exercisable in full when the Director ceases to be a
non-employee director of Alleghany for any reason other than
resignation as a director prior to the next Annual Meeting
succeeding the date hereof. If the Director resigns as a
non-employee director of Alleghany prior to the next Annual Meeting
succeeding the date hereof, the Option shall terminate
simultaneously with his resignation.
4. Transferability and Sale. To the extent that the Option is not
exercisable, the Option shall not be transferable by the Director
otherwise than by will or the laws of descent and distribution, and
shall be exercisable during his lifetime only by him. To the extent
that the Option is exercisable, the Option may be transferred,
without consideration, to the Director's immediate family members
(i.e., children, grandchildren or spouse), to trusts for the benefit
of the Director's immediate family members and to partnerships in
which the only partners are the Director's immediate family members.
In all cases, the instrument of transfer of the Option shall be
approved by, and shall contain such conditions, restrictions and
agreements relating to any further transfer or exercise of the
Option as may be required by, the general counsel of Alleghany.
5. Requirement of Continuing Service. The Option shall not be
exercisable unless the Director has been, at all times during the
period beginning with the date of grant of the Option and ending on
the date of such exercise, a non-employee director of Alleghany,
except that:
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(A) if the Director shall cease to be such a non-employee director
for reasons other than death and such Option has not terminated or
expired and has not been fully exercised, the person exercising the
Option, at any time within one year of the date the Director ceased
to be a non-employee director but not thereafter (and in no event
after the Option has expired under the provisions of Paragraph 3
hereof), may exercise the Option with respect to any shares of
Common Stock as to which the Option has not been exercised on the
date the Director ceased to be such a non-employee director; and
(B) if the Director shall die and the Option has not been fully
exercised, the person holding the Option may, at any time within one
year after the date of the death of the Director but not thereafter
(and in no event after the Option has expired under the provisions
of Paragraph 3 hereof), exercise the Option with respect to any
shares of Common Stock as to which the Director could have exercised
the Option at the time of his death (in the absence of any permitted
transfer of the Option).
6. No Rights as a Stockholder. The Director (and any person
succeeding to the Director's rights pursuant to this Agreement)
shall have no rights as a stockholder with respect to any shares of
Alleghany Common Stock issuable pursuant to the Option until the
date of the issuance of a stock certificate for such shares to the
Director (or successor). Except as provided in the Plan, no
adjustment shall be made for dividends, distributions or other
rights (whether ordinary or extraordinary, and whether in cash,
securities or other property) for which the record date is prior to
the date such stock certificate is issued.
7. Legality of Issuance. Alleghany shall not be obligated to issue
any Option Shares pursuant to this Agreement unless Alleghany's
counsel shall be satisfied that such issuance will be in compliance
with applicable federal, state and other securities laws.
8. Restrictive Legends on Stock Certificates. Stock certificates
evidencing Option Shares may bear such restrictive legends as
Alleghany's counsel may deem necessary or advisable under applicable
law or pursuant to this Agreement.
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9. Plan. The Option is granted subject to all terms and conditions
of the Plan, which is incorporated herein by reference. In the event
of any inconsistency between the provisions of this Agreement and
the provisions of the Plan, the provisions of the Plan shall govern.
10. Tax Advice. Alleghany makes no warranties or representations
with respect to the income tax consequences of the transactions
contemplated by this Agreement.
11. Acceptance of Terms. By acceptance of this Option, the Director
indicates his acceptance and ratification of, and his consent to,
the terms and conditions of this Agreement, the Plan and any action
taken under the Plan by Alleghany or the Board of Directors of
Alleghany.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
ALLEGHANY CORPORATION
By: ________________________
_____________________________
Director
