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EXHIBIT 10.3
STOCK OPTION AGREEMENT
("B" OPTIONS)
AGREEMENT made this 9th day of May, 1986, between Trenwick Group,
Inc., a Delaware corporation, with offices at 00 Xxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000 ("Trenwick") and Xxxxx X. Xxxxxxx, Xx., an individual with a
business address at 00 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 ("Xxxxxxx").
WITNESSETH:
WHEREAS, Xxxxxxx is the Chairman and Chief Executive Officer of
Trenwick and Trenwick wishes to grant to Xxxxxxx, pursuant to a resolution
adopted by the Board of Directors, a stock option to purchase shares of the
Common Stock of Trenwick (formerly Class A Common Stock and after giving effect
to the fifteen -to-one stock split) on the terms and conditions set forth in
this Agreement.
WHEREAS, such stock option shall not qualify as an incentive
stock option under the Internal Revenue Code.
IT IS THEREFORE AGREED AS FOLLOWS:
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1. GRANT AND EXERCISE OF OPTION
1.1 Trenwick hereby grants Xxxxxxx an option to purchase from
Trenwick 110,852 shares of Common Stock of Trenwick (the "Option Shares") for a
purchase price of $28.80 per share (the "Option"), which price represents at
least the fair market value of the shares as of the date of this Agreement (the
"Grant Date"), determined in good faith by the Board of Directors of Trenwick.
1.2 The Option shall be vested and may be exercised according to
the following vesting schedule:
After Grant Amount of Option
Date Exercisable
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One Year 20%
Two Years 40%
Three Years 60%
Four Years 80%
Five Years 100%
The Board of Directors of Trenwick or a committee designated thereby shall have
the right to accelerate the time periods for the vesting and exercise of the
Option.
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1.3 The Option shall expire 10 years from the Grant Date, i.e.,
May 9, 1996.
1.4 Except as provide in Article 1.5, if Xxxxxxx for any reason
ceases to be a full-time executive officer of Trenwick (whether by voluntary or
involuntary termination), Xxxxxxx shall have thirty (30) days to give notice of
exercise of all or a part of the Option which was vested and exercisable as of
the date of termination. Any part of the Option for which notice of exercise is
not given as required by this Article 1.4 shall expire and cease to exist.
1.5 If Xxxxxxx shall die while still a full time salaried
employee of Trenwick, the amount of the Option vested and exercisable shall be
equal to the amount vested and exercisable as of the next anniversary ("Next
Anniversary") of the Grant Date and Xxxxxxx'x representative shall have the
greater of (i) thirty (30) days after the Next Anniversary or (ii) six (6)
months from the date of Xxxxxxx'x death to give notice of exercise of up to that
amount of the Option which would be vested and exercisable as of the Next
Anniversary. Any part of the Option which is not so vested and exercisable and
any part
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of the Option which is so vested and exercisable but for which notice of
exercise is not given as required by this Article 1.5, shall expire and cease to
exist.
1.6 Xxxxxxx or his representative may exercise the Option by
notice to Trenwick within a reasonable time prior to the date of intended
exercise of the Option. Such notice shall describe the Option exercised and
state the number of Option Shares as to which it is exercised. Any exercise of
the Option shall be effective on the date specified in the notice, provided that
the full purchase price or an effective Exercise Notice has been tendered with
the notice of exercise. Payment of the purchase price shall be made in cash
(including check, bank draft or money order); by the delivery of full shares
of Trenwick Common Stock, valued at their Fair Market Value, provided that
Xxxxxxx has held such shares for at least six (6) months; by promissory note
(containing such terms and conditions as the Board of Directors or a committee
designated thereby may in its discretion determine); or by any combination
thereof. Xxxxxxx may pay any taxes which Trenwick is required to collect or
withhold with respect to the issue or transfer of Common Stock underlying the
Option by the delivery to Trenwick of full shares
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of Trenwick Common Stock, valued at their Fair Market Value, provided that
Xxxxxxx has held such shares for at least six (6) months, or by directing
Trenwick to withhold full shares of Trenwick Common Stock, valued at their Fair
Market Value, from the shares issuable upon exercise of the Option. For
purposes of this Section,
(i) the term `Exercise Notice' shall mean a written notice
from Xxxxxxx to Trenwick which (A) includes Xxxxxxx'x irrevocable election to
exercise all or any portion of the Option and irrevocable direction to Trenwick
to deliver the common stock certificate(s) to be issued upon such exercise
directly to a "broker" or "dealer" (within the meaning of Section 3(a) of the
Securities Exchange Act of 1934, as amended from time to time), and (B) includes
or is accompanied by Xxxxxxx'x irrevocable instructions to the broker or dealer
to (x) promptly sell a sufficient number of shares of such common stock, or loan
Xxxxxxx a sufficient amount of money, to pay the exercise price for the Option
and fund any related withholding tax obligations, and (y) promptly remit such
sums to Trenwick upon the broker's or dealer's receipt of the certificate(s);
and
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(ii) the term `Fair Market Value' shall mean the closing
market price per share of Trenwick's Common Stock on the Nasdaq National Market
on the business day immediately prior to the date of the exercise of the Option
or, if such stock was not traded on that day, on the next preceding day on which
it was traded.
2. SUCCESSORS AND ASSIGNS
2.1 This Agreement shall be binding on, and shall inure to the benefit
of, Trenwick and Xxxxxxx and their respective heirs, legal representatives,
successors and assigns; provided, however, that Xxxxxxx may not pledge,
hypothecate or otherwise encumber or permit any liens to attach to the Option
granted to Xxxxxxx under this Agreement nor shall he sell, transfer or dispose
of any of his interest in the Option.
3. ARBITRATION
3.1 In the event of any dispute between Xxxxxxx and Trenwick, such
dispute shall be settled in New York, New York, in accordance with the rules
then obtaining of the American
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Arbitration Association, and judgment upon the award rendered may be entered in
any court having jurisdiction thereof.
4. AGREEMENT TO PERFORM NECESSARY ACTS
4.1 Each party to this Agreement agrees to perform any further acts
and execute and deliver any documents that may be reasonably necessary to carry
out the provisions of this Agreement.
5. AMENDMENTS
5.1 The provisions of this Agreement may be waived, altered, amended,
or repealed, in whole or in part, only on the written consent of all parties to
the Agreement.
6. VALIDITY OF AGREEMENT
6.1 It is intended that each section of this Agreement shall be viewed
as separate and divisible, and in the event that any section shall be held
invalid, the remaining sections shall continue in full force and effect.
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7. NOTICE
7.1 All notices, requests, demands and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given on the
date of service if served by telex, cable or personally on the party to whom
notice is given, or within five (5) days after mailing, if mailed to the party
to whom notice is to be given, by first class mail (airmail, if international),
registered or certified, postage prepaid, and properly addressed to the party,
if to Trenwick or Xxxxxxx, at the address set forth on the first page of this
Agreement or any other address that Trenwick or Xxxxxxx may designate by written
notice to the other party.
8. GOVERNING LAW
8.1 This Agreement shall be construed in accordance with the laws of
the State of Delaware.
9. COUNTERPARTS
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9.1 This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXX X. XXXXXXX, XX.
TRENWICK GROUP INC.
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