Exhibit 10.9
MARKEL CORPORATION
EMPLOYEE STOCK PURCHASE AND BONUS
PLAN
This document provides information
about a total of 100,000 shares of the Common Stock, no par value
(“Common Stock”), of Markel Corporation (the
“Company”) which may be acquired by employees and
Directors of the Company and its subsidiaries under the
Company’s Employee Stock Purchase and Bonus Plan (the
“Plan”). This document also provides information about
a Loan Program (the “Loan Program”) to facilitate
purchases of shares of the Company’s Common Stock under the
Plan. Under the Loan Program an eligible participant may borrow an
amount equal to the full purchase price of shares of Common Stock
purchased under the Plan (a “Loan”).
THIS DOCUMENT CONSTITUTES PART OF
A PROSPECTUS
COVERING SECURITIES THAT HAVE
BEEN
REGISTERED UNDER THE
SECURITIES
ACT OF 1933 (the “1933
Act”).
DATE: November 20,
2008
INTRODUCTION TO THE
PLAN
The Company has adopted the Markel
Corporation Employee Stock Purchase and Bonus Plan in a
continuation of the Company’s efforts to encourage share
ownership by employees and Directors. The Plan provides an easy
method for making purchases of the Company’s Common Stock and
also encourages share ownership by providing a share bonus based on
the net increase in the number of shares of Common Stock purchased
under the Plan by an employee or Director in a given year. A
description of the Loan Program feature of the Plan begins on page
6. The Plan is not subject to the Employee Retirement Income
Security Act of 1974 (“ERISA”) and will be administered
by the Company’s Human Resources Department in Glen Allen,
Virginia. You may obtain additional information about the Plan and
its administration by contacting Human Resources at
(804) 747-0136.
PLAN ELIGIBILITY
All full-time and part-time
employees of the Company or its designated subsidiaries are
eligible to participate in the Plan. Subject to certain conditions,
non-employee Directors of the Company are also eligible to
participate. An eligible Participant may elect to participate in
the Plan by completing an enrollment form (available from your
Human Resources Department or on the Company Intranet) and an IRS
W-9 or W-8 Form (also available from your Human Resources
Department or on the Company Intranet).
An eligible Participant may elect to
participate at any time, may make changes in the amount of
deductions at any time and may also terminate participation at any
time by sending written instructions directly to the Human
Resources Department. Elections will become effective as soon as
practicable following the receipt of the election or change form by
the Human Resources Department.
Participation in the Plan will
automatically terminate in the payroll period following the date an
employee ceases to be a full-time or part-time employee or for
Directors, on the date a Director ceases to serve as a Director of
the Company.
NON-EMPLOYEE DIRECTOR
PARTICIPANTS
Non-employee Directors of the
Company may participate in the Plan subject to the following
conditions: (i) shares purchased under the Plan and Awards
made under the Plan must be held at least six months before they
may be withdrawn from the Plan or otherwise sold or disposed of by
the Director (the Director’s election to participate in the
Plan authorizes the imposition of transfer restrictions as
necessary to implement this provision); (ii) stock purchases
made by a Director under the Plan may not exceed the amount of
annual fees paid to the Director
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by the Company (including any incentive payments
under the Loan Program); and (iii) if a Director ceases
participation in the Plan, he or she may not participate again for
at least six months. Directors may no longer receive new loans
under the Loan Program.
All other applicable plan provisions
apply to a non-employee Director’s participation in the
Plan.
METHOD FOR MAKING STOCK
PURCHASES
At the time of enrollment an
eligible Participant will specify the amounts to be invested and
the Company will regularly deduct the specified amount from the
Participant’s pay. The Participant may also elect to purchase
shares other than by payroll deduction provided each such purchase
is for an amount of at least $500/£300. Deductions or
contributions made in currencies other than U.S. Dollars will be
converted by the Company into U.S. Dollars at the then existing
exchange rate as reasonably determined by the Company. Amounts
contributed will be combined with all the money contributed by
other Participants, if any, and then sent to the stock plan record
keeper (the “Record Keeper”), who will then forward the
amounts to one or more brokers (collectively the “Investing
Broker”) to be used to purchase Common Stock at market prices
current at the time of purchase. Purchases may be made on the open
market or directly from the Company. The amount of all
Participants’ deductions or contributions will be forwarded
by the Company to the Record Keeper at least once a payroll cycle
for payroll deduction purchases and as soon as practicable for lump
sum and Loan Program purchases. Purchases will be made by the
Record Keeper, upon receipt of the funds, no less frequently than
once a payroll cycle for payroll deduction purchases and as soon as
practicable for lump sum and Loan Program purchases. The purchase
price for a Participant’s stock will be determined by the
average of the market prices for the Common Stock purchased for all
Participants in connection with the same purchase order placed by
the Record Keeper.
Each Participant must specify on the
Enrollment Form the amount to be withheld from his or her gross
paycheck (multiples of $/£5, minimum of $25/£15 per pay
period), and such deductions will remain in effect until the
Participant files a new Enrollment Form or elects to terminate
deductions.
The current Record Keeper is AST
Equity Plan Solutions, a division of American Stock
Transfer & Trust Company, and the current Investing Broker
is Wachovia Securities.
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FEES AND EXPENSES
The Company will pay the Investing
Broker’s fees for stock purchases made for Participants. The
Company will also pay for the cost of administering the stock bonus
feature of the Plan described below. The Investing Broker fees and
other charges in connection with sales, or in connection with
purchases of Common Stock or other securities not made under the
Plan will be payable directly by the Participant ordering such
transactions.
PARTICIPANTS’ ACCOUNTS WITH
THE RECORD KEEPER
The Record Keeper will open and
maintain an individual account for each Participant and will make
purchases of Common Stock for the Participant’s account using
deductions and contributions made for the Participant.
Participants’ accounts will be credited with amounts that
would represent “fractional shares.” Under this
feature, cash amounts which are not sufficient to purchase whole
shares will be credited to a Participant’s account as
fractional interests. Certificates for fractional shares will not,
however, be issued. Upon sale or distribution, a Participant will
receive cash for such fractional interests based on the then
current market price of the Common Stock as determined by the
Record Keeper.
Each Participant will receive a
statement each quarter as long as there is a balance in his or her
account and all notices of meetings, proxy statements and any other
material distributed by the Company for the benefit of its
stockholders. A Participant may call the Record Keeper from the
U.S. toll-free at 866-709-7704 or from the U.K. at
(718) 921-8348 to obtain certain account information and
assistance. A Participant may also access certain account
information online by visiting the Record Keeper’s internet
site at www.astepsinc.com . These procedures may be changed
in the future. The Company will not be responsible for keeping
records with respect to the Plan other than for payroll purposes
and for purposes of determining the Stock Bonus Awards described
below. All other record keeping will be done by the Record Keeper.
The Company may receive information about a Participant’s
account, including purchases and sales, under the Plan.
STOCK BONUS AWARDS
Participants will receive a stock
bonus of ten percent of the net increase in shares of Common Stock
purchased under the Plan during a given year (a “Stock Bonus
Award”). Stock Bonus Awards will be based on the net number
of shares of Common Stock purchased from January 1 through
December 31 of a given year and will be issued to or on behalf
of a Participant not later than March 31 following the end of
the year. An employee will not receive a Stock Bonus Award unless
he or she is an eligible Participant not on probation on the date
the Stock Bonus Award is made. Stock Bonus Awards will not be
counted as an increase in the number of shares purchased by a
Participant during a calendar year.
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Unless other arrangements
satisfactory to the Company in its sole discretion are made, the
net increase in the number of shares purchased under the Plan will
be based on statements provided by the Record Keeper and the
Company will be entitled to rely conclusively on such statements in
determining Stock Bonus Awards to be made under the Plan. Because
Stock Bonus Awards will be determined by reference to the
statements of the Record Keeper, any requests by a Participant for
the issuance of shares in certificated form may cause those shares
not to be reflected on the statements and accordingly not to be
counted for purposes of determining the Stock Bonus
Award.
No Stock Bonus Award will be made
for an increase in the number of shares of Common Stock held
resulting solely from a subdivision or consolidation of shares, the
payment of a stock dividend, a stock split or other change in
capitalization. Stock Bonus Awards will be appropriately adjusted
to reflect the effects of such a change.
SALE OF SHARES
Each Participant may sell all or
part of his or her stock by contacting the Record Keeper directly.
Sales will be processed as soon as practicable on a daily basis. A
Participant will be responsible for any sales or brokerage
commission incurred in connection with a sale of shares. The right
to receive a Stock Bonus Award may not be sold or
transferred.
Persons who are
“affiliates” of the Company within the meaning of
applicable federal securities laws and regulations (which, in
general, means the executive officers and directors of the Company)
may not resell shares of Common Stock acquired under the Plan in
the absence of an effective registration statement under the 1933
Act or the availability of an exemption from such registration,
such as the one afforded by Rule 144 of the 1933 Act. The
acquisition of shares of Common Stock by executive officers and
non-employee Directors (including the acquisition of shares by
bonus awards) as well as any subsequent resale of such shares may
be subject to Section 16 of the Securities Exchange Act of
1934 (the “1934 Act”) and the rules issued thereunder
regarding “short swing” trading.
TAX CONSEQUENCES OF PLAN
PARTICIPATION
Stock Bonus Awards and Special Stock
Bonus Awards are subject to applicable income withholding
requirements and, unless the Company in its sole discretion accepts
another arrangement for the payment of such withholding, that
withholding will be deducted from the employee’s first
paycheck following receipt of an Award. Stock Bonus Awards received
by non-employee Directors will not be subject to withholding
(unless a Director is subject to back-up withholding) but may need
to be considered by Directors when making estimated tax
payments.
Stock purchases made under the Loan
Program will be made with after tax dollars and will not have a tax
impact on the employee or provide a tax deduction for the
Company.
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LOAN PROGRAM
ELIGIBILITY
The Loan Program is available to all
regular full-time and part-time employees of the Company and its
designated subsidiaries. New Loans under the Loan Program are not
available to (x) Directors and Executive Officers,
(y) employees who are on probation and (z) employees who
are employed (i) to perform a specific assignment,
(ii) for a period of time of limited duration, (iii) at a
location, business unit or division that is being closed, or
(iv) who have failed, when required, to execute and deliver an
Employee Secrecy and Non-Piracy Agreement. New Loans under the Loan
Program are also not available to employees who participated in the
Loan Program or a previous loan program and who have disposed of
their stock when such disposal was not previously approved by the
Company’s Human Resources Department. All requests by
eligible employees to participate in the Program are subject to
approval, disapproval or reductions in loan amount by the Executive
Officers of the Company.
LEVELS OF
PARTICIPATION
In order to participate in the Loan
Program, a participant must agree to borrow a minimum of
$10,000/£6,000. If an employee’s base salary is less
than $50,000/£30,000, the maximum aggregate principal amount
outstanding of all Loans to the employee under the Loan Program
generally will be limited to 50% of the employee’s base
salary. If an employee’s base salary is greater than or equal
to $50,000/£30,000, the maximum aggregate principal amount
outstanding of all Loans available to the employee under the Loan
Program generally will be limited to 100% of base salary. In either
case, the Executive Officers of the Company may, in their sole
discretion and if requested, approve a greater amount up to a
maximum of four times base salary or, under special circumstances,
$1,000,000/£600,000. The aggregate principal amount
outstanding of all Loans to an employee may not exceed
$1,000,000/£600,000 without the approval of the
Company’s Board of Directors or the Compensation Committee of
the Board of Directors.
LOAN TERMS
Amount
The Loan to an employee will be in
an original principal amount equal to $10,000/£6,000 and
increments above that amount of $2,500/£1,500, as selected by
the employee. Loan amounts selected in sterling will be converted
by the Company into, and the Loan will be made in, U.S. Dollars at
the then existing exchange rate as reasonably determined by the
Company. The Loan will be unsecured but will be full recourse to
the employee. This means the Loan will represent an unconditional
promise to repay the principal amount borrowed plus accrued
interest irrespective of the value of the shares of Common Stock
purchased under the Plan. Any unpaid
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principal and interest on the Loan will be due
on April 1 of the tenth year from the year the Loan is made.
Loans may become due and payable at earlier times upon the
occurrence of certain events. See “Other Terms”
below.
Interest
The Loan will accrue interest from
the date on which shares are purchased (“Closing”)
until paid in full at a rate of 3% per year. The interest rate
may increase if any of the shares (including Special Stock Bonus
Awards) acquired under the Loan Program or previous loan programs
are sold, pledged or otherwise transferred except as permitted by
the Plan. The interest rate may also increase upon termination of
employment of an employee who is a “specified employee”
for purposes of Section 409A of the Internal Revenue Code. See
“Other Terms” below
Payments
If the original principal amount of
the Loan is less than $25,000/£15,000, payment must be made
by bi-weekly or monthly payroll deductions, as applicable, which
will begin as soon as practicable after Closing. If the Loan amount
is greater than or equal to $25,000/£15,000, an employee may
elect to make annual payments on March 31 of each year. For
annual payment loans made during the first calendar quarter of the
year the full annual payment will be due on the following
March 31; for annual payment loans made in the second calendar
quarter the first payment due will be 75% of the annual amount; for
annual payment loans made in the third calendar quarter the first
payment due will be 50% of the annual amount and for loans made in
the fourth quarter the first payment due will be 25% of the annual
amount.
Payment amounts, whether bi-weekly,
monthly or annual, will be based on a 3% interest rate per annum
and assuming full amortization of the Loan over a 15-year term. The
Loan will, however, be due and payable in full on April 1 of
the tenth year from the year the loan is made; for example a loan
made in August 2007 will be due and payable on April 1, 2017.
There will be a balloon payment of remaining principal and accrued
interest due at maturity.
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