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EXHIBIT 10(o): DESCRIPTION OF COMPENSATION ARRANGEMENTS WITH
EXECUTIVE OFFICERS
Item 1: With respect to June E. Drewery, Senior Vice
President and Chief Knowledge and Technology Officer with an
employment date of May 28, 1996, LNC agreed that if, during
the first three years of her employment, LNC terminated her
employment for other than cause or causes a significant
diminution in her job responsibilities, she will be eligible
for one year of severance at her then current base salary.
****************
Item 2: With respect to Richard C. Vaughan, Executive Vice
President and Chief Financial Officer, LNC agreed to pay one
year of his then base salary if the corporation terminates his
employment between June 18, 1996 and age 55.
****************
Item 3: Jeffrey J. Nick was granted performance units in the
Cannon Lincoln Limited Phantom Stock Plan on May 12, 1993:
Cannon Lincoln Limited Phantom Stock Plan
1. Purpose
The Purpose of the Cannon Lincoln Limited Phantom Stock
Plan (the "Plan") is to provide deferred compensation to
Jeffrey J. Nick, an employee of Lincoln National Corporation
(the "Company"). It is recognized by the management of the
Company that Mr. Nick has certain management responsibilities
with respect to Cannon Lincoln Limited ("Cannon") and the Plan
is established to reward Mr. Nick to the extent that Cannon
increases in value to the Company. The deferred compensation
provided under the Plan shall be based on the increased value
of Performance Units, the value of which is related to the
value of the common stock of Cannon.
2. Administration
The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors of the
Company. Subject to the provisions of the Plan, the
Committee shall have authority to interpret the Plan, to adopt
and revise rules and regulations relating to the Plan, to
determine the conditions subject to which any awards may be
made or payable, and to make any other determinations which it
believes necessary or advisable for the administration of the
Plan. Determinations by the Committee shall be made in its
sole discretion by majority vote and shall be final and
binding on all parties with respect to all matters relating to
the Plan.
3. Grant and of Performance Units
Mr. Nick is hereby granted 15,000 Performance Units on
May 12, 1993. All such Performance Units shall be credited to
a Performance Unit Account (the "Account") established and
maintained for Mr. Nick. The Account of Mr. Nick is the
record of Performance Units granted to him under the Plan and
is solely for accounting purposes. The establishment of the
Account shall not require a segregation of any Company assets.
Subsequent to the date of grant each Performance Unit shall be
valued by the Committee, in the manner provided by Paragraph
6. The value of each Performance Unit on the date of
grant shall be 29.73 Pounds Sterling.
4. Maturity of Performance Units
Performance Units granted to Mr. Nick shall mature at a
rate of 25% per year beginning on November 1, 1993, and on
each November 1 thereafter so long as his primary place of
employment is the United Kingdom and his is employed by the
Company, one of its subsidiaries or an affiliate. In the
event Mr. Nick is transferred from the United Kingdom prior to
November 1, 1996, all Performance Units that are not matured
shall be forfeited. In the event of Mr. Nick's termination of
employment with the Company due to death, disability or
retirement, prior to November 1, 1996, all Performance Units
shall become fully matured. In the event of the sale of
Cannon prior to November 1, 1996, all nonmatured shares shall
become 100% vested.
5. Payment for Performance Units
Upon the earlier of January 1, 1997, and the termination
of Mr. Nick's employment with the Company and all of its
subsidiaries and affiliates for any reason, Mr. Nick shall be
entitled to receive from the Company an amount, with respect
to each then mature Performance Unit. The amount
payable for each Performance Unit shall be determined as
follows: (a) the value of each Performance Unit shall be
determined by the Committee pursuant to Paragraph 6, and (b)
such value shall then be reduced by 29.73 Pounds Sterling.
Mr. Nick will not be entitled to receive any increase in the
value of Performance Units with respect to the period between
the valuation of the Performance Unit and the payment under
the Plan.
Prior to the later of November 1, 2002, and his
termination of employment, Mr. Nick may request a cash out of
all or a specified number of mature Performance Units by
filing a written request with the Committee by the November 1,
prior to the January 1, on which he designates that he
requests a valuation and cash out of a specified number of the
Performance Units. In no event may he request a cash out
relating to less than 1,000 Performance Units at any one
time. In a cash out, he shall receive an amount for each
Performance Unit as provided above. All Performance Units
not cashed out on or before January 1, 2003, shall be
forfeited.
Payment for the appreciation in value of the Performance
Units shall be made in U.S. currency in a single lump sum
payment. The conversion rate shall be the higher of $1.50
(U.S.) per pound sterling and the rate of exchange for the
first business day after the valuation date as quoted for
that day by National Westminster Bank. Payment shall be made
by the March 15 following the valuation.
Notwithstanding any other provision of the Plan, all
rights to any payments hereunder will be discontinued and
forfeited and the Company will have no further obligation
hereunder to Mr. Nick, if either of the following
circumstances occur: (i) he is discharged from employment with
the Company for cause; or (ii) he performs active willful
malfeasance or gross negligence in a matter of material
importance to the Company.
The Committee shall have sole discretion with respect to
the application of the provisions of this paragraph and such
exercise of discretion shall be conclusive and binding upon
Mr. Nick and all other persons. In addition, the Committee
may require a cash out of all outstanding Performance Units in
the event that the Company transfers more
than 50% of its interest in Cannon.
6. Valuation of Performance Units
The Valuation of a Performance Unit shall be determined
as follows: each Performance Unit shall be equal to the per
share price of common stock of Cannon as determined in
accordance with the valuation procedures contained in the
Cannon Lincoln Employee Share Option Scheme on each January
1; provided, however, that in the event of Mr. Nick's
termination of employment prior to January 1, 1997, other than
on account of death or disability, fifty percent of the
Performance Units shall be valued as of the first day of the
calendar year in which the termination occurs, and the
other fifty percent shall be valued as of the first day of the
calendar year immediately following the calendar year in which
the termination occurs; and further provided, however, that in
the event of a cash out after the Company transfers more than
50% of its interest in Cannon, the value of each Performance
Unit shall be equal to the per share price of common stock of
Cannon paid by the transferee.
7. Forfeiture of Performance Units
If the employment of Mr. Nick with the Company and all of
its affiliates and subsidiaries is terminated for any reason
other than death, disability or retirement, or if, the owners
of a majority of shares of the common stock of Cannon
terminate the business of, or liquidate or dissolve
Cannon, or if substantially all of the assets of Cannon are
sold, or if Cannon merges or consolidates with any other
corporation and Cannon is not the surviving corporation of
such merger or consolidation, then Mr. Nick's rights with
respect to Performance Units shall as of the date of the
occurrence of the event be cashed out in accordance with
Paragraph 5.
8. Changes in Capital and Corporate Structure
In the event of any change in the outstanding shares of
common stock of Cannon by reason of an issuance of additional
shares, recapitalization, reclassification, reorganization,
stock split, reverse stock split, combination of shares, stock
dividend or similar transaction, the Committee shall
proportionally adjust, in an equitable manner, the number of
Performance Units held by Mr. Nick under the Plan. The
foregoing adjustment shall be made in a manner that will cause
the relationship between the aggregate appreciation and
outstanding common stock of Cannon and the increase in value
of each Performance Unit granted to remain unchanged as a
result of the applicable transaction.
9. Nontransferability
Performance Units and any rights and privileges
pertaining thereto may not be transferred, assigned, pledged,
or hypothecated in any manner, by operation of law or
otherwise, other than by will or by the laws of descent
and distribution, and shall not be subject to execution,
attachment, or similar process. In the event of Mr. Nick's
death, payment of any amount due under the Plan shall be made
to the following beneficiary so designated by Mr. Nick:
(Name)
(Relationship)
10. Withholding
The Company shall have the right to deduct from all
amounts paid pursuant to the Plan any taxes required by law to
be withheld with respect to such payment.
11. Voting and Dividend Rights
Mr. Nick shall not be entitled to any voting rights or
entitled to receive any dividends or to have his Account
credited or increased as a result of any dividends or other
distributions with respect to shares of Cannon other than as
provided in paragraph 8, above.
12. Mediation and Arbitration
Any controversy, dispute or question arising out of, in
connection with, or in relation to this Plan or its
interpretation, performance, or nonperformance or any breach
thereof shall be resolved through mediation. In the event
mediation fails to reach a satisfactory conclusion within 30
days after a mediator has been agreed upon or such other
longer period as may be agreed to by Mr. Nick and the Company,
such controversy, dispute or question shall be resolved
through arbitration in accordance with the Center
for Public Resources Rules for Non-Administered Arbitration of
Business Disputes, by a sole arbitrator. The arbitration
shall be governed by the United States Arbitration Act, 9
U.S.C. 2{1-16, and judgement upon the award rendered by the
arbitrator may be entered by any court having jurisdiction
thereof. The place of the arbitration shall be Fort Wayne,
Indiana.
13. Miscellaneous Provisions
Neither the Plan nor any action taken hereunder shall be
construed as giving Mr. Nick any right to be retained in the
employ of the Company. The Plan shall at all times be
entirely unfunded and no provision shall at any time be made
with respect to segregating assets of the Company for payment
of any benefits hereunder. Neither Mr. Nick nor any other
person shall have any interest in any particular assets of the
Company by reason of the right to receive a benefit under the
Plan and Mr. Nick shall have only the rights of a general
unsecured creditor of the Company with respect to any rights
under the Plan. The Committee may by writing, delegate any of
its duties and responsibilities under the Plan to the Chief
Executive Officer of LNC, the Chief Operating Officer of LNC,
or any vice president of LNC.
14. Amendment of the Plan
The Committee may alter or amend the Plan from time to
time. No amendment to the Plan may alter, impair or reduce
the number of Performance Units granted under the Plan prior
to the effective date of such amendment without the written
consent of Mr. Nick.
Lincoln National Corporation
Dated:____________ ___________________________________
By: P. Kenneth Dunsire
Executive Vice President
Dated:____________ ___________________________________
By: Jeffrey J. Nick
*****************
Item 4: Agreement dated January 1, 1997 by and between
American States Financial Corporation and Robert A. Anker:
AGREEMENT
AGREEMENT made as of January 1, 1997, by and between
American States Financial Corporation (hereinafter called
"Company"), an Indiana corporation having its principal place of
business in Indianapolis, Indiana, and Robert A. Anker
(hereinafter called "Employee"):
WITNESSETH:
WHEREAS, Employee desires to render faithful and
efficient service to Company; and
WHEREAS, Company desires to receive the benefit of
Employee's service; and
WHEREAS, Employee is willing to be employed by Company;
and
WHEREAS, Company deems it essential to formalize the
conditions of Employee's employment by written agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter set forth, the parties agree as
follows:
1. Office. Company hereby employs Employee as its
Chief Executive Officer, and Employee hereby agrees to serve
Company in such capacity or in such other capacity as the
Board of Directors of Company may from time to time designate.
2. Term of Employment. Employee's employment shall be
for the "Employment Period," with the term commencing on
January 1, 1997 and ending on December 31, 1997. During the
Employment Period, Employee's employment may be terminated for
Cause as defined in Section 5. Employee's employment may
continue by mutual agreement at the will of Company after the
expiration of the Employment Period or Employee and Employer
may extend this contract by mutual written agreement. During
any such period of at will employment, the provisions of
Sections 12, 15, 16 and 17 of this Agreement shall continue to
apply as if the Employment Period under this Agreement had not
ended.
3. Incapacity. If during the Employment Period,
Employee should be prevented from performing Employee's duties
or fulfilling Employee's responsibilities by reason of any
incapacity or disability that is reasonably expected to
continue for a period of six (6) months or until death, then
Company, in its sole and absolute discretion, may, based on
the opinion of a qualified physician, consider such incapacity
or disability to be total and may on ninety (90) days written
notice to Employee terminate the Employment Period.
4. Death. The Employment Period shall automatically
terminate upon the death of Employee.
5. For Cause. For purposes of this Agreement, Cause
means a determination by the Board of Directors of Company or
the Chief Executive Officer of Lincoln National Corporation
("Lincoln"), made in good faith, without being bound by
Company's progressive discipline policy for employees:
a. that Employee has engaged in acts or omissions
against Company, its parent company, or any of its
subsidiaries constituting dishonesty, intentional breach of
fiduciary obligation or intentional wrongdoing or misfeasance;
b. that Employee has been arrested or indicted in
a possible criminal violation involving fraud or dishonesty;
c. after due consideration and with prior written
notice to the Employee, that Employee has performed poorly;
d. that Employee has failed or refused to perform
Employee's duties set forth in paragraph 6 hereof, or
willfully failed to execute any reasonable instruction
relating to Employee's duties with Company given him by the
Board of Directors of Company, or the Chief Executive Officer
of Lincoln, if either such failure or refusal is not corrected
within ten (10) business days after Employee's receipt of
written notification of such failure or refusal; or
e. that Employee has intentionally and in bad
faith acted in a manner which results in a material detriment
to the assets, business or prospects of Lincoln, Company or
the subsidiaries or affiliates of either of them.
6. Responsibilities. During the period of Employee's
employment, Employee shall devote Employee's entire business
time and attention, except during reasonable vacation periods,
to, and exert Employee's best efforts to promote, the affairs
of Company, and shall render such services to Company as may
be required by the Board of Directors of Company consistent
with services required by virtue of the office set forth in
paragraph 1 hereof and shall perform such other services as
may now or hereafter be specified or enumerated in the By-Laws
of Company consistent with such office. While employed by
Company, Employee shall not, directly or indirectly, alone or
as a member of a partnership or association, or as an officer,
director, advisor, consultant, agent or employee of any other
company, be engaged in or concerned with any other duties or
pursuits requiring Employee's personal services except with
the prior written consent of the Board of Directors of
Company. Nothing herein contained shall preclude the
ownership by Employee of stocks or other investment
securities. Nothing herein contained shall preclude service
by Employee on boards of directors or trustees of charitable
or other not-for-profit entities not engaged in any business
competitive with the business of Company so long as such
service does not materially interfere with Employee's
responsibilities to Company.
7. Compensation. During the Employment Period,
Employee shall receive a base salary that shall be at an
annual rate of not less than $565,000 payable in accordance
with the payroll practices of Company as from time to time in
effect with regard to executive personnel.
8. Benefit Plans and Programs. During the Employment
Period, Employee shall be eligible for participation in all
benefit plans and programs made available by Company to its
employees generally (other than Company's generally available
severance program) and in those benefit plans and programs
applicable to executives of the Employee's level to the extent
Employee is not eligible for comparable benefits from Lincoln.
The bonus payable by Company for periods which include the
Employment Period will be payable under the terms of Company's
Executive Performance Incentive Compensation Plan ("EPIC").
Employee's performance goals and target and maximum awards are
set out in Exhibit A. To the extent an EPIC bonus is payable
in the form of stock, phantom stock, or stock units, it shall
be awarded and payable in the form of (or, in the case of
phantom stock or stock units, measured by reference to) Common
Stock of Company.
Employee shall be entitled through March 31, 1998 to the
benefit of Company's standard relocation package for
executives at Employee's level.
9. Stock Options and Restricted Stock Awards. Among
the benefit plans and programs to be made available by Company
to certain of its employees is Company's Stock Option Plan.
Any options granted to Employee shall be options for Company
Common Stock at the appropriate level for his position.
10. Payments after Termination. If Employee's
employment with Company terminates at the end of the
Employment Period referred to in Section 2 hereof for reasons
other than incapacity or death or Cause, Employee shall be
entitled to all the following upon execution of a release
satisfactory to Company and Lincoln ("Release"):
a. Company shall pay to the Employee $600,000 in
26 equal biweekly installments;
b. Employee shall become entitled to EPIC bonus
payments as set out on Exhibit A;
c. Employee shall be entitled to receive an early
retirement benefit without adjustment for Employee's age;
d. Employee shall be entitled to outplacement
benefits through Right & Associates' standard program for
executives or a similar firm approved by Company; and
e. Employee shall be entitled to executive
financial planning benefits for calendar year 1998.
In the event that Employee's employment terminates prior to
the end of the Employment Period due to death or disability,
the amounts specified in subsections a, b and c above shall
still be payable. If Employee's employment terminates during
the Employment Period for the reasons specified in Section 5c,
upon execution of a Release, Employee shall be entitled to
receive $285,000 in 26 equal biweekly installments and the
benefit specified in subsection c above shall also be payable.
If Employee's employment terminates during the Employment
Period for the reasons specified in Section 5b, upon execution
of a Release, the Employee shall be entitled to receive
$285,000 in 26 equal biweekly installments. The amounts
provided under subsections b and c above shall be payable only
if the indictment or charges are dismissed or Employee is
acquitted as a result of a trial.
11. Expenses. During the Employment Period, Company
shall allow Employee reasonable expense of travel and business
entertainment incurred in the performance of Employee's duties
hereunder, subject to the rules and regulations adopted by
Company for the handling of such business expenses.
12. Other Obligations of Employee. All payments to the
Employee provided for under Section 10 of this Agreement or
under the Executive Salary Continuation Plan of Company, the
exercise of any options for stock of Company and the vesting
or payment of any restricted stock (or restricted phantom
stock or restricted stock units) of Company or Lincoln shall
be subject, to the extent permitted by law, to Employee's
compliance with the following provisions. (For purposes of
this Section, Company and Lincoln shall be deemed to include
their affiliates and subsidiaries.)
a. Assistance in Litigation. At all times during
and after the term of this Agreement, Employee shall, upon
reasonable notice, furnish such information and proper
assistance to Company or Lincoln as may reasonably be required
by Company or Lincoln in connection with any litigation in
which it is, or may become, a party.
b. Confidential Information. At all times during
and after the term of this Agreement, Employee shall not
knowingly disclose or reveal to any unauthorized person any
trade secret or other confidential information relating to
Company or Lincoln or to any of the businesses operated by
them. Employee acknowledges, understands and agrees that any
amounts payable under this Agreement that have not been paid
shall be immediately forfeited in the event Employee divulges
or appropriates to Employee's own use or the use of any other
person or organization, except as otherwise ordered by a court
of competent jurisdiction, any secret or confidential
information or knowledge pertaining to the businesses of
Company or Lincoln obtained during Employee's employment with
Company or Lincoln. Employee recognizes and acknowledges that
(1) all plans, systems, methods, designs, programs,
procedures, books and records relating to the operations,
practices and personnel of Company or Lincoln (whether
instituted or commenced prior or subsequent to the date
Employee was first employed by Company or Lincoln and whether
or not devised, created or initially instituted by Company or
Lincoln) and (2) all other records, documents and information
concerning the business activities, practices and procedures,
as they may exist from time to time, constitute and will
constitute secret or confidential information or knowledge
pertaining to the businesses of Company or Lincoln. The
information and material described in this paragraph shall
constitute secret or confidential information or knowledge
only to the extent such information and material has remained
confidential (except for unauthorized disclosures) and except
as otherwise ordered by a court of competent jurisdiction.
The provisions of this Section 12b shall not be construed as
prohibiting or limiting Company or Lincoln from pursuing any
other remedies for the divulgence or appropriation or
threatened divulgence or appropriation of secret or
confidential information or knowledge relating to Company or
Lincoln.
c. Non-competition. During the term of Employee's
employment and for a period of three (3) years following the
termination of Employee's employment, Employee will not act as
a director, officer, employee, consultant or advisor to, nor
directly or indirectly become associated with any person,
firm, company or corporation where his activities relate to
any business competitive with Company or Lincoln; provided,
however, that this prohibition shall not extend to the
Property Casualty Reinsurance business. Employee specifically
acknowledges that the geographic region to which this
restriction applies is the same geographic region in which
Employee personally was present and performed services for
Lincoln during the past two (2) years. This restriction does
not prohibit Employee from buying, selling, or otherwise
trading in the securities of any corporation which is listed
on any recognized securities exchange, and he may engage in
any other business activities not competitive with Company or
Lincoln. Neither Company nor Lincoln will object to
Employee's service on the boards of other companies as a
Director so long as there is no conflict with the terms of
this subsection or subsection b above or e below. Employee
may request an interpretation by the Chief Executive Officer
of Lincoln of the applicability of this provision to specific
activities in which Employee contemplates engaging.
d. Non-solicitation. During the term of
Employee's employment and for a period of three (3) years
following the termination of the Employee's employment,
Employee shall not directly or indirectly solicit or endeavor
to entice away from Company or Lincoln any person who is
employed with Company or Lincoln.
e. Change in Control. During the term of
Employee's employment and for a period of three (3) years
following the termination of Employee's employment, Employee
agrees that neither he nor any entity directly or indirectly
controlled by him will directly or indirectly participate in a
proscribed activity. A "proscribed activity" shall mean
either (1) soliciting others to invest in the Common Stock of
Lincoln for the purpose of effecting an acquisition of control
of Lincoln or Employee's directly investing in more than 1% of
the Common Stock of Lincoln or (2) using confidential
information (as described in subparagraph b above) to assist
any person, entity or group of persons which intends to or
does attempt to effect an acquisition of control of Lincoln.
The term "Control" shall be defined for purposes of this
subparagraph to have the meaning of control contained in Ind.
Code Ann. Sec. 27-1-23-1(e) (West, 1996).
f. Consideration and Legal Action. As
consideration for the receipt of the amounts payable under
this Agreement, Employee acknowledges, understands and agrees
that any such amounts that have not been paid will be
immediately forfeited if Employee breaches any provision of
this Section 12 during the term of Employee's employment and
for a period of three (3) years following the termination of
Employee's employment. Employee acknowledges that the
restrictions contained in this Section 12 b, c, d and e are
reasonable and necessary to protect the legitimate interests
of Company and Lincoln; and that, therefore, Company or
Lincoln shall be entitled to seek preliminary and permanent
injunctive and other equitable relief (including, without
limitation, and equitable accounting of all earnings, profits
and other benefits arising from such violation) in any court
of competent jurisdiction, which rights shall be cumulative
and in addition to any other rights or remedies to which
Company or Lincoln may be entitled. Employee hereby
irrevocably consents to the personal jurisdiction over him of
the courts of the State of Indiana and of any Federal court
located in such state in connection with any action or
proceeding arising out of or relating to this Section 12 or
any related breach of this Agreement involved in such action
or proceeding and further agrees, and shall not contest, that
the proper venue for filing and maintaining any such action or
proceeding shall be in the State of Indiana.
13. Effect of Termination of the Employment Period.
Except as specifically provided in Sections 2, 10 and 12, this
Agreement shall terminate upon the termination of the
Employment Period. The obligations of the Employee under
Section 12 and the rights and remedies available to Company
under that Section for any breach of such obligations,
however, shall in all events survive.
14. Notice. Any notice required to be given by Company
hereunder to Employee shall be in proper form and signed by an
Officer or Director of Company. Until one party shall advise
the other in writing to the contrary, notices shall be deemed
delivered:
a. to Company if delivered to Lynda Van Kirk, Vice
President, with a copy to Tom Ober, General Counsel, or, if
mailed, certified or registered mail, postage prepaid, to the
above-named individuals at American States Insurance Company,
500
North Meridian Street, Indianapolis, IN 46204; and a copy to
George Davis, Senior Vice President, Lincoln National
Corporation, 200 East Berry Street, Fort Wayne, IN 46802.
b. to Employee if delivered to Employee, or if
mailed to him, certified or registered mail, postage prepaid,
at 3603 West Hamilton Road, Fort Wayne, IN 46804.
15. Alternative Dispute Resolution. With the exception
of actions under Sections 12b, c, d and e of this Agreement,
any controversy, dispute or questions arising out of, in
connection with or in relation to this Agreement or its
interpretation, performance or nonperformance or any breach
thereof shall be resolved through mediation. In the event
mediation fails to resolve the dispute within sixty (60) days
after a mediator has been agreed upon or such other longer
period as may be agreed to by the parties, such controversy,
dispute or question shall be settled by arbitration in
accordance with the Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes, by a sole
arbitrator. The arbitrator shall be governed by the United
States Arbitration Act, 9 U.S.C. Sec. 1-16, and judgment upon
the award rendered by the arbitrator may be entered by any
court having jurisdiction thereof. The place of the
arbitration shall be Indianapolis, Indiana. In any such
controversy or dispute, regardless of the party by whom such
controversy or dispute is initiated, Company shall, if
written notice is given and upon presentation of appropriate
vouchers, pay all legal expenses, including reasonable
attorneys' fees, court costs and ordinary and necessary
out-of-pocket costs of attorneys, billed to and payable by the
Employee in connection with the bringing, prosecuting,
defending, litigating, negotiating, or settling such
controversy or dispute; provided, however, that such expenses,
fees and costs shall not be paid by Company unless and until
the Employee is successful on the merits; further provided,
however, that in the event such controversy or dispute is
settled, the settlement agreement shall provide for the
allocation of such expenses, fees and costs between the
parties.
16. Benefit. This Agreement shall bind and inure to
the benefit of Company and the Employee, their respective
heirs, successors and assigns.
17. Conditions. This Agreement is effective upon the
approval of the Agreement by the non-interested members of the
Board of Directors of Company or its designated compensation
committee. Should the aforementioned conditions not be
satisfied, this Agreement shall become null and void and shall
have no effect whatsoever on any previous agreement, expressed
or implied, between Employee and Company.
18. Effect on Previous Agreements. Should this
Agreement become effective, it will supersede all employment
related agreements between Employee and Company or Lincoln or
their affiliates or subsidiaries.
19. Amendments. This Agreement may only be amended by
the written agreement of Employee and Company with the written
approval of Lincoln.
20. Severability. In case any part of this Agreement
shall be invalid, illegal or otherwise unenforceable, the
validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired
thereby. In lieu of any such illegal, invalid or
unenforceable provision, there automatically will be added as
part of this Agreement a legal, valid and enforceable
provision as similar in terms and intent to such illegal,
invalid or unenforceable provision as possible.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
American States Financial Corporation
By:
Name: William J. Lawson
Title:
Employee
By:
Name: Robert A. Anker
Title:
EXHIBIT A
Executive Performance Incentive Compensation Plan
Performance Threshold Target Maximum
Cycle
1996-1997 $174,825 $436,230 $765,900
These numbers were established taking into account Employee's
actual Employment Period with Company during the Performance
Cycle.
If employment terminates as set out in Section 10, Employee
shall be entitled to receive a pro rata award for the 1997-1999
EPIC cycle.
****************
ITEM 5: LNC's ongoing benefit obligations to Robert A. Anker
as of and after the transfer of his employment from LNC to
American states as set forth in letter dated January 10, 1997:
January 10, 1997
Mr. Robert A. Anker
Chairman & CEO
American States Insurance Company
500 North Meridian Street
Indianapolis, IN 46204
This letter outlines LNC's ongoing benefit obligations to you
as of and after the transfer of your employment from LNC to
American States. This is just a summary and is not intended
to modify the terms of your employment agreement with American
States nor to modify the terms of the specific plans.
LNC EVSP
The LNC Compensation Committee has agreed to pay out all
performance cycles in which you currently participate on
a prorata basis based on your service as LNC COO through
12-31-96. This means that in 1997 you will be eligible
for a full award for the 1994-1996 cycle. In 1998 you
will be eligible to receive 2/3 of the award for the
1995-1997 cycle. In 1999 you will be eligible to receive
1/3 of the award for the 1996-1998 cycle. These awards
have traditionally been paid in cash and LNC restricted
stock and, as you know, the amount of the award for each
cycle is determined by the Compensation Committee.
LNC Options
Your outstanding LNC stock options will not be affected
by the transfer and will continue to vest as provided in
the option agreement.
LNC Restricted Shares and Restricted Phantom
The Compensation Committee has the right to convert some
or all of your restricted shares which are scheduled to
vest on January 1, 1997 into phantom stock due to
Internal Revenue Code section 162(m) -- the $1 million
cap. Service with ASI will continue to count toward the
vesting requirements of your restricted phantom shares.
LNC Deferred Compensation
American States is a participating employer under the
terms of this plan.
LNC Employees Savings and Profit Sharing Plan
Upon transfer to American States, this account balance
remains in the plan since the transfer of employment is
not a "distributable event" and your account balance
cannot be rolled into the American States plan. Any
additional employer matching contribution declared by the
LNC Board at its May 1997 meeting will be credited to
your account under this plan.
LNC Employees Retirement Plan
Currently, there is a liability under both the American
States and the Non-Life retirement plans for your
retirement benefit. At the end of 1997 there will be a
transfer of assets between the Non-Life and American
States plans so that your qualified benefit will be under
the American States plan. Because this is a funded plan,
this will not have any impact on the ultimate benefit.
LNC Excess Compensation Plan
This is an unfunded plan which provides retirement
benefits based on salary amounts in excess of $150,000
(as adjusted for cost of living). This liability will
be transferred to American States.
LNC Supplemental Pension Plan
This is also an unfunded plan which provides retirement
benefits in excess of the IRC section 415 limits. To the
extent that any benefits are payable from this plan, ASI
will be responsible for making these payments since your
participation will be transferred to the ASI plan.
LNC Executive Salary Continuation Plan
Your participation will be transferred from this plan to
the identical American States plan. This plan provides
an additional monthly payment of 10% per month after
retirement subject to the terms of the plan.
LNC Executive Severance Benefit Plan
This is the plan which goes into effect in the event of a
change of control of LNC. As CEO of American States, you
will continue to be a participant.
Split Dollar Plan
Currently this contract is between you and LNC, this
contract will need to be amended so that it is consistent
with those of the other officers of American States.
There will be no change in the benefit.
LNC Medical for Retired Employees
If you retire as of December 31, 1997, and at any time
thereafter lose your coverage under another group health
plan (including the American States Medical Plan for
Retired Employees), you may elect to participate within
60 days of losing such coverage, but not later than your
attaining age 65.
The receipt of amounts outlined above which are in addition to
amounts to which you are otherwise entitled, is conditioned on
your execution of an agreement and release provided to you by
LNC upon termination of your employment. The terms of the
agreement will be substantially identical to the ones set out
in Section 12 of your Employment Agreement with American
States effective January 1, 1997. The release will be the
same one required by Section 10 of that Employment Agreement.
****************
Item 6: Agreement made as of March 18, 1996 by and between
American States Financial Corporation and F. Cedric McCurley:
AGREEMENT
Agreement made as of March______, 1996, by and between
American States Financial Corporation (hereinafter called "the
Company"), an Indiana corporation having its principal place of
business in Indianapolis, Indiana, and F. Cedric McCurley
(hereinafter called "Employee"):
WITNESSETH:
WHEREAS, Employee desires to render faithful and efficient
service to the Company; and
WHEREAS, the Company desires to receive the benefit of
Employee's service; and
WHEREAS, the Company deems it essential to formalize the
conditions of Employee's employment by written agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter set forth, the parties agree as
follows:
1. Office. The Company hereby employs Employee as its
Chief Executive Officer, and Employee hereby agrees to serve the
Company in such capacity or in such other capacity as the Board
of Directors of the Company may from time to time designate.
2. Term of Employment. Employee's employment shall be
for the "Employment Period," with the term commencing at the
closing date (the "Closing Date") of the initial public offering
of the Company's common stock ("Initial Public Offering") and
extending to the later of December 31, 1997, or the date which
is twelve (12) months following the date on which the Board of
Directors of the Company designates anyone other than the
Employee as the Chief Executive Officer of the Company. Except
as Employee and Company may agree otherwise in writing,
Employee's employment shall continue at the will of the Company
after the expiration of the Employment Period. During any such
period of at will employment, the provisions of Sections 11, 14,
15, and 16 of this Agreement shall continue to apply as if the
Employment Period under this Agreement had not ended.
3. Incapacity. If during the Employment Period, Employee
should be prevented from performing his duties or fulfilling his
responsibilities by reason of any incapacity or disability that
is reasonably expected to continue for a period of six (6)
months or until death, then the Company, in its sole and
absolute discretion, may, based on the opinion of a qualified
physician, consider such incapacity or disability to be total
and may on ninety (90) days written notice to Employee terminate
the Employment Period.
4. Death. The Employment period shall automatically
terminate upon the death of Employee.
5. Responsibilities. During the Period of his employment
as Chief Executive Officer of the Company, Employee shall devote
his entire business time and attention, except during reasonable
vacation periods, to, and exert his best efforts to promote, the
affairs of the Company, and shall render such services to the
Company as may be required by the Board of Directors of the
Company consistent with services required by virtue of the
office
set forth in paragraph 1 hereof and shall perform such other
services as may now or hereafter be specified or enumerated in
the By-Laws of the Company consistent with such office. While
employed by the Company, Employee shall not, directly or
indirectly, alone or as a member of a partnership or
association, indirectly, alone or as a member of a partnership
or association, or as an officer, director, advisor, consultant,
agent or employee of any other company be engaged in or
concerned with any other duties or pursuits requiring his
personal services except with the prior written consent of the
Board of Directors of the Company. Nothing herein contained
shall preclude the ownership by Employee of stocks or other
investment securities. Nothing herein contained shall preclude
service by Employee on boards of directors or trustees of
charitable or other not-for-profit entities not engaged in any
business competitive with the business of the Company so long as
such service does not materially interfere with his
responsibilities to the Company.
6. Compensation. During the Employment Period, Employee
shall receive a base salary that shall be at an annual rate of
not less than $385,000, payable in accordance with the payroll
practices of the Company as from time to time in effect with
regard to executive personnel, plus, commencing in 1997, any
annual increase to such salary as determined by the Board of
Directors of the Company or its Compensation Committee.
7. Benefit Plans and Programs. During the Employment
Period, Employee shall be eligible for participation in all
benefit plans and programs made available by the Company to its
employees generally (other than the Company's generally
available severance program) and in those benefit plans and
programs applicable to executives of the Employee's level.
The bonus payable by the Company to the Employee in May
1996 shall be the bonus that would have been payable, based on
the performance of Lincoln National Corporation and the
determinations of the Compensation Committee of the Board of
Lincoln National Corporation, under the Lincoln National
Corporation Executive Value Sharing Plan for the performance
cycle ending in 1995. Such bonus shall be payable fifty percent
in cash and fifty percent in restricted common stock (or
restricted phantom stock or stock units) of the Company. Any
bonus payable to the Employee under the American States
Financial Corporation Executive Performance Incentive
Compensation Plan or similar plan ("EPIC") for cycles ending in
1996 and subsequent years shall be payable by the Company and
shall be in lieu of any bonus payable under the Lincoln National
Corporation Executive Value Sharing Plan for such cycles,
because the transitional provisions of EPIC take such bonuses
into account. To the extent an EPIC bonus for such cycles is
payable in the form of stock, phantom stock, or stock units, it
shall be awarded and payable in the form of (or, in the case of
phantom stock or stock units, measured by reference to) common
stock of the Company.
8. Stock Options and Restricted Stock Awards. Among the
benefit plans and programs to be made available by the Company
to certain of its employees after the Initial Public Offering is
the Company's Stock Option Plan. Effective on the Closing Date,
and in lieu of any award of Lincoln National Corporation options
in 1996, Employee shall be awarded stock options to purchase, at
the price per share of the Company's common stock at the Initial
Public Offering ("Initial Offering Price"), a number of shares
of the Company's common stock. Such number will be determined
by multiplying the number of shares subject to stock options
granted to Employee by Lincoln National Corporation in 1995 by a
Conversion Ratio. The Conversion Ratio shall be a fraction, the
numerator of which shall be the average of the opening price and
the closing price on the New York Stock Exchange of common stock
of Lincoln National Corporation on the business day immediately
preceding the Closing Date and the denominator of which shall be
the Initial Offering Price. Such stock options shall be
reflected in an Option Agreement which will be substantially in
the form attached as Exhibit A. Any options subsequently
granted to Employee also shall be options for Company common
stock.
9. Payments after Termination.
(a) In the event that Employee's employment is
terminated by the Company (or the Company terminates the
Employment Period) before the end of the Employment Period
referred to in Section 2 hereof for reasons other than
incapacity or death and without Cause:
(1) The Company shall pay to the Employee an amount equal
to his then current annual base salary accrued through
the date termination becomes effective (the
"Termination Date") and shall continue to make
payments of such base salary at the same rate as if
the Employee's employment continued throughout such
Period;
(2) The Employee shall become entitled to EPIC bonus
payments at such times and to the same extent (if any)
that he would have been entitled to payments had his
employment continued until the end of the Employment
Period and he had retired from the Company on such
date;
(3) all options granted to him under paragraph 8 of this
Agreement shall become vested and exercisable as if
his employment had continued until the end of the
Employment Period and he had retired from the Company
on such date; and
(4) to the extent that the Employee's termination of
employment results in a loss of benefits or
contributions that the Employee would have become
entitled to had he remained employed until the end of
the Employment Period, and retired on such date under
the Company's tax-qualified defined benefit retirement
and profit-sharing plans or under supplemental
nonqualified plans designed to provide benefits equal
to benefits that would have been received under those
plans but for Internal Revenue Code restrictions
(collectively, the "Plans"), the Company shall make
additional payments to the Employee having a value
equal to that of the benefits from amounts that would
have been paid by the Company and Company
profit-sharing contributions lost. For this purpose,
the Company shall have discretion to determine
such value, and the amount of any Company
profit-sharing contributions shall be determined
on the assumption that the Employee made the maximum
permitted contributions to the Plans.
For purposes of this Agreement, Cause means a determination by
the Chief Executive Officer or the Chief Operating Officer of
Lincoln National Corporation, made in good faith, without being
bound by the Company's progressive discipline policy for
employees:
* that Employee has engaged in acts or omissions against
the Company, its parent company, or any of its
subsidiaries constituting dishonesty, intentional
breach of fiduciary obligation or intentional
wrongdoing or misfeasance;
* that Employee has been arrested or indicted in a
possible criminal violation involving fraud or
dishonesty;
* after due consideration and with notice to the
Employee, that Employee has performed poorly;
* that Employee has failed or refused to perform his
duties set forth in paragraph 5 hereof, or willfully
failed to execute any reasonable instruction relating
to his duties with the Company given him by the Board
of Directors of the Company, or the Chief Executive
Officer or the Chief Operating Officer of Lincoln
National Corporation, if either such failure or
refusal is not corrected within ten business days
after his receipt of written notification of such
failure or refusal; or
* that Employee has intentionally and in bad faith acted
in a manner which results in a material detriment to
the assets, business or prospects of Lincoln National
Corporation, the Company or the subsidiaries of either
of them.
(b) If on the Termination Date, following termination for
any reason, Employee shall not be fully vested in the employer
matching contributions made on his behalf under the Company's
profit sharing plan, the Company shall pay to Employee within 30
days following the Termination Date a lump sum cash amount equal
to the value of the unvested portion of such employer matching
contributions; provided, however, that if any payment pursuant
to this paragraph (9) (d) may or would result in such payment
being deemed a transaction which is subject to Section 16(b) of
the Securities Exchange Act of 1934, as amended, the Company
shall make such payment so as to meet the conditions for an
exemption from such Section 16(b) as set forth in the rules (and
interpretive and no-action letters relating thereto) under
Section 16. The value of any such unvested employer matching
contributions shall be determined as of the Termination Date.
10. Expenses. During the Employment Period, the Company
shall allow Employee his reasonable expenses of travel and
business entertainment incurred in the performance of his duties
hereunder, subject to the rules and regulations adopted by the
Company for the handling of such business expenses.
11. Other obligations of Employee. All payments to the
Employee provided for under Section 9 of this Agreement or under
the Executive Salary Continuation Plan of the Company, the
exercise of any options for stock of the Company, and the
vesting or payment of any restricted stock (or restricted
phantom stock or restricted stock units) of the Company shall be
subject, to the extent permitted by law, to the Employee's
compliance with the following provisions:
(a) Assistance in Litigation. At all times during and
after the term of this Agreement, the Employee shall, upon
reasonable notice, furnish such information and proper
assistance to the Company as may reasonably be required by the
Company in connection with any litigation in which it or any of
its subsidiaries or affiliates is, or may become, a party.
(b) Confidential Information. At all times during and
after the term of this Agreement, the Employee shall not
knowingly disclose or reveal to any unauthorized person any
trade secret or other confidential information relating to the
Company or its subsidiaries or affiliates, or to any of the
businesses operated by them. Employee acknowledges, understands
and agrees that any amounts payable under this Agreement that
have not been paid shall be immediately forfeited in the event
Employee divulges or appropriates to his own use or the use of
any other person or organization (except with the prior written
consent of the Company or pursuant to the written order of a
regulatory commission, department or agency or a court of
competent jurisdiction) any trade secret or confidential
information or knowledge pertaining to the business of the
Company obtained during his employment with the Company.
Employee recognizes and acknowledges that (a) all plans,
systems, methods, designs, programs, procedures, notes, books
and records relating to the operations, practices and personnel
of the Company and its subsidiaries and affiliates (whether
instituted or commenced prior or subsequent to the date Employee
was first employed by the Company and whether or not devised,
created or initially instituted by the Company); and (b) all
other records, documents and information concerning the business
activities, practices and procedures, as they may exist from
time to time, constitute and will constitute secret or
confidential information or knowledge pertaining to the business
of the Company; provided, however, that the information and
material described in this sentence shall constitute secret or
confidential information or knowledge only to the extent such
information and material has theretofore remained confidential
(except for unauthorized disclosures) and except as otherwise
ordered by a court of competent jurisdiction.
The Employee further acknowledges that the restrictions
contained in this Section 11(b) are reasonable and necessary, in
view of the nature of the Company's business, in order to
protect the legitimate interests of the Company, and that any
violation thereof would result in irreparable injury to the
Company. The provisions of this Section 11(b) shall not be
construed as prohibiting or limiting the Company from pursuing
any other remedies for the divulgence or appropriation or
threatened divulgence or appropriation of trade secrets or
confidential information or knowledge relating to the Company.
The Employee agrees that the Company and its affiliates shall be
entitled to preliminary and permanent injunctive and other
equitable relief (including, without limitation, an equitable
accounting of all earnings, profits and other benefits arising
from such violation) in any court of competent jurisdiction,
which rights shall be cumulative and in addition to any other
rights or remedies to which the Company or its affiliates may be
entitled. Employee hereby irrevocably consents to the personal
jurisdiction over him of the courts of the State of Indiana and
of any Federal court located in such State in connection with
any action or proceeding arising out of or under or relating to
this Section 11(b) or any related breach of this Agreement
involved in such action or proceeding and further agrees, and
shall not contest, that the proper venue for filing and
maintaining any such action or proceeding shall be in the State
of Indiana.
12. Grounds for Termination of Employment. The Company
may terminate the Employment period by written notice to
Employee, specifying the ground or grounds for such termination,
if any.
13. Effect of Termination of the Employment period.
Except as specifically provided in Sections 2, 9 and 11, this
Agreement shall terminate upon the termination of the Employment
period. The obligations of the Employee under Section 11 and
the rights and remedies available to the Company under that
Section for any breach of such obligations, however, shall in
all events survive.
14. Notice. Any notice required to be given by the
Company hereunder to Employee shall be in proper form and signed
by an officer or Director of the Company. Until one party shall
advise the other in writing to the contrary, notices shall be
deemed delivered:
(a) to the Company if delivered to Lynda Van Kirk, Vice
President, with a copy to Tom Ober, General Counsel,
or, if mailed, certified or registered mail, postage
prepaid, to the above-named individuals at American
States Insurance Companies, 500 N. Meridian Street,
Indianapolis, IN 46204.
(b) to Employee if delivered to Employee, or if mailed to
him, certified or registered mail, postage prepaid, at
4436 Edinburgh Point, Indianapolis, IN 46208.
15. Alternative Dispute Resolution. With the exception of
actions under Section 11(b) of this Agreement, any controversy,
dispute or questions arising out of, in connection with or in
relation to this Agreement or its interpretation, performance or
nonperformance or any breach thereof shall be resolved through
mediation. In the event mediation fails to resolve the dispute
within 60 days after a mediator has been agreed upon or such
other longer period as may be agreed to by the parties, such
controversy, dispute or question shall be settled by arbitration
in accordance with the Center for Public Resources Rules for
Non-Administered Arbitration of Business Disputes, by a sole
arbitrator. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. Sec. 1-16, and judgment upon
the award rendered by the arbitrator may be entered by any court
having jurisdiction thereof. The place of the arbitration shall
be Indianapolis, Indiana. In any such controversy or dispute,
regardless of the party by whom such controversy or dispute is
initiated, the Company shall, if written notice is given and
upon presentation of appropriate vouchers, pay all legal
expenses, including reasonable attorneys' fees, court costs and
ordinary and necessary out-of-pocket costs of attorneys, billed
to and payable by the Employee in connection with the bringing,
prosecuting, defending, litigating, negotiating, or settling
such controversy or dispute; provided, however, that such
expenses, fees and costs shall not be paid by the Company unless
and until the Employee is successful on the merits; further
provided, however, that in the event such controversy or dispute
is settled, the settlement agreement shall provide for the
allocation of such expenses, fees and costs between the parties.
16. Benefit. This Agreement shall bind and inure to the
benefit of the Company and the Employee, their respective heirs,
successors and assigns.
17. Conditions. This Agreement is effective upon the
satisfaction of the following conditions: (a) the closing of the
proposed Initial Public Offering of the Company, and (b) the
approval of the Agreement by the non-interested members of the
Board of Directors of the Company or its designated compensation
committee. Should the aforementioned conditions not be
satisfied, this Agreement shall become null and void and shall
have no effect whatsoever on any previous agreement, express or
implied, between Employee and the Company.
18. Effect on Previous Agreements. Should this Agreement
become effective, it will supersede all employment-related
agreements between Employee and the Company or any member of the
Lincoln National Corporation controlled group of companies.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
Attest: American States Financial Corporation
[Sharon L. Wilson] By: William J. Lawson
Signed, sealed and delivered
in the presence of:
[Sharon L. Wilson] F. Cedric McCurley
[Thomas M. Ober]
EXHIBIT A
Nonqualified Stock Option
This Stock Option Agreement (the Agreement") evidences the
grant by American States Financial Corporation ("ASFC") of a
Nonqualified Stock Option (the "Option") to F. Cedric McCurley
(the "Grantee") on ________________, (the "Date of Grant") and
the Grantee's acceptance of the Option in accordance with the
provisions of the American States Financial Corporation Stock
Option Incentive Plan (the "Plan"), as modified by this
Agreement. ASFC and the Grantee agree as follows:
1. Shares Optioned and Option Price
The Grantee shall have an Option to purchase _______shares
of ASFC common stock, for $_______ (United States dollars) for
each share. The shares optioned are subject to the Plan terms
and the terms of the Agreement.
2. Vesting Dates
Grantee shall be entitled to exercise the shares optioned
as follows:
_______shares on____________________, 1997;
_______shares on____________________, 1998;
_______shares on____________________, 1999; and
_______shares on____________________, 2000.
In addition, Grantee shall be entitled to exercise all the
shares optioned under this Agreement on either of the following
dates:
(i) the date of Grantee's death; and (ii) the date of the
Grantee's total disability (as defined in paragraph 3). Each
date on which such shares are exercisable is known as the
"Vesting Date" with respect to those shares.
3. Exercise Period
The Option may be exercised, from time to time, with
respect to all or any number of unexercised shares subject to
the Option on any regular business day of ASFC at its then
executive offices during the period beginning on a Vesting Date
of such shares and ending on the earliest to occur of the
following dates:
(a) the tenth anniversary of the Date of Grant;
(b) the first anniversary of the date of the Grantee's
termination of employment with ASFC and all Subsidiaries (as
defined in the Plan) on account of death or total disability (as
defined below);
(c) the fourth anniversary of the Grantee's normal
retirement or, with the approval of the Grantee's employer,
early retirement at either 55 with 5 years of service or under
the terms of a retirement plan of ASFC or a Subsidiary;
(d) the date three months after the date that the
Grantee's employment with ASFC and all Subsidiaries terminates
on account of an involuntary termination of employment other
than for Cause as defined in section 9 of the Grantee's
employment agreement of ___________, 1996;
(e) the date that the Grantee's employment with ASFC and
all Subsidiaries terminates for any reason other than described
in (b), (c), or (d) next above; or
(f) the date of any violation of section 11 of the
Grantee's employment agreement of _______________, 1996.
If Grantee is an insider subject to Section 16(b) of the
Securities Exchange Act of 1934, such period shall not begin
sooner than 6 months after the Date of Grant. For the purposes
of the Agreement, the term "total disability" means the Grantee
is prevented from performing his duties or fulfilling his
responsibilities to ASFC by reason of any incapacity or
disability that is reasonably expected to continue for a period
of six (6) months or until death. The determination of whether
a Grantee's employment terminated on account of total disability
shall be made by ASFC, in its sole and absolute discretion,
based on the opinion of a qualified physician.
4. Exercise
During the period that the Option is exercisable, it may be
exercised in full or in part by the Grantee or, in the event of
the Grantee's death, by the person or persons to whom the Option
was transferred by will or the laws of descent and distribution,
by delivering or mailing written notice of the exercise and full
payment of the purchase price to the Secretary of ASFC. The
written notice shall be signed by each person entitled to
exercise the Option and shall specify the address and social
security number of each such person. If any person other than
the Grantee purports to be entitled to exercise all or any
portion of the Option, the written notice shall be accompanied
by proof, satisfactory to the Secretary of ASFC, of that
entitlement. The written notice shall be accompanied by full
payment in cash (including personal check), in shares of ASFC
common stock represented by certificates which had been owned
for at least six months transferring ownership to ASFC and with
an aggregate Fair Market Value (as defined in the Plan) equal to
the purchase price on the date the written notice is received by
the Secretary, or in any combination of cash and such shares.
The written notice will be effective and the Option will be
deemed exercised to the extent specified in the notice on the
date that the written notice (together with required
accompaniments) is received by the Secretary of ASFC at its then
executive offices during regular business hours.
5. Transfer of Shares Upon Exercise
As soon as practicable after receipt of an effective
written notice of exercise and full payment of the purchase
price as provided in paragraph 4, the Secretary of ASFC shall
cause ownership of the appropriate number of shares of ASFC
common stock to be transferred to the person or persons
exercising the Option by having a certificate or certificates
for those shares registered in the name of such person or
persons and shall have each certificate delivered to the
appropriate person. Notwithstanding the foregoing, if ASFC or a
Subsidiary requires reimbursement of any tax required by law to
be withheld with respect to shares of ASFC common stock, the
Secretary shall not transfer ownership of those shares until the
required payment is made. ASFC may permit the Grantee to
surrender shares of ASFC common stock to satisfy all withholding
requirements.
6. Transferability
No rights under this Agreement may be transferred except by
will or the laws of descent and distribution. The rights under
this Agreement may be exercised during the lifetime of the
Grantee only by the Grantee.
7. Authorized Leave
Authorized leaves of absence from ASFC or a Subsidiary
shall not constitute a termination of employment for purposes of
this Agreement. For purposes of this Agreement, an authorized
leave of absence shall be an absence while the Grantee is on
military leave, sick leave, or other bona fide leave of absence
so long as the Grantee's right to employment with ASFC or a
Subsidiary is guaranteed by statute, contract, or company
policy.
IN WITNESS WHEREOF, ASFC, by its duly authorized officers
has signed this Agreement as of the day and year first above
written.
AMERICAN STATES FINANCIAL CORPORATION
William J. Lawson