Exhibit 10.3
OHIO CASUALTY CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
1.00 PURPOSE
This Plan is intended to foster and promote the Company's long-term
financial success and to increase shareholder value by [1] providing
Participants an opportunity to acquire an ownership interest or to increase
an ownership interest in the Company and [2] enabling the Company to attract
and retain the services of outstanding individuals upon whose judgment,
interest and dedication the successful conduct of the Company's business is
largely dependent.
2.00 DEFINITIONS
When used in this Plan, the following terms will have the meanings given to
them in this section unless another meaning is expressly provided elsewhere
in this Plan. When applying these definitions, the form of any term or word
will include any of its other forms.
Act. The Securities Exchange Act of 1934, as amended.
Beneficiary. The individual a Participant designates to receive any Plan
benefits that are unpaid when the Participant dies. A Beneficiary may be
designated only by following the procedures described in Section 10.02;
neither the Company nor the Committee is required or permitted to infer a
Beneficiary from any other source.
Board. The Company's Board of Directors.
Code. The Internal Revenue Code of 1986, as in effect on the Effective Date
or as amended or superceded after the Effective Date, and any regulations
and applicable rulings issued under the Code.
Committee. The Board's compensation committee which also constitutes a
"compensation committee" within the meaning of Treas. Reg. Section
1.162-27(c)(4). The Committee will be comprised of at least three
individuals [1] each of whom must be [a] an outside director, as defined in
Treas. Reg. Section 1.162-27(e)(3)(i) and [b] a "non-employee director"
within the meaning of Rule 16b-3 under the Act and [2] none of whom may
receive remuneration in any capacity other than as a director, except as
permitted under Treas. Reg. Section 1.162-27(e)(3)(ii).
Company. Ohio Casualty Corporation, a corporation organized under the laws
of Ohio, and any successor to it.
Custodial Account. The account established for each Participant under
Section 3.01[2][f] to which the Company transfers shares of Stock acquired
under the Plan.
Effective Date. The date the Plan is adopted by the Board.
Eligible Employee. Any Employee who normally works at least 20 hours each
week and complies with Section 4.00 and other Plan provisions.
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Employee. Any individual who is a common law employee of any Employer. A
worker who is classified as other than a common law employee but who is
subsequently reclassified as a common law employee of an Employer for any
reason and on any basis will be treated as a common law employee only from
the first Offering Period that begins after the date of that determination
and will not retroactively be reclassified as an Employee for any purpose of
this Plan.
Employer. The Company and each Subsidiary.
Fair Market Value. The value of one share of Stock on the relevant date,
determined as follows:
[1] If the Stock is traded on an exchange (including the NASDAQ
National Market System), the reported "closing price" on the
relevant date, assuming it is a trading date, otherwise on the next
trading day;
[2] If the Stock is traded over-the-counter with no reported
closing price, the mean between the lowest bid and the highest asked
prices on that quotation system on the relevant date, assuming it is
a trading day, otherwise on the next trading day; and
[3] If neither [1] nor [2] apply, the fair market value as
determined by the Committee in good faith. This determination will
be conclusive and binding on all persons.
Offering Period. The period over which Participants are offered an option
to purchase shares of Stock and during which payroll deductions may be
accumulated in Plan Accounts to fund the purchase of shares of Stock. Each
Offering Period will consist of six months, unless a different period is
established by the Committee and announced to the Employees at the beginning
of the Offering Period, although each Offering Period must comply with
limits imposed by Code Section 423(b)(7). The first day of each Offering
Period is the date that options are granted under the Plan. The last day of
each Offering Period is the date that the options are deemed to have been
exercised.
Participant. Any Eligible Employee who meets the conditions described in
Section 4.00 for the current Offering Period. An Eligible Employee will
continue to be a Participant with respect to any earlier Offering Period
until he or she receives all accumulated Plan benefits for that Offering
Period.
Plan. The Ohio Casualty Corporation Employee Stock Purchase Plan.
Plan Account. The individual account established by the Committee under
Section 3.01[2][e] for each Participant.
Purchase Price. The price that each Participant must pay to purchase shares
of Stock under this Plan but which may never be less than the lesser of
[1] 85 percent of the Fair Market Value of a share of Stock on the first
trading day of each Offering Period or [2] 85 percent of the Fair Market
Value of a share of Stock on the last trading day of the same Offering
Period.
Stock. The common shares issued by the Company.
Subsidiary. Any corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company if, at the time of the granting
of the option, each of the corporations other than the last corporation in
the unbroken chain owns stock possessing 50 percent or more of the total
combined voting power of all classes of stock in one of the other
corporations in that chain.
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Termination of Employment. Cessation of the employee-employer relationship
between a Participant and each Employer for any reason. Also, a Participant
will be treated as having Terminated Employment on the date his or her
employer is no longer an Employer.
3.00 ADMINISTRATION
3.01 Committee Duties.
[1] The Committee is granted all powers appropriate and
necessary to administer the Plan. Consistent with the Plan's
purpose, the Committee may adopt, amend and rescind rules and
regulations relating to the Plan, to the extent appropriate to
protect the Company's interests, and has complete discretion to make
all other decisions necessary or advisable for the administration
and interpretation of the Plan. Any action by the Committee will be
final, binding and conclusive for all purposes and upon all affected
persons.
[2] Consistent with the terms of the Plan, the Committee will:
[a] Establish the duration of each Offering Period;
[b] Establish the Purchase Price applicable to shares of
Stock available for purchase during each Offering Period;
[c] Establish the number of shares of Stock that may be
acquired during each Offering Period;
[d] Develop and impose other terms and conditions it
believes are appropriate and necessary to implement the
purposes of this Plan;
[e] Establish and maintain a Plan Account for each
Participant to which will be credited all amounts authorized
to be withheld under Section 4.01;
[f] Establish a Custodial Account for each Participant
as provided in Section 6.04;
[g] Administer procedures through which Eligible Employees may
enroll in the Plan;
[h] Disseminate this information to Eligible Employees; and
[i] Apply all Plan rules and procedures
3.02 Delegation of Duties. In its sole discretion, the Committee may
delegate to any individual (including Employees) or entity that it deems
appropriate any of its duties other than those described in Section
3.01[2][a], [b], [c] and [d].
3.03 General Limit on Committee. Consistent with applicable law and Plan
terms, the Plan will be administered in a manner that extends equal rights
and privileges to all Participants.
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4.00 PARTICIPATION
4.01 Enrollment.
[1] Each Eligible Employee may become a Participant for any
Offering Period beginning after the date the Employee:
[a] Completes at least 90 days of active employment as
an Employee;
[b] Authorizes the Employer to withhold a portion of his
or her compensation. This authorization [i] must be stated
in whole dollars, [ii] may not authorize a deduction less
than $20.00 per payroll period (or other amount specified by
the Committee at the beginning of an Offering Period),
[iii] must be signed by the enrolling Eligible Employee and
[iv] must be delivered to the Committee at least 45 days
before the beginning of the Offering Period for which it is
to be effective; and
[c] Complies with any other rules established by the Committee.
[2] By enrolling in the Plan, each Participant will be deemed to
have [a] agreed to the terms of the Plan and [b] authorized the
Employer to withhold from his or her compensation [i] the amounts
authorized under Section 4.01[1][b] and [ii] any taxes and other
amounts due in connection with any transaction contemplated by the
Plan.
4.02 Duration of Election to Participate.
Subject to Section 7.00:
[1] Participants' withholding elections will be implemented
beginning with the first payroll period ending after it is filed.
[2] A Participant who elects to participate in the Plan for any
Offering Period by complying with the rules described in Section
4.01 may modify or revoke that election once with respect to each
Offering Period but only by complying with the rules described in
Section 4.01. Any change to the amount of compensation to be
withheld will be implemented beginning with the first payroll period
that begins no fewer than 10 days after that revised election is
delivered to the Committee.
[3] Any election made under Section 4.01[1][b] will remain in
effect for subsequent Offering Periods until revoked or changed by
the Participant. Any change or revocation of an election made under
Section 4.01[1][b] must comply with the rules described in Section 4.01.
4.03 No Interest Paid. No interest will be paid with respect to any amount
credited to or held in any Plan Account.
5.00 OFFERING
5.01 Option to Purchase. Subject to Section 6.00, for each Offering
Period, Participants will be granted options to purchase shares of Stock.
Subject to Sections 5.02 and 5.04, the number of shares of Stock that may be
purchased during each Offering Period will be established by the Committee
before the beginning of the Offering Period.
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5.02 Number of Shares. Subject to Section 5.04, the aggregate number of
shares of Stock that may be purchased under the Plan is 2,000,000.
5.03 Restriction on Options. No Employee may be granted an option under
the Plan if, immediately after the option is granted, he or she owns five
percent or more of the total combined voting power or value of all classes
of stock of any Employer. For purposes of the preceding sentence, [1] Code
Section 424(d) of the Code and applicable regulations will be applied to
determine an Employee's Stock and [2] Stock which the Employee may purchase
under outstanding options will be treated as Stock owned by the Employee.
5.04 Adjustment in Capitalization. If, after the Effective Date, there
is a Stock dividend, Stock split or recapitalization, the aggregate number
of shares of Stock available under the Plan or subject to outstanding
options and the respective prices and/or limitations applicable to those
shares will be adjusted, as appropriate, to reflect the effect of the Stock
dividend, Stock split or recapitalization, including changing the number of
shares of Stock reserved under the Plan and the price of the current
offering.
5.05 Source of Stock. Stock to be purchased under the Plan may, in the
Committee's discretion, be newly issued shares or treasury shares previously
acquired by the Company Shares of authorized but unissued Stock may not be
delivered under the Plan if the Purchase Price is less than the par value of
the Stock.
6.00 PURCHASE
6.01 Purchase. As of the last day of each Offering Period and subject to
the terms and limits of the Plan:
[1] The value of each Participant's Plan Account will be divided
by the Purchase Price established for that Offering Period. If a
Participant's Plan Account contains sufficient funds to purchase one
or more whole shares of Stock, the Participant will be deemed to
have exercised an option to purchase the number of whole shares of
Stock produced by dividing the value of the Participant's Plan
Account as of the last day of the Offering Period by the Purchase
Price. Simultaneously, the Participant's Plan Account will be
charged for the amount of the purchase.
[2] Any amount accumulated in a Participant's Plan Account that
is not used to purchase shares of Stock during the Offering Period
for which it was withheld will [a] be retained in the Participant's
Plan Account and applied to purchase shares of Stock during a
subsequent Offering Period or, [b] if the Participant requests,
returned to the Participant within a reasonable period after the end
of the Offering Period for which it was withheld.
6.02 Purchase Limitations. Regardless of any other Plan provision, no
Participant may purchase Stock under the Plan and any other stock purchase
plan maintained by any Employer under Code Section 423 at a rate that exceeds
$25,000 (adjusted from time to time under applicable Treasury regulations)
in Fair Market Value (determined at the effective date of the offering) for
each calendar year during which the option is outstanding at any time.
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6.03 Remaining Available Shares.
[1] If the number of shares of Stock that Participants become
entitled to purchase for any Offering Period is larger than the
number of shares of Stock offered during that Offering Period, the
Committee will allocate available shares among Participants.
[2] If the number of shares of Stock made available for purchase
for any Offering Period is larger than the number of shares of Stock
that Participants become entitled to purchase for that Offering
Period, the excess may be made available for purchase during a
subsequent Offering Period.
6.04 Delivery of Shares; Participants' Custodial Accounts.
[1] At or as promptly as practicable after the end of each
Offering Period, the Company will deliver the shares of Stock
purchased by a Participant during that Offering Period to the
custodian for deposit into that Participant's Custodial Account.
[2] Unless the Committee decides otherwise, cash dividends on
any shares of Stock credited to a Participant's Custodial Account
will be automatically reinvested in additional whole and fractional
shares of Stock and will not be available in the form of cash to
Participants. All cash dividends paid on Stock credited to
Participants' Custodial Accounts will be paid over by the Company to
the custodian at the dividend payment date. The custodian will
aggregate all purchases of Stock in connection with the Plan for a
given dividend payment date. Purchases of Stock for purposes of
dividend reinvestment will be made as promptly as practicable (but
not more than 30 days) after a dividend payment date. The custodian
will make these purchases, as directed by the Committee, either
[a] in transactions on any securities exchange upon which shares of
Stock are traded, otherwise in the over-the-counter market, or in
negotiated transactions, or [b] directly from the Company at 100
percent of the Fair Market Value of a share of Stock on the dividend
payment date.
[3] Each Participant's Custodial Account will be credited with
any shares of Stock distributed as a dividend or distribution in
respect of shares of Stock credited to that Participant's Custodial
Account or in connection with a split of Stock credited to that
Participant's Custodial Account.
[4] As soon as reasonably practicable after receipt, the
custodian will sell any noncash dividends (other than Stock) received
with respect to any Stock held in a Participant's Custodial Account
and apply the proceeds of that sale to purchase additional shares of
Stock in the manner described in Section 6.04[2]. After this
transaction is completed, the custodian will credit the purchased
shares of Stock to the Custodial Account to which was credited the
Stock with respect to which the noncash dividend was distributed.
[5] Each Participant will be entitled to vote the number of
shares of Stock credited to his or her Custodial Account (including
any fractional shares) on any matter as to which the approval of the
Company's shareholders is sought. If a Participant does not vote or
grant a valid proxy with respect to shares credited to his or her
Custodial Account, those shares will be voted by the custodian in
accordance with any stock exchange or other rules governing the
custodian in the voting of shares held for customer accounts.
Similar procedures will apply in the case of any consent solicitation
of Company shareholders.
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7.00 TERMINATION OF EMPLOYMENT/DISTRIBUTION OF CUSTODIAL ACCOUNTS
7.01 Effect of Termination of Employment on Election to Participate.
A Participant who Terminates Employment will be deemed to have elected to
withdraw from the Plan, and all cash amounts credited to his or her Plan
Account for the Offering Period during which the Termination of Employment
occurs will be returned to the Participant or, if appropriate, to his or her
Beneficiary and, except as provided in Section 6.04 no shares of Stock will
be purchased for that Participant for the Offering Period during which he or
she Terminates Employment.
7.02 Distribution of Custodial Accounts.
[1] No later than the earlier of [a] six full calendar months
beginning after the Participant Terminates Employment or [b] the
date the Participant specifies in writing, all shares of Stock and
cash held in his or her Custodial Account will be distributed to the
Participant or transferred as the Participant elects or, in the
absence of any direction, as determined by the Committee.
[2] Custodial Accounts that are to be distributed to the former
Participant will be distributed in one or more certificates for
whole shares issued in the name of and delivered to the Participant,
plus cash in lieu of fractional shares based on the Fair Market
Value of a share of Stock on the date of distribution.
[3] Custodial Accounts that are to be transferred to a broker-
dealer or financial institution that maintains an account for the
Participant will be transferred in one or more certificates for
whole shares, and cash in lieu of fractional shares will be paid
directly to the former Participant based on the Fair Market Value of
a share of Stock on the date of transfer.
[4] Any Participant that wants to withdraw or transfer shares of
Stock must give instructions to the custodian in a form and manner
that complies with rules prescribed by the Committee and the
custodian. Withdrawals and transfers will be subject to any fees or
expenses imposed as provided in Section 10.10.
8.00 MERGER, CONSOLIDATION OR SIMILAR EVENT
If [1] the Company undergoes a merger or consolidation (other than a merger
or consolidation to effect a reincorporation of the Company under the laws
of another jurisdiction) or if there is a reclassification of Stock or the
exchange of Stock for the securities of another entity (other than a
Subsidiary) that has acquired the Company's assets or which is in control
[as defined in Code Section 368(c)] of an entity that has acquired the
Company's assets and [2] the terms of that plan or agreement are binding on
all holders of Stock (except to the extent that dissenting shareholders are
entitled to relief under applicable law), then [3] the Plan will terminate
and all Plan Accounts will be distributed to Participants as described in
Section 9.02 [4] no shares of Stock will be sold through this Plan for that
Offering Period.
9.00 AMENDMENT, MODIFICATION AND TERMINATION OF PLAN
9.01 Ability to Amend, Modify and Terminate the Plan. The Board or the
Committee may terminate, suspend or amend the Plan at any time without
shareholder approval except to the extent that shareholder approval is
required to satisfy applicable requirements imposed by [1] Rule 16b-3 under
the
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Act, or any successor rule or regulation, [2] applicable requirements of
the Code or [3] any securities exchange, market or other quotation system on
or through which the Company's securities are listed or traded. Also, no
Plan amendment may [4] result in the loss of a Committee member's status as
a "non-employee director" as defined in Rule 16b-3 under the Act, or any
successor rule or regulation, with respect to any employee benefit plan of
the Company, or [5] cause the Plan to fail to meet requirements imposed by
Rule 16b-3.
9.02 Effect of Plan Termination. Any Plan termination also will
terminate the Offering Period during which the Plan is terminated. Any cash
balances held in Plan Accounts and Custodial Accounts when the Plan is
terminated will be repaid by check or cash to the Participant for whom the
Plan Account was established, and no additional shares of Stock will be sold
through this Plan for that Offering Period. All shares of Stock held in
Custodial Accounts will be distributed following the procedures described in
Section 7.02.
10.00 MISCELLANEOUS
10.01 Restriction on Transfers. No option, right or benefit under the
Plan may be transferred, assigned, alienated, pledged or otherwise disposed
of in any way by a Participant. All options, rights and benefits under the
Plan may be exercised during the Participant's lifetime only by the
Participant.
10.02 Beneficiary Designation. Each Participant may name a Beneficiary or
Beneficiaries (who may be named contingently or successively) to receive any
Plan benefits that are unpaid at the Participant's death. Each designation
made will revoke all earlier designations made by the same Participant, must
be made on a form prescribed by the Committee and will be effective only when
filed in writing with the Committee. If a Participant has not made an
effective Beneficiary designation, the deceased Participant's Beneficiary will
be his or her surviving spouse or, if there is no surviving spouse, the
deceased Participant's estate.
10.03 No Guarantee of Employment or Participation. Nothing in the Plan may
be construed as:
[1] Interfering with or limiting the right of any Employer to
terminate any Participant's employment at any time; or
[2] Conferring on any Participant or Employee any right to continue
as an Employee.
10.04 Tax Requirements and Notification. Each Participant is solely
responsible for satisfying local, state and federal tax requirements for any
dividends issued with respect to Stock purchased by the Participant. Each
Participant is solely responsible for satisfying local, state and federal
tax requirements attributable to the disposition of any Stock purchased
under the Plan. The Company will withhold appropriate taxes as required by
any relevant taxing authority. Each Participant may be requested to notify
the Committee of any disposition of shares of Stock purchased through the
Plan before the expiration of the holding periods described in Code Section 423.
10.05 Indemnification. Each individual who is or was a member of the
Committee or of the Board will be indemnified and held harmless by the
Company against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit or proceeding to which he or she may
be made a party or in which he or she may be involved by reason of any
action taken or failure to take action under the Plan as a Committee
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member and against and from any and all amounts paid, with the Company's
approval, by him or her in settlement of any matter related to or arising
from the Plan as a Committee member; or paid by him or her in satisfaction
of any judgment in any action, suit or proceeding relating to or arising from
the Plan against him or her as a Committee member, but only if he or she gives
the Company an opportunity, at its own expense, to handle and defend the
matter before he or she undertakes to handle and defend it in his or her own
behalf. The right of indemnification described in this section is not
exclusive and is independent of any other rights of indemnification to which
the individual may be entitled under the Company's organizational documents,
by contract, as a matter of law, or otherwise.
10.06 No Limitation on Compensation. Nothing in the Plan is to be
construed to limit the right of the Company to establish other plans or to
pay compensation to its employees or Directors in cash or property, in a
manner not expressly contemplated by the Plan.
10.07 Requirements of Law. The grant of options and the issuance of
shares of Stock under the Plan will be subject to all applicable laws, rules
and regulations and to all required approvals of any governmental agencies
or national securities exchange, market or other quotation system. Also, no
shares of Stock will be issued under the Plan unless the Company is
satisfied that the issuance of those shares of Stock will comply with
applicable federal and state securities laws. Certificates for shares of
Stock delivered under the Plan may be subject to any stock transfer orders and
other restrictions that the Committee believes to be advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission,
any stock exchange or other recognized market or quotation system upon which
the Stock is then listed or traded, or any other applicable federal or state
securities law. The Committee may cause a legend or legends to be placed on
any certificates issued under the Plan to make appropriate reference to
restrictions within the scope of this section.
10.08 Use of Funds. All amounts credited to and held in Plan Accounts may
be used by the Company for any corporate purpose and the Company is not
required to segregate Plan Accounts from its general assets.
10.09 Term of Plan. The Plan will be effective upon its adoption by the
Board and approval by the affirmative vote of the holders of a majority of
the shares of voting stock present in person or represented by proxy at the
first annual meeting occurring after the Board approves the Plan.
10.10 Expenses. Except as otherwise provided in this section and the
Plan, costs and expenses incurred in the administration of the Plan and
maintenance of Plan Accounts will be paid by the Company, including the
custodian's annual fees and any brokerage fees and commissions arising in
connection with the purchase of Stock upon reinvestment of dividends and
distributions. However, Participants will be liable for any fees imposed by
(or passed through by) the custodian in connection with the withdrawal of
Stock from Custodial Accounts or for other services unrelated to the
purchase of Stock under the Plan, but only to the extent approved in writing
by the Company and communicated to participants. In no circumstance will
the Company pay any brokerage fees and commissions arising in connection
with the sale of Stock acquired under the Plan by any Participant.
10.11 Governing Law. The Plan and all related agreements will be
construed in accordance with and governed by the laws (other than laws
governing conflicts of laws) of the United States and of the State of Ohio.
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