Exhibit 99.1
Employee Name:
Address:
SSN:
OHIO CASUALTY CORPORATION
2005 INCENTIVE PLAN
INCENTIVE STOCK OPTION AWARD AGREEMENT
[EMPLOYEE'S NAME]
This Award Agreement describes the type of Award that you have been granted
and the terms and conditions that must be met before you may realize any value
associated with your Award. To fully understand these terms and conditions,
you should:
- Read this Award Agreement carefully along with the Plan and the
Plan prospectus.
- Contact the General Counsel at 513-603-2213 if you have any
questions about your Award.
Also, you must sign both copies of this Award Agreement as the
"Optionee/Grantee", keeping one (1) copy for your file and returning one (1)
copy to Shareholder Relations in the enclosed self-addressed envelope no later
than [INSERT DATE]. After the Ohio Casualty Corporation (the "Company")
receives your signed Award Agreement, you will receive an acknowledgement of
receipt of the same.
Thank you for your continued commitment to the Company.
DESCRIPTION OF YOUR INCENTIVE STOCK OPTIONS
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Your Award Consists of Incentive Stock Options
You have been awarded Incentive Stock Options (or "ISOs") to purchase
common shares of the Company ("Stock"). Your ISOs are subject to the
terms and conditions set forth in this Award Agreement and in the
Plan. The ISOs are intended to be incentive stock options that comply
with Section 422 of the Code.
Grant Date
Your ISOs were granted on [INSERT DATE].
Number of ISOs
You have been granted [INSERT NUMBER] ISOs. You may purchase one
share of Stock for each ISO granted, but only if you meet the terms
and conditions described in this Award Agreement and in the Plan.
Exercise Price
You may exercise each vested ISO by paying [INSERT EXERCISE PRICE]
[Exercise Price must be at least 100% of Fair Market Value; at
least 110% of Fair Market Value for 10% Shareholders] to purchase one
share of Stock. When you purchase Stock by exercising an ISO, the ISO
exercised is cancelled.
Vesting Period
Normally, the ISOs will vest and may be exercised by you as follows:
[Describe vesting schedule.]
However, there are some situations in which the ISOs may become
exercisable earlier. These are described below.
Expiration Date and Exercise Period
In general, you must exercise all these ISOs, if at all, by no later
than [INSERT DATE] [fifth anniversary if 10% Shareholder] (the
"Expiration Date"). However, if your Service Terminates prior to the
Expiration Date and subject to Section 12.03 of the Plan, the ISOs
will remain exercisable for the period set forth below and thereafter
will terminate and be of no further force and effect:
(1) Death or Disability. If your Service Terminates due to your
death or Disability, you (or, if applicable, your Beneficiary) may
exercise the ISOs (whether or not vested) anytime before the earlier
of (a) the Expiration Date and (b) 15 months after such Termination of
Service. However, if the ISOs are not exercised within 12 months
after
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such Termination of Service, they will be treated as nonqualified stock
options ("NQSOs").
(2) Retirement. If your Service Terminates due to your Retirement, you
(or, if applicable, your Beneficiary) may exercise the ISOs (whether or
not vested) anytime before the earlier of (a) the Expiration Date and
(b) 15 months after such Termination of Service. However, if the ISOs
are not exercised within three months after such Termination of Service,
they will be treated as NQSOs.
(2) Voluntary Termination of Service by You or Involuntary Termination
Without Cause. If you voluntarily Terminate Service or you are
Terminated involuntarily without Cause, you (or, if applicable, your
Beneficiary) may exercise the vested ISOs anytime before the earlier of
(a) the Expiration Date and (b) three months after such Termination of
Service.
(3) Involuntary Termination of Service With Cause. If your Service is
Terminated involuntarily for Cause, the ISOs (whether or not vested)
will terminate in full and cease to be exercisable as of the date of
Termination of Service.
If you do not exercise the vested ISOs by the applicable date set
forth above they will expire and may not be exercised at a later date.
EXERCISING YOUR ISOs
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Minimum Number of ISOs That You May Exercise: The smallest number of ISOs
that you may exercise at any one time is 100 or, if fewer, the total number of
your outstanding vested ISOs.
Also, you may not exercise any ISO to buy a fractional share of Stock; the
value of a fractional share will be paid in cash.
Procedures for Exercising Your ISOs: To exercise a vested ISO, you must:
- Complete a copy of the Incentive Stock Option Exercise Form
attached to this Award Agreement (additional copies are available
from Shareholder Relations at (513) 603-2175); and
- Pay the Exercise Price for each share being purchased by exercising
an ISO.
This must be done before your ISOs expire.
Paying for your ISO Exercise:
ISOs will be exercised through the Company's Shareholder Relations Office
and/or your broker. ISOs may be exercised by (i) paying cash or a personal
check immediately payable to the Company; (ii) delivering a properly executed
notice together with a copy of irrevocable instructions to a broker to sell
Stock obtained upon the exercise of the ISOs and deliver promptly to the
Company the amount of sale proceeds to pay the Exercise Price; and (iii)
giving the
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Company other shares of Stock having a value equal to the Exercise
Price due (but only if you have owned those shares for at least six months).
GENERAL TERMS AND CONDITIONS
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1.00 Buy Out of ISOs by Company: The Company may decide at any time to buy
out your ISOs. This may happen without your consent and at any time.
If the Company decides to buy out your Awards, it will pay you the
difference between the Fair Market Value of each Award to be cancelled
and the Exercise Price of the Award.
2.00 Beneficiary Designation: You may name a Beneficiary or Beneficiaries
to receive or to exercise any vested ISOs that are unpaid or
unexercised when you die. This may be done only on the attached
Beneficiary Designation Form and by the following the rules described
in that form. This form need not be completed now and is not required
as a condition of receiving your ISOs. If you die without completing
a Beneficiary Designation Form or if you do not complete the form
correctly, your Beneficiary will be your surviving spouse, or if you
do not have a surviving spouse, your estate.
3.00 Transferring your ISOs: Normally your ISOs may not be transferred to
another person. However, you may complete a Beneficiary Designation
Form to name the person who may exercise your ISOs if you die before
their Expiration Date (see section titled "Beneficiary Designation"
above). The Company may allow you to transfer your Award to certain
Permissible Transferees (as defined in the Plan). Contact Shareholder
Relations at (513) 603-2175 if you are interested in doing this.
4.00 Restrictions on Transfers of Stock: The Company may impose
restrictions on any shares of Stock you acquire by exercising an ISO,
including restrictions related to applicable securities laws, the
rules of any national securities exchange or system on which the Stock
is listed or traded.
5.00 Section 16 of the Exchange Act: You are responsible for ensuring
that all requirements of Section 16 are met, including the holding of
securities purchased under this Award Agreement for a minimum of six
months before disposition.
6.00 Tax Withholding: In some cases, income taxes must be withheld on the
value of your Award exercised. These taxes may be paid in one of
several ways, including:
- The Company may withhold this amount from other amounts owed to
you (e.g., your salary); or
- You may pay these taxes by giving the Company cash equal to the
amount that must be withheld or by giving the Company other shares
of Company stock (that you have owned for at least six months)
with a value equal to the taxes due.
You may choose the approach you prefer when the Award is payable,
although the Company may reject your preferred method for any reason
(or for no reason). If this happens, you must pay these taxes in the
way the Company specifies.
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7.00 Governing Law: This Award Agreement 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.
8.00 Other Agreements: Your ISOs will be subject to the terms of any other
agreements between you and the Company.
9.00 Adjustments to ISOs: Your ISOs will be adjusted to reflect any change
to the Company's capital structure (e.g., a Stock split) as described
in Section 4.03 of the Plan.
10.00 Other Rules: Your ISOs also are subject to more rules described in
the Plan and in the Prospectus. You should read both these documents
carefully to ensure you fully understand all the terms and conditions
of this Award.
11.00 Conflict: In the event of conflict between the terms of this Award
Agreement and the Plan, the terms of the Plan govern.
12.00 Capitalized Terms: Capitalized terms not otherwise defined herein
shall have the same meanings as in the Plan.
# # # # # # # # # # # # # #
Section 409A of the Internal Revenue Code of 1986, as amended ("Section
409A"), imposes substantial penalties on persons who receive some forms of
deferred compensation (see the Plan's prospectus for more information about
these penalties). Your Award has been designed to avoid these penalties.
However, because the Internal Revenue Service ("IRS") has not yet issued rules
fully defining the effect of Section 409A, it is possible that your Award and
the Award Agreement may be revised after the IRS issues these rules. As a
condition of accepting this Award, you must agree to accept those revisions,
without any further consideration, even if those revisions change the terms of
your Award and/or reduce its value or potential value.
Please sign this Award Agreement and return it to Shareholder Relations no
later than [INSERT DATE]. By signing this Award Agreement you acknowledge
that this Award is granted under and is subject to the terms and conditions
described in this Award Agreement and in the Plan.
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OPTIONEE/GRANTEE OHIO CASUALTY CORPORATION
- --------------------------- -----------------------------
[_______] Dan R. Carmichael
[_______] President & CEO
THIS FORM OF AWARD AGREEMENT IS PART OF A PROSPECTUS COVERING SECURITIES
REGISTERED UNDER THE SECURITIES ACT OF 1933
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INCENTIVE STOCK OPTION AWARD AGREEMENT
GRANTED TO [____] ON [INSERT DATE]
ACKNOWLEDGEMENT OF RECEIPT
A signed copy of this Award Agreement was received on .
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By:
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Shareholder Relations Department Representative
Date: ----------------------------------
Note: Send a copy of this completed form to the participant and keep a copy
as part of the Plan's permanent records.
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