Exhibit 99.2
Employee Name:
Address:
SSN:
OHIO CASUALTY CORPORATION
2005 INCENTIVE PLAN
NONQUALIFIED 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 commitment to the Company.
DESCRIPTION OF YOUR NONQUALIFIED STOCK OPTIONS
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Your Award Consists of Nonqualified Stock Options
You have been awarded Nonqualified Stock Options (or "NQSOs") to
purchase common shares of the Company ("Stock"). Your NQSOs are
subject to the terms and conditions set forth in this Award Agreement
and in the Plan. The NQSOs are intended to be nonqualified stock
options, and are not intended to be treated as options that comply
with Section 422 of the Code.
Grant Date
Your NQSOs were granted on [INSERT DATE].
Number of NQSOs
You have been granted [INSERT NUMBER] NQSOs. You may purchase one
share of Stock for each NQSO 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 NQSO by paying [INSERT EXERCISE PRICE] to
purchase one share of Stock. When you purchase Stock by exercising a
NQSO, the NQSO exercised is cancelled.
Vesting Period
Normally, the NQSOs will vest and may be exercised by you as follows:
[Describe vesting schedule.]
However, there are some situations in which the NQSOs may become
exercisable earlier. These are described below.
Expiration Date and Exercise Period
In general, you must exercise all these NQSOs, if at all, by no later
than [INSERT DATE] (the "Expiration Date"). However, if your Service
Terminates prior to the Expiration Date and subject to Section 12.03
of the Plan, the NQSOs will remain exercisable for the period set
forth below and thereafter will terminate and be of no further force
and effect:
(1) Death, Disability or Retirement. If your Service Terminates
due to your Retirement, death or Disability, you (or, if applicable,
your Beneficiary) may exercise the NQSOs (whether or not vested)
anytime before the earlier of (a) the Expiration Date and (b) 15
months after such Termination of Service.
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(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 NQSOs 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 NQSOs (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 NQSOs by the applicable date set
forth above they will expire and may not be exercised at a later date.
EXERCISING YOUR NQSOs
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Minimum Number of NQSOs That You May Exercise: The smallest number of NQSOs
that you may exercise at any one time is 100 or, if fewer, the total number of
your outstanding vested NQSOs.
Also, you may not exercise any NQSO to buy a fractional share of Stock; the
value of a fractional share will be paid in cash.
Procedures for Exercising Your NQSOs: To exercise a vested NQSO, you must:
- Complete a copy of the Nonqualified 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 NQSO.
This must be done before your NQSOs expire.
Paying for your NQSO Exercise:
NQSOs will be exercised through the Company's Shareholder Relations Office
and/or your broker. NQSOs 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 NQSOs and deliver promptly to the
Company the amount of sale proceeds to pay the Exercise Price; and (iii)
giving the 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 NQSOs by Company: The Company may decide at any time to
buy out your NQSOs. This may happen without your consent and at any
time. If the Company
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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 NQSOs
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 NQSOs. 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 NQSOs: Normally your NQSOs may not be transferred
to another person. However, you may complete a Beneficiary
Designation Form to name the person who may exercise your NQSOs 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 NQSO,
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: The Company may be required to withhold an amount
sufficient to satisfy federal, state and local withholding tax
requirements on your NQSOs, exercise or cancellation of your NQSOs or
purchase of shares of Stock. 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);
- You may pay this amount by giving the Company cash or a personal
check in an amount equal to the taxes that must be withheld;
- You may give the Company other shares of Stock (that you have held
for at least six months) with an aggregate Fair Market Value equal
to the taxes that must be withheld; or
- The Company may withhold a portion of the shares that you
otherwise would have received on the exercise date. The number of
shares withheld will have a Fair Market Value equal to the taxes
that must be withheld.
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You may choose the approach you prefer, although the Company may
reject your preferred method for any reason (or for no reason). If
this happens, you must pay these amounts in the way the Company
specifies.
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 NQSOs will be subject to the terms of any
other agreements between you and the Company.
9.00 Adjustments to NQSOs: Your NQSOs 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 NQSOs 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.
OPTIONEE/GRANTEE OHIO CASUALTY CORPORATION
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[_______] Dan R. Carmichael
[_______] President & CEO
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THIS FORM OF AWARD AGREEMENT IS PART OF A PROSPECTUS COVERING SECURITIES
REGISTERED UNDER THE SECURITIES ACT OF 193
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NONQUALIFIED 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:
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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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