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Exhibit 10.a1
OHIO CASUALTY CORPORATION 1993 STOCK INCENTIVE PROGRAM
(as amended through February 20, 1997)
1. Purpose. The purpose of the Ohio Casualty Corporation 1993 Stock
Incentive Program (the "Program") is to attract and retain outstanding
individuals as directors, officers and other key employees of Ohio Casualty
Corporation (the "Company") and its Subsidiaries, and to furnish incentives to
such persons by providing such persons opportunities to acquire Common Shares
of the Company, or monetary payments based on the value of such shares, on
advantageous terms as herein provided.
2. Administration. The Program will be administered by a committee
(the "Committee") of at least three persons which shall be either the
Executive Compensation Committee of the Board of Directors of the Company or
such other committee comprised entirely of persons that are both (i) Non-
Employee Directors as defined in Rule 16b-3 promulgated by the Securities and
Exchange Commission, and (ii) "outside directors" as defined in Section 162(m)
of the Internal Revenue Code of 1986, as amended, and the regulations
thereunder, as the Board of Directors of the Company may from time to time
designate. The Committee shall interpret the Program, prescribe, amend and
rescind rules and regulations relating thereto, and make all other
determinations necessary or advisable for the administration of the Program.
Any determination, decision or action of the Committee in connection with the
construction, interpretation, administration or application of the Program
shall be final, conclusive and binding upon all persons participating in the
Program and any person validly claiming under or through persons participating
in the Program. A majority of the
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members of the Committee shall constitute a quorum at any meeting of the
Committee, and all determinations of the Committee at a meeting shall be made
by a majority of its members. Any determination of the Committee under the
Program may be made without a meeting of the Committee by a writing signed by
all of its members. The Company shall effect the granting of Awards under the
Program in accordance with the determination of the Committee, by execution of
instruments in writing in such form as approved by the Committee.
With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), transactions under this
Program are intended to comply with all applicable conditions of Rule 16b-3 of
the Securities and Exchange Commission or its successors. To the extent any
provision of the Program or action by the Committee fails to so comply, it
shall be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee.
3. Participants. Participants in the Program will consist of such
officers and other full-time, salaried employees of the Company and its
Subsidiaries as the Committee in its sole discretion may designate from time
to time to receive Awards hereunder. The Committee's designation of a
Participant in any year shall not require the Committee to designate such
person to receive an Award in any other year. The Committee shall consider
such factors as it deems pertinent in selecting Participants and in
determining the type and amount of their respective Awards, including without
limitation (i) the financial condition of the Company and its Subsidiaries;
(ii) anticipated profits for the current or future years; (iii) contributions
of Participants to the profitability
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and development of the Company and its Subsidiaries; and (iv) other
compensation provided to Participants. Non-Employee Directors shall also be
Participants in the Program solely for purposes of receiving Stock Options
under Section 11 hereof. For purposes of Section 11 of the Program, the term
"Non-Employee Director" shall mean a member of the Board of Directors of the
Company who is not a full-time employee of the Company or any of its
Subsidiaries.
4. Types of Awards. Awards under the Program may be granted in any
one or a combination of (a) Incentive Stock Options; (b) Non-Qualified Stock
Options; (c) Stock Appreciation Rights; (d) Limited Stock Appreciation Rights;
(e) Stand Alone Stock Appreciation Rights; and (f) Restricted Stock Awards,
all as described below in Sections 6-11 hereof. The maximum aggregate number
of Common Shares with respect to which Awards may be made to any Participant
in any calendar year is 75,000 Common Shares. For purposes of this
limitation, a Stock Option shall be treated as being made with respect to the
number of Common Shares that may be purchased with the Stock Option; a Stand
Alone Stock Appreciation Right shall be treated as being made with respect to
the number of Common Shares as to which the cash payment at exercise is
computed; a Restricted Stock Award shall be counted as being equal to the
number of underlying Common Shares; and Stock Appreciation Rights and Limited
Stock Appreciation Rights shall not enter into the computation hereunder if
such Awards, when exercised, will result in a related Stock Option being
surrendered.
5. Shares Reserved Under the Program. There is hereby reserved for
issuance under the Program an aggregate of One Million (1,000,000) Common
Shares,
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which may be newly issued or treasury shares. The Common Shares hereby
reserved are in addition to the Common Shares previously reserved under the
Company's 1982 Incentive Stock Program (the "Prior Stock Option Program").
Any Common Shares reserved for issuance under the Prior Stock Option Program
in excess of the number of Common Shares as to which stock options or other
awards have been awarded thereunder on the Effective Date, plus any such
shares as to which stock options or other awards granted under the Prior Stock
Option Program may lapse, expire, terminate or be canceled after the Effective
Date (so long as the holder thereof has not received any benefits of ownership
of such shares), shall also be reserved and available for issuance in
connection with Awards under this Program. All of such shares may, but need
not, be issued pursuant to the exercise of Incentive Stock Options.
If there is a lapse, expiration, termination or cancellation of any
Award granted hereunder without the issuance of Common Shares or payment of
cash thereunder, or if Common Shares are issued under any Award and thereafter
are reacquired by the Company pursuant to rights reserved upon the issuance
thereof, the Common Shares subject to or reserved for such Award may again be
used for new Stock Options or other Awards under this Program so long as the
holder thereof has not received any benefits of ownership of such shares;
provided, however, that in no event may the number of Commons Shares issued
under this Program exceed the total number of Common Shares reserved for
issuance hereunder.
6. Incentive Stock Option Plan. Incentive Stock Options will consist
of Stock Options, qualifying as "incentive stock options" under the
requirements of
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Section 422 of the Code, to purchase Common Shares at purchase prices not less
than One Hundred Percent (100%) of the Fair Market Value of such Common Shares
on the date of grant. Incentive Stock Options will be exercisable over not
more than ten (10) years after the date of grant. In the event of termination
of employment for any reason other than Retirement, Disability or death, the
right of the optionee to exercise an Incentive Stock Option shall terminate
immediately upon the termination of employment. In the event of termination
of employment due to Retirement, the right of the optionee to exercise an
Incentive Stock Option shall terminate upon the earlier of the end of the
original term of the Incentive Stock Option or three (3) months after the date
of such Retirement. In the event of termination of employment due to
Disability, the right of the optionee to exercise an Incentive Stock Option
shall terminate upon the earlier of the end of the original term of the
Incentive Stock Option or one (1) year after the date of termination of
employment. If the optionee should die while employed, the right of the
optionee's successor in interest to exercise an Incentive Stock Option granted
to the optionee shall terminate upon the earlier of the end of the original
term of the Incentive Stock Option or one (1) year after optionee's last date
of employment. If the optionee should die within three (3) months after
termination of employment due to Retirement, the right of his or her successor
in interest to exercise an Incentive Stock Option shall terminate three (3)
months after the date of termination of employment as a result of such
Retirement, but not later than the end of the original term of the Incentive
Stock Option. If the optionee should die within one (1) year after
termination of employment due to Disability, the right of his or her successor
in interest to exercise
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an Incentive Stock Option shall terminate upon the earlier of one (1) year
after the date of termination of employment or the end of the original term of
the Incentive Stock Option. The aggregate fair market value (determined as of
the time the Stock Option is granted) of the Common Shares with respect to
which incentive stock options are exercisable for the first time by any
Participant during any calendar year (under all option plans of the Company
and all Subsidiaries and Parents of the Company) shall not exceed $100,000.
An Incentive Stock Option granted to a Participant under the Program may be
exercised only after six (6) months from its grant date. Anything contained
herein to the contrary notwithstanding, no Incentive Stock Option shall be
granted to an employee who, at the time the Incentive Stock Option is granted,
owns (actually or constructively under the provisions of Section 424(d) of the
Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of any Parent or Subsidiary of the Company,
unless the option exercise price is not less than 110% of the Fair Market
Value of the Common Shares subject to the Incentive Stock Option on the date
of grant and the Incentive Stock Option by its terms is not exercisable more
than five years from the date it is granted. For purposes of this Section 6,
if an optionee terminates his employment voluntarily, the date of termination
of employment shall be deemed the date on which he notifies the Company of his
intention to terminate his employment; in all other cases the date of
termination of employment shall be the last day of employment.
7. Non-Qualified Stock Option Plan. Non-Qualified Stock Options will
consist of options (other than Incentive Stock Options) to purchase Common
Shares at
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purchase prices not less than One Hundred Percent (100%) of the Fair Market
Value of such Common Shares on the date of grant. Non-Qualified Stock Options
will be exercisable over not more than ten (10) years after the date of grant.
In the event of termination of employment for any reason other than
Retirement, Disability or Death, the right of the optionee to exercise a Non-
Qualified Stock Option shall terminate immediately upon the termination of
employment. In the event of termination of employment due to Retirement or
Disability, or if the optionee should die while employed, the right of the
optionee or his or her successor in interest to exercise a Non-Qualified Stock
Option shall terminate upon the earlier of the end of the original term of the
Non-Qualified Stock Option or one (1) year after the date of termination of
employment as a result of such Retirement, Disability or Death. If the
optionee should die within one (1) year after termination of employment due to
Retirement or Disability, the right of his or her successor in interest to
exercise a Non-Qualified Stock Option shall terminate upon the earlier of one
(1) year after termination of employment as a result of such Retirement or
Disability or the end of the original term of the Non-Qualified Stock Option.
A Non-Qualified Stock Option granted to a Participant under the Program may be
exercised only after six (6) months from its grant date. For purposes of this
Section 7, if an optionee terminates his employment voluntarily, the date of
termination of employment shall be deemed the date on which he notifies the
Company of his intention to terminate his employment; in all other cases the
date of termination shall be the last day of employment.
8. Stock Appreciation Rights Plan. The Committee may, in its
discretion, grant a Stock Appreciation Right to the holder of any Stock Option
granted hereunder.
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Such Stock Appreciation Rights shall be subject to such terms and conditions
consistent with the Program as the Committee shall impose from time to time,
including the following:
(a) A Stock Appreciation Right may be granted with respect to
a Stock Option at the time of its grant or at any time thereafter up to
six (6) months prior to its expiration.
(b) Stock Appreciation Rights will permit the holder to
surrender any related Stock Option or portion thereof which is then
exercisable and to elect to receive in exchange therefor cash in an
amount equal to:
(I) The excess of the Fair Market Value on the date
of such election of one Common Share over the option exercise
price, multiplied by
(ii) The number of Common Shares covered by such
Stock Option or portion thereof which is so surrendered.
(c) A Stock Appreciation Right granted to a Participant under
the Program may be exercised only after six (6) months from its grant
date.
(d) The Committee shall have the discretion to satisfy a
Participant's right to receive the amount of cash determined under
subsection (b) hereof, in whole or in part, by the delivery of Common
Shares valued as of the date of the Participant's election.
(e) A Stock Appreciation Right may be granted to a
Participant regardless of whether such Participant has been granted a
Limited Stock Appreciation Right with respect to the same Stock Option.
However, a Stock
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Appreciation Right may not be exercised during any period that a Limited
Stock Appreciation Right with respect to the same Stock Option may be
exercised.
(f) In the event of the exercise of a Stock Appreciation
Right, the number of Common Shares reserved for issuance hereunder
shall be reduced by the number of shares covered by the Stock Option or
portion thereof surrendered.
8A. Stand Alone Stock Appreciation Rights Plan. The Committee may, in
its discretion, grant Stand Alone Stock Appreciation Rights to any
Participant. Such Stand Alone Stock Appreciation Rights shall be subject to
such terms and conditions consistent with the Program as the Committee shall
impose from time to time, including the following:
(a) Stand Alone Stock Appreciation Rights shall be granted
without reference to any Stock Option which is then exercisable.
(b) Each Stand Alone Stock Appreciation Right will permit the
holder to elect to receive in exchange therefor cash in an amount equal
to the excess of:
(I) the Fair Market Value on the date of such
election of one Common Share, over
(ii) the Fair Market Value of one Common Share on the
date which the Stand Alone Stock Appreciation Right was
granted.
(c) A Stand Alone Stock Appreciation Right granted to a
Participant under the Program may be exercised only after six (6)
months from its grant date.
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(d) The Committee shall have the discretion to satisfy a
Participant's right to receive the amount of cash determined under
subsection (b) hereof, in whole or in part, by the delivery of Common
Shares valued as of the date of the Participant's election.
(e) Stand Alone Stock Appreciation Rights will be exercisable
over not more than ten (10) after the date of grant.
(f) In the event of termination of employment of a Participant
to whom a Stand Alone Stock Appreciation Right is granted for any
reason other than Retirement, Disability or death, the right of the
holder to exercise such Stand Alone Stock Appreciation Right shall
terminate immediately upon the termination of employment. In the event
of termination of employment due to Retirement or Disability, or if the
optionee should die while employed, the right of the holder or his or
her successor in interest to exercise a Stand Alone Stock Appreciation
Right shall terminate upon the earlier of the end of the original term
of the Stand Alone Stock Appreciation Right or one (1) year after the
date of termination of employment as a result of such Retirement,
Disability or Death. If the holder should die within one (1) year
after termination of employment due to Retirement or Disability, the
right of his or her successor in interest to exercise a Stand Alone
Stock Appreciation Right shall terminate upon the earlier of one (1)
year after termination of employment as a result of such Retirement or
Disability or the end of the original term of the Stand Alone Stock
Appreciation Right. For purposes of this Section 8A, if a holder
terminates his employment voluntarily, the date of termination of
employment shall be deemed the date on which he
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notifies the Company of his intention to terminate his
employment; in all other cases the date of termination of employment
shall be the last day of employment.
(g) In the event of the grant of any Stand Alone Stock
Appreciation Rights, the number of Common Shares reserved for issuance
hereunder shall be reduced by the number of Stand Alone Stock
Appreciation Rights granted.
9. Limited Stock Appreciation Rights Plan. The Committee may, in its
discretion, grant a Limited Stock Appreciation Right to the holder of any
Stock Option granted hereunder. Such Limited Stock Appreciation Rights shall
be subject to such terms and conditions consistent with the Program as the
Committee shall impose from time to time, including the following:
(a) A Limited Stock Appreciation Right may be granted with
respect to a Stock Option at the time of its grant or at any time
thereafter up to six (6) months prior to its expiration.
(b) A Limited Stock Appreciation Right will permit the holder
to surrender any related Stock Option or portion thereof which is then
exercisable and to receive in exchange therefor cash in an amount equal
to:
(I) The excess of the Fair Market Value on the date
of such election of one Common Share over the option exercise
price, multiplied by
(ii) The number of Common Shares covered by such
Stock Option or portion thereof which is so surrendered.
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(c) A Limited Stock Appreciation Right granted to a
Participant under the Program may be exercised only after six (6)
months from its grant date and only during the sixty (60) day period
commencing with the day following the date of a Change in Control.
(d) A Limited Stock Appreciation Right may be granted to a
Participant regardless of whether such Participant has been granted a
Stock Appreciation Right with respect to the same Stock Option.
(e) In the event of the exercise of a Limited Stock
Appreciation Right, the number of Common Shares reserved for issuance
hereunder shall be reduced by the number of Common Shares covered by
the Stock Option or portion thereof surrendered.
10. Restricted Stock Awards Plan. Restricted Stock Awards will consist of
Common Shares transferred to Participants without other payment therefor
(other than the payment of the par value of such shares if required by
applicable law) as additional compensation for their services to the Company
or one of its Subsidiaries. Restricted Stock Awards shall be subject to such
terms and conditions as the Committee determines appropriate including,
without limitation, restrictions on the sale or other disposition of such
shares and rights of the Company to reacquire such shares upon termination of
the Participant's employment within specified periods. Subject to such other
restrictions as are imposed by the Committee, the Common Shares covered by a
Restricted Stock Award granted to a Participant under the Program may be sold
or otherwise disposed of only after six (6) months from the grant date of the
award.
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11. Non-Qualified Stock Option Awards for Non-Employee Directors.
(a) Grant of Options. Each person who is a Non-Employee
Director shall be granted a Non-Qualified Stock Option to purchase
3,000 Common Shares effective on the third business day following the
date of his or her first election or appointment to the Board of
Directors and on the third business day following each annual meeting
of shareholders at which he or she is re-elected to the Board of
Directors.
(b) Price. The option exercise price per share of each Non-
Qualified Stock Option granted under this Section 11 shall be equal to
the Fair Market Value of a Common Share on the date of grant, provided
that the option exercise price shall be subject to adjustment as
provided in Section 18 hereof:
(c) Term of Options. Non-Qualified Stock Options granted
under this Section 11 shall be effective on and shall be of a term of
ten (10) years from the date of grant. Each such option shall be
subject to earlier termination as provided in subsection (e) hereof.
(d) Restriction on Exercise. Non-Qualified Stock Options
granted under this Section 11 may not be exercised within six (6)
months following their date of grant.
(e) Termination of Service as a Director.
(I) Except as otherwise provided in this subsection
(e), any Non-Qualified Stock Option granted under this
Section 11 is exercisable only by the optionee, is exercisable
only while the optionee is a director of the Company and then
only if the option has become exercisable by its
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terms, and if not exercisable by its terms at the time
the optionee ceases to be a director of the Company, shall
immediately expire on the date the optionee ceased to be a
director of the Company.
(ii) Any Non-Qualified Stock Option granted under
this Section 11 which is exercisable by its terms at the time
the optionee ceases to be a director of the Company must be
exercised on or before the earlier of three months after the
date the optionee ceases to be a director of the Company or the
expiration date of such option, after which period such option
shall expire. Notwithstanding the foregoing, if an optionee's
status as a director of the Company is Terminated For Cause (as
herein defined), however, all options granted to such optionee
shall, to the extent not previously exercised, expire
immediately upon such termination.
(iii) In the event of the death of the holder of a
Non-Qualified Stock Option granted under this Section 11 while
a director of the Company or within three months after he
ceases to be a director of the Company, such optionee's
unexercised Non-Qualified Stock Option (whether or not then
exercisable by its terms) shall become immediately exercisable
by the optionee's successor in interest for a period ending on
the earlier of the end of the original term of the option or
twelve months after the date of death, after which period such
option shall expire.
(iv) In the case of any Non-Qualified Stock Option
granted under this Section 11, in the event the optionee ceases
to be a director of
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the Company by reason of a Disability, such optionee's
unexercised Non-Qualified Stock Option (whether or not then
exercisable by its terms) shall become immediately exercisable
for a period ending on the earlier of the end of the original
term of such option or twelve months from the date the optionee
ceases to be a director, after which period such option shall
expire.
(f) Except in the event of conflict, all provisions
of the Program shall apply to this Section 11. In the event of
any conflict between the other provisions of the Program and
this Section 11, this Section 11 shall control. Those
provisions of Sections 8 and 9 hereof which authorize the
Committee to grant a Stock Appreciation Right or a Limited
Stock Appreciation Right with respect to a Stock Option shall
not apply to any Non-Qualified Stock Option granted under this
Section 11. Those provisions of Section 14 hereof which
authorize the Committee to declare outstanding options to be
vested and to amend or modify the terms of any Awards shall not
apply to any Non-Qualified Stock Option granted under this
Section 11.
12. Nontransferability. Each Stock Option, Stock Appreciation Right,
Limited Stock Appreciation Right and Restricted Stock Award granted under this
Program shall not be transferable other than by will or the laws of descent
and distribution, and shall be exercisable, during the Participant's lifetime,
only by the Participant or the Participant's guardian or legal representative.
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13. Other Provisions. The grant of any Award under the Program may
also be subject to other provisions (whether or not applicable to any Award
granted to any other Participant) as the Committee determines appropriate
including, without limitation, provisions for the purchase of Common Shares
under Stock Options in installments, provisions for the payment of the option
exercise price of shares under a Stock Option by delivery of other Common
Shares of the Company having a then Fair Market Value equal to the option
exercise price of such shares, restrictions on resale or other disposition,
such provisions as may be appropriate to comply with federal or state
securities laws and stock exchange requirements and understandings or
conditions as to the Participant's employment in addition to those
specifically provided for under the Program.
The Committee may, in its discretion, permit payment of the option
exercise price of shares under Stock Options by delivery of a properly
executed exercise notice together with a copy of irrevocable instructions to a
broker to deliver promptly to the Company the amount of sale or loan proceeds
to pay the option exercise price. To facilitate the foregoing, the Company
may enter into agreements for coordinated procedures with one or more
brokerage firms.
The Committee may, in its discretion and subject to such rules as it
may adopt, permit a Participant (other than a Non-Employee Director who
receives a Non-Qualified Stock Option under Section 11 hereof) to pay all or a
portion of the federal, state and local taxes, including FICA withholding tax,
arising in connection with the following transactions: (a) the exercise of a
Non-Qualified Stock Option; (b) the lapse of restrictions on Common Shares
received as a Restricted Stock Award; or (c) the receipt
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or exercise of any other Award; by electing (i) to have the Company
withhold Common Shares, (ii) to tender back Common Shares received in
connection with such Award or (iii) to deliver other previously acquired
Common Shares of the Company having a Fair Market Value approximately equal to
the amount to be withheld.
14. Term of Program and Amendment, Modification, Cancellation or
Acceleration of Awards. No Award shall be granted under the Program more than
ten (10) years after the date of the original adoption of this Program by the
Company's Board of Directors. The terms and conditions applicable to any
Award granted prior to such date may at any time be amended, modified or
canceled, without shareholder approval, by mutual agreement between the
Committee and the Participant or such other persons as may then have an
interest therein, so long as shareholder approval of such amendment,
modification or cancellation is not required under Rule 16b-3 of the
Securities and Exchange Commission or any applicable requirements of any
securities exchange on which are listed any of the Company's equity securities
or any applicable requirements for issuers whose securities are traded in the
NASDAQ National Market System or any applicable requirements of the Code. The
Committee may, at any time and in its sole discretion, declare any or all
Stock Options, Stock Appreciation Rights and Stand Alone Stock Appreciation
Rights then outstanding under this Program or the Prior Stock Option Program
to be exercisable and any or all then outstanding Restricted Stock Awards to
be vested, whether or not such options, rights or awards are then otherwise
exercisable or vested.
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15. Amendment to Prior Stock Option Program. No Stock Options or
other awards shall be granted under the Prior Stock Option Program on or after
the Effective Date.
16. Taxes. The Company shall be entitled to withhold the amount of
any tax attributable to any amount payable or shares deliverable under the
Program after giving the person entitled to receive such amount or shares
notice as far in advance as practicable, and the Company may defer making
payment or delivery if any such tax may be pending unless and until
indemnified to its satisfaction.
17. Definitions.
(a) Award. The term "Award" means an award or grant of a
Stock Option, Stock Appreciation Right, Limited Stock Appreciation
Right, Stand Alone Stock Appreciation Right or Restricted Stock Award
made to a Participant under Sections 5, 6, 7, 8, 9, 10 or 11 of the
Program.
(b) Change in Control. A "Change in Control" shall be deemed
to have occurred on the earliest of the following dates:
(I) The date any entity or person (including a
"group" as defined in Section 13(d)(3) of the Exchange Act)
shall have become the beneficial owner of, or shall have
obtained voting control over, twenty percent (20%) or more of
the outstanding Common Shares;
(ii) The date the shareholders of the Company approve
a definitive agreement (A) to merge or consolidate the Company
with or into another corporation, in which the Company is not
the continuing or surviving corporation or pursuant to which
any Common Shares would be
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converted into cash, securities or other property of
another corporation, other than a merger of the Company in
which holders of Common Shares immediately prior to the merger
have the same proportionate ownership of Common Shares of the
surviving corporation immediately after the merger as
immediately before, or (B) to sell or otherwise dispose of
substantially all the assets of the Company; or
(iii) The date there shall have been a change in a
majority of the Board of Directors of the Company within a
twelve (12) month period; provided, however, that any new
director whose nomination for election by the Company's
shareholders was approved, or who was appointed or elected to
the Board, by the vote of two-thirds of the directors then
still in office who were in office at the beginning of the
twelve (12) month period shall not be counted in determining
whether there has been such a change in a majority of the
Board.
(c) Code. The term "Code" means the Internal Revenue Code of
1986, as amended, and regulations and rulings thereunder. References
to a particular section of the Code shall include references to
successor provisions.
(d) Committee. The "Committee" means the Committee of the
Board of Directors of the Company constituted as provided in Section 2
hereof.
(e) Common Shares. "Common Shares" means the Common Shares
of the Company or any security of the Company issued in substitution,
exchange or lieu thereof.
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(f) Company. The "Company" means Ohio Casualty Corporation,
an Ohio corporation, or any successor corporation.
(g) Disability. The term "Disability" means, as it relates
to the exercise of an Incentive Stock Option after termination of
employment, a disability within the meaning of Section 22(e)(3) of the
Code, and for all other purposes, a mental or physical condition which,
in the opinion of the Committee, renders an optionee unable or
incompetent to carry out the job responsibilities which such optionee
held or the tasks to which such optionee was assigned at the time the
disability was incurred, and which is expected to be permanent or for
an indefinite duration exceeding one year.
(h) Effective Date. The term "Effective Date" means the date
on which the Program is approved by the shareholders of the Company.
(I) Exchange Act. The term "Exchange Act" means the
Securities Act of 1934, as amended, or a successor statute.
(j) Fair Market Value. The "Fair Market Value" of the
Company's Common Shares at any time shall mean, on any given date, the
closing price of the Common Shares, as reported on the NASDAQ National
Market System for such date or, if Common Shares were not traded on
such date, on the next preceding day on which Common Shares were
traded; provided, however, that in the case of any Limited Stock
Appreciation Right (other than a right related to an Incentive Stock
Option), the Fair Market Value shall be the higher of:
(I) The highest daily closing price of the Common
Shares during the sixty (60) day period following the Change in
Control; or
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(ii) The highest gross price paid or to be paid for
the Common Shares in any of the transactions described in
Sections 17(b)(i) and 17(b)(ii).
(k) Incentive Stock Option. "Incentive Stock Option" means
any Stock Option granted pursuant to the provisions of Section 6 of the
Program that is intended to be and is specifically designated as an
"incentive stock option" within the meaning of Section 422 of the Code.
(l) Limited Stock Appreciation Rights. "Limited Stock
Appreciation Rights" mean limited stock appreciation rights granted to
a Participant under Section 9 of the Program.
(m) Non-Employee Director. For purposes of Section 11 of the
Program, "Non-Employee Director" means a member of the Board of
Directors of the Company who is not a full-time employee of the Company
or any Subsidiary.
(n) Non-Qualified Stock Option. A "Non-Qualified Stock
Option" means any Stock Option granted pursuant to the provisions of
Section 7 or Section 11 of the Program that is not an Incentive Stock
Option.
(o) Parent. The term "Parent of the Company" shall have the
meaning set forth in 424(e) of the Code.
(p) Participant. The term "Participant" means a full-time
employee of the Company or a Subsidiary or a Non-Employee Director who
is granted a Non-Qualified Stock Option under Section 11 of the
Program.
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(q) Prior Stock Option Program. The "Prior Stock Option
Program" means the Ohio Casualty Corporation 1982 Incentive Stock
Program, as amended.
r Program. The "Program" means this Ohio Casualty
Corporation 1993 Stock Incentive Program, as set forth herein and as it
may be hereafter amended and from time to time in effect.
(s) Restricted Stock Awards. "Restricted Stock Awards" mean
awards of restricted stock granted to a Participant under Section 10 of
the Program.
(t) Retirement. The term "Retirement" for all purposes of
the Program shall have the meaning given to such term in the Ohio
Casualty Corporation Employees Retirement Plan.
(u) Stock Appreciation Rights. "Stock Appreciation Rights"
mean stock appreciation rights granted to a Participant under Section 8
of the Program.
(v) Stock Option. The term "Stock Option" means any
Incentive Stock Option or Non-Qualified Stock Option granted under the
Program.
(w) Stock Option Awards. The term "Stock Option Awards"
means any grant of a Stock Option to a Participant under the Program.
(x) Subsidiary. The term "Subsidiary" for all purposes other
than the Incentive Stock Option plan described in Section 6, shall mean
any corporation, partnership, joint venture or business trust, fifty
percent (50%) or more of the control of which is owned, directly or
indirectly, by the Company. For Incentive Stock Option plan purposes
the term "Subsidiary" shall be defined as provided in Section 424(f) of
the Code.
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(y) Terminated for Cause. The term "Terminated for Cause"
for purposes of the Program shall mean termination on account of any
act of fraud or intentional misrepresentation or embezzlement,
misappropriation or conversion of assets or opportunities of the
Company or a Subsidiary, the conviction of a felony or intentional and
repeated violations of the written policies or procedures of the
Company or any Subsidiary.
(z) Stand Alone Stock Appreciation Rights. The term "Stand
Alone Stock Appreciation Rights" means the stock appreciation rights
granted to a Participant under Section 8A of the Program.
18. Adjustment Provisions.
(a) The existence of this Program and the Awards granted
hereunder shall not affect or restrict in any way the right or power of
the Board of Directors or the shareholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other
change in the Company's capital structure or its business, any merger
or consolidation of the Company, any issue of bonds, debentures,
preferred or prior preference stocks ahead of or affecting the
Company's capital stock or the rights thereof, the dissolution or
liquidation of the Company or any sale or transfer of all or any part
of its assets or business, or any other corporate act or proceeding.
(b) In the event of any change in capitalization affecting
the Common Shares, such as a stock dividend, stock split,
recapitalization, merger, consolidation, split-up, combination or
exchange of shares or other form of reorganization, or any other change
affecting the Common Shares, the
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Committee shall make proportionate adjustments to reflect such
change with respect to the aggregate number of Common Shares for which
Awards in respect thereof may be granted under the Program, the maximum
number of Common Shares which may be sold or awarded to any
Participant, the number of Common Shares covered by each outstanding
Award and the price per share in respect of outstanding Awards.
(c) The Committee also shall make such adjustments in the
number of shares covered by, and the price or other value of any
outstanding Awards in the event of a spin-off or other distribution
(other than normal cash dividends) of Company assets to shareholders.
(d) Subject to the six month holding requirements of Sections
6, 7, 8(c), 8A(c), 9(c), 10 and 11(d) but notwithstanding any other
provision of this Program or the Prior Stock Option Program, upon the
occurrence of a Change in Control:
(I) All Stock Options then outstanding under this
Program or the Prior Stock Option Program shall become fully
exercisable as of the date of the Change in Control, whether or
not then otherwise exercisable;
(ii) All Stock Appreciation Rights, Stand Alone Stock
Appreciation Rights and Limited Stock Appreciation Rights then
outstanding shall become fully exercisable as of the date of
the Change in Control, whether or not then otherwise
exercisable; and
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(iii) All terms and conditions of all Restricted Stock
Awards then outstanding shall be deemed satisfied as of the
date of the Change in Control, whether or not then otherwise
satisfied.
19. Amendment and Termination of Program. The Board of Directors of
the Company may amend the Program from time to time or terminate the Program
at any time without the approval of the shareholders of the Company except as
such shareholder approval may be required (a) to satisfy the requirements of
Rule 16b-3 of the Securities and Exchange Commission, (b) to satisfy
applicable requirements of the Code or (c) to satisfy applicable requirements
of any securities exchange on which are listed any of the Company's equity
securities or any requirements applicable to issuers whose securities are
traded in the NASDAQ National Market System. No such action to amend or
terminate the Program shall reduce the then existing amount of any
Participant's Award or adversely change the terms and conditions thereof
without the Participant's consent. Section 11 of the Program may not be
amended more frequently than once every six months other than to comport with
changes in the Code, or changes in the Employees Retirement Income Securities
Act, or the rules thereunder, and no amendment of the Program shall result in
any Committee member losing his or her status as a "disinterested person" as
defined in Rule 16b-3 of the Securities and Exchange Commission with respect
to any employee benefit plan of the Company or result in the Program losing
its status as a plan satisfying the requirements of said Rule 16b-3.
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20. No Right to Employment. Neither the adoption of the Program nor
the granting of any Awards hereunder shall confer upon any employee of the
Company or any Subsidiary any right to continued employment with the Company
or any Subsidiary, as the case may be, nor shall it interfere in any way with
the right of the Company or a Subsidiary to terminate the employment of any of
its employees at any time, with or without cause.
21. Unfunded Plan. The Program shall be unfunded and the Company
shall not be required to segregate any assets that may at any time be
represented by Awards under the Program. Any liability of the Company to any
person with respect to any Awards under the Program shall be based solely upon
any contractual obligations that may be effected pursuant to the Program. No
such obligation of the Company shall be deemed to be secured by any pledge of,
or other encumbrance on, any property of the Company or any Subsidiary.
22. Payments to Trust. The Committee is authorized to cause to be
established a trust agreement or several trust agreements whereunder the
Committee may make payments of amounts due or to become due to Participants in
the Program.
23. Engaging in Competition with Company. In the event a Participant
terminates his or her employment with the Company or a Subsidiary for any
reason whatsoever, and within eighteen (18) months after the date thereof
accepts employment with any competitor of, or otherwise engaged in competition
with, the Company or any subsidiary, the Committee, in its sole discretion,
may require such Participant to return to the Company the economic value of
any Award which is realized
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or obtained (measured at the date of exercise, vesting or payment) by
such Participant at any time during the period beginning on that date which is
six months prior to the date of such Participant's termination of employment
with the Company or any Subsidiary.
24. Other Company Award and Compensation Programs. Payments and
other Awards received by a Participant under the Program shall not be deemed a
part of a Participant's regular, recurring compensation for purposes of any
termination indemnity or severance pay law and shall not be included in, nor
have any effect on, the determination of Awards under any other employee
benefit plan or similar arrangement provided by the Company or a Subsidiary
unless expressly so provided by such other plan or arrangements, or except
where the Committee or the Board of Directors determines that an Award or
portion of an Award should be included to accurately reflect competitive
compensation practices or to recognize that an Award has been made in lieu of
a portion of competitive annual cash compensation. Awards under the Program
may be made in combination with or in tandem with, or as alternatives to,
grants, awards or payments under any other Company or Subsidiary plans. The
Program notwithstanding, the Company or any Subsidiary may adopt such other
compensation programs and additional compensation arrangements as it deems
necessary to attract, retain and reward employees for their service with the
Company and its Subsidiaries.
25. Securities Law Restrictions. No Common Shares shall be issued
under the Program unless counsel for the Company shall be satisfied that such
issuance will
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be in compliance with applicable federal and state securities law.
Certificates for Common Shares delivered under the Program may be subject to
such stock-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Shares are then listed or traded on the NASDAQ National Market System or any
applicable federal or state securities law. The Committee may cause a legend
or legends to be put on any such certificates to make appropriate reference to
such restrictions.
26. Award Agreement. Each Participant receiving an Award under the
Program shall enter into an agreement with the Company in a form specified by
the Committee agreeing to the terms and conditions of the Award and such
related matters as the Committee shall, in its sole discretion determine.
27. Cost of Program. The costs and expenses of administering the
Program shall be borne by the Company.
28. Governing law. The Program and all actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Ohio.
29. Shareholder Approval. The Program was adopted by the Board of
Directors of the Company on February 18, 1993. The Program and any Award
granted thereunder shall be null and void if shareholder approval is not
obtained within twelve (12) months of the adoption of the Program by the Board
of Directors.
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