Exhibit 10(c)
AMENDED AND RESTATED
2002
OLD REPUBLIC INTERNATIONAL CORPORATION
NON-QUALIFIED STOCK OPTION PLAN
1. Purpose.
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The purpose of this Non-Qualified Stock Option Plan (the "Plan") is to
promote the interests of Old Republic International Corporation, a
Delaware corporation (the "Company"), and its shareholders by providing
key employees on whom rests the major responsibility for the present
and future success of the Company and its subsidiaries with an
opportunity to acquire a proprietary interest in the Company and
thereby develop a stronger incentive to put forth maximum effort for
the continued success and growth of the Company and its subsidiaries.
In addition, the opportunity to acquire a proprietary interest in the
Company will aid in attracting and retaining key personnel of
outstanding ability. Only designated salaried officers and other
designated salaried key employees of the Company and its subsidiaries,
who are in a position to affect the profitability and growth of the
Company, will be eligible to receive options to purchase common stock
under the Plan. Directors who are designated salaried key employees
within the meaning of the foregoing are eligible to participate in the
Plan. Except as otherwise provided, for all purposes of the Plan the
term "subsidiary" or "subsidiary corporation" shall have the meaning
ascribed in the Internal Revenue Code of 1986, as amended. As used
herein, the term "optionee" applies both to male and female designated
salaried officers or other designated salaried key employees of the
Company or of any subsidiary corporation eligible under the Plan.
2. Administration.
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The Compensation Committee of the Board of Directors of the Company
("Compensation Committee"), which shall consist of three or more
disinterested directors, shall act as a committee to administer this
Plan. The Compensation Committee shall be responsible for the
interpretation of the provisions of the Plan. Subject to the provisions
of the Plan, the Compensation Committee may from time to time, and at
its sole discretion, adopt such rules and regulations for the
administration of the Plan as it deems appropriate. Except for the
terms and conditions explicitly set forth in this Plan, the
Compensation Committee shall have the authority to determine all
matters relating to awards under the Plan, including:
(a) which individuals shall receive options;
(b) the terms and conditions of the options including terms of
exercise, limitations on exercise, the price, and payment
terms;
(c) the number of options to be granted;
(d) the number of shares subject to each option;
(e) the form or forms of the instruments evidencing any options
granted under the Plan and of any other instruments required
under the Plan, and to change such forms from time to time,
as may be required or necessary.
All determinations, selections, decisions and rulings made by the
Compensation Committee pursuant to the provisions of the Plan shall be
final and binding.
Except with respect to awards made to executive officers or directors
of the Company, before making awards, the Compensation Committee may
consult with the Office of the Chief Executive Officer (OCEO) and may
seek the OCEO's recommendations and advice. The OCEO is comprised of
the Chairman of the Board of the Company and the President and Chief
Executive Officer of the Company.
The OCEO will have the responsibility for maintaining the records
concerning options granted to optionees, including the records
concerning exercises, lapses or forfeitures of options held by
optionees.
3. Shares Subject to the Plan.
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The shares that may be made subject to options granted under the Plan
shall be shares of Common Stock of the Company, $1.00 par value
("Common Stock"). The aggregate number of shares subject to options and
issued pursuant to this Plan shall not exceed at six percent (6%) of
the Common Stock of the Company issued and outstanding (excluding
Common Stock held by the Company and any of its subsidiaries) as of the
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end of the month immediately preceding the granting of an
option("Maximum Number"). However, in no event shall the aggregate
number of shares subject to outstanding options pursuant to this Plan
and all other stock option plans sponsored by the Company exceed the
Maximum Number. If any option is forfeited, terminated or cancelled for
any reason before being completely exercised, the shares covered by the
unvested as well as the unexercised portion of such option shall again
be available for the granting of options and said shares may be used to
grant new options under the Plan subject to the aforementioned Maximum
Number of shares. Appropriate adjustments in the number of shares and
in the option price per share will be made to give effect to
adjustments made in the number of outstanding shares of Common Stock
through recapitalization, reclassification, stock dividend, stock split
or other similar relevant changes. Shares issued upon exercise of
options granted under the Plan may be shares held by the Company as
treasury shares or authorized but previously unissued shares.
4. Election to Receive Series G Preferred Stock.
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With respect to options which were vested and exercisable as of
December 31, 2004, an optionee may elect, in lieu of receiving Common
Stock under this Plan, to receive the same number of shares of Series
G-3 Convertible Preferred Stock ("Series G-3 Preferred Stock") at the
same price and under the same terms and conditions as if the optionee
had elected to receive Common Stock. An election to receive Series G-3
Preferred Stock may only be made as of the first business day of March,
June, September or December of each year. Notice of such election must
be in writing and received by the Company prior to such dates. No such
election may be made with respect to any options or portions thereof
which were not vested and exercisable as of December 31, 2004.
5. Eligibility.
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The individuals who shall be eligible to participate in the Plan shall
be such designated salaried officers or other designated salaried key
employees described in Paragraph 1 hereof of the Company, or of any
subsidiary corporation, as the Compensation Committee shall determine
from time to time.
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6. Granting of Options.
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Subject to the terms and conditions of the Plan, the Compensation
Committee, may from time to time prior to May 31, 2012, grant to such
eligible employees' options to purchase such number of shares of Common
Stock under such terms and conditions as the Compensation Committee may
determine. More than one option may be granted to the same employee.
The day on which the Compensation Committee approves the granting of an
option shall be considered as the date on which such option is granted.
7. Option Price.
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The purchase price per share of Common Stock subject to an option shall
be fixed by the Compensation Committee but shall not be less than 100%
of the fair market value per share of Common Stock on the date the
option is granted. For the purposes of this Plan, the fair market value
of the Common Stock shall be determined as follows:
(a) If the Common Stock is listed on a national
securities exchange or admitted to unlisted trading
privileges on such an exchange, fair market value
shall be the composite transactions closing price for
the Common Stock on the immediately preceding trading
date of such securities exchange, as published in The
Wall Street Journal, or, if there was no trading of
the Common Stock on such day, then the composite
transactions closing price for the Common Stock on
the last previous trading date for which there was
trading on such exchange, as published in The Wall
Street Journal; or
(b) If the Common Stock is not listed or admitted to
unlisted trading privileges, fair market value shall
be the mean of the last reported bid and asked prices
of the Common Stock as reported by the National
Quotation Bureau, Inc. on the date in question; or
(c) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices
are not reported, fair market value shall be an
amount, not less than book value, determined in such
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reasonable manner as may be prescribed by the Board
of Directors of the Company.
8. Term of Options.
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The term of each option shall not exceed ten (10) years from the date
of grant. Except as provided in Paragraph 12 hereof, no option may be
exercised at any time unless the holder thereof is then an employee of
the Company or of a subsidiary. An employee shall have none of the
rights of a shareholder with respect to any of the shares subject to
option until such shares shall be issued to the optionee upon the
exercise of said option.
9. Method of Exercising Options.
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Any option granted hereunder may be exercised by the optionee by
delivering to the Company at its main office (attention of the OCEO)
written notice of the number of shares with respect to which the option
rights are being exercised. Payment in full of the purchase price plus
the amount required to be withheld by the then current Internal Revenue
Regulations will be required before the issuance and delivery of
certificates.
10. Amount Exercisable.
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Each option may be exercised, so long as it is valid and outstanding,
from time to time in part or as a whole, subject to the following
percentage limitations and any limitations with respect to the number
of shares for which the option may be exercised at a particular time
and to such other conditions as the Compensation Committee in its
discretion may specify upon granting the option.
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(a) Options may be exercised in accordance with the following
schedule of vesting:
Annual Cumulative
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10% as of December 31st of the year of the grant 10%
15% as of the second December 31st 25%
following the date of the grant
20% as of the third December 31st 45%
following the date of the grant
25% as of the fourth December 31st 70%
following the date of the grant
30% as of the fifth December 31st 100%
following the date of the grant;
(b) If the optionee (i) dies while in the employ of the Company
or any subsidiary, or (ii) retires in good standing from the
employ of the Company or any subsidiary after attaining age
57, or (iii) retires as a result of disability under the
then established rules of the Company or the subsidiary,
then options shall vest to the extent of the higher of:
(1) 10% of the number of shares covered by the option
for each year that the optionee has been employed
by the Company or any subsidiary; or
(2) the actual vested percentage determined pursuant to
the schedule in subparagraph (a) above, plus 50% of
the unvested remaining shares;
determined as of the date of the optionee's death or
retirement, with no additional vesting thereafter; or
(c) If there is any Change of Control of the Company, regardless
of the resulting price per share of Common Stock, then, in
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accordance with the vesting provisions set forth in the
preceding subparagraph (b) hereof, and any shares remaining
unvested thereafter shall vest in accordance with the
vesting schedule in subparagraph (a) above.
The right to purchase shall be cumulative and may be exercised as to
any shares not previously purchased during the remainder of the term of
the option.
For purposes of subparagraphs (b) and (c) above, years of employment
shall be measured from the date an employee was first employed by the
Company or any subsidiary and shall include periods of employment prior
to the time when the subsidiary or division of the Company was acquired
by the Company. As used in subparagraph (c) above, the term "Change of
Control of the Company" refers to: (i) the date of any consolidation or
merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other
property; or (ii) the date of any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Company, other than any
sale, lease, exchange or other transfer to any corporation where the
Company owns, directly or indirectly, at least 80% of the outstanding
voting securities of such corporation after any such transfer; or (iii)
the date of any plan or proposal for the liquidation or dissolution of
the Company; or (iv) the date any person (as such term is used in
Section 13(d) of the Securities Exchange Act of 1934, hereinafter the
"1934 Act"), other than the Old Republic International Corporation
Employees Savings and Stock Ownership Trust or any other trust
established by or contributed to by the Company or any of its
subsidiaries for the benefit of employees of the Company or its
subsidiaries, shall become the beneficial owner (within the meaning of
Rule 13d-3 under the 1934 Act) of 20% or more of the Company's
outstanding Common Stock; or (v) the date, during any period of 24
consecutive months, on which individuals who at the beginning of such
period constitute the entire Board of Directors of the Company shall
cease for any reason to constitute a majority thereof.
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11. Transferability of Options.
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Options shall be transferable by the optionee only by will, living
trust, under the laws of descent and distribution, or by written
designation of a beneficiary filed with the Company during the
optionee's lifetime. During the optionee's lifetime, options shall be
exercisable only by the optionee.
12. Termination of Options Upon Severance of Employment.
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Except as otherwise expressly provided herein, options shall terminate
immediately upon severance of the employment relationship between the
Company and its subsidiaries and the optionee for any reason, for or
without cause, other than death or retirement in good standing from the
employ of Company or its subsidiaries for reasons of age or disability
under the then established rules of the Company or the subsidiary.
Whether authorized leave of absence, or absence on military or
government service, shall constitute severance of the employment
relationship between the Company and the subsidiary and the optionee
shall be determined by the Compensation Committee at the time thereof.
(a) Death. In the event of the death of the holder of an option
while in the employ of the Company or any subsidiary and
before the date of expiration of such option, such option
shall terminate on the earlier of such date of expiration or
four (4) years following the date of such death. After the
death of the optionee, the optionee's executors,
administrators, or any person or persons to whom the
optionee's option may be transferred by will, by the laws of
descent and distribution or by beneficiary designation shall
have the right, at any time prior to such termination, to
exercise the option, in whole or in part. The numbers of
shares vested and exercisable, however, shall be determined
as of the date of death, with no further vesting thereafter.
(b) Retirement. If, before the date of expiration of the
option, the optionee shall be retired in good standing from
the employ of the Company or any subsidiary for reasons of
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age or disability under the then established rules of the
Company or the subsidiary, the option shall terminate on
the earlier of the normal date of expiration or four (4)
years after the date of such retirement. In the event of
such retirement, the option shall be exercisable prior to
the termination of such option to the extent to which the
optionee was entitled to exercise such option immediately
prior to such retirement unless the provisions of Paragraph
10(b) concerning accelerated vesting apply. An employment
relationship between the Company and the optionee shall be
deemed to exist during any period in which the optionee is
employed by the Company or any subsidiary. If the optionee
dies after retirement but prior to the expiration date of
the optionee's options, the option period shall not be
extended but shall terminate on the earlier of the date of
expiration or four (4) years after the date of retirement.
The number of shares vested and exercisable, however,
shall be determined as of the date of retirement, with no
further vesting thereafter.
(c) Change of Control of the Company. In the event of any
involuntary severance of the employment relationship
between the optionee and the Company or its subsidiaries
occurring within eighteen (18) months after any Change of
Control of the Company, as defined in Paragraph 10 hereof,
such option shall terminate on the earlier of its scheduled
date of expiration or six (6) months following severance of
the employment relationship.
13. Requirements of Law.
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The Company shall not be required to sell or issue any shares under any
option if the issuance of such shares shall constitute a violation by
the optionee or the Company of any provisions of any law or regulation
of any governmental authority. In addition, in connection with the
Securities Act of 1933 (as now in effect or hereafter amended), upon
exercise of any option, the Company shall not be required to issue such
shares unless the Compensation Committee has received evidence
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satisfactory to it to the effect that the holder of such option will
not transfer such shares except pursuant to a registration statement in
effect under said Act or unless an opinion of counsel to the Company
has been received by the Company to the effect that such registration
is not required. Any determination in this connection by the
Compensation Committee shall be final, binding and conclusive. At the
request of the Company to enable it to comply with said Act, the person
exercising the option shall also represent in writing that the shares
acquired upon exercise of the option are being acquired for the
optionee's own account for investment and not with a view to resale. In
the event the shares issuable on exercise of an option are not
registered under the Securities Act of 1933, the Company may imprint
the following legend or any other legend which counsel for the Company
considers necessary or advisable to comply with the Securities Act of
1933:
"The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 or under the
securities laws of any State and may not be sold or
transferred except upon such registration or upon receipt by
the Company of an opinion of counsel satisfactory to the
Company, in form and substance satisfactory to the Company,
that registration is not required for such sale or transfer."
The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act of 1933 (as
now in effect or as hereafter amended); and in the event any shares are
so registered the Company may remove any legend on certificates
representing such shares. The Company shall make reasonable efforts to
cause the exercise of an option or the issuance of shares pursuant
thereto to comply with any law or regulation of any governmental
authority.
14. No Rights as Shareholder.
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No optionee shall have rights as a shareholder with respect to shares
covered by the optionee's option until the date of issuance of a stock
certificate for such shares; and, except as otherwise provided in
Paragraph 3 hereof, no adjustment for dividends, or otherwise, shall be
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made if the record date thereof is prior to the date of issuance of
such certificate.
15. Employment Obligation.
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The granting of any option shall not impose upon the Company any
obligation to employ or continue to employ any optionee; and the right
of the Company to terminate the employment of any officer or other
employee shall not be diminished or affected by reason of the fact that
an option has been granted to the optionee.
16. Written Agreement.
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Each option granted hereunder shall be embodied in a written option
agreement which shall be subject to the terms and conditions prescribed
above and shall be signed by the optionee and by a member of the OCEO
for and in the name and on behalf of the Company. Such an option
agreement shall contain such other provisions as the Compensation
Committee in their discretion shall deem advisable.
17. Shareholder Approval and Termination.
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This Plan shall be effective on the date it is approved by the
affirmative vote of the holders of a majority of the Company's
securities present and entitled to vote at a meeting duly held in
accordance with the applicable laws of Delaware. It shall terminate on
May 31, 2012 provided, however, that the Board of Directors of the
Company may at any time amend, suspend or terminate the Plan. No
termination or amendment of the Plan may, without the consent of the
individual to whom any option shall have been theretofore granted,
adversely affect the rights of such individual under such option.
* * *
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IN WITNESS WHEREOF, the Company has caused its Chairman and Chief
Executive Officer to execute this Amended and Restated 2002 Non Qualified Stock
Option Plan this 23rd day of February, 2006.
OLD REPUBLIC INTERNATIONAL CORPORATION
By: /s/ A.C. Zucaro
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A. C. Zucaro, Chairman and
Chief Executive Officer
ATTEST:
/s/ Spencer LeRoy III
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