Exhibit 10(iii)
THE HARTFORD STEAM BOILER INSPECTION
AND INSURANCE COMPANY
1995 STOCK OPTION PLAN
ARTICLE I - PLAN ADMINISTRATION AND ELIGIBILITY
1.1 Purpose of Plan
The purpose of the 1995 Stock Option Plan is to attract
and retain persons of ability as employees of the
Company and its Subsidiaries and to motivate such
employees to exert their best efforts to contribute to
the long-term growth of the Company by encouraging
ownership in the Company. The Plan is further designed
to promote a closer identity of interest between key
employees and the Company's shareholders.
1.2 Definitions
a. "Appreciation" shall mean the excess of the Fair
Market Value of a share over the specified option
price per share multiplied by the number of shares
subject to the option or portion thereof which is
surrendered.
b. "Beneficiary" shall mean the legal representative
of the estate of a deceased Optionee or the person
or persons who shall acquire the right to exercise
an option or Stock Appreciation Right by bequest or
inheritance or by reason of the death of the
Optionee. In the case where a Participant's right
to shares of Restricted Stock vest as provided in
Section 2.5(d) on or prior to the Participant's
date of death, the term "Beneficiary" shall also
mean the legal representative of the estate of the
Participant or the person or persons who shall
acquire the right to such vested shares of Stock by
bequest or inheritance or by reason of the death of
such Participant.
c. "Board" shall mean the Board of Directors of the
Company.
d. "Code" shall mean the Internal Revenue Code of
1986, as amended.
e. "Committee" shall mean the Human Resources
Committee of the Board or any future committee of
the Board performing similar functions.
f. "Company" shall mean The Hartford Steam Boiler
Inspection and Insurance Company.
g. "Disability" shall mean any condition which would
entitle an employee of the Company or a Subsidiary
to receive benefits under the Company's Long-Term
Disability Plan or any long-term disability plan
maintained by the Subsidiary.
h. "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
i. "Fair Market Value" shall mean the average of the
high and low prices per share of the Company's
Stock as reported by the New York Stock Exchange
Composite Transaction Reporting System (NYSE) on
the date for which the Fair Market Value is being
determined, or if no quotations are available for
the Company's Stock, for the next preceding date
for which such a quotation is available. If shares
of Company Stock are not then listed on the NYSE,
Fair Market Value shall be reasonably determined by
the Committee, in its sole discretion.
j. "Incentive Stock Option" shall mean an option
described in Section 422 of the Code.
k. "Nonstatutory Stock Option" shall mean an option
which does not qualify as an Incentive Stock Option
under Section 422 of the Code.
l. "Optionee" shall mean an employee of the Company or
a Subsidiary to whom an option is granted.
m. "Participant" shall mean an employee of the Company
or a Subsidiary to whom an option is granted or to
whom Restricted Stock is awarded.
n. "Plan" shall mean The Hartford Steam Boiler
Inspection and Insurance Company 1995 Stock Option
Plan, as amended.
o. "Restricted Stock" shall mean one or more shares of
Stock awarded to an eligible employee under Section
2.5 of the Plan and subject to the terms and
conditions set forth in Section 2.5.
p. "Retirement" shall mean the termination of
employment under circumstances which entitle an
employee to receive retirement benefits under the
Company's Employees' Retirement Plan or any
Subsidiary's retirement plan.
q. "Stock" shall mean the Common Stock of the Company.
r. "Stock Appreciation Right" shall mean a right to
surrender to the Company all or any portion of an
option and, as determined by the Committee, to
receive in exchange therefor cash or whole shares
of Stock (valued at current Fair Market Value) or a
combination thereof having an aggregate value equal
to the excess of the current Fair Market Value of
one (1) share over the option price of one (1)
share specified in such option grant multiplied by
the number of shares subject to such option or the
portion thereof which is surrendered.
s. "Subsidiary" shall mean any corporation of which at
least 50% of the voting stock is owned by the
Company and/or one or more of the Company's other
Subsidiaries.
1.3 Administration
The Plan shall be administered by the Committee as
defined herein. No member of the Committee shall be
eligible to be granted an option under the Plan. Each
member of the Committee shall be a "disinterested
director" within the meaning of Rule 16b-3 of the
General Rules and Regulations promulgated under the
Exchange Act and an "outside director" within the
meaning of Section 162(m) of the Code. The Committee
shall have the responsibility of interpreting the Plan
and establishing and amending such rules and
regulations necessary or appropriate for the
administration of the Plan or for the continued
qualification of any Incentive Stock Options granted
hereunder. In addition, the Committee shall have the
authority to designate the employees who shall be
granted options and awarded Restricted Stock under the
Plan and the amount and nature of the options, related
rights and awards to be granted to each such employee.
All interpretations of the Plan or of any options,
related rights or awards issued under it made by the
Committee shall be final and binding upon all persons
having an interest in the Plan. No member of the
Committee shall be liable for any action or
determination taken or made in good faith with respect
to this Plan or any option granted hereunder.
1.4 Eligibility
Executive and middle management employees of the
Company or its Subsidiaries shall be eligible to
receive grants of stock options and awards of
Restricted Stock under the Plan.
1.5 Stock Subject to the Plan
a. The maximum number of shares which may be optioned
or awarded under the Plan shall be 850,000 shares
of Stock. Preferred Stock may be used in lieu of
grants of Stock under the Plan subject to further
authorization of the Board of the Company.
Notwithstanding the foregoing, in no event shall
the Committee grant any Participant Incentive Stock
Options, Nonstatutory Stock Options, Stock
Appreciation Rights or Restricted Stock in any
single calendar year for more than 100,000 shares
of Stock. The limitation on the number of shares
which may be optioned or awarded under the Plan or
to an individual Participant shall be subject to
adjustment under Section 3.2 of this Plan.
b. If any outstanding option under the Plan for any
reason expires, lapses or is terminated, the shares
of the Stock which were subject to such option
shall be restored to the total number of shares
available for grant pursuant to the Plan. Shares
as to which there is a surrender in whole or in
part of an option upon the exercise of a Stock
Appreciation Right shall not again be available for
grant pursuant to the Plan. Stock delivered upon
the exercise of a Stock Appreciation Right shall
not be charged against the number of shares of
Stock available for the grant of options.
c. Upon the exercise of an option or a Stock
Appreciation Right, or payment of a Restricted
Stock award, the Company may distribute authorized
but unissued shares, treasury shares or shares
previously repurchased on behalf of the Company
through a broker or other independent agent
designated by the Committee. Such repurchases
shall be subject to such rules and procedures as
the Committee may establish hereunder and shall be
consistent with such conditions as may be
prescribed from time to time by law or by the
Securities and Exchange Commission ("SEC") in any
rule or regulation or in any exemptive order or
no-action letter issued by the SEC to the Company
or the broker with respect to the making of such
purchase or otherwise.
ARTICLE II - OPTIONS, STOCK APPRECIATION RIGHTS AND
RESTRICTED STOCK
2.1 Granting of Options
The Committee may grant Incentive Stock Options (ISOs),
Nonstatutory Stock Options or any combination thereof,
provided that the aggregate Fair Market Value
(determined at the time the option is granted) of the
shares of Stock with respect to which ISOs are
exercisable for the first time by an employee during
any calendar year (under this Plan and any other option
plan of the Company or its Subsidiaries) shall not
exceed $100,000. No such maximum limitation shall
apply to Nonstatutory Stock Options.
2.2 Terms and Conditions of Options
Each option granted under the Plan shall be authorized
by the Committee and shall be evidenced by an
instrument delivered to the participant, in a form
approved by the Committee, containing the following
terms and conditions and such other terms and
conditions as the Committee may deem appropriate.
a. Option Term - Each option shall specify the term
for which the option thereunder is granted and
shall provide that the option shall expire at the
end of such term. In no event shall any option be
exercisable any earlier than one year after the
date of such grant. The Committee shall have
authority to grant options exercisable in
cumulative or non-cumulative installments. No
option shall be exercisable after the expiration of
ten years from the date upon which such option is
granted.
b. Option Price - The option price per share shall be
determined by the Committee at the time an option
is granted, and shall not be less than the Fair
Market Value of one share of Stock on the date the
option is granted.
c. Exercise of Option -
1) Options may be exercised only by written notice
to the Company accompanied by the proper amount
of payment for the shares.
2) The Committee may postpone any exercise of an
option or a Stock Appreciation Right or the
delivery of Stock following the lapse of
certain restrictions with respect to awards of
Restricted Stock for such time as the Committee
in its discretion may deem necessary, in order
to permit the Company with reasonable diligence
(i) to effect or maintain registration of the
Plan or the shares issuable upon the exercise
of the option or the Stock Appreciation Right
or the lapse of certain restrictions respecting
awards of Restricted Stock under the Securities
Act of 1933, as amended, or the securities laws
of any applicable jurisdiction, or (ii) to
determine that such shares and Plan are exempt
from such registration; the Company shall not
be obligated by virtue of any option or any
provision of the Plan to recognize the exercise
of an option or the exercise of a Stock
Appreciation Right or the lapse of certain
restrictions respecting awards of Restricted
Stock to sell or issue shares in violation of
said Act or of the law of the government having
jurisdiction thereof. Any such postponement
shall not extend the term of an option; neither
the Company nor its directors or officers shall
have any obligation or liability to the
Optionee of an option or Stock Appreciation
Right, or to the Optionee's Beneficiary with
respect to any shares as to which the option or
Stock Appreciation Right shall lapse because of
such postponement.
3) To the extent an option is not exercised for
the total number of shares with respect to
which such options become exercisable, the
number of unexercised shares shall accumulate
and the option shall be exercisable, to such
extent, at any time thereafter, but in no event
later than ten years from the date the option
was granted or after the expiration of such
shorter period (if any) which the Committee may
have established with respect to such option
pursuant to Subsection (a) of this Section 2.2.
d. Payment of Purchase Upon Exercise - Payment for the
shares as to which an option is exercised shall be
made in one of the following ways:
1) payment in cash of the full option price of the
shares purchased;
2) if permitted by the Committee, the delivery of
Stock of the Company held by the purchaser for
at least six months accompanied by the
certificates therefor registered in the name of
such purchaser and properly endorsed for
transfer, having a Fair Market Value (as of the
date of exercise) equal to the full option
price; or
3) if permitted by the Committee, a combination of
cash and Stock (as described in (2) above) such
that the sum of the amount of cash and the Fair
Market Value of the Stock (as of the date of
exercise) is equal to the full option price.
e. Nontransferability - No option granted under the
Plan shall be transferable other than by will or by
the laws of descent and distribution subject to
Section 2.4 hereunder, unless the Committee shall
permit (on such terms and conditions as it shall
establish) such option to be transferred to a
member of the Participant's immediate family or to
a trust or similar vehicle for the benefit of such
immediate family members, or to an "alternate
participant" pursuant to a Qualified Domestic
Relations Order as defined in the Code. During the
lifetime of an Optionee, an option shall be
exercisable only by such Optionee, or if
applicable, a transferee. For purposes of Section
2.4 hereunder, a transferred option may be
exercised by the transferee to the extent that the
Participant would have been entitled had the option
not been transferred.
f. Laws and Regulations - The Committee shall have the
right to condition any issuance of shares to any
Optionee or Participant hereunder upon such
Optionee's or Participant's undertaking in writing
to comply with such restrictions on the subsequent
disposition of such shares as the Committee shall
deem necessary or advisable as a result of any
applicable law or regulation. In the case of Stock
issued or cash paid upon exercise of options or
associated Stock Appreciation Rights, or the lapse
of restrictions with respect to Restricted Stock
awarded to a Participant under the Plan, the
Optionee, Participant or other person receiving
such Stock or cash shall be required to pay to the
Company or a Subsidiary the amount of any taxes
which the Company or Subsidiary is required to
withhold with respect to such Stock or cash. The
Company or a Subsidiary may, in its sole
discretion, permit an Optionee or Participant or
other person receiving such Stock or cash to
satisfy any Federal, state or local (if any) tax
withholding requirements, in whole or in part by
(i) delivering to the Company or subsidiary shares
of Stock held by such Optionee, Participant or
other person having a Fair Market Value equal to
the amount of the tax or (ii) directing the Company
or Subsidiary to retain Stock otherwise issuable to
the Optionee, Participant or other person under the
Plan having a Fair Market Value equal to the amount
of the tax. If Stock is used to satisfy tax
withholding, such Stock shall be valued based on
the Fair Market Value when the tax withholding is
required to be made.
g. Modification - The Committee shall have authority
to modify an option without the consent of the
Optionee, provided that such modification does not
affect the exercise price or otherwise materially
diminish the value of such option to the Optionee,
and provided further, that except in connection
with an amendment to the Plan, the Committee shall
not have authority to make any modification to any
particular option that materially increases the
value of the option to the Optionee.
2.3 Stock Appreciation Rights
a. The Committee may, but shall not be required to,
grant a Stock Appreciation Right to the Optionee
either at the time an option is granted or by
amending the option at any time during the term of
such option. A Stock Appreciation Right shall be
exercisable only during the term of the option with
which it is associated. The Stock Appreciation
Right shall be an integral part of the option with
which it is associated and shall have no existence
apart therefrom. The conditions and limitations of
the Stock Appreciation Right shall be determined by
the Committee and shall be set forth in the option
or amendment thereto. An amendment granting a
Stock Appreciation Right shall not be deemed to be
a grant of a new option for purposes of the Plan.
b. A Stock Appreciation Right may be exercised by:
1) filing with the Secretary of the Company a
written election, which election shall be
delivered by the Secretary to the Committee
specifying:
i) the option or portion thereof to be
surrendered; and
ii) the percentage of the Appreciation
which the Optionee desires to receive
in cash, if any; and
2) surrendering such option for cancellation or
partial cancellation, as the case may be,
provided, however, that any election to receive
any portion of the Appreciation in cash shall
be of no force or effect unless and until the
Committee shall have consented to such
election.
c. No election to receive any portion of the
Appreciation in cash shall be filed with the
Secretary and no Stock Appreciation Right shall be
exercised to receive any cash unless such election
and exercise shall occur during the period
(hereinafter referred to as the "Cash Window
Period") beginning on the third business day
following the date of release for publication by
the Company of a regular quarterly or annual
statement of sales and earnings and ending on the
twelfth business day following such date. The
Committee may consent to the election of a holder
to receive any portion of the Appreciation in cash
at any time after such election has been made. If
such election is consented to, the Stock
Appreciation Right shall be deemed to have been
exercised during the Cash Window Period in which,
or next occurring after which, the Optionee
completed all acts required of such Optionee under
the preceding paragraphs to exercise the Stock
Appreciation Right. Any Stock Appreciation Right
exercised during said Cash Window Period shall be
valued and deemed exercised as of the date during
such Cash Window Period when the average of the
high and low prices for the shares of Stock as
reported by the NYSE is the highest.
2.4 Exercise of Option or Stock Appreciation Right in
the Event of Termination of Employment or Death
a. Options and associated Stock Appreciation Rights
shall terminate immediately upon the termination of
the Optionee's employment with the Company or a
Subsidiary unless the written option instrument of
such Optionee provides otherwise. The conditions
established by the Committee in the instrument for
exercising options and Stock Appreciation Rights
following termination of employment are limited by
the following restrictions.
1) If termination of employment is by reason of
the death of the Optionee, no exercise by the
Optionee's Beneficiary may occur more than two
years after the Optionee's death.
2) If termination of employment is the result of
Disability or Retirement, no exercise by the
Optionee or his Beneficiary may occur more than
two years following such termination of
employment.
3) If termination of employment is for a reason
other than death, Disability, Retirement or
"involuntary termination for cause", no
exercise by the Optionee may occur more than
three months following such termination of
employment. As used herein "involuntary
termination for cause" shall mean termination
of employment by reason of the Optionee's
commission of a felony, fraud or willful
misconduct which has resulted, or is likely to
result, in substantial and material damage to
the Company or its Subsidiaries. Whether an
involuntary termination is for "cause" will be
determined in the sole discretion of the
Committee.
b. If the Optionee should die after termination of
employment, such termination being for a reason
other than Disability, Retirement or involuntary
termination for cause, but while the option is
still exercisable, the option or associated Stock
Appreciation Right, if any, may be exercised by the
Beneficiary of the Optionee no later than one year
from the date of termination of employment of the
Optionee.
c. Under no circumstances may an option or Stock
Appreciation Right be exercised by an Optionee or
Beneficiary after the expiration of the term
specified for the option.
2.5 Awarding of Restricted Stock
a. The Committee shall from time to time in its
absolute discretion select from among the eligible
employees the Participants to whom awards of
Restricted Stock shall be granted and the number of
shares subject to such awards. Each award of
Restricted Stock under the Plan shall be evidenced
by an instrument delivered to the Participant in
such form as the Committee shall prescribe from
time to time in accordance with the Plan. The
Restricted Stock subject to such award shall be
registered in the name of the Participant and held
in escrow by the Committee during the Restricted
Period (as defined herein).
b. Upon the award to a Participant of shares of
Restricted Stock pursuant to Section 2.5(a), the
Participant shall, subject to Subsection (c) of
this Section 2.5, possess all incidents of
ownership of such shares, including the right to
receive dividends with respect to such shares and
to vote such shares.
c. Shares of Restricted Stock awarded to a Participant
may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by
will or the laws of descent and distribution, for a
period of five years, or such shorter period as the
Committee shall determine, from the date on which
the award is granted (the "Restricted Period").
The Committee may also impose such other
restrictions and conditions on the shares as it
deems appropriate and any attempt to dispose of
any such shares of Restricted Stock in contravention of
such restrictions shall be null and void and
without effect. In determining the Restricted
Period of an award, the Committee may provide that
the foregoing restrictions shall lapse with respect
to specified percentages of the awarded shares on
successive anniversaries of the date of such award.
In no event shall the Restricted Period end with
respect to awarded shares prior to the satisfaction
by the Participant of any liability arising under
Section 2.2(f).
d. The restrictions described in Section 2.5(c) shall
lapse upon the completion of the Restricted Period
with respect to specific shares of Restricted Stock
and the Participant's right to such shares shall
vest on such date or, if earlier, on the date that
the Participant's employment terminates on account
of the death, Disability or Retirement of the
Participant. The Company shall deliver to the
Participant, or the Beneficiary of such
Participant, if applicable, within 30 days of the
termination of the Restricted Period, the number of
shares of Stock that were awarded to the
Participant as Restricted Stock and with respect to
which the restrictions imposed under Section 2.5(c)
have lapsed, less any stock returned to the Company
to satisfy tax withholding pursuant to Section
2.2(f), if applicable.
e. Except as provided in Sections 2.5(d) and (f), if
the Participant's continuous employment with the
Company or a Subsidiary shall terminate for any
reason prior to the expiration of the Restricted
Period of an award, any shares remaining subject to
restrictions shall thereupon be forfeited by the
Participant and transferred to, and reacquired by,
the Company or a Subsidiary at no cost to the
Company or Subsidiary.
f. The Committee shall have the authority (and the
instrument evidencing an award of Restricted Stock
may so provide) to cancel all or any portion of any
outstanding restrictions prior to the expiration of
the Restricted Period with respect to any or all of
the shares of Restricted Stock awarded to an
employee hereunder on such terms and conditions as
the Committee may deem appropriate.
ARTICLE III - GENERAL PROVISIONS
3.1 Authority
Appropriate officers of the Company designated by the
Committee are authorized to execute and deliver written
instruments evidencing awards hereunder, and amendments
thereto, in the name of the Company, as directed from
time to time by the Committee.
3.2 Adjustments in the Event of Change in Common Stock
of the Company
In the event of any change in the Stock of the Company
by reason of any stock dividend, stock split,
recapitalization, reorganization, merger,
consolidation, split-up, combination, or exchange of
shares, or rights offering to purchase Stock at a price
substantially below Fair Market Value, or of any
similar change affecting the Stock, the number and kind
of shares which thereafter may be obtained and sold
under the Plan and the number and kind of shares
subject to options in outstanding option instruments
and the purchase price per share thereof and the number
of shares of Restricted Stock awarded pursuant to
Section 2.5(a) with respect to which all restrictions
have not lapsed, shall be appropriately adjusted
consistent with such change in such manner as the Board
in its discretion may deem equitable to prevent
substantial dilution or enlargement of the rights
granted to, or available for, Participants in the Plan.
Any fractional shares resulting from such adjustments
shall be eliminated. However, without the consent of
the Optionee, no adjustment shall be made in the terms
of an ISO which would disqualify it from treatment
under Section 421(a) of the Code or would be considered
a modification, extension or renewal of an option under
Section 425(h) of the Code.
3.3 Rights of Employees
The Plan and any option or award granted under the Plan
shall not confer upon any Optionee or Participant any
right with respect to continuance of employment by the
Company or any Subsidiary nor shall they interfere in
any way with the right of the Company or Subsidiary by
which an Optionee or Participant is employed to
terminate his employment at any time. The Company
shall not be obligated to issue Stock pursuant to an
option or an award of Restricted Stock for which the
restrictions hereunder have lapsed if such issuance
would constitute a violation of any applicable law. No
Optionee shall have any rights as a shareholder with
respect to any shares subject to option prior to the
date of issuance to such Optionee of a certificate or
certificates for such shares. Except as provided
herein, no Participant shall have any rights as a
shareholder with respect to any shares of Restricted
Stock awarded to such Participant.
3.4 Amendment, Suspension and Discontinuance of the Plan
The Board may from time to time amend, suspend or
discontinue the Plan, provided that the Board may not,
without shareholder approval, take any of the following
actions unless such actions fall within the provisions
of Section 3.2 herein:
a. increase the number of shares reserved for options
pursuant to Section 1.5;
b. alter in any way the class of persons eligible to
participate in the Plan;
c. permit the granting of any option at an option
price less than that provided under Section 2.2(b)
hereof; or
d. extend the term of the Plan or the term during
which any option may be granted or exercised.
No amendment, suspension or discontinuance of the Plan
shall impair an Optionee's rights under an option
previously granted to an Optionee without the
Optionee's consent.
3.5 Governing Law
This Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the
State of Connecticut.
3.6 Effective Date of the Plan
The Plan as amended and restated shall be effective on
April 18, 1995, subject to the requisite approval of
shareholders. No option shall be granted pursuant to
this Plan later than April 17, 2005, but options
granted before such date may extend beyond it in
accordance with their terms and the terms of the Plan.
Exhibit 10(iii)
THE HARTFORD STEAM BOILER INSPECTION
AND INSURANCE COMPANY
LONG-TERM INCENTIVE PLAN
1. Purposes of Plan
The purposes of this Plan are: (a) to provide an
additional incentive for Senior Officers and other
selected key employees to increase the earnings of the
Company on a long-term basis; (b) to attract and retain
in the employ of the Company and its subsidiaries
persons of outstanding abilities; and (c) to more
closely align the interests of the Senior Officers and
other selected key employees with those of the
shareholders of the Company.
2. Definitions
a. "Base Salary" shall mean the annual base salary of
a Participant in effect as of the December 31 of
the year immediately preceding the Performance
Period for which a Performance Contingent Award is
made, unless otherwise determined pursuant to
Section 5(a) hereof.
b. "Board" shall mean the Board of Directors of the
Company.
c. "Change in Control" shall mean an event described
under Section 15 hereof.
d. "Code" shall mean the Internal Revenue Code of
1986, as amended.
e. "Committee" shall mean the Human Resource Committee
of the Board or any future committee of the Board
performing similar functions.
f. "Company" shall mean The Hartford Steam Boiler
Inspection and Insurance Company.
g. "Disability" shall mean any condition which would
entitle an employee of the Company to receive
benefits under the Company's Long-Term Disability
Plan.
h. "Dividend Equivalent" shall mean an amount equal to
the cash dividends that would have been paid with
respect to an award of Performance Contingent Units
paid hereunder if the award constituted Stock, duly
issued and outstanding on the date on which a
dividend is payable on the Stock.
i. "Fair Market Value" shall mean the average of the
high and low prices per share of the Company's
Stock as reported by the New York Stock Exchange
Composite Transaction Reporting System (NYSE) on
the date for which the Fair Market Value is being
determined, or if no quotations are available for
the Company's Stock, for the next preceding date
for which such a quotation is available. If shares
of Company Stock are not then listed on the NYSE,
Fair Market Value shall be reasonably determined by
the Committee in its sole discretion.
j. "Participant" shall mean an employee of the Company
to whom an award has been made under the Plan.
k. "Performance Contingent Award" shall mean an award
of Performance Contingent Units.
l. "Performance Contingent Unit" shall mean the right
to receive up to 100% of the value of shares of
Stock, which value may be paid in cash or shares of
Stock, which may be Restricted Stock, as determined
by the Committee, contingent upon the achievement
of Performance Goals established by the Committee.
m. "Performance Goals" shall mean specific levels of
one or more Performance Measures at a corporate
and/or business unit level established in writing
by the Committee for a particular Performance
Period.
n. "Performance Measures" shall mean any of the
following:
- Combined Ratio
- Expense Ratio
- Net Income Per Share
- Return on Equity
- Total Shareholder Return
- Return on Assets
- Revenues
- Operating Margin
- Increase in Book Value
- Market Share
o. "Performance Period" shall mean a three consecutive
year period beginning each January 1st.
p. "Plan" shall mean the Long-Term Incentive Plan.
q. "Restricted Stock" shall mean one or more shares of
Stock issued in payment of a Performance Contingent
Award and subject to the terms and conditions
established by the Committee pursuant to Section 7.
r. "Retirement" shall mean the termination of
employment under circumstances which entitle an
employee to receive retirement benefits under the
Company's Employees' Retirement Plan.
s. "Stock" shall mean the Common Stock of the Company.
3. Administration of the Plan
The Plan shall be administered by the Committee as
defined herein. Each member of the Committee shall be
a "disinterested director" within the meaning of Rule
16b-3 of the General Rules and Regulations promulgated
under the Securities Exchange Act of 1934 and an
"outside director" within the meaning of Section 162(m)
of the Code. The Committee is authorized to interpret
the Plan and shall adopt guidelines for carrying out
the Plan as it may deem appropriate. Such guidelines
shall be consistent with the Plan and may include, but
need not be limited to, the size and terms of awards to
be made and the conditions for payment of such awards.
Decisions of the Committee shall be final, conclusive
and binding upon all parties concerned, unless
otherwise determined by a vote of a majority of the
disinterested members of the Board of Directors.
4. Stock Subject To the Plan
Subject to the provisions of Section 9 of the Plan, the
maximum number of shares which may be issued under the
Plan shall be 150,000 shares of Stock.
5. Eligibility
a. All Senior Officers of the Company (presently
defined as Chief Executive Officer, President,
Executive Vice President, Senior Vice President,
Corporate Secretary and Treasurer) other than any
individual expressly excluded by the Committee, are
eligible to participate in this Plan. An
individual who is elected by the Board as a Senior
Officer following the commencement of a Performance
Period shall, unless otherwise determined by the
Committee, be eligible for an award for such
Performance Period(s) based on such individual's
Base Salary in effect at the time of such election,
and prorated for the number of full months within
such Performance Period that such individual was a
Senior Officer.
b. The Committee, in its sole discretion, may
designate from time to time certain other officers
or key employees of the Company, its affiliates and
subsidiaries who may participate in this Plan.
6. Establishment of Performance Goals and Performance
Contingent Awards
a. Prior to or within ninety days (or such shorter
period as is required under Section 162(m) of the
Code) following the commencement of each
Performance Period, the Committee shall establish
in writing for each Participant, or all
Participants as a group, specific Performance Goals
based on one or more Performance Measures. For
each Performance Goal an award schedule of
Performance Contingent Units shall be established
for minimum, target and maximum attainment of such
goal. The actual Performance Contingent Award to
be paid to a Participant at the conclusion of the
Performance Period shall be based on the level of
attainment of the Performance Goals established for
such period. The Committee may designate that
Performance Contingent Awards shall be credited
with Dividend Equivalents during the Performance
Period which shall be paid when and if such awards
are paid.
b. The maximum award of Performance Contingent Units
for any Participant for a Performance Period cannot
exceed 60% of such Participant's Base Salary
divided by the Fair Market Value of the Stock on
the first trading date of the Performance Period.
c. After Performance Goals have been established, they
shall not be modified in respect to the Performance
Period to which they relate.
7. Payment of Performance Contingent Awards and Dividend
Equivalents
a. Following the end of a Performance Period, the
Committee shall ascertain and certify in writing
whether and the degree to which the Performance
Goals for such period have been met. A Participant
shall be entitled to receive payment of an amount
not exceeding the Fair Market Value of the maximum
award of Performance Contingent Units established
by the Committee pursuant to Section 6 hereof based
upon the level of attainment of the Performance
Goals determined by the Committee. The Committee
shall have the authority to reduce the award of any
Participant even if the Performance Goals
attributable to such award have been met. The
Committee shall have no authority hereunder to
increase any award calculated under this Plan.
b. As soon as practicable following certification by
the Committee pursuant to Section 7(a), payment of
awards to Participants shall be made. Payments
shall be made in cash, shares of Stock or in shares
of Restricted Stock as prescribed by the Committee
and shall be subject to such other terms and
conditions as the Committee shall establish.
c. Any Restricted Stock issued in payment of a
Performance Contingent Award may not be sold,
transferred, or otherwise disposed of by the
Participant, except by will or the laws of descent
and distribution, for such period established by
the Committee. The Committee shall have the
authority to cancel all or any portion of any
outstanding restrictions on such Restricted Stock
prior to the expiration of such period on such
terms and conditions as it may deem appropriate.
During the restricted period the shares of
Restricted Stock shall be registered in the name of
the Participant and deposited with the Company, and
the Participant shall be entitled to vote such
shares and receive any dividends with respect to
such shares.
d. Payment of any award of Dividend Equivalents shall
be made at the same time as payment of the
Performance Contingent Award to which it relates
and shall be made in cash or shares of Stock as
prescribed by the Committee.
e. The maximum aggregate dollar value of Performance
Contingent Units and Dividend Equivalents which may
be awarded to any Participant for any Performance
Period shall not exceed $1 million.
8. Election to Defer Payment
a. A Participant may, with permission of the Committee
elect to defer receipt of all or a specified part
of any Performance Contingent Award and related
Dividend Equivalents. Such an election shall be
subject to such terms and conditions as are
prescribed by the Committee. Deferral elections
are irrevocable and must be made during the time
period and in the manner prescribed by the
Committee.
b. The right of a Participant to receive any unpaid
portion of any amount deferred hereunder shall be
an unsecured claim against the general assets of
the Company.
9. Adjustments in the Event of Change in Common Stock of
the Company
In the event of any change in the Stock of the Company
by reason of any stock dividend, stock split,
recapitalization, reorganization, merger,
consolidation, split-up, combination, or exchange of
shares, or rights offering to purchase Stock at a price
substantially below Fair Market Value, or of any
similar change affecting the Stock, the number of
Performance Contingent Units awarded which have not
been paid and the number of shares of Stock which may
be awarded hereunder shall be appropriately adjusted
consistent with such change in such manner as the Board
in its discretion may deem equitable to prevent
substantial dilution or enlargement of the awards and
rights granted to, or available for Participants
hereunder. Any fractional shares resulting from such
adjustments shall be eliminated.
10. No Right to an Award or Continued Employment
a. Nothing contained in this Plan or in any resolution
adopted or to be adopted by the Board of Directors
will constitute the granting of an award hereunder.
The granting of an award pursuant to the Plan will
take place only when authorized by the Committee.
No award and no rights of ownership thereunder will
be transferable otherwise than pursuant to Section
12.
b. Nothing in the Plan shall interfere with or limit
in any way the right of the Company to terminate
any Participant's employment at any time, nor
confer upon any Participant any right to continue
in the employ of the Company.
11. Rights on Termination of Employment
a. If a Participant in this Plan shall terminate
employment with the Company on account of
Retirement or Disability or otherwise terminate
employment with the written consent of the Company
prior to the expiration of any Performance
Period(s) in respect of which such Participant may
be eligible for an award, or if a subsidiary at
which a Participant is employed shall cease to be a
subsidiary of the Company prior to the expiration
of any Performance Period(s), the award(s) paid to
such Participant shall be prorated according to the
number of months of employment in each such
Performance Period.
b. A Participant whose employment terminates by
dismissal with or without cause, or who voluntarily
terminates employment without consent prior to the
expiration of a Performance Period, shall lose any
right to receive payment of such award.
c. A Participant whose employment terminates within
two years following the month within which a
"Change in Control" (as defined herein) occurs and
prior to the expiration of any Performance Period
(i) by dismissal (other than dismissal on account
of defalcation), or (ii) by voluntary termination
of employment with or without consent of the
Company, shall be entitled to receive an award
prorated according to the number of full months of
employment completed by the Participant in each
such Performance Period.
d. In no event shall an award or a portion thereof the
payment of which has been deferred pursuant to
Section 8 be subject to forfeiture.
12. Death of a Participant
a. A Participant may file with the Corporate Secretary
of the Company a designation of a beneficiary or
beneficiaries on a form to be provided by such
Participant, which designation may be changed or
revoked by the Participant's sole action, provided
that the change or revocation is filed with the
Corporate Secretary on a form provided by such
Participant. In case of the death of the
Participant, before or after termination of
employment, any earned but unpaid portion of an
award to which he or she is entitled and any
deferred portions of a deceased Participant's award
shall be delivered to the beneficiary or
beneficiaries so designated or, if no beneficiary
has been designated or survives such Participant,
shall be delivered to, or in accordance with the
directions of, the executor or administrator of
such Participant's estate.
b. If a Participant shall die during a Performance
Period, such Participant's beneficiary shall only
be entitled to receive the award declared for the
Performance Period ending in the year of the
Participant's death.
13. Tax Withholding
The Company shall have the right to require
Participants to remit to the Company an amount
sufficient to satisfy any tax withholding requirements
or to deduct from any payments made pursuant to the
Plan amounts sufficient to satisfy tax withholding
requirements.
14. Termination and Modification
a. The Committee may at any time terminate or from
time to time modify or suspend, and if suspended,
may reinstate any or all of the provisions of this
Plan except that no modification of this Plan may
be made which will adversely affect any rights or
obligations with respect to any awards theretofore
made under the Plan.
b. No amendment to the Plan shall be made without
shareholder approval if such approval is required
in order for the Plan to continue to meet the
requirements of Section 162(m) of the Code and/or
Rule 16b-3 of the General Rules and Regulations
promulgated under the Securities Exchange Act of
1934.
15. Change in Control
In the event of a Change in Control of the Company,
this Plan shall continue to be binding upon the
Company, any successor in interest to the Company and
all persons in control of the Company or any successor
thereto, and no transaction or series of transactions
shall have the effect of reducing or canceling the
award of a Participant that has been declared but not
paid unless consented to in writing by such affected
Participant. A "Change in Control" as referred to
under this Plan shall be deemed to have occurred if:
a. any "person" (as defined in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), other than a trustee
or other fiduciary holding securities under an
employee benefit plan of the Company, is or becomes
the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Company representing twenty-five
percent (25%) or more of the combined voting power
of the Company's then outstanding securities;
b. during any period within two (2) consecutive years
there shall cease to be a majority of the Board of
Directors comprised as follows: individuals who at
the beginning of such period constitute the Board
of Directors and any new director(s) whose election
by the Board of Directors or nomination for
election by the Company's shareholders was approved
by a vote of at least two-thirds (2/3) of the
directors then still in office who either were
directors at the beginning of the period or whose
election or nomination for election was previously
so approved; or
c. the shareholders of the Company approve a merger or
consolidation of the Company with any other
corporation, other than (i) a merger or
consolidation which would result in the voting
securities of the Company outstanding immediately
prior thereto continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity) more
than 80% of the combined voting power of the voting
securities after such merger or consolidation or
(ii) a merger or consolidation effected to
implement a recapitalization of the Company (or
similar transaction) in which no "person" (as
hereinabove defined) acquires more than 25% of the
combined voting power of the Company's then
outstanding securities; or
d. the shareholders of the Company approve (i) a plan
of complete liquidation of the Company or (ii) the
sale or other disposition of all or substantially
all the Company assets.
16. Unfunded Obligations; Trust Agreement
a. The Company will pay from its general assets all
awards to be made hereunder. However, the Company
may in its discretion, establish a trust, escrow
agreement or similar arrangement in order to aid
the Company in meeting its obligations hereunder.
b. Any assets transferred by the Company into any such
arrangement shall remain at all times assets of the
Company and subject to the claims of the Company's
general creditors in the event of bankruptcy or
insolvency of the Company. No security interest in
such assets shall be created in a Participant's
favor and a Participant's rights under this Plan
and under any such arrangement shall be those of a
general unsecured creditor of the Company.
17. Assignment and Alienation
Benefits under this Plan may not be anticipated,
assigned (either at law or in equity), alienated, or
subjected to attachment, garnishment, levy, execution
or other legal or equitable process. If any
Participant or beneficiary under this Plan becomes
bankrupt or attempts to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge any
benefit under this Plan, such benefit shall, in the
discretion of the Committee cease and terminate, in
which event the Committee may hold or apply the same or
any part thereof for the benefit of such Participant,
his or her beneficiary, spouse, children, other
dependents or any of such individuals, in such manner
and in such proportion as the Committee may deem
proper.
18. Effective Date and Termination of the Plan
This Plan shall become effective as of January 1, 1994
subject to the approval of the shareholders at their
annual meeting in 1995. Unless earlier terminated by
the Committee subject to Section 14, the Plan shall
terminate on December 31, 1998. No Performance
Contingent Award shall be made pursuant to this Plan
after the termination date, but awards made prior to
its termination date may extend beyond that date.