UNUM CORPORATION
1990 LONG-TERM STOCK INCENTIVE PLAN
SECTION 1. PURPOSE.
The purpose of the UNUM Corporation 1990 Long-Term Stock Incentive Plan (the
"Plan") is to promote the interests of UNUM Corporation and its stockholders by
(i) attracting and retaining executive officers, other key employees and
corporation directors of outstanding ability; (ii) motivating such individuals,
by means of performance-related incentives, to achieve longer-range performance
goals; and (iii) enabling such individuals to participate in the long-term
growth and financial success of UNUM Corporation.
SECTION 2. DEFINITIONS.
"Affiliate" shall mean any corporation or other entity which is not a Subsidiary
but as to which the Corporation possesses a direct or indirect ownership
interest and has representation on the board of directors or any similar
governing body.
"Award" shall mean a grant or award under Sections 6 through 10, inclusive, of
the Plan, as evidenced in a written document delivered to a Participant.
"Board" shall mean the Board of Directors of the Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" shall mean the Compensation Committee of the Board.
"Common Stock" or "Stock" shall mean the common stock, $.10 par value, of the
Corporation.
"Corporation" shall mean UNUM Corporation.
"Employee" shall mean any employee of the Employer.
"Employer" shall mean the Corporation and any Subsidiary or Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time.
"Fair Market Value" shall mean the average of the highest and lowest sales
prices reported for consolidated trading of the Stock on the New York Stock
Exchange on the date in question,
or, if the Stock shall not have been traded on such date, the average of such
highest and lowest sales prices on the first day prior thereto on which the
Stock was so traded.
"Fiscal Year" shall mean the fiscal year of the Corporation.
"Incentive Stock Option" shall mean a stock option granted under Section 6 which
is intended to meet the requirements of Section 422A of the Code.
"Limited Right" shall mean a limited stock appreciation right granted under
Section 8.
"Non-Qualified Stock Option" shall mean a stock option granted under Section 6
which is not intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
"Participant" shall mean an Employee who is selected by the Committee to receive
an Award under the Plan.
"Restricted Period" shall mean the period of years selected by the Committee
during which a grant of Restricted Stock may be forfeited to the Corporation.
"Restricted Stock" shall mean shares of Common Stock contingently granted to a
Participant under Section 9 of the Plan.
"Subsidiary" shall mean any business entity in which the Corporation possesses
directly or indirectly fifty percent (50%) or more of the total combined voting
power.
SECTION 3. ADMINISTRATION.
Except as provided in Section 10, the Committee shall have full power to
interpret and administer the Plan and full authority to select the individuals
to whom Awards will be granted and to determine the type and amount of Award(s)
to be granted to each Participant, the terms and conditions of Awards granted
under the Plan and the terms and conditions of the agreements which will be
entered into with Participants. As to the selection and grant of Awards to
Participants who are not subject to Sections 16(a) and 16(b) of the Exchange
Act, or any successor sections, the Committee may delegate its responsibilities
to members of the Company's management consistent with applicable law.
The Committee shall have the authority to adopt, alter and repeal such rules,
guidelines and practices governing the Plan as it shall, from time to time, deem
advisable; to interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any agreements relating thereto); to direct employees
of the Corporation and its subsidiaries or other advisors to prepare such
materials or perform such analysis as the Committee deems necessary or
appropriate; and otherwise to supervise the administration of the Plan.
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Any interpretation and administration of the Plan by the Committee, and all
actions of the Committee, shall be final, binding and conclusive on the
Corporation, its stockholders, Subsidiaries, Affiliates, all Participants, their
respective legal representatives, successors and assigns and upon all persons
claiming under or through any of them. No member of the Board or of the
Committee shall incur any liability for any action taken or omitted, or any
determination made, in good faith in connection with the Plan.
SECTION 4. ELIGIBILITY.
Participation in the Plan shall be limited to those key employees of the
Corporation and any Subsidiary and Affiliate selected at the sole discretion of
the Committee.
SECTION 5. MAXIMUM AMOUNT AVAILABLE FOR AWARDS.
Subject to adjustment as provided in Section 12(j), the maximum number of shares
of Stock in respect of which Awards may be made under the Plan shall be a total
of 6,800,000 shares of Common Stock. Shares of Common Stock may be made
available from the authorized but unissued shares of the Corporation or from
shares reacquired by the Corporation, including shares purchased in the open
market. In the event that (i) an Option, or Stock Appreciation Right, or
Limited Right expires or is cancelled unexercised as to any shares of Common
Stock covered thereby, or (ii) any Award in respect of shares is forfeited for
any reason under the Plan, such shares shall thereafter be again available for
award pursuant to the Plan.
SECTION 6. STOCK OPTIONS.
(a) GRANT. Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine the Employees to whom Options
shall be granted, the number of shares to be covered by each Option, the
Option Price, as defined below, therefor and the conditions and limitations
applicable to the exercise of the Option. The Committee shall have the
authority to grant Incentive Stock Options, or to grant Non-Qualified Stock
Options, or to grant both types of Options. In the case of Incentive Stock
Options, the terms and conditions of such grants shall be subject to and
comply with such rules as may be prescribed by Section 422A of the Code and
any regulations implementing Section 422A.
(b) OPTION PRICE. The Committee shall establish the exercise price of the
Option (the "Option Price") at the time each Option is granted, which
Option Price shall not be less than 100% of the Fair Market Value of the
Common Stock on the date of grant.
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(c) EXERCISE.
(1) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may, in its sole discretion,
specify in the applicable Award or thereafter; provided, however, that
in no event may any Option granted hereunder be exercisable after the
expiration of ten years from the date of grant. The Committee may
impose such conditions with respect to the exercise of Options,
including without limitation, any relating to the application of
federal or state securities laws, as it may deem necessary or
advisable.
(2) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the Option Price therefor is received by the
Corporation. Such payment may be made in cash, or its equivalent, or,
subject to such rules and guidelines as the Committee may establish,
by exchanging shares of Common Stock owned by the optionee (which are
not the subject of any pledge or other security interest), or by a
combination of the foregoing, provided that the combined value of all
cash and cash equivalents and the Fair Market Value of any such Common
Stock so tendered to the Corporation, valued as of the date of such
tender, is at least equal to such Option Price.
(d) TERMINATION OF EMPLOYMENT.
(1) Except as provided below, if a Participant ceases to be an Employee
other than by reason of death, retirement or disability, any then
outstanding Options may be exercised any time before their expiration
date or within three months after the date of termination, whichever
is earlier, but only to the extent that such Options were exercisable
when employment ceased, absent a determination by the Committee to the
contrary; provided, however, that a Participant is terminated for
cause the Committee may determine that no Option may be exercised at
any time after the termination date.
(2) If a Participant's employment terminates because of death or
disability, all then outstanding Options previously granted to the
Participant will become exercisable. In the case of death of the
Participant, such Options may be exercised at any time before their
expiration date or within three years after the date of termination,
whichever is earlier. In the case of permanent disability, such
Options may be exercised at any time before their expiration date.
(3) If a Participant's employment terminates because of retirement prior
to January 1, 1995, any then outstanding Options may be exercised any
time before their expiration date or within three years after the date
of termination, whichever is earlier, but only to the extent that such
Options were exercisable when employment ceased absent a determination
by the Committee to the contrary. If a Participant's employment
terminates because of retirement on or after January 1,
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1995, any then outstanding Options may be exercised any time before
their expiration date or within five years after the date of
termination, whichever is earlier, but only to the extent that such
Options were exercisable when employment ceased absent a determination
by the Committee to the contrary.
SECTION 7. STOCK APPRECIATION RIGHTS.
(a) The Committee shall have the authority to grant Stock Appreciation Rights
in tandem with the grant of an Option or freestanding and unrelated to an
Option. Stock Appreciation Rights granted in tandem with an Option may be
granted either at or after the time of the grant of such Option.
Stock Appreciation Rights or any applicable portion thereof granted in
tandem with a given Option shall only be exercisable to the extent that the
related Option is exercisable and shall terminate and no longer be
exercisable upon the expiration or cancellation of the related Option.
The exercise of an Option shall result in an immediate forfeiture of any
Stock Appreciation Right granted in tandem with that Option, and the
exercise of such Stock Appreciation Right shall cause an immediate
forfeiture of its related Option. Stock Appreciation Rights shall not be
exercisable after the expiration of ten years from date of grant. A Stock
Appreciation Right granted in tandem with an Option may be exercised by an
optionee, in accordance with this Section 7, by surrendering the applicable
portion of the related Option. Upon such exercise and surrender, the
optionee shall be entitled to receive an amount determined in the manner
prescribed in this Section 7.
(b) A Stock Appreciation Right shall entitle the Participant to receive from
the Corporation an amount equal to the excess of the Fair Market Value of a
share of Common Stock on the date of the exercise of the Stock Appreciation
Right over the grant price thereof, provided that the Committee may for
administrative convenience determine that, for any Stock Appreciation Right
which is not related to an Incentive Stock Option and can only be exercised
during limited periods of time in order to satisfy the conditions of
certain rules of the Securities and Exchange Commission, the exercise of
any such Stock Appreciation Right for cash during such limited period shall
be deemed to occur for all purposes hereunder on the day during such
limited period on which the Fair Market Value of the Stock is the highest.
Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights
granted prior to such determination as well as Stock Appreciation Rights
thereafter granted. The Committee shall determine whether Stock
Appreciation Rights shall be settled in cash, shares of Common Stock or a
combination of cash and shares of Common Stock.
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SECTION 8. LIMITED RIGHTS.
(a) The Committee shall have the authority to grant Limited Rights in tandem
with the grant of an Option or freestanding and unrelated to an Option.
Limited Rights granted in tandem with an Option may be granted either at or
after the time of the grant of such Option.
Limited Rights or any applicable portion thereof granted in tandem with a
given Option shall terminate and no longer be exercisable upon the
expiration or cancellation of the related Option. The exercise of an
Option shall result in an immediate forfeiture of any Limited Right granted
in tandem with that Option, and the exercise of such Limited Right shall
cause an immediate forfeiture of its related Option.
A Limited Right granted in tandem with an Option may be exercised by an
optionee, in accordance with this Section 8, by surrendering the applicable
portion of the related Option. Upon such exercise and surrender, the
optionee shall be entitled to receive an amount determined in the manner
prescribed in this Section 8.
(b) Limited Rights shall only be exercisable during the 30 day period following
a Change in Control as defined in Section 11 and shall not be exercisable
after the expiration of ten years from the date of grant.
(c) Upon the exercise of a Limited Right, an optionee shall be entitled to
receive from the Corporation an amount in cash equal in value to the excess
of (i) the higher of (A) the highest price per share paid in connection
with the Change in Control or (B) the highest Fair Market Value per share
as reported in the Wall Street Journal at any time during the 60 day period
preceding the Change in Control over (ii) in the case of a Limited Right
granted in tandem with an Option, the Option Price per share specified in
the related Option and in the case of all other Limited Rights, the price
per share established in the grant of the Limited Right, such excess to be
multiplied by the number of shares in respect of which the Limited Right
shall have been exercised; provided, however, that upon the exercise of a
Limited Right granted in tandem with an Incentive Stock Option, the amount
set forth in clause (i) shall not exceed the Fair Market Value of a share
on the date of exercise of the Limited Right.
(d) Limited Rights shall be subject to such other terms and conditions, not
inconsistent with the provisions of the Plan, as shall be determined from
time to time by the Committee. This Section 8 shall be interpreted in
accordance and consistent with the principles set forth in Rule 16b-3 of
the Exchange Act.
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SECTION 9. RESTRICTED STOCK.
(a) Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the Employees to whom shares of Restricted
Stock shall be granted, the number of shares of Restricted Stock to be
granted to each Participant, the duration of the Restricted Period during
which, and the conditions under which, the Restricted Stock may be
forfeited to the Corporation, and the other terms and conditions of such
Awards. The Committee may determine that the Restricted Period applicable
to a particular grant may vary depending upon the attainment of particular
conditions, such as corporate earnings, share price or other targets set by
the Committee.
(b) Shares of Restricted Stock may not be sold, assigned, transferred, pledged
or otherwise encumbered, except as herein provided, during the Restricted
Period. Certificates issued in respect of shares of Restricted Stock shall
be registered in the name of the Participant and deposited by such
Participant, together with a stock power endorsed in blank, with the
Corporation. At the expiration of the Restricted Period, the Corporation
shall deliver such certificates to the Participant or the Participant's
legal representative.
(c) If a Participant's employment terminates by reasons of disability or death,
any Restricted Stock held by such Participant shall thereafter vest and any
restriction lapse, to the extent such Restricted Stock would have become
vested and no longer subject to such restrictions within one year from the
time of termination had the Participant continued to fulfill all of the
conditions of the Restricted Stock during such period (or on such
accelerated basis as the Committee may determine at or after grant).
Unless otherwise determined by the Committee, if a Participant's employment
terminates for any reasons other than permanent disability or death, any
Restricted Stock which is unvested or subject to restriction shall
thereupon be forfeited.
SECTION 10. NON-EMPLOYEE DIRECTOR OPTIONS.
Notwithstanding any of the other provisions of the Plan to the contrary, the
provisions of this Section 10 shall only apply to a non-employee member of the
Board. The other provisions of the Plan shall apply to grants of Options under
this Section 10 to the extent not inconsistent with the provisions of this
Section.
(a) This Section 10 shall be administered by the Board.
(b) Each non-employee member of the Board shall receive Non-Qualified Stock
Options in accordance with the provisions of this Section 10.
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(c) (i) Recipients of Options under this Section 10 shall enter into a stock
option agreement with the Corporation, which agreement shall set
forth, among other things, the exercise price of the Option, the
term of the Option and provisions regarding exercisability of the
Option granted thereunder.
(ii) On the Effective Date (as defined below) each non-employee member of
the Board of the Corporation shall receive Options to purchase 2,000
shares of Common Stock. Beginning in 1991, on the date after each
annual stockholders meeting of the Corporation each continuing non-
employee member of the Board shall be granted an Option to purchase
1,000 shares of Common Stock and, beginning in 1990, each newly
elected non-employee director shall be granted an Option to purchase
2,000 shares of Common Stock. The Option Price per share of Common
Stock purchasable under such Options shall be equal to the Fair
Market Value of the Common Stock on the date of grant. Such Option
shall remain exercisable until the earlier of ten years from the
date of grant or the termination of any post-directorship
consultancy agreement with the Corporation; PROVIDED, HOWEVER, that
if such consultancy agreement terminates by reason of death or
disability any then outstanding Options may be exercised (x) at any
time before their expiration date or (y), if such termination is by
reason of death, within three years of the date of death, whichever
is earlier. Such Options shall be exercisable one year from the
date of grant by payment in full in cash or in shares of Common
Stock having a Fair Market Value equal to the Option Price or in a
combination of cash and such shares.
(d) The Board may not amend, alter, or discontinue this Section 10 without the
approval of the stockholders of the Corporation.
SECTION 11. CHANGE OF CONTROL.
Notwithstanding anything to the contrary contained herein, and notwithstanding
any contrary waiting period or installment period in any agreement relating to
an Award or in the Plan, each outstanding Option, Stock Appreciation Right and
Limited Right granted under the Plan shall become exercisable in full for the
aggregate number of shares covered thereby, and any restriction or deferral
limitation applicable to any Restricted Stock shall lapse and such shares and
Awards shall be deemed fully vested, in the event of a Change in Control (as
hereinafter defined).
For purposes of this Plan, a Change in Control shall be deemed to have occurred
upon the first to occur of the following events:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Corporation or any corporation
owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their ownership
of stock of the Corporation), is or becomes the "beneficial
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owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing more
than 40% of the number of the Corporation's then outstanding
securities;
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into
an agreement with the Corporation to effect a transaction described
in Subsection 11(i), (iii) or (iv) of this Section 11) whose
election by the Board or nomination for election by the
Corporation's stockholders 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, cease for any
reason to constitute at least a majority thereof;
(iii) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation, other
than a merger or consolidation which would result in the voting
securities of the Corporation outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or being
converted into voting securities of the surviving entity) more than
60% of the number of outstanding securities of the Corporation or
such surviving entity outstanding immediately after such merger or
consolidation; or
(iv) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets.
SECTION 12. GENERAL PROVISIONS.
(a) WITHHOLDING. The Employer shall have the right to deduct from all amounts
paid to a Participant in cash (whether under this Plan or otherwise) any
taxes required by law to be withheld in respect of Awards under this Plan.
In the case of payments of Awards in the form of Common Stock, at the
Committee's discretion the Participant may be required to pay to the
Employer the amount of any taxes required to be withheld with respect to
such Common Stock, or, in lieu thereof, to the extent permitted by
applicable federal and state securities laws, the Employer shall have the
right to retain (or the Participant may be offered the opportunity to elect
to tender) the number of shares of Common Stock whose Fair Market Value
equals the amount required to be withheld. The Optionee shall be entitled
to elect to pay all or a portion of the exercise price for options granted
under this Plan and any withholding taxes in connection with such exercise
by having the shares of Common Stock to be issued by UNUM Corporation
pursuant to such exercise sold by a broker-dealer under circumstances
meeting the requirements of 12 C.F.R. Section 220.
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(b) NONTRANSFERABILITY. No Award shall be assignable or transferable, and no
right or interest of any Participant shall be subject to any lien,
obligation or liability of the Participant, except by will or the laws of
descent and distribution.
(c) NO RIGHT TO EMPLOYMENT. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the
Employer. Further, the Employer expressly reserves the right at any time
to dismiss a Participant free from any liability, or any claim under the
Plan, except as provided herein or in any agreement entered into with
respect to an Award.
(d) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the applicable
Award, no Participant or transferee of an Option shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed
under the Plan until he or she has become the holder thereof.
Notwithstanding the foregoing, in connection with each grant of Restricted
Stock hereunder, the applicable Award shall specify if and to what extent
the Participant shall not be entitled to the rights of a stockholder in
respect of such Restricted Stock.
(e) CONSTRUCTION OF THE PLAN. The validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined solely in accordance with
the laws of the State of Delaware.
(f) EFFECTIVE DATE. Subject to the approval of the stockholders of the
Corporation, the Plan shall be effective on February 9, 1990 (the
"Effective Date"). No Options or Awards may be granted under the Plan
after February 9, 2000.
(g) AMENDMENT OF PLAN. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, provided that no amendment shall be made
without stockholder approval if such approval is necessary to comply with
any tax or regulatory requirement, including for these purposes any
approval requirement which is a prerequisite for exemptive relief under
Section 16(b) of the Exchange Act. Notwithstanding anything to the
contrary contained herein, the Committee may amend the Plan in such manner
as may be necessary so as to have the Plan conform with local rules and
regulations. The Chief Executive Officer shall be authorized to make minor
or administrative modifications to the Plan as well as modification to the
Plan which may be dictated by requirements of federal or state statutes
applicable to the Corporation or authorized or made desirable by such
statutes. No modification or termination of the Plan shall, without the
optionee's consent, alter or impair any of his or her rights or obligations
under any Option, Stock Appreciation Right or Limited Right theretofore
granted to him or her under the Plan.
(h) AMENDMENT OF AWARD. The Committee may amend, modify or terminate any
outstanding Award with the Participant's consent at any time prior to
payment or exercise in any manner not inconsistent with the terms of the
Plan, including without
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limitation, (i) to change the date or dates as of which (A) an Option,
Stock Appreciation Right or Limited Right becomes exercisable; (B)
Restricted Stock becomes nonforfeitable; or (ii) to cancel and reissue an
Award under such different terms and conditions as it determines
appropriate.
(i) HARDSHIP DISTRIBUTIONS. In no event shall any Option granted under this
Plan be exercisable through payment of the Option Price in cash during the
period of one year following a hardship distribution under the UNUM
Employees Retirement Savings Plan and Trust, as defined therein.
(j) ADJUSTMENTS AND ASSUMPTION. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares,
merger, consolidation, distribution of assets, or any other change in the
corporate structure or shares of the Corporation, the Committee shall make
such adjustments as it deems appropriate in the number and kind of shares
authorized by the Plan, in the number and kind of shares covered by the
Awards granted, and in the purchase price of outstanding Options. In the
event of any merger, consolidation or other reorganization in which the
Corporation is not the surviving or continuing corporation, all Awards
granted hereunder and outstanding on the date of such event shall be
assumed by the surviving or continuing corporation with appropriate
adjustment as to the number and kind of shares and purchase price of the
shares.
(k) In addition to the purposes set forth in Section 1, the Committee may grant
Awards to eligible Participants in order to compensate such Participants to
surrender existing rights to receive benefits from the Employer under this
or any other benefit plan or arrangement.
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