EXHIBIT 10.12
UNUMPROVIDENT CORPORATION
STOCK PLAN OF 1999
(as approved by Committee 2/8/01)
ARTICLE I
Purpose
1.1 General. The purpose of the UnumProvident Stock Plan of 1999 (the
"Plan") is to promote the success, and enhance the value, of UnumProvident
Corporation (the "Corporation"), by linking the personal interests of its
employees, officers, producers and directors to those of Corporation
stockholders and by providing such persons with an incentive for outstanding
performance. The Plan is further intended to provide flexibility to the
Corporation in its ability to motivate, attract, and retain the services of
employees, officers, producers and directors upon whose judgment, interest, and
special effort the successful conduct of the Corporation's operation is largely
dependent. Accordingly, the Plan permits the grant of incentive awards from time
to time to selected employees, officers, producers and directors.
ARTICLE 2
Effective Date
2.1 Effective Date. The Plan was effective as of January 1, 1999, and has
most recently been amended by the Board on February 8, 2001.
ARTICLE 3
Definitions
3.1 Definitions. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Section 1.1 unless a clearly different meaning is required by the
context. The following words and phrases shall have the following meanings:
(a) "Award" means any Option, Stock Appreciation Right, Restricted
Stock Award, or Dividend Equivalent Award, or any other right or interest
relating to Stock or cash, granted to a Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract, or
other instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Corporation.
(d) "Change in Control" means and includes the occurrence of any of
the following events:
"Change in Control" means and includes any of the following events:
(i) during any period of two consecutive years, individuals who, at
the beginning or such period, constitute the Board (the "Incumbent
Directors") cease for any reason to constitute at least a majority
of the Board, provided that any person becoming a director and whose
election or nomination for election was approved by a vote of at
least two-thirds of the Incumbent Directors then on the Board
(either by a specific vote or by approval of the proxy statement of
the Company in which such person is named as a nominee for director,
without written objection to such nomination) shall be an Incumbent
Director; provided, however, that no individual initially elected or
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nominated as a director of the Company as a result of an actual or
threatened election contest (as described in Rule 14a-11 under the
Act) ("Election Contest") or other actual or threatened solicitation
of proxies or consents by or on behalf of any "person" (as such term
is defined in Section 3(a)(9) of the Act and as used in Sections
13(d)(3) and 14(d)(2) of the Act) other than the Board ("Proxy
Contest"), including by reason of any agreement intended to avoid or
settle any Election or Contest or Proxy Contest, shall be deemed an
Incumbent Director;
(ii) any person is or becomes a "beneficial owner" (as defined in
Rule 13d-3 under the Act), directly or indirectly, of securities of
the Company representing 20% or more of the combined voting power of
the Company's then outstanding securities eligible to vote for the
election of the Board (the "Company Voting Securities"); provided,
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however, that the event described in this paragraph (ii) shall not
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be deemed to be a Change in Control of the Company by virtue of any
of the following acquisitions: (A) by the Company of any subsidiary,
(B) by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any subsidiary, (C) by an underwriter
temporarily holding securities pursuant to an offering of such
securities, (D) pursuant to a Non-Qualifying Transaction (as defined
in paragraph (iii), or (E) a transaction (other than one described
in (iii) below) in which Company Voting Securities are acquired from
the Company, if a majority of the Incumbent Directors approve a
resolution providing expressly that the acquisition pursuant to this
clause (E) does not constitute a Change in Control of the Company
under this paragraph (ii);
(iii) the consummation of a merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the
Company or any of its subsidiaries that requires the approval of the
Company's stockholders, whether for such transaction or the issuance
of securities in the transaction (a "Reorganization"), or sale or
other disposition of all or substantially all of the Company's
assets to an entity that is not an affiliate of the Company (a
"Sale"), unless immediately following such Reorganization or Sale:
(A) more than 50% of the total voting power of (x) the corporation
resulting from such Reorganization or the corporation which has
acquired all or substantially all of the assets of the Company (in
either case, the "Surviving Corporation"), or (y) if applicable, the
ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities eligible to
elect directors of the Surviving Corporation (the "Parent
Corporation"), is represented by the Company Voting Securities that
were outstanding immediately prior to such Reorganization or Sale
(or, if applicable, is represented by shares into which such Company
Voting Securities were converted pursuant to such Reorganization or
Sale), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such
Company Voting Securities among the holders thereof immediately
prior to the Reorganization or Sale, (B) no person (other than any
employee benefit plan (or related trust) sponsored or maintained by
the Surviving Corporation or the Parent Corporation) is or becomes
the beneficial owner, directly or indirectly, of 20% or more of the
total voting power of the outstanding voting securities eligible to
elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority
of the members of the board of directors of the Parent Corporation
(or, if there is no
Parent Corporation, the Surviving Corporation) following the
consummation of the Reorganization or Sale were Incumbent Directors
at the time of the Board's approval of the execution of the initial
agreement providing for such Reorganization or Sale (any
Reorganization or Sale which satisfies all of the criteria specified
in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying
Transaction"); or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company.
Notwithstanding the foregoing, a Change in Control of the Company
shall not be deemed to occur solely because any person acquires
beneficial ownership of more than 20% of the Company Voting
Securities as a result of the acquisition of Company Voting
Securities by the Company which reduces the number of Company Voting
Securities outstanding; provided, that if after such acquisition by
the Company such person becomes the beneficial owner of additional
Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such
person, a Change in Control of the Company shall then occur.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" means the committee of the Board described in
Article 4.
(g) "Corporation" means UnumProvident Corporation , a Delaware
corporation.
(h) "Covered Employee" means a covered employee as defined in Code
Section 162(m)(3).
(i) "Disability" means any illness or other physical or mental
condition of a Participant that renders the Participant incapable of
performing his customary and usual duties for the Corporation, or any
medically determinable illness or other physical or mental condition
resulting from a bodily injury, disease or mental disorder which, in the
judgment of the Committee, is permanent and continuous in nature. The
Committee may require such medical or other evidence as it deems necessary
to judge the nature and permanency of the Participant's condition.
Notwithstanding the above, with respect to an Incentive Stock Option,
Disability shall mean Permanent and Total Disability as defined in Section
22(e)(3) of the Code.
(j) "Dividend Equivalent" means a right granted to a Participant
under Article 11.
(k) "Effective Date" has the meaning assigned such term in Section
2.1.
(l) "Fair Market Value", on any date, means (i) if the Common Stock
is listed on a securities exchange or traded over the Nasdaq National
Market, the average of the high and low market prices reported in The Wall
Street Journal at which a Share of Common Stock shall have been sold on
such day or on the next preceding trading day if such date was not a
trading day, or (ii) if the Common Stock is not listed on a securities
exchange or traded over the Nasdaq National Market, the mean between the
bid and offered prices as quoted by Nasdaq for such date, provided that if
it is determined that the fair market value is not properly reflected by
such Nasdaq quotations, Fair Market Value will be determined by such other
method as the Committee determines in good faith to be reasonable.
(m) "Incentive Stock Option" means an Option that is intended to
meet the requirements of Section 422 of the Code or any successor
provision thereto.
(n) "Non-Qualified Stock Option" means an Option that is not an
Incentive Stock Option.
(o) "Option" means a right granted to a Participant under Article 7
of the Plan to purchase Stock at a specified price during specified time
periods. An Option may be either an Incentive Stock Option or a
Non-Qualified Stock Option.
(p) "Parent" means a corporation which owns or beneficially owns a
majority of the outstanding voting stock or voting power of the
Corporation. Notwithstanding the above, with respect to Incentive Stock
Options, the term shall have the same meaning as set forth in Section
424(e) of the Code.
(q) "Participant" means a person who, as an employee, officer,
Producer or director of the Corporation or any Parent or Subsidiary, has
been granted an Award under the Plan.
(r) "Plan" means the UnumProvident Corporation Stock Plan of 1999,
as amended from time to time.
(s) "Producer" means a producer of insurance business for the
benefit of the Corporation or its subsidiaries. For purposes of this Plan,
Producers are deemed to be consultants of the Corporation or its Parent or
Subsidiaries.
(t) "Restricted Stock Award" means Stock granted to a Participant
under Article 10 that is subject to certain restrictions and to risk of
forfeiture.
(u) "Retirement" means a Participant's voluntary termination of
employment with the Corporation , Parent or Subsidiary at or after age 65
or after attaining age 55 with at least 15 years of service with the
Corporation or a Parent or Subsidiary or with an entity that has been
acquired by the Corporation or a Parent or Subsidiary, or with the
approval of the Committee.
(v) "Stock" means the $.10 par value common stock of the
Corporation and such other securities of the Corporation as may be
substituted for Stock pursuant to Article 12.
(w) "Stock Appreciation Right" or "SAR" means a right granted to a
Participant under Article 8 to receive a payment equal to the difference
between the Fair Market Value of a share of Stock as of the date of
exercise of the SAR over the grant price of the SAR, all as determined
pursuant to Article 8.
(x) "Subsidiary" means any corporation, limited liability company,
partnership or other entity of which a majority of the outstanding voting
stock or voting power is beneficially owned directly or indirectly by the
Corporation. Notwithstanding the above, with respect to Incentive Stock
Options, the term shall have the meaning set forth in Section 424(f) of
the Code.
(y) "1933 Act" means the Securities Act of 1933, as amended from
time to time.
(z) "1934 Act" means the Securities Exchange Act of 1934, as amended
from time to time.
ARTICLE 4
Administration
4.1 Committee. The Plan shall be administered by a committee (the
"Committee") appointed by the Board (which Committee shall consist of two or
more directors) or, at the discretion of the Board from time to time, the Plan
may be administered by the Board. It is intended that the directors appointed to
serve on the Committee shall be "non-employee directors" (within the meaning of
Rule 16b-3 promulgated under the 1934 Act) and "outside directors" (within the
meaning of Code Section 162(m) and the regulations thereunder) to the extent
that Rule 16b-3 and, if necessary for relief from the limitation under Code
Section 162(m) and such relief is sought by the Corporation, Code Section
162(m), respectively, are applicable. However, the mere fact that a Committee
member shall fail to qualify under either of the foregoing requirements shall
not invalidate any Award made by the Committee which Award is otherwise validly
made under the Plan. The members of the Committee shall be appointed by, and may
be changed at any time and from time to time in the discretion of, the Board.
During any time that the Board is acting as administrator of the Plan, it shall
have all the powers of the Committee hereunder, and any reference herein to the
Committee (other than in this Section 4.1) shall include the Board.
4.2 Action By The Committee. For purposes of administering the Plan, the
following rules of procedure shall govern the Committee. A majority of the
Committee shall constitute a quorum. The acts of a majority of the members
present at any meeting at which a quorum is present, and acts approved
unanimously in writing by the members of the Committee in lieu of a meeting,
shall be deemed the acts of the Committee. Each member of the Committee is
entitled to, in good faith, rely or act upon any report or other information
furnished to that member by any officer or other employee of the Corporation or
any Parent or Subsidiary, the Corporation's independent certified public
accountants, or any executive compensation consultant or other professional
retained by the Corporation to assist in the administration of the Plan.
4.3 Authority Of Committee. Except as provided below the Committee has the
exclusive power, authority and discretion to:
(a) Designate Participants;
(b) Determine the type or types of Awards to be granted to each
Participant;
(c) Determine the number of Awards to be granted and the number of
shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted under
the Plan, including but not limited to, the exercise price, grant price,
or purchase price, any restrictions or limitations on the Award, any
schedule for lapse of forfeiture restrictions or restrictions on the
exercisability of an Award, and accelerations or waivers thereof, based in
each case on such considerations as the Committee in its sole discretion
determines;
(e) Accelerate the vesting or lapse of restrictions of any
outstanding Award, based in each case on such considerations as the
Committee in its sole discretion determines;
(f) Determine whether, to what extent, and under what circumstances
an Award may be settled in, or the exercise price of an Award may be paid
in, cash, Stock, other Awards, or other property, or an Award may be
canceled, forfeited, or surrendered;
(g) Prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(h) Decide all other matters that must be determined in connection
with an Award;
(i) Establish, adopt or revise any rules and regulations as it may
deem necessary or advisable to administer the Plan;
(j) Make all other decisions and determinations that may be required
under the Plan or as the Committee deems necessary or advisable to
administer the Plan;
(k) Amend the Plan or any Award Agreement as provided herein; and
(l) Adopt such modifications, procedures, and subplans as may be
necessary or desirable to comply with provisions of the laws of non-U.S.
jurisdictions in which the Corporation or any Parent or Subsidiary may
operate, in order to assure the viability of the benefits of Awards
granted to Participants located in such other jurisdiction and to meet the
objectives of the Plan.
Notwithstanding the above, the Board or the Committee may expressly
delegate to a special committee consisting of one or more directors who
are also officers of the Corporation some or all of the Committee's
authority under subsections (a) through (g) above with respect to those
eligible Participants who, at the time of the grant are not, and are not
anticipated to become, either (I) Covered Employees or (ii) persons
subject to the insider trading rules of Section 16 of the 1934 Act.
Further, the Committee may delegate its general administrative duties
under the Plan to an officer or employee or committee of officers or
employees of the Company.
4.4. Decisions Binding. The Committee's interpretation of the Plan, any
Awards granted under the Plan, any Award Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties. No member of the Committee shall be liable for any
act done in good faith.
ARTICLE 5
Shares Subject To The Plan
5.1. Number Of Shares. The aggregate number of shares of Stock reserved
and available for Awards or which may be used to provide a basis of measurement
for or to determine the value of an Award (such as with a Stock Appreciation
Right) shall be 7,500,000 of which not more than twenty percent (20% may be
granted as Awards of Restricted Stock or unrestricted Stock Awards, and not more
than ten percent (10%) shares of Stock shall be granted in the form of Incentive
Stock Options.
5.2. Lapsed Awards and Shares Withheld or Tendered. To the extent that an
Award is canceled, terminates, expires or lapses for any reason, any shares of
Stock subject to the Award will again be available for the grant of Awards under
the Plan. Shares subject to SARs or other Awards settled in cash will be
available for the grant of an Award under the Plan. Shares of Stock that are
surrendered or withheld from any Award to satisfy a Participant's income tax
withholding obligations, or shares of Stock owned by a Participant that are
tendered to pay the exercise price of Options granted under the Plan will be
available for the grant of Awards under the Plan. Stock delivered by the
Corporation, any shares of stock with respect to which Awards are made by the
Corporation and any shares of Common Stock with respect to which the Corporation
becomes obligated to make Awards, through the assumption of, or in substitution
for, the outstanding awards previously granted by a acquired entity, shall not
be counted against the shares available for Awards under this Plan.
5.3. Stock Distributed. Any Stock distributed pursuant to an Award may
consist, in whole or in part, of authorized and unissued Stock, treasury Stock
or Stock purchased on the open market.
5.4. Limitation On Awards. Notwithstanding any provision in the Plan to
the contrary, but subject to adjustment as provided in Section 12.4the maximum
number of shares of Stock with respect to one or more Options and/or SARs that
may be granted during any one calendar year under the Plan to any one
Participant shall be 1,000,000. The maximum Fair Market Value (measured as of
the date of grant) of any Awards other than Options and SARs that may be
received by any one Participant (less any consideration paid by the Participant
for such Award) during any one calendar year under the Plan shall be
$10,000,000.
ARTICLE 6
Eligibility
6.1. General. Awards may be granted only to individuals who are employees,
officers, Producers or directors of the Corporation or a Parent or Subsidiary.
ARTICLE 7
Stock Options
7.1. General. The Committee is authorized to grant Options to Participants
on the following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock under an
Option shall be determined by the Committee, provided that the exercise
price for any Option shall not be less than the Fair Market Value as of
the date of the grant.
(b) Time And Conditions Of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in part.
The Committee also shall determine the performance or other conditions, if
any, that must be satisfied before all or part of an Option may be
exercised. The Committee may waive any exercise provisions at any time in
whole or in part based upon factors as the Committee may determine in its
sole discretion so that the Option becomes exercisable or vested at an
earlier date.
(c) Payment. The Committee shall determine the methods by which the
exercise price of an Option may be paid, the form of payment, including,
without limitation, cash, shares of Stock, or other property (including
"cashless exercise" arrangements), and the methods by which shares of
Stock shall be delivered or deemed to be delivered to Participants;
provided, however, that if shares of Stock are used to pay the exercise
price of an Option, such shares must have been held by the Participant for
at least six months. When shares of Stock are delivered , such delivery
may be by attestation of ownership or actual delivery of one or more
certificates. Failure by the Committee to specify methods by which the
exercise price of an Option may be paid or the form of payment shall be
deemed to express the Committee's determination that all methods and forms
of payment under the Plan are permitted for that Option.
(d) Evidence Of Grant. All Options shall be evidenced by a written
Award Agreement between the Corporation and the Participant. The Award
Agreement shall include such provisions, not inconsistent with the Plan,
as may be specified by the Committee.
(e) Additional Options Upon Exercise. The Committee may, in its sole
discretion, provide in an Award Agreement, or in an amendment thereto, for
the automatic grant of a new Option to any Participant who delivers shares
of Stock as full or partial payment of the exercise price of the original
Option. Any new Option granted in such a case (i) shall be for the same
number of shares of Stock as the Participant delivered in exercising the
original Option, (ii) shall have an exercise price of 100% of the Fair
Market Value of the surrendered shares of Stock on the date of exercise of
the original Option (the grant date for the new Option), and (iii) shall
have a term equal to the unexpired term of the original Option.
(f) Exercise Term. In no event may an Option be exercisable for more
than ten years from the date of its grant.
7.2. Incentive Stock Options. The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:
(a) Exercise Price. The exercise price per share of Stock shall be
set by the Committee, provided that the exercise price for any Incentive
Stock Option shall not be less than the Fair Market Value as of the date
of the grant.
(b) Exercise. In no event may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(c) Lapse Of Option. An Incentive Stock Option shall lapse under the
earliest of the following circumstances; provided, however, that the
Committee may, prior to the lapse of the Incentive Stock Option under the
circumstances described in paragraphs (3), (4) and (5) below, provide in
writing that the Option will extend until a later date, but if Option is
exercised after the dates specified in paragraphs (3), (4) and (5) below,
it will automatically become a Non-Qualified Stock Option:
(1) The Incentive Stock Option shall lapse as of the option
expiration date set forth in the Award Agreement.
(2) The Incentive Stock Option shall lapse ten years after it
is granted, unless an earlier time is set in the Award Agreement.
(3) If the Participant terminates employment for any reason
other than as provided in paragraph (4) or (5) below, the Incentive
Stock Option shall lapse, unless it is previously exercised, three
months after the Participant's termination of employment; provided,
however, that if the Participant's employment is terminated by the
Corporation for cause (as determined by the Corporation ), the
Incentive Stock Option shall (to the extent not previously
exercised) lapse immediately.
(4) If the Participant terminates employment by reason of his
Disability, the Incentive Stock Option shall lapse, unless it is
previously exercised, one year after the Participant's termination
of employment.
(5) If the Participant dies while employed, or during the
three-month period described in paragraph (3) or during the one-
year period described in paragraph (4) and before the Option
otherwise lapses, the Option shall lapse one year after the
Participant's death. Upon the Participant's death, any exercisable
Incentive Stock Options may be exercised by the Participant's
beneficiary, determined in accordance with Section 11.6.
Unless the exercisability of the Incentive Stock Option is accelerated as
provided in Article 11, if a Participant exercises an Option after termination
of employment, the Option may be exercised only with respect to the shares that
were otherwise vested on the Participant's termination of employment.
(d) Individual Dollar Limitation. The aggregate Fair Market Value
(determined as of the time an Award is made) of all shares of Stock with
respect to which Incentive Stock Options are first exercisable by a
Participant in any calendar year may not exceed $100,000.00.
(e) Ten Percent Owners. No Incentive Stock Option shall be granted
to any individual who, at the date of grant, owns stock possessing more
than ten percent of the total combined voting power of all classes of
stock of the Corporation or any Parent or Subsidiary unless the exercise
price per share of such Option is at least 110% of the Fair Market Value
per share of Stock at the date of grant and the Option expires no later
than five years after the date of grant.
(f) Expiration Of Incentive Stock Options. No Award of an Incentive
Stock Option may be made pursuant to the Plan after the day immediately
prior to the tenth anniversary of the Effective Date.
(g) Right To Exercise. During a Participant's lifetime, an Incentive
Stock Option may be exercised only by the Participant or, in the case of
the Participant's Disability, by the Participant's guardian or legal
representative.
(h) Directors. The Committee may not grant an Incentive Stock Option
to a non-employee director. The Committee may grant an Incentive Stock
Option to a director who is also an employee of the Corporation or Parent
or Subsidiary but only in that individual's position as an employee and
not as a director.
ARTICLE 8
Stock Appreciation Rights
8.1. Grant of SARs. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
(a) Right To Payment. Upon the exercise of a Stock Appreciation
Right, the Participant to whom it is granted has the right to receive the
excess, if any, of:
(1) The Fair Market Value of one share of Stock on the date of
exercise; over
(2) The grant price of the Stock Appreciation Right as
determined by the Committee, which shall not be less than the Fair
Market Value of one share of Stock on the date of grant.
(b) Other Terms. All awards of Stock Appreciation Rights shall be
evidenced by an Award Agreement. The terms, methods of exercise, methods
of settlement, form of consideration payable in settlement, and any other
terms and conditions of any Stock Appreciation Right shall be determined
by the Committee at the time of the grant of the Award and shall be
reflected in the Award Agreement.
ARTICLE 9
Restricted Stock Awards
9.1. Grant Of Restricted Stock. The Committee is authorized to make Awards
of Restricted Stock to Participants in such amounts and subject to such terms
and conditions as may be selected by the Committee. All Awards of Restricted
Stock shall be evidenced by a Restricted Stock Award Agreement.
9.2. Issuance And Restrictions. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted Stock).
These restrictions may lapse separately or in combination at such times, under
such circumstances, in such installments, upon the satisfaction of performance
goals or otherwise, as the Committee determines at the time of the grant of the
Award or thereafter.
9.3. Forfeiture. Except as otherwise determined by the Committee at the
time of the grant of the Award or thereafter, upon termination of employment
during the applicable restriction period or upon failure to satisfy a
performance goal during the applicable restriction period, Restricted Stock that
is at that time subject to restrictions shall be forfeited and reacquired by the
Corporation; provided, however, that the Committee may provide in any Award
Agreement that restrictions or forfeiture conditions relating to Restricted
Stock will be waived in whole or in part in the event of terminations resulting
from specified causes, and the Committee may in other cases waive in whole or in
part restrictions or forfeiture conditions relating to Restricted Stock.
9.4. Certificates For Restricted Stock. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine. If
certificates representing shares of Restricted Stock are
registered in the name of the Participant, certificates must bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock.
ARTICLE 10
Dividend Equivalents
10.1 Grant Of Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to Participants subject to such terms and conditions as may
be selected by the Committee. Dividend Equivalents shall entitle the Participant
to receive payments equal to dividends with respect to all or a portion of the
number of shares of Stock subject to an Award, as determined by the Committee.
The Committee may provide that Dividend Equivalents be paid or distributed when
accrued or be deemed to have been reinvested in additional shares of Stock, or
otherwise reinvested.
ARTICLE 11
Provisions Applicable To Awards
11.1. Stand-alone, Tandem, And Substitute Awards. Awards granted under the
Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other Award granted
under the Plan. If an Award is granted in substitution for another Award, the
Committee may require the surrender of such other Award in consideration of the
grant of the new Award. Awards granted in addition to or in tandem with other
Awards may be granted either at the same time as or at a different time from the
grant of such other Awards.
11.2. Term Of Award. The term of each Award shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option or a Stock Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant
(or, if Section 7.2(e) applies, five years from the date of its grant).
11.3. Form Of Payment For Awards. Subject to the terms of the Plan and any
applicable law or Award Agreement, payments or transfers to be made by the
Corporation or a Parent or Subsidiary on the grant or exercise of an Award may
be made in such form as the Committee determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance with
rules adopted by, and at the discretion of, the Committee.
11.4. Limits On Transfer. No right or interest of a Participant in any
unexercised or restricted Award may be pledged, encumbered, or hypothecated to
or in favor of any party other than the Corporation or a Parent or Subsidiary,
or shall be subject to any lien, obligation, or liability of such Participant to
any other party other than the Corporation or a Parent or Subsidiary. No
unexercised or restricted Award shall be assignable or transferable by a
Participant other than by will or the laws of descent and distribution or,
except in the case of an Incentive Stock Option, pursuant to a domestic
relations order that would satisfy Section 414(p)(1)(A) of the Code if such
Section applied to an Award under the Plan; provided, however, that the
Committee may (but need not) permit other transfers where the Committee
concludes that such transferability (i) does not result in accelerated taxation,
(ii) does not
cause any Option intended to be an Incentive Stock Option to fail to be
described in Code Section 422(b), and (iii) is otherwise appropriate and
desirable, taking into account any factors deemed relevant, including without
limitation, state or federal tax or securities laws applicable to transferable
Awards.
11.5 Beneficiaries. Notwithstanding Section 11.4, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
Award upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award Agreement applicable to the
Participant, except to the extent the Plan and Award Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If no beneficiary has been designated or survives the
Participant, payment shall be made to the Participant's estate. Subject to the
foregoing, a beneficiary designation may be changed or revoked by a Participant
at any time provided the change or revocation is filed with the Committee.
11.6. Stock Certificates. All Stock issuable under the Plan is subject to
any stop-transfer orders and other restrictions as the Committee deems necessary
or advisable to comply with federal or state securities laws, rules and
regulations and the rules of any national securities exchange or automated
quotation system on which the Stock is listed, quoted, or traded. The Committee
may place legends on any Stock certificate or issue instructions to the transfer
agent to reference restrictions applicable to the Stock.
11.7 Acceleration Upon Death, Disability Or Retirement. Notwithstanding
any other provision in the Plan or any Participant's Award Agreement to the
contrary, upon the Participant's death or Disability during his employment or
service as a producer or director or upon the Participant's Retirement, all
outstanding Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully exercisable and all
restrictions on outstanding Awards shall lapse. Any Option or Stock Appreciation
Rights Awards shall thereafter continue or lapse in accordance with the other
provisions of the Plan and the Award Agreement. To the extent that this
provision causes Incentive Stock Options to exceed the dollar limitation set
forth in Section 7.2(d), the excess Options shall be deemed to be Non-Qualified
Stock Options.
11.8. Acceleration Upon A Change In Control. Except as otherwise provided
in the Award Agreement, upon the occurrence of a Change in Control, all
outstanding Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully exercisable and all
restrictions on outstanding Awards shall lapse; provided, however that such
acceleration will not occur if, in the opinion of the Corporation's accountants,
such acceleration would preclude the use of "pooling of interest" accounting
treatment for a Change in Control transaction that (a) would otherwise qualify
for such accounting treatment, and (b) is contingent upon qualifying for such
accounting treatment. To the extent that this provision causes Incentive Stock
Options to exceed the dollar limitation set forth in Section 7.2(d), the excess
Options shall be deemed to be Non-Qualified Stock Options.
11.9. Acceleration Upon Certain Events Not Constituting A Change In
Control. In the event of the occurrence of any circumstance, transaction or
event not constituting a Change in Control (as defined in Section 3.1) but which
the Board of Directors deems to be, or to be reasonably likely to lead to, an
effective change in control of the Corporation of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of the 1934
Act, the Committee may in its sole discretion declare all outstanding Options,
Stock Appreciation Rights, and other Awards in the nature of rights that may be
exercised to be fully exercisable, and/or all restrictions on all outstanding
Awards to have lapsed, in each case, as of such date as the Committee may, in
its sole discretion, declare, which may be on or before the
consummation of such transaction or event. To the extent that this provision
causes Incentive Stock Options to exceed the dollar limitation set forth in
Section 7.2(d), the excess Options shall be deemed to be Non-Qualified Stock
Options.
11.10. Acceleration For Any Other Reason. Regardless of whether an event
has occurred as described in Section 11.8 or 11.9 above, the Committee may in
its sole discretion at any time determine that all or a portion of a
Participant's Options, Stock Appreciation Rights, and other Awards in the nature
of rights that may be exercised shall become fully or partially exercisable,
and/or that all or a part of the restrictions on all or a portion of the
outstanding Awards shall lapse, in each case, as of such date as the Committee
may, in its sole discretion, declare. The Committee may discriminate among
Participants and among Awards granted to a Participant in exercising its
discretion pursuant to this Section 11.10.
11.11 Effect Of Acceleration. If an Award is accelerated under Section
11.8 or 11.9, the Committee may, in its sole discretion, provide (i) that the
Award will expire after a designated period of time after such acceleration to
the extent not then exercised, (ii) that the Award will be settled in cash
rather than Stock, (iii) that the Award will be assumed by another party to the
transaction giving rise to the acceleration or otherwise be equitably converted
in connection with such transaction, or (iv) any combination of the foregoing.
The Committee's determination need not be uniform and may be different for
different Participants whether or not such Participants are similarly situated.
11.12. Performance Goals. The Committee may determine that any Award
granted pursuant to this Plan to a Participant (including, but not limited to,
Participants who are Covered Employees) shall be determined solely on the basis
of (a) the achievement by the Corporation , or an individual or a business unit
of the Corporation or a Parent or Subsidiary, of a specified target with respect
to, or target growth in, any of the following areas: (i) return on equity or on
assets, (ii) overall or selected premium or sales growth, (iii) revenues, net
income or earnings per share, (iv) expense efficiency ratios (ratio of expenses
to premium income), (v) customer service measures or indices, (vi) underwriting
efficiency and/or quality, (vii) market share, or (vii) persistency factors, or
(b) the Corporation's s or a Parent's or Subsidiary's stock performance, or (c)
any combination of the goals set forth in any of (a) or (b) above. If an Award
is made on such basis, the Committee shall establish goals prior to the
beginning of the period for which such performance goal relates (or such later
date as may be permitted under Code Section 162(m) or the regulations
thereunder) and the Committee has the right for any reason to reduce (but not
increase) the Award, notwithstanding the achievement of a specified goal. Any
payment of an Award granted with performance goals shall be conditioned on the
written certification of the Committee in each case that the performance goals
and any other material conditions were satisfied.
11.13. Termination Of Employment. Whether military, government or other
service or other leave of absence shall constitute a termination of employment
shall be determined in each case by the Committee at its discretion, and any
determination by the Committee shall be final and conclusive. A termination of
employment shall not occur in a circumstance in which a Participant transfers
from the Corporation to one of its Parents or Subsidiaries, transfers from a
Parent or Subsidiary to the Corporation, or transfers from one Parent or
Subsidiary to another Parent or Subsidiary or in the discretion of the Committee
as specified at or prior to such occurrence, in the case of a spin-off, sale or
disposition of the Participant's employer from the Corporation or any Parent or
Subsidiary. To the extent that this provision causes the Incentive Stock Options
to extend beyond three months from the date a Participant is deemed to be an
employee of the Corporation, a Parent or Subsidiary for purposes of Section
424(f) of the Code, the Options held by such Participant shall be deemed to be
Non-Qualified Stock Options.
ARTICLE 12
Changes In Capital Structure
12.1. General. In the event of a corporate transaction involving the
Corporation (including without limitation, any stock dividend, stock split,
extraordinary cash dividend, recapitalization , reorganization, merger,
consolidation split-up, spin-off, combination or exchange of shares) the
authorization limits under Section 5.1 and 5.4 shall be adjusted
proportionately, and the Committee may adjust Awards to preserve the benefits or
potential benefits of the Awards. Action by the Committee may include: (I)
adjustment of the number and kind of shares which may be delivered under the
Plan; (ii) adjustment of the number and kind of shares subject to outstanding
Awards, adjustment of the exercise price of outstanding Awards; and (iv) any
other adjustments that the Committee determines to be equitable. Without
limiting the foregoing, in the event a stock dividend or stock split is declared
upon the Stock, the authorization limits under Section 5.1 and 5.4 shall be
increased proportionately, and the shares of Stock then subject to each Award
shall be increased proportionately without any change in the aggregate purchase
price therefor.
ARTICLE 13
Amendment, Modification And Termination
13.1. Amendment, Modification And Termination. The Board or the Committee
may, at any time and from time to time, amend, modify or terminate the Plan
without stockholder approval; provided, however, that the Board or Committee may
condition any amendment or modification on the approval of stockholders of the
Corporation if such approval is necessary or deemed advisable with respect to
tax, securities or other applicable laws, policies or regulations.
13.2 Awards Previously Granted. At any time and from time to time, the
Committee may amend, modify or terminate any outstanding Award without approval
of the Participant; provided, however, that subject to the terms of the
applicable Award Agreement such amendment, modification or termination shall
not, without the Participant's consent, reduce or diminish the value of such
Award determined as if the Award had been exercised, vested, cashed in or
otherwise settled on the date of such amendment or termination; and provided
further that, the original term of any Option may not be extended and, except as
otherwise provided in the anti-dilution provision of the Plan, the exercise
price of any Option may not be reduced. No termination, amendment, or
modification of the Plan shall adversely affect any Award previously granted
under the Plan, without the written consent of the Participant.
ARTICLE 14
General Provisions
14.1. No Rights To Awards. No Participant or employee, officer, producer
or director shall have any claim to be granted any Award under the Plan, and
neither the Corporation nor the Committee is obligated to treat Participants or
eligible participants uniformly.
14.2. No Stockholder Rights. No Award gives the Participant any of the
rights of a stockholder of the Corporation unless and until shares of Stock are
in fact issued to such person in connection with such Award.
14.3. Withholding. The Corporation or any Parent or Subsidiary shall have
the authority and the right to deduct or withhold, or require a Participant to
remit to the Corporation, an amount sufficient to satisfy federal, state, and
local taxes (including the Participant's FICA obligation) required by law to be
withheld with respect to any taxable event arising as a result of the Plan. With
respect to withholding required upon any taxable event under the Plan, the
Committee may, at the time the Award is granted or thereafter, require or permit
that any such withholding requirement be satisfied, in whole or in part, by
withholding from the Award shares of Stock having a Fair Market Value on the
date of withholding equal to the minimum amount (and not any greater amount)
required to be withheld for tax purposes, all in accordance with such procedures
as the Committee establishes.
14.4. No Right To Continued Service. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Corporation
or any Parent or Subsidiary to terminate any Participant's employment or status
as an officer, Producer or director at any time, nor confer upon any Participant
any right to continue as an employee, officer, Producer or director of the
Corporation or any Parent or Subsidiary.
14.5. Unfunded Status Of Awards. The Plan is intended to be an "unfunded"
plan for incentive and deferred compensation. With respect to any payments not
yet made to a Participant pursuant to an Award, nothing contained in the Plan or
any Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Corporation or any Parent or Subsidiary.
14.6. Relationship To Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or benefit plan of the
Corporation or any Parent or Subsidiary unless provided otherwise in such other
plan.
14.7. Expenses. The expenses of administering the Plan shall be borne by
the Corporation and its Parents or Subsidiaries.
14.8. Titles And Headings. The titles and headings of the Sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings, shall control.
14.9. Gender And Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
14.10. Fractional Shares. No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.
14.11. Government and other Regulations. The obligation of the Corporation
to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Corporation shall be under no obligation to
register under the 1933 Act, or any state securities act, any of the shares of
Stock issued in connection with the Plan. The shares issued in connection with
the Plan may in certain circumstances be exempt from registration under the 1933
Act, and the Corporation may restrict the transfer of such shares in such manner
as it deems advisable to ensure the availability of any such exemption.
14.12. Governing Law. To the extent not governed by federal law, the Plan
and all Award Agreements shall be construed in accordance with and governed by
the laws of the State of Tennessee.
14.13. Additional Provisions. Each Award Agreement may contain such other
terms and conditions as the Committee may determine; provided that such other
terms and conditions are not inconsistent with the provisions of this Plan.
The foregoing is hereby acknowledged as being the Provident Companies,
Inc. 1999 Stock Plan as adopted and amended by the Compensation Committee of the
Board of Directors of the Corporation on February 8, 20001, and approved by the
stockholders of the Corporation on May 10, 2001.
UNUMPROVIDENT CORPORATION.
By:
Its: