EXHIBIT 10.3
PROVIDENT COMPANIES, INC.
NON-EMPLOYEE DIRECTOR COMPENSATION PLAN OF 1998
1. Establishment of Plan.
(a) Purpose. The purpose of the Provident Companies, Inc. Non-Employee
Director Compensation Plan of 1998 is to attract, retain and compensate
highly-qualified individuals who are not employees of Provident Companies,
Inc. or any of its subsidiaries or affiliates for service as members of the
Board by providing them with an opportunity to increase their ownership
interest in the Common Stock of the Company. The Company intends that the Plan
will benefit the Company and its stockholders by allowing Non-Employee
Directors to have a personal financial stake in the Company through an
ownership interest in the Common Stock and will closely associate the
interests of Non-Employee Directors with that of the Company's stockholders.
(b) Status of Plan. The Plan is intended, in part, to be a nonqualified,
unfunded plan of deferred compensation under the Internal Revenue Code of
1986, as amended. Although the plan is unfunded for tax purposes, the Company
may establish a trust under Revenue Procedure 92-64 to provide benefits under
the Plan.
(c) Establishment of Trust. As noted above, the Company may establish a
trust to fund benefits provided under the terms of the Plan ("Trust"). It is
intended that a transfer of assets into the Trust will not generate taxable
income (for federal income tax purposes) to the Participants until such assets
are actually distributed or otherwise made available to the Participants.
2. Defined Terms. Unless the context clearly indicates otherwise, the
following terms shall have the following meanings:
"Annual Retainer" means the annual retainer payable by the Company at the
beginning of each Plan Year to a Non-Employee Director for service as a
director of the Company, as such amount may be changed from time to time.
Until changed by the Board, the Annual Retainer will be $80,000.
"Board" means the Board of Directors of the Company.
"Change in Control" means the occurrence of any of the following after the
Effective Date:
(1) any "person" or "group" (as those terms are used in Sections 13(d)
and 14(d), respectively, of the Securities Exchange Act of 1934 ("Exchange
Act")), other than the Maclellan family or a trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock
of the Company, is or becomes the "beneficial owner" (as defined in Rule
13d-3 of the Exchange Act), directly or indirectly, of securities of the
Company representing thirty percent (30%) or more of the combined voting
power of the Company's then outstanding securities and (ii) the "group"
comprised of the Maclellan family does not then beneficially own, directly
or indirectly, securities of the Company representing more than thirty
percent (30%) of the combined voting power of the Company's then
outstanding securities; or
(2) the stockholders of the Company approve a merger or consolidation of
the Company with any other corporation, other than 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 fifty percent (50%) of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all
or substantially all the Company's assets.
"Company" means Provident Companies, Inc., a Delaware corporation.
"Committee" has the meaning assigned such term in Section 3.
"Common Stock" means the common stock, par value $1.00 per share, of the
Company.
"Deferred Share Right" means a right, granted under Section 7, to receive
one share of Common Stock on the Payment Date.
"Deferral Period" has the meaning set forth in Section 7(f) of the Plan.
"Deferral Termination Date" has the meaning set forth in Section 7(e) of the
Plan.
"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.
"Payment Date" has the meaning set forth in Section 7(e) of the Plan.
"Director Retirement Program" means the Company's program which provides
certain retirement benefits to directors elected for the first time prior to
May 4, 1994.
"Distributions" has the meaning set forth in Section 7(f) of the Plan.
"Election Form" means a form approved by the Committee pursuant to which a
Non-Employee Director elects a method of payment of Annual Retainer and the
payment terms for Deferred Share Rights, if applicable.
"Election Period" means the period designated by the Committee each year
during which Non-Employee Directors may elect to receive Options or Deferred
Share Rights as payment of some or all of their Annual Retainer. The Election
Period shall end on or before April 30 of each year for the following Plan
Year.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"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.
"Grant Date" means the date on which Options are granted pursuant to Section
6 or Deferred Share Rights are granted pursuant to Section 7, which, in each
case, shall be the date on which the Annual Retainer is payable in each Plan
Year.
"Hardship" has the meaning set forth in Section 7(h) of the Plan.
"Non-Employee Director" means a director of the Company who is not an
employee of the Company or of any of its subsidiaries or affiliates.
"Option" means an option to purchase Shares granted under Section 6. Options
granted under the Plan are not incentive stock options within the meaning of
Section 422 of the Internal Revenue Code.
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"Optionee" means a Non-Employee Director of the Company to whom an Option
has been granted or, in the event of such Non-Employee Director's death prior
to the expiration of an Option, such Non-Employee Director's estate or other
designated beneficiary.
"Option Notice" means a written notice, agreement or certificate with a Non-
Employee Director from the Company evidencing an Option.
"Option Valuation Percentage" means the percentage determined by the
Committee on or before the Election Date in each Plan Year as being the
approximate fair value of an Option relative to a share of Common Stock on the
date of the grant of the Option. The Option Valuation Percentage may not be
less than 30%. Until changed by the Committee, the Option Valuation Percentage
shall be 33%.
"Participant" means any Non-Employee Director who is participating in the
Plan.
"Permitted Transferee" of an Optionee means (i) one or more of the following
family members of the Optionee: spouse, former spouse, child (whether natural
or adopted), stepchild, any other lineal descendent of the Optionee; (ii) a
trust, partnership or other entity established and existing for the sole
benefit of, or under the sole control of, one or more of the above family
members of the Optionee, or (iii) any other transferee specifically approved
by the Committee after taking into account any state or federal tax,
securities or other laws applicable to transferable options.
"Plan" means the Provident Companies, Inc. Non-Employee Director
Compensation Plan of 1998, as amended from time to time.
"Plan Year" means the approximately twelve-month period beginning on the
date of the annual meeting of the stockholders of the Company ("annual
meeting") in any year and ending on the date of the following annual meeting,
which, for purposes of the Plan, is the period for which Annual Retainers are
earned.
"Retirement" means a Participant's termination of service as a director
after attaining mandatory retirement age, or, in the event there is no
mandatory retirement age for directors, as determined by the Committee in its
reasonable judgment.
"Rule 16b-3" means Rule 16b-3, as amended from time to time, of the
Securities and Exchange Commission as promulgated under the Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of Common Stock.
3. Administration. The Plan shall be administered by the Compensation
Committee of the Board (the "Committee"). Subject to the provisions of the
Plan, the Committee shall be authorized to interpret the Plan, to establish,
amend and rescind any rules and regulations relating to the Plan, and to make
all other determinations necessary or advisable for the administration of the
Plan; provided, however, that the Committee shall have no discretion with
respect to the eligibility or selection of Non-Employee Directors to receive
awards under the Plan, the number of Shares subject to any such awards or the
time at which any such awards are to be granted. The Committee's
interpretation of the Plan, and all actions taken and determinations made by
the Committee pursuant to the powers vested in it hereunder, shall be
conclusive and binding upon all parties concerned including the Company, its
stockholders and persons granted awards under the Plan. The Committee may
appoint a plan administrator to carry out the ministerial functions of the
Plan, but the administrator shall have no other authority or powers of the
Committee. Notwithstanding the foregoing, the Board shall exercise any and all
rights, duties and powers of the Committee under the Plan to the extent
required by the applicable exemptive conditions of Rule 16b-3, as determined
by the Board its sole discretion.
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4. Shares Subject to Plan. The Shares issued under the Plan shall not exceed
in the aggregate 500,000 Shares of Common Stock. Such Shares may be acquired
on the open market or issued out of authorized and unissued Shares or treasury
Shares.
5. Participation.
(a) Eligibility. All active Non-Employee Directors shall be eligible to
participate in the Plan.
(b) Annual Retainer Elections. A Participant may elect on or before the
Election Date for a Plan Year to receive up to 100% of his or her Annual
Retainer in the form of Options or Deferred Share Rights in accordance with
the terms of the Plan and the Election Form. A Participant may not elect to
receive both Options and Deferred Share Rights in any one Plan Year. Any
amount of the Annual Retainer not elected to be received in the form of
Options of Deferred Share Rights shall be paid to the Participant in cash.
(c) Accrued Balances under Director Retirement Program. Each Non-Employee
Director having an accrued account balance in the Director Retirement Program
as of the Effective Date shall be required to convert the net present value of
such account either 100% to Options in accordance with the procedures
described in Section 6 below with respect to Annual Retainer, or 100% to
Deferred Share Rights, in accordance with the procedures described in Section
7 below with respect to Annual Retainer. The election as to which form of
payment shall be made on an Election Form filed during the Election Period.
(d) Deferral Accounts. For bookkeeping purposes, any amounts which the
Participant elects to receive in the form of Deferred Share Rights, and any
Distributions credited in accordance with Section 7(f), shall be transferred
to and held in individual deferral accounts.
6. Stock Option Awards.
(a) Election to Receive Options. A Non-Employee Director may elect each year
to receive up to 100% of his or her Annual Retainer in the form of Options in
accordance with this Section 6. A Non-Employee Director who wishes to receive
some or all of his or her Annual Retainer for a Plan Year in the form of
Options must irrevocably elect to do so during the Election Period for such
Plan Year, by delivering a valid Election Form to the Committee or the plan
administrator. A Non-Employee Director's participation in Section 6 of the
Plan will be effective with respect to the Annual Retainer to be earned in the
first Plan Year beginning after the Committee or the plan administrator
receives the Non-Employee Director's Election Form.
(b) Irrevocable, Annual Election. Elections to receive Options as payment of
Annual Retainer are irrevocable and shall be valid only for one Plan Year. New
elections must be made for participation in Section 6 of the Plan for
subsequent Plan Years.
(c) Time of Grant. Options shall be granted to each Non-Employee Director
who, during the applicable Election Period, filed with the Committee or the
plan administrator a written irrevocable election to receive Options as
payment of some or all of such Non-Employee Director's Annual Retainer payable
in the following Plan Year. Such Options will be granted on the date the
Annual Retainer for such Plan Year is otherwise payable (the "Grant Date").
(d) Number of Options. The number of Shares subject to an Option granted
pursuant to this Section 6 shall be the number of whole Shares equal to (i)
the dollar amount of the Annual Retainer that the Non- Employee Director
elects shall be payable in the form of Options, divided by (ii) the Option
Valuation Percentage times the Fair Market Value per Share on the Grant Date.
In determining the number of Shares subject to an Option, Shares will be
rounded to the nearest 100 Shares. For example:
Assume that a Non-Employee Director has elected to receive $50,000 of his or
her Annual Retainer in the form of Options, that the Option Valuation
Percentage is 33%, and that the Fair Market Value per Share on the Grant Date
is $36. The Non-Employee Director would be granted 4,200 Options as payment of
the $50,000 compensation. $50,000 divided by 33% of $36 FMV = 4,200 Options
granted (rounded to the nearest 100 Shares).
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(e) Exercise Price. The total price paid per Share under each Option granted
under this Section 6 shall be the Fair Market Value per Share on the Grant
Date.
(f) Exercise of Options. An Option, or portion thereof, may be exercised in
whole or in part only with respect to whole Shares. Each Option shall be fully
exercisable on the first anniversary of the date of grant or upon the earlier
death, Disability or Retirement of the Optionee or the occurrence of a Change
in Control. Each Option will remain exercisable for 10 years from the Grant
Date; provided, however, that:
(i) if a Participant terminates his or her service as a director for any
reason after four years of service on the Board, or due to Retirement,
death or Disability, his or her unexercised Options shall expire on the
earlier of (A) the original expiration date of the Option or (B) the fifth
anniversary of such termination of service; and
(ii) if a Participant has served as a director for fewer than four years
and terminates his or her service as a director for any reason other than
Retirement, death or Disability, his or her unexercised Options shall
expire on the date of such termination of service.
(g) Payment of Exercise Price. Shares shall be issued to the Optionee (or
his or her Permitted Transferee) pursuant to the exercise of an Option only
upon receipt by the Company from the Optionee (or his or her Permitted
Transferee) of payment in full of the exercise price. The exercise price shall
be payable in United States dollars upon the exercise of the Option and may be
paid in cash, by check, or in Shares having a total Fair Market Value on the
date of exercise equal to the exercise price; provided that if the Shares
surrendered in payment of the exercise price were themselves acquired
otherwise than on the open market, such Shares shall have been held for at
least six months. The Committee may permit the use of any cashless exercise
methods that are permitted by law.
(h) Option Notice. Each Option granted under the Plan shall be evidenced by
an Option Notice which shall be executed by an authorized officer of the
Company. Such Option Notice shall contain provisions regarding (a) the number
of Shares that may be issued upon exercise of the Option, (b) the exercise
price per Share of the Option and the means of payment therefor, (c) the term
of the Option, and (d) such other terms and conditions not inconsistent with
the Plan as may be determined from time to time by the Committee.
(i) Transferability of Options. No Option shall be assignable or
transferable by the Optionee other than by will or the laws of descent and
distribution or to a Permitted Transferee. Any transfer to a Permitted
Transferee shall be subject to the following terms and conditions:
(i) An Option transferred to a Permitted Transferee shall not be
assignable or transferable by the Permitted Transferee other than by will
or the laws of descent and distribution.
(ii) Transferred Options shall continue to be subject to all the terms
and conditions of the Option as applicable to the original Optionee (other
than the ability to further transfer the Option).
(iii) The Optionee and the Permitted Transferee shall execute any and all
documents reasonably requested by the Committee or the plan administrator,
including without limitation documents (A) to confirm the status of the
transferee as a Permitted Transferee, (B) to satisfy any requirements for
an exemption for the transfer under applicable federal and state securities
laws, and (C) to evidence the transfer.
(iv) Shares acquired by a Permitted Transferee through exercise of an
Option may not be transferred, nor will any assignee or transferee thereof
be recognized as an owner of such Shares by the Company for any purpose,
unless a registration statement under the Securities Act and any applicable
state securities act with respect to such Shares shall then be in effect or
unless the availability of an exemption from registration with respect to
any proposed transfer or disposition of such Shares shall be established to
the satisfaction of counsel for the Company.
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7. Deferred Share Rights.
(a) Election to Receive Deferred Share Rights. A Non-Employee Director may
elect each year to receive up to 100% of his or her Annual Retainer in the
form of Deferred Share Rights in accordance with this Section 7. A Non-
Employee Director who wishes to receive some or all of his or her Annual
Retainer for a Plan Year in the form of Deferred Share Rights must irrevocably
elect to do so during the Election Period for such Plan Year, by delivering a
valid Election Form to the Committee or the plan administrator. A Non-Employee
Director's participation in Section 7 of the Plan will be effective with
respect to the Annual Retainer to be earned in the first Plan Year beginning
after the Committee or the plan administrator receives the Non-Employee
Director's Election Form.
(b) Irrevocable, Annual Election. Elections to receive Deferred Share Rights
as payment of Annual Retainer shall be valid only for one Plan Year. New
elections must be made for participation in Section 7 of the Plan for
subsequent Plan Years. The deferral Election Form signed by the Participant
prior to the Plan Year will be irrevocable except in case of Hardship (as
defined in Section 7(h)) as determined in good faith by the Board pursuant to
Section 7(h); provided, however, that the Participant may, at least one year
in advance of the original Deferral Termination Date, designate a later
Deferral Termination Date.
(c) Time of Grant. Deferred Share Rights shall be granted to each Non-
Employee Director who, during the applicable Election Period, filed with the
Committee or the plan administrator a written irrevocable election to receive
Deferred Share Rights as payment of some or all of such Non-Employee
Director's Annual Retainer payable in the following Plan Year. Such Deferred
Share Rights will be granted on the date the Annual Retainer for such Plan
Year is otherwise payable (the "Grant Date").
(d) Number of Deferred Share Rights. The number of Deferred Share Rights
granted pursuant to this Section 7 shall be the number of whole Shares equal
to (i) the dollar amount of the Annual Retainer that the Non-Employee Director
elects shall be payable in the form of Deferred Share Rights, divided by (ii)
90% of the Fair Market Value per Share on the Grant Date. In determining the
number of Deferred Share Rights, any fraction of a Deferred Share Right will
be rounded to the next highest whole number of Deferred Share Rights. For
example:
Assume that a Non-Employee Director has elected to defer $50,000 of his or
her Annual Retainer and that the Fair Market Value per Share on the Grant Date
is $36. The Non-Employee Director would be granted 1,544 Deferred Share Rights
as payment of the $50,000 compensation. $50,000 divided by (90% of $36 FMV) =
1,544 Deferred Share Rights granted (rounded to the next highest whole
number).
(e) Nature of Deferred Share Rights. Each Deferred Share Right constitutes
the right to receive one Share of Common Stock on the earlier of (i) the
Participant's termination of service as a director or (ii) another designated
date at least three years after the date of such deferral election (in either
case, the "Deferral Termination Date"). Pursuant to the Election Form, the
Participant will elect whether the Shares will be (a) granted within 30 days
after the Deferral Termination Date or (b) granted in approximately equal
annual installments of Shares over a period of three, five or seven years (as
the Participant may elect) after the Deferral Termination Date, each such
annual grant to be made within 30 days after the anniversary of the Deferral
Termination Date. No Shares will be issued until the payment date(s) (the
"Payment Date") at which time the Company agrees to issue Shares of Common
Stock to the Participant. The Participant will have no rights as a stockholder
with respect to the Deferred Share Rights, and the Deferred Share Rights will
be unsecured.
(f) Deferred Dividend Account. If any dividends or other rights or
distributions of any kind ("Distributions") are distributed to holders of
Common Stock during the period from the applicable Grant Date until the
Deferral Termination Date (the "Deferral Period") but prior to the
Participant's termination of service, an amount equal to the cash value of
such Distributions on their distribution date, as such value is determined by
the Committee, will be credited to a deferred dividend account for the
Participant as follows: the account will be credited with the right to receive
Shares having a Fair Market Value as of the date of the Distribution equal to
the cash value of the Distribution. The Company will issue Shares equal to the
cumulative total of rights to Shares in such account within 30 days after the
Participant's Deferral Termination Date.
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If a Distribution is distributed to holders of Common Stock after the
Participant's Deferral Termination Date but prior to the settlement in full of
the Participant's Deferred Share Rights, an amount equal to the cash value of
such Distributions pertaining to the Participant's outstanding Deferred Share
Rights shall be converted into Shares equivalent in value to the Distribution
(based on the Fair Market Value as of the date of Distribution) and such
Shares will be issued to the Participant as soon as practical after the date
of the Distribution.
(g) Transferability of Deferred Share Rights. No Deferred Share Rights shall
be assignable or transferable by the Participant other than by will or the
laws of descent and distribution. No right or interest in the Deferred Share
Rights or in the deferred dividend account shall be subject to liability for
the debts, contracts or engagements of the Participant or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect;
provided, however, that nothing in this Section 7(g) shall prevent transfers
by will or by the applicable laws of descent and distribution.
(h) Hardship. The Board may accelerate the payment in Shares of all or a
portion of a Participant's Deferred Share Rights on account of his or her
Hardship, subject to the following requirements: (i) the value of such
accelerated distribution shall not exceed the amount necessary to satisfy the
Hardship, less the amount which can be satisfied from other resources which
are reasonably available to the Participant, (ii) the denial of the
Participant's request for a Hardship acceleration would result in severe
financial hardship to the Participant, and (iii) the Participant has not
received an accelerated distribution on account of Hardship within the 12-
month period preceding the acceleration. For purposes of this Plan, "Hardship"
of a Participant, as determined by the Board in its discretion on the basis of
all relevant facts and circumstances and in accordance with the following
nondiscriminatory and objective standards uniformly interpreted and
consistently applied, shall mean a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of his or her dependent, loss of the Participant's property due
to casualty, or other extraordinary and unforeseeable circumstances arising as
a result of events beyond the control of the Participant. A financial need
shall not constitute a Hardship unless it is for at least $1,000,000 or the
entire value of the principal amount of the Participant's Deferred Share
Rights.
(i) Funding. Deferred Share Rights shall be paid from the general assets of
the Company or as otherwise directed by the Company. To the extent that any
Participant acquires the right to receive Deferred Share Rights under the
Plan, such right shall be no greater than that of an unsecured general
creditor of the Company. Participants and their Beneficiaries shall not have
any preference or security interest in the assets of the Company other than as
a general unsecured creditor.
(j) Designation of Beneficiary. Each Participant from time to time may
designate any person or persons (who may be designated contingently or
successively and who may be an entity other than a natural person) as his or
her beneficiary or beneficiaries to whom the Participant's Deferred Share
Rights are to be paid if the Participant dies before receipt of Shares. Each
beneficiary designation shall be on the form prescribed by the Committee and
will be effective only when filed with the Committee during the Participant's
lifetime. Each beneficiary designation filed with the Committee will cancel
all beneficiary designations previously filed with the Committee. The
revocation of a beneficiary designation, no matter how effected, shall not
require the consent of any designated beneficiary.
8. Prorated Grants. If on any date, Shares of Common Stock are not available
under the Plan to grant to Non-Employee Directors the full amount of a grant
(Options or Deferred Share Rights) contemplated by the Plan, then each such
director shall receive an award of Options or Deferred Share Rights, as the
case may be, equal to the number of Shares of Common Stock then available
under the Plan divided by the number of Non-Employee Directors entitled to a
grant of Options or Deferred Share Rights on such date. Fractional Shares
shall be ignored and not granted. Any shortfall resulting from such proration
shall be paid in the form of cash.
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9. Withholding. Except with respect to the exercise of Options transferred
to Permitted Transferees, whenever the Company issues Shares under the Plan,
the Company shall have the right to withhold from sums due the recipient, or
to require the recipient to remit to the Company, any amount sufficient to
satisfy any federal, state and/or local withholding tax requirements prior to
the delivery of any certificate for such Shares.
10. Adjustments.
(a) Notwithstanding any other term of this Plan, in the event that the
Committee determines that any Distribution (whether in the form of cash,
Common Stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Common Stock or other securities of the Company, issuance of warrants or
other rights to purchase Common Stock or other securities of the Company,
or other similar corporate transaction or event, in the Committee's sole
discretion, affects the Common Stock such that an adjustment is determined
by the Committee to be appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan or with respect to an award or awards hereunder,
then the Committee shall, in such manner as it may deem equitable, adjust
the number and type of shares (or other securities or property) which may
be granted under the Plan (including, but not limited to, adjustments of
the maximum number and kind of securities which may be issued).
(b) Notwithstanding any other term of this Plan, in the event of any
corporate transaction or event described in paragraph (a) which results in
Shares being exchanged for or converted into cash, securities or other
property (including securities of another corporation), all Deferred Share
Rights granted under Section 7 shall become the right to receive such cash,
securities or other property, and there shall be substituted on an
equitable basis for each Share of Common Stock then subject to an Option
granted pursuant to Section 6 the consideration payable with respect to the
outstanding Shares of Common Stock in connection with such corporate
transaction or event, all without any change in the aggregate purchase
price for the Shares then subject to the Option.
(c) The number of Shares finally granted under this Plan shall always be
rounded to the next highest whole Share.
(d) Any decision of the Committee pursuant to the terms of this Section
10 shall be final, binding and conclusive upon the Participants, the
Company and all other interested parties.
11. Amendment. The Committee may terminate or suspend the Plan at any time,
without stockholder approval. The Committee may amend the Plan at any time and
for any reason without stockholder approval; provided, however, that the
Committee may condition any amendment on the approval of stockholders of the
Company if such approval is necessary or deemed advisable with respect to tax,
securities or other applicable laws, policies or regulations. No termination,
modification or amendment of the Plan may, without the consent of a
Participant, adversely affect a Participant's rights under an award granted
prior thereto.
12. Responsibility for Investment Choices. Each Participant is solely
responsible for any decision to receive Annual Retainer in the form of Options
or Deferred Share Rights and accepts all investment risks entailed by such
decision, including the risk of loss and a decrease in the value of the
amounts he or she elects to receive in the form of Options or Deferred Share
Rights.
13. Indemnification. Each person who is or has been a member of the
Committee or who otherwise participates in the administration or operation of
this Plan shall be indemnified by the Company against, and held harmless from,
any loss, cost, liability or expense that may be imposed upon or incurred by
him or her in connection with or resulting from any claim, action, suit or
proceeding in which such person may be involved by reason of any action taken
or failure to act under the Plan and shall be fully reimbursed by the Company
for any and all amounts paid by such person in satisfaction of judgment
against him or her in any such action, suit or proceeding, provided he or she
will give the Company an opportunity, by written notice to the Committee, to
defend the same at the Company's own expense before he or she undertakes to
defend it on his or her own behalf. This right of indemnification shall not be
exclusive of any other rights of indemnification.
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The Committee and the Board may rely upon any information furnished by the
Company, its public accountants and other experts. No individual will have
personal liability by reason of anything done or omitted to be done by the
Company, the Committee or the Board in connection with the Plan.
14. Duration of the Plan. The Plan shall remain in effect until the fifth
anniversary of the Effective Date, unless terminated earlier by the Committee.
15. Expenses of the Plan. The expenses of administering the Plan shall be
borne by the Company.
The foregoing is hereby acknowledged as being the Provident Companies, Inc.,
Non-Employee Director Compensation Plan of 1998 as adopted by the Board of
Directors of the Company on March 26, 1998, and approved by the stockholders
of the Company on May 6, 1998.
PROVIDENT COMPANIES, INC.
By:__________________________________
Its:_________________________________
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