EXHIBIT 10.1
UNITRIN, INC.
1990 STOCK OPTION PLAN
AS AMENDED AND RESTATED
May 5, 1999
1. Purpose.
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The purpose of this 1990 Stock Option Plan (the "Plan") of Unitrin, Inc.,
a Delaware corporation (the "Company"), is to secure for the Company and its
shareholders the benefits arising from stock ownership by selected executive and
other key employees of the Company or its subsidiaries and such other persons
(other than Directors who are not employees of the Company) as the Stock Option
Committee, may from time to time determine. The Plan will provide a means
whereby (i) such employees may purchase shares of the Common Stock of the
Company pursuant to options which will qualify as "incentive stock options"
under Section 422A of the Internal Revenue Code of 1986, as amended (the
"Code"), (ii) such employees or other persons (other than Directors who are not
employees of the Company), may purchase shares of Common Stock of the Company
pursuant to "non-incentive" or "non-qualified" stock options and (iii) any of
such persons may receive shares of the Common Stock of the Company, or cash in
lieu thereof, pursuant to stock appreciation rights granted in tandem with such
options.
2. Administration.
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The Plan shall be administered by a Stock Option Committee (the
"Committee") appointed by the Board of Directors of the Company consisting of
two or more directors of the Company, all of whom shall be "disinterested
persons" (within the meaning of Rule 16b-3 of the Securities Exchange Act of
1934, as amended), to whom administration of the Plan has been duly delegated.
No member of the Committee shall
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be eligible for grants or allocations to acquire equity securities of the
Company under the Plan or any other discretionary plan of the Company or its
affiliates for a period of one year before membership on the Committee and
during such membership (or for such other period as may be required from time to
time by Rule 16b-3 of the Securities Exchange Act of 1934, as amended). Any
action of the Committee with respect to administration of the Plan shall be
taken by a majority vote or written consent of its members.
Subject to the provisions of the Plan, the Committee shall have authority
(i) to construe and interpret the Plan, (ii) to define the terms used herein,
(iii) to prescribe, amend and rescind rules and regulations relating to the
Plan, (iv) to determine the individuals to whom and the time or times at which
options shall be granted, whether such options will be incentive stock options
or non-qualified stock options, whether to include a stock appreciation right
with an option and the terms of such rights, the number of shares to be subject
to each option, the option price, the number of installments, if any, in which
each option may be exercised, and the duration of each option, (v) to approve
and determine the duration of leaves of absence which may be granted to
participants without constituting a termination of their employment for the
purposes of the Plan, and (vi) to make all other determinations necessary or
advisable for the administration of the Plan. All determinations and
interpretations made by the Committee shall be binding and conclusive on all
participants in the Plan and their legal representatives and beneficiaries.
3. Shares Subject to the Plan.
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Subject to adjustment as provided in paragraph 16 hereof, the shares to be
offered under the Plan shall consist of the Company's authorized but unissued
Common Stock, and the aggregate amount of such stock which may be issued upon
exercise of all options under the Plan shall not exceed Two Million Five Hundred
Thousand (2,500,000) of such shares. If any option granted under the Plan shall
expire or terminate for any
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reason (other than surrender at the time of exercise of a related stock
appreciation right provided for in paragraph 8 hereof), without having been
exercised in full, the unpurchased shares subject thereto shall again be
available for options to be granted under the Plan.
Any shares of the Company's Common Stock that are used (whether actually or
constructively) by an option holder as full or partial payment to the Company of
the purchase price of the shares of Common Stock being acquired through the
exercise of an option granted under the Plan shall be added to the aggregate
number of shares of Common Stock available for issuance under the Plan.
4. Eligibility and Participation.
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All executive and other key employees of the Company or of any subsidiary
corporation (as defined in Section 425(f) of the Code) and directors of the
Company who are regular employees of the Company, shall be eligible for
selection to participate in the Plan. Other non-employees (excluding Committee
members for the periods specified in paragraph 2 hereof and other directors who
are not regular employees of the Company), may participate in the Plan with
respect to non-qualified stock options, but only selected executive and other
key employees of the Company or a subsidiary may receive incentive stock options
under the Plan. An individual who has been granted an option, may if such
individual is otherwise eligible, be granted an additional option or options if
the Committee shall so determine, subject to the other provisions of the Plan.
No incentive stock option may be granted to any person who, at the time the
incentive stock option is granted, owns shares of the Company's outstanding
Common Stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company (and of its affiliates if
applicable), unless the exercise price of such option is at least 110 percent
(110%) of the fair market value of the stock subject to the option and such
option by its terms is not exercisable after the expiration of five years from
the date
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such option is granted.
The aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock options (whenever
granted and including the substitute options) are exercisable for the first time
by an optionee during any calendar year (under all incentive stock option plans
of the Company and its subsidiaries) shall not exceed $100,000.
All options granted under the Plan shall be granted within ten years from
February 15, 1990.
5. Duration of Options.
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Each option and all rights associated therewith, shall expire on such date
as the Committee may determine, and shall be subject to earlier termination as
provided herein; provided, however, that in the case of incentive stock options,
each incentive stock option and all rights associated therewith shall expire in
any event within ten (10) years of the date on which such incentive stock option
is granted.
6. Purchase Price.
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The purchase price of the stock covered by each option shall be determined
by the Committee, but in the case of incentive stock options, shall not be less
than one hundred percent (100%) of the fair market value of such stock on the
date the incentive stock option is granted. The purchase price of the shares
upon exercise of an option shall be paid in full at the time of exercise (i) in
cash or by check payable to the order of the Company, (ii) by delivery of shares
of Common Stock of the Company already owned by, and in the possession of the
option holder, or (iii) if authorized by the Committee or if specified in the
option being exercised, by a promissory note made by option holder in favor of
the Company, upon the terms and conditions determined by the Committee and
secured by the shares issuable upon exercise complying with applicable law
(including,
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without limitation, state corporate and federal margin requirements), or any
combination thereof. Shares of Common Stock used to satisfy the exercise price
of an option shall be valued at their fair market value determined (in
accordance with paragraph 9 hereof) as of the close of business on the date of
exercise (or if such date is not a business day, as of the close of the business
day immediately preceding such date).
7. Exercise of Option/Grant of Restorative Stock Option
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Each option granted under this Plan shall be exercisable in such
installments during the period prior to its expiration date as the Committee
shall determine, but in no event shall any option be exercisable for at least
six months after grant except in the case of the death or disability of the
option holder; provided that, unless otherwise determined by the Committee, if
the option holder shall not in any given installment period purchase all of the
shares which the option holder is entitled to purchase in such installment
period, then the option holder's right to purchase any shares not purchased in
such installment period shall continue until the expiration date or sooner
termination of the option holder's option. No option may be exercised for a
fraction of a share and no partial exercise of any option may be for less than
fifty (50) shares.
Upon the exercise of an option by an option holder by delivering (whether
actually or constructively) previously-acquired shares of Common Stock of the
Company in full or partial payment for the shares received upon such exercise
(as provided in Section 6), the Committee shall grant the option holder a
"restorative stock option" to purchase additional shares of Common Stock of the
Company. A restorative stock option shall also be granted to an option holder
who delivers previously-acquired shares or has shares withheld from an exercise
to the extent permitted in paragraph 10 in connection with the income tax
withholding liability arising from such exercise. The number of shares of
Common Stock subject to a restorative stock option shall be equal to the
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number of shares delivered in payment of the purchase price and/or the number of
shares delivered or withheld in connection with the related tax withholding
obligation. The purchase price of the restorative stock option shall not be less
than one hundred percent (100%) of the fair market value of such Common Stock on
the date other restorative stock option is granted. All other terms of
restorative stock options granted hereunder, including, but not limited to,
vesting and expiration, shall be identical to the terms of the initial option
upon which the restorative stock option is granted.
8. Stock Appreciation Rights.
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If deemed appropriate by the Committee, any stock option may be coupled
with a stock appreciation right at the time of the grant of the option, or, the
Committee may grant a stock appreciation right to any person at any time after
granting an option to such person prior to the end of the term of such
associated option. Such stock appreciation right shall be subject to such terms
and conditions not inconsistent with the Plan as the Committee shall impose,
provided that:
(1) A stock appreciation right shall be exercisable to the extent, and
only to the extent, the associated option is exercisable and shall be
exercisable only for such period as the Committee may determine (which period
may expire prior to the expiration date of the option);
(2) A stock appreciation right shall entitle the option holder to
surrender to the Company unexercised the option to which it is related, or any
portion thereof, and to receive from the Company in exchange therefor that
number of shares (rounded down to the nearest whole number) having an aggregate
value equal to the excess of the fair market value of one share (determined as
thereinafter provided) over the option price per share specified in such option
multiplied by the number of shares subject to the option, or portion thereof,
which is so surrendered; and
(3) The Committee may elect to settle, or the stock appreciation right
may
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permit the optionee to elect to receive (subject to approval by the Committee),
any part or all of the Company's obligation arising out of the exercise of a
stock appreciation right by the payment of cash equal to the aggregate fair
market value of that part or all of the shares it would otherwise be obligated
to deliver, provided that in no event shall cash be payable to an officer or
director of the Company upon exercise of a stock appreciation right (i) if the
stock appreciation right was exercised during the first six months of its term;
and (ii) unless the stock appreciation right was exercised during a period of
ten business days beginning with the third business day after the release to the
public of a quarterly or annual summary statement of the Company's sales and
earnings; or (iii) unless the transaction is otherwise exempt from the operation
of Section 16(b) of the Securities Exchange Act of 1934.
9. Fair Market Value of Common Stock.
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The fair market value of a share of Common Stock of the Company shall be
determined for purposes of the Plan by reference to the closing price on the New
York Stock Exchange (or other principal stock exchange on which such shares are
then listed) or, if such shares are not then listed on such exchange (or other
principal stock exchange), by reference to the closing price (if a National
Market Issue) or the mean between the bid and asked price (if other over-the-
counter issue) of a share as supplied by the National Association of Securities
Dealers through NASDAQ (or its successor in function), in each case as reported
by The Wall Street Journal, for the date on which the option or stock
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appreciation right is granted or exercised, or if such date is not a business
day, for the business day immediately preceding such date (or, if for any reason
no such price is available, in such other manner as the Committee may deem
appropriate to reflect the then fair market value thereof).
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10. Withholding Tax.
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Upon (i) the disposition by an employee or other person of shares of
Common Stock acquired pursuant to the exercise of an incentive stock option
granted pursuant to the Plan within two years of the granting of the incentive
stock option or within one year after exercise of the incentive stock option,
(ii) the exercise of "non-incentive" or "non-qualified" options, or (iii) the
exercise of a stock appreciation right, the Company shall have the right to (a)
require such employee or such other person to pay the Company the amount of any
taxes which the Company may be required to withhold with respect to such shares
or (b) deduct from all amounts paid in cash with respect to the exercise of a
stock appreciation right the amount of any taxes which the Company may be
required to withhold with respect to such cash amounts.
Subject to the limitation set forth in the next sentence, any holder of
an option or stock appreciation right hereunder may elect to satisfy all or any
portion of the tax withholding obligations arising from the exercise of such
option or stock appreciation right either by delivering previously-acquired
shares of Common Stock of the Company or by having the Company withhold shares
that would otherwise be issued pursuant to such exercise. With respect to
exercises of options and stock appreciation rights granted on or after May 5,
1999, no holder thereof shall have the right to deliver previously-acquired
shares of Common Stock or to have shares of Common Stock withheld in excess of
the minimum number required to satisfy applicable tax withholding requirements
based on minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes.
11. Nontransferability.
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An option (and any accompanying stock appreciation right) granted under
the Plan shall, by its terms, be non-transferable by the option holder, either
voluntarily or by operation of law, otherwise than by will or the laws of
descent and distribution, and shall
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be exercisable during option holder's lifetime only by the option holder,
regardless of any community property interest therein of the spouse of the
option holder, or such spouse's successors in interest. If the spouse of the
option holder shall have acquired a community property interest in such option
(or accompanying stock appreciation right), the option holder, or the option
holder's permitted successors in interest, may exercise the option (or
accompanying stock appreciation right) on behalf of the spouse of the option
holder or such spouse's successors in interest.
12. Holding of Stock After Exercise of Option.
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At the discretion of the Committee, any option may provide that the option
holder, by accepting such option, represents and agrees, for the option holder
and the option holder's permitted transferees (by will or the laws of descent
and distribution), that none of the shares purchased upon exercise of the option
or any accompanying stock appreciation right will be acquired with a view to any
sale, transfer or distribution of said shares in violation of the Securities Act
of 1933, as amended, and the rules and regulations promulgated thereunder, or
any applicable state "blue sky" laws, and the person entitled to exercise the
same shall furnish evidence satisfactory to the Company (including a written and
signed representation) to that effect in form and substance satisfactory to the
Company, including an indemnification of the Company in the event of any
violation of the Securities Act of 1933 or state blue sky law by such person.
13. Termination of Employment.
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If a holder of an incentive stock option ceases to be employed by the
Company or one of its subsidiaries for any reason other than the option holder's
death or permanent disability (within the meaning of Section 105(d) (4) of the
Code), the option holder's incentive stock option (and any accompanying stock
appreciation right) shall be exercisable for a period of three (3) months after
the date option holder ceases to be an
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employee of the Company or such subsidiary (unless by its terms it sooner
expires ) to the extent exercisable on the date of such cessation of employment
and shall thereafter expire and be void and of no further force or effect. A
leave of absence approved in writing by the Committee shall not be deemed a
termination of employment for the purposes of this paragraph 13, but no option
may be exercised during any such leave of absence, except during the first three
(3) months thereof. Termination of employment or other relationship with the
Company by the holder of a non-qualified stock option will have the effect
specified in the individual option agreement, as determined by the Committee.
14. Death or Permanent Disability of Option Holder.
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If the holder of an incentive stock option dies or becomes permanently
disabled while option holder is employed by the Company or one of its
subsidiaries, option holder's option (and any accompanying stock appreciation
right) shall expire one (1) year after the date of such death or permanent
disability unless by its terms it sooner expires. During such period after
death, such option (and any accompanying stock appreciation right) may, to the
extent that it remained unexercised (but exercisable by the option holder
according to such option's terms) on the date of such death, be exercised by the
person or persons to whom the option holder's rights under the option shall pass
by option holder's will or by the laws of descent and distribution. The death or
disability of a holder of a non-qualified stock option will have the effect
specified in the individual option agreement as determined by the Committee.
15. Privileges of Stock Ownership.
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No person entitled to exercise any option or stock appreciation right
granted under the Plan shall have any of the rights or privileges of a
shareholder of the Company in respect of any shares of stock issuable upon
exercise of such option or stock
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appreciation right until certificates representing such shares shall have been
issued and delivered. No shares shall be issued and delivered upon the exercise
of any option or accompanying stock appreciation rights unless and until there
shall have been full compliance with all applicable requirements of the
Securities Act of 1933 (whether by registration or satisfaction of exemption
conditions), all applicable listing requirements of any national securities
exchange on which shares of the same class are then listed and any other
requirements of law or of any regulatory bodies having jurisdiction over such
issuance and delivery.
16. Adjustments.
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If the outstanding shares of the Common Stock of the Company are increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar transaction, an appropriate and proportionate adjustment shall be made
in the maximum number and kind of shares as to which options may be granted
under this Plan. A corresponding adjustment changing the number or kind of
shares allocated to unexercised options or portions thereof, which shall have
been granted prior to any such change, shall likewise be made. Any such
adjustment in the outstanding options shall be made without change in the
aggregate purchase price applicable to the unexercised portion of the option but
with a corresponding adjustment in the price for each share or other unit of any
security covered by the option.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all the property or more than eighty percent
(80%) of the then outstanding stock of the Company to another corporation, the
Plan shall terminate, and all options and stock
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appreciation rights theretofore granted hereunder shall terminate; provided,
however, that notwithstanding the foregoing, the Board of Directors shall
provide in writing in connection with such transaction for any or all of the
following alternatives (separately or in combinations): (i) for the options and
any accompanying stock appreciation rights theretofore granted more than six
months before such transaction to become immediately exercisable notwithstanding
the provisions of paragraph 7 hereof, except the last sentence thereof; (ii) for
the assumption by the successor corporation of the options and stock
appreciation rights theretofore granted or the substitution by such corporation
for such options and rights of new options and rights covering the stock of the
successor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices; (iii) for the
continuance of the Plan by such successor corporation in which event the Plan
and the options and any accompanying stock appreciation rights theretofore
granted shall continue in the manner and under the terms so provided; or (iv)
for the payment in cash or stock in lieu of and in complete satisfaction of such
options and rights.
Adjustments under this paragraph 16 shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive. No fractional shares of stock shall be
issued under the Plan on any such adjustment.
At the discretion of the Committee, any option may contain provisions to
the effect that upon the happening of certain events, including a change in
control (as defined by the Committee in the option) of the Company, any
outstanding options and accompanying stock appreciation rights not theretofore
exercisable shall immediately become exercisable in their entirety,
notwithstanding any of the other provisions of the option.
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17. Amendment and Termination of Plan.
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The Committee may at any time suspend or terminate the Plan. The Committee
may also at any time amend or revise the terms of the Plan, provided that no
such amendment or revision shall, unless appropriate shareholder approval of
such amendment or revision is obtained, increase the maximum number of shares in
the aggregate which may be sold pursuant to options granted under the Plan,
except as permitted under the provisions of paragraph 16, or change the minimum
purchase price of incentive stock options set forth in paragraph 6, or increase
the maximum term of incentive stock options provided for in paragraph 5, or
permit the granting of options or stock appreciation rights to anyone other than
as provided in paragraph 4.
Notwithstanding the foregoing, no amendment, suspension or termination of
the Plan shall, without specific action of the Committee and the consent of the
option holder, in any way modify, amend, alter or impair any rights or
obligations under any option or accompanying stock appreciation right
theretofore granted under the Plan.
18. Effective Date of Plan.
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Effectiveness of the Plan is subject to approval by the holders of the
outstanding voting stock of the Company as hereinafter provided within twelve
months from the date the Plan is adopted by the Board of Directors. The Plan
shall be deemed approved by the holders of the outstanding voting stock of the
Company by (i) the affirmative vote of the holders of a majority of the voting
shares of the Company represented and voting at a duly held meeting at which a
quorum is present or (ii) the written consent of the holders of a majority of
the outstanding voting shares of the Company. Any options granted under the Plan
prior to obtaining such shareholder approval shall be granted under the
conditions that the options so granted: (1) shall not be exercisable prior to
such approval, and (2) shall become null and void if such shareholder approval
is not obtained.
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