UNUM CORPORATION
1990 LONG-TERM STOCK INCENTIVE PLAN
SECTION 1. Purpose.
The purpose of the UNUM Corporation 1990 Long-Term Stock Incentive Plan (the
"Plan") is to promote the interests of UNUM Corporation and its stockholders by
(i) attracting and retaining executive officers, other key employees and
corporation directors of outstanding ability; (ii) motivating such individuals,
by means of performance-related incentives, to achieve longer-range performance
goals; and (iii) enabling such individuals to participate in the long-term
growth and financial success of UNUM Corporation.
SECTION 2. Definitions.
"Affiliate" shall mean any corporation or other entity which is not a Subsidiary
but as to which the Corporation possesses a direct or indirect ownership
interest and has representation on the board of directors or any similar
governing body.
"Award" shall mean a grant or award under Sections 6 through 10, inclusive, of
the Plan, as evidenced in a written document delivered to a Participant.
"Board" shall mean the Board of Directors of the Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" shall mean the Compensation Committee of the Board.
"Common Stock" or "Stock" shall mean the common stock, $.10 par value, of the
Corporation.
"Corporation" shall mean UNUM Corporation.
"Employee" shall mean any employee of the Employer.
"Employer" shall mean the Corporation and any Subsidiary or Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time.
"Fair Market Value" shall mean the average of the highest and lowest sales
prices reported for consolidated trading of the Stock on the New York Stock
Exchange on the date in question,
or, if the Stock shall not have been traded on such date, the average of such
highest and lowest sales prices on the first day prior thereto on which the
Stock was so traded.
"Fiscal Year" shall mean the fiscal year of the Corporation.
"Incentive Stock Option" shall mean a stock option granted under Section 6 which
is intended to meet the requirements of Section 422A of the Code.
"Limited Right" shall mean a limited stock appreciation right granted under
Section 8.
"Non-Qualified Stock Option" shall mean a stock option granted under Section 6
which is not intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
"Participant" shall mean an Employee who is selected by the Committee to receive
an Award under the Plan.
"Restricted Period" shall mean the period of years selected by the Committee
during which a grant of Restricted Stock may be forfeited to the Corporation.
"Restricted Stock" shall mean shares of Common Stock contingently granted to a
Participant under Section 9 of the Plan.
"Subsidiary" shall mean any business entity in which the Corporation possesses
directly or indirectly fifty percent (50%) or more of the total combined voting
power.
SECTION 3. Administration.
Except as provided in Section 10, the Committee shall have full power to
interpret and administer the Plan and full authority to select the individuals
to whom Awards will be granted and to determine the type and amount of Award(s)
to be granted to each Participant, the terms and conditions of Awards granted
under the Plan and the terms and conditions of the agreements which will be
entered into with Participants. As to the selection and grant of Awards to
Participants who are not subject to Sections 16(a) and 16(b) of the Exchange
Act, or any successor sections, the Committee may delegate its responsibilities
to members of the Company's management consistent with applicable law.
The Committee shall have the authority to adopt, alter and repeal such rules,
guidelines and practices governing the Plan as it shall, from time to time, deem
advisable; to interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any agreements relating thereto); to direct employees
of the Corporation and its subsidiaries or other advisors to prepare such
materials or perform such analysis as the Committee deems necessary or
appropriate; and otherwise to supervise the administration of the Plan.
Any interpretation and administration of the Plan by the Committee, and all
actions of the Committee, shall be final, binding and conclusive on the
Corporation, its stockholders, Subsidiaries, Affiliates, all Participants, their
respective legal representatives, successors and assigns and upon all persons
claiming under or through any of them. No member of the Board or of the
Committee shall incur any liability for any action taken or omitted, or any
determination made, in good faith in connection with the Plan.
SECTION 4. Eligibility.
Participation in the Plan shall be limited to those key employees of the
Corporation and any Subsidiary and Affiliate selected at the sole discretion of
the Committee.
SECTION 5. Maximum Amount Available for Awards.
Subject to adjustment as provided in Section 12(j), the maximum number of shares
of Stock in respect of which Awards may be made under the Plan shall be a total
of 13,600,000 shares of Common Stock. Shares of Common Stock may be made
available from the authorized but unissued shares of the Corporation or from
shares reacquired by the Corporation, including shares purchased in the open
market. In the event that (i) an Option, or Stock Appreciation Right, or Limited
Right expires or is cancelled unexercised as to any shares of Common Stock
covered thereby, or (ii) any Award in respect of shares is forfeited for any
reason under the Plan, such shares shall thereafter be again available for award
pursuant to the Plan.
SECTION 6. Stock Options.
(a) Grant. Subject to the provisions of the Plan, the Committee shall have
sole and complete authority to determine the Employees to whom Options
shall be granted, the number of shares to be covered by each Option, the
Option Price, as defined below, therefor and the conditions and
limitations applicable to the exercise of the Option. The Committee
shall have the authority to grant Incentive Stock Options, or to grant
Non-Qualified Stock Options, or to grant both types of Options. In the
case of Incentive Stock Options, the terms and conditions of such grants
shall be subject to and comply with such rules as may be prescribed by
Section 422A of the Code and any regulations implementing Section 422A.
(b) Option Price. The Committee shall establish the exercise price of the
Option (the "Option Price") at the time each Option is granted, which
Option Price shall not be less than 100% of the Fair Market Value of the
Common Stock on the date of grant.
(c) Exercise.
(1) Each Option shall be exercisable at such times and subject to
such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Award or thereafter;
provided, however, that in no event may any Option granted
hereunder be exercisable after the expiration of ten years from
the date of grant. The Committee may impose such conditions with
respect to the exercise of Options, including without limitation,
any relating to the application of federal or state securities
laws, as it may deem necessary or advisable.
(2) No shares shall be delivered pursuant to any exercise of an
Option until payment in full of the Option Price therefor is
received by the Corporation. Such payment may be made in cash, or
its equivalent, or, subject to such rules and guidelines as the
Committee may establish, by exchanging shares of Common Stock
owned by the optionee (which are not the subject of any pledge or
other security interest), or by a combination of the foregoing,
provided that the combined value of all cash and cash equivalents
and the Fair Market Value of any such Common Stock so tendered to
the Corporation, valued as of the date of such tender, is at
least equal to such Option Price.
(d) Termination of Employment.
(1) Except as provided below, if a Participant ceases to be an
Employee other than by reason of death, retirement or disability,
any then outstanding Options may be exercised any time before
their expiration date or within three months after the date of
termination, whichever is earlier, but only to the extent that
such Options were exercisable when employment ceased, absent a
determination by the Committee to the contrary; provided,
however, that a Participant is terminated for cause the Committee
may determine that no Option may be exercised at any time after
the termination date.
(2) If a Participant's employment terminates because of death or
disability, all then outstanding Options previously granted to
the Participant will become exercisable. In the case of death of
the Participant, such Options may be exercised at any time before
their expiration date or within three years after the date of
termination, whichever is earlier. In the case of permanent
disability, such Options may be exercised at any time before
their expiration date.
(3) If a Participant's employment terminates because of retirement
prior to January 1, 1995, any then outstanding Options may be
exercised any time before their expiration date or within three
years after the date of termination, whichever is earlier, but
only to the extent that such Options were exercisable when
employment ceased absent a determination by the Committee to the
contrary. If a Participant's employment terminates because of
retirement on or after January 1,
1995, any then outstanding Options may be exercised any time
before their expiration date or within five years after the date
of termination, whichever is earlier, but only to the extent that
such Options were exercisable when employment ceased absent a
determination by the Committee to the contrary.
SECTION 7. Stock Appreciation Rights.
(a) The Committee shall have the authority to grant Stock Appreciation
Rights in tandem with the grant of an Option or freestanding and
unrelated to an Option. Stock Appreciation Rights granted in tandem with
an Option may be granted either at or after the time of the grant of
such Option.
Stock Appreciation Rights or any applicable portion thereof granted in
tandem with a given Option shall only be exercisable to the extent that
the related Option is exercisable and shall terminate and no longer be
exercisable upon the expiration or cancellation of the related Option.
The exercise of an Option shall result in an immediate forfeiture of any
Stock Appreciation Right granted in tandem with that Option, and the
exercise of such Stock Appreciation Right shall cause an immediate
forfeiture of its related Option. Stock Appreciation Rights shall not be
exercisable after the expiration of ten years from date of grant. A
Stock Appreciation Right granted in tandem with an Option may be
exercised by an optionee, in accordance with this Section 7, by
surrendering the applicable portion of the related Option. Upon such
exercise and surrender, the optionee shall be entitled to receive an
amount determined in the manner prescribed in this Section 7.
(b) A Stock Appreciation Right shall entitle the Participant to receive from
the Corporation an amount equal to the excess of the Fair Market Value
of a share of Common Stock on the date of the exercise of the Stock
Appreciation Right over the grant price thereof, provided that the
Committee may for administrative convenience determine that, for any
Stock Appreciation Right which is not related to an Incentive Stock
Option and can only be exercised during limited periods of time in order
to satisfy the conditions of certain rules of the Securities and
Exchange Commission, the exercise of any such Stock Appreciation Right
for cash during such limited period shall be deemed to occur for all
purposes hereunder on the day during such limited period on which the
Fair Market Value of the Stock is the highest. Any such determination by
the Committee may be changed by the Committee from time to time and may
govern the exercise of Stock Appreciation Rights granted prior to such
determination as well as Stock Appreciation Rights thereafter granted.
The Committee shall determine whether Stock Appreciation Rights shall be
settled in cash, shares of Common Stock or a combination of cash and
shares of Common Stock.
SECTION 8. Limited Rights.
(a) The Committee shall have the authority to grant Limited Rights in tandem
with the grant of an Option or freestanding and unrelated to an Option.
Limited Rights granted in tandem with an Option may be granted either at
or after the time of the grant of such Option.
Limited Rights or any applicable portion thereof granted in tandem with
a given Option shall terminate and no longer be exercisable upon the
expiration or cancellation of the related Option. The exercise of an
Option shall result in an immediate forfeiture of any Limited Right
granted in tandem with that Option, and the exercise of such Limited
Right shall cause an immediate forfeiture of its related Option.
A Limited Right granted in tandem with an Option may be exercised by an
optionee, in accordance with this Section 8, by surrendering the
applicable portion of the related Option. Upon such exercise and
surrender, the optionee shall be entitled to receive an amount
determined in the manner prescribed in this Section 8.
(b) Limited Rights shall only be exercisable during the 30 day period
following a Change in Control as defined in Section 11 and shall not be
exercisable after the expiration of ten years from the date of grant.
(c) Upon the exercise of a Limited Right, an optionee shall be entitled to
receive from the Corporation an amount in cash equal in value to the
excess of (i) the higher of (A) the highest price per share paid in
connection with the Change in Control or (B) the highest Fair Market
Value per share as reported in the Wall Street Journal at any time
during the 60 day period preceding the Change in Control over (ii) in
the case of a Limited Right granted in tandem with an Option, the Option
Price per share specified in the related Option and in the case of all
other Limited Rights, the price per share established in the grant of
the Limited Right, such excess to be multiplied by the number of shares
in respect of which the Limited Right shall have been exercised;
provided, however, that upon the exercise of a Limited Right granted in
tandem with an Incentive Stock Option, the amount set forth in clause
(i) shall not exceed the Fair Market Value of a share on the date of
exercise of the Limited Right.
(d) Limited Rights shall be subject to such other terms and conditions, not
inconsistent with the provisions of the Plan, as shall be determined
from time to time by the Committee. This Section 8 shall be interpreted
in accordance and consistent with the principles set forth in Rule 16b-3
of the Exchange Act.
SECTION 9. Restricted Stock.
(a) Subject to the provisions of the Plan, the Committee shall have sole and
complete authority to determine the Employees to whom shares of
Restricted Stock shall be granted, the number of shares of Restricted
Stock to be granted to each Participant, the duration of the Restricted
Period during which, and the conditions under which, the Restricted
Stock may be forfeited to the Corporation, and the other terms and
conditions of such Awards. The Committee may determine that the
Restricted Period applicable to a particular grant may vary depending
upon the attainment of particular conditions, such as corporate
earnings, share price or other targets set by the Committee.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as herein provided, during the
Restricted Period. Certificates issued in respect of shares of
Restricted Stock shall be registered in the name of the Participant and
deposited by such Participant, together with a stock power endorsed in
blank, with the Corporation. At the expiration of the Restricted Period,
the Corporation shall deliver such certificates to the Participant or
the Participant's legal representative.
(c) If a Participant's employment terminates by reasons of disability or
death, any Restricted Stock held by such Participant shall thereafter
vest and any restriction lapse, to the extent such Restricted Stock
would have become vested and no longer subject to such restrictions
within one year from the time of termination had the Participant
continued to fulfill all of the conditions of the Restricted Stock
during such period (or on such accelerated basis as the Committee may
determine at or after grant). Unless otherwise determined by the
Committee, if a Participant's employment terminates for any reasons
other than permanent disability or death, any Restricted Stock which is
unvested or subject to restriction shall thereupon be forfeited.
SECTION 10. Non-Employee Director Options.
Notwithstanding any of the other provisions of the Plan to the contrary, the
provisions of this Section 10 shall only apply to a non-employee member of the
Board. The other provisions of the Plan shall apply to grants of Options under
this Section 10 to the extent not inconsistent with the provisions of this
Section.
(a) This Section 10 shall be administered by the Board.
(b) Each non-employee member of the Board shall receive Non-Qualified Stock
Options in accordance with the provisions of this Section 10.
(c) (i) Recipients of Options under this Section 10 shall enter into a
stock option agreement with the Corporation, which agreement
shall set forth, among other things, the exercise price of the
Option, the term of the Option and provisions regarding
exercisability of the Option granted thereunder.
(ii) On the Effective Date (as defined below) each non-employee
member of the Board of the Corporation shall receive Options to
purchase 2,000 shares of Common Stock. Beginning in 1997, on the
date after each annual stockholders meeting of the Corporation
each continuing non-employee member of the Board shall be
granted an Option to purchase 4,000 shares of Common Stock and,
beginning in 1990, each newly elected non-employee director
shall be granted an Option to purchase 6,000 shares of Common
Stock. The Option Price per share of Common Stock purchasable
under such Options shall be equal to the Fair Market Value of
the Common Stock on the date of grant. Such Option shall remain
exercisable until the earlier of ten years from the date of
grant or the termination of any post-directorship consultancy
agreement with the Corporation; provided, however, that if such
consultancy agreement terminates by reason of death or
disability any then outstanding Options may be exercised (x) at
any time before their expiration date or (y), if such
termination is by reason of death, within three years of the
date of death, whichever is earlier. Such Options shall be
exercisable one year from the date of grant by payment in full
in cash or in shares of Common Stock having a Fair Market Value
equal to the Option Price or in a combination of cash and such
shares.
(d) The Board may not amend, alter, or discontinue this Section 10 without
the approval of the stockholders of the Corporation.
SECTION 11. Change of Control.
Notwithstanding anything to the contrary contained herein, and notwithstanding
any contrary waiting period or installment period in any agreement relating to
an Award or in the Plan, each outstanding Option, Stock Appreciation Right and
Limited Right granted under the Plan shall become exercisable in full for the
aggregate number of shares covered thereby, and any restriction or deferral
limitation applicable to any Restricted Stock shall lapse and such shares and
Awards shall be deemed fully vested, in the event of a Change in Control (as
hereinafter defined).
For purposes of this Plan, a Change in Control shall be deemed to have occurred
upon the first to occur of the following events:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Corporation or any corporation
owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their
ownership of stock of the Corporation), is or becomes the
"beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation
representing more than 40% of the number of the Corporation's
then outstanding securities;
(ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has
entered into an agreement with the Corporation to effect a
transaction described in Subsection 11(i), (iii) or (iv) of this
Section 11) whose election by the Board or nomination for
election by the Corporation's stockholders was approved by a vote
of at least two-thirds (2/3) of the directors then still in
office who either were directors at the beginning of the period
or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority
thereof;
(iii) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation,
other than a merger or consolidation which would result in the
voting securities of the Corporation outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or being converted into voting securities of the
surviving entity) more than 60% of the number of outstanding
securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation; or
(iv) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets.
SECTION 12. General Provisions.
(a) Withholding. The Employer shall have the right to deduct from all
amounts paid to a Participant in cash (whether under this Plan or
otherwise) any taxes required by law to be withheld in respect of Awards
under this Plan. In the case of payments of Awards in the form of Common
Stock, at the Committee's discretion the Participant may be required to
pay to the Employer the amount of any taxes required to be withheld with
respect to such Common Stock, or, in lieu thereof, to the extent
permitted by applicable federal and state securities laws, the Employer
shall have the right to retain (or the Participant may be offered the
opportunity to elect to tender) the number of shares of Common Stock
whose Fair Market Value equals the amount required to be withheld. The
Optionee shall be entitled to elect to pay all or a portion of the
exercise price for options granted under this Plan and any withholding
taxes in connection with such exercise by having the shares of Common
Stock to be issued by UNUM Corporation pursuant to such exercise sold by
a broker-dealer under circumstances meeting the requirements of 12
C.F.R. Section 220.
(b) Nontransferability. No Award shall be assignable or transferable, and no
right or interest of any Participant shall be subject to any lien,
obligation or liability of the Participant, except by will or the laws
of descent and distribution.
(c) No Right to Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the
Employer. Further, the Employer expressly reserves the right at any time
to dismiss a Participant free from any liability, or any claim under the
Plan, except as provided herein or in any agreement entered into with
respect to an Award.
(d) No Rights as Stockholder. Subject to the provisions of the applicable
Award, no Participant or transferee of an Option shall have any rights
as a stockholder with respect to any shares of Common Stock to be
distributed under the Plan until he or she has become the holder
thereof. Notwithstanding the foregoing, in connection with each grant of
Restricted Stock hereunder, the applicable Award shall specify if and to
what extent the Participant shall not be entitled to the rights of a
stockholder in respect of such Restricted Stock.
(e) Construction of the Plan. The validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations,
and rights relating to the Plan, shall be determined solely in
accordance with the laws of the State of Delaware.
(f) Effective Date. Subject to the approval of the stockholders of the
Corporation, the Plan shall be effective on February 9, 1990 (the
"Effective Date"). No Options or Awards may be granted under the Plan
after February 9, 2000.
(g) Amendment of Plan. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, provided that no amendment shall be
made without stockholder approval if such approval is necessary to
comply with any tax or regulatory requirement, including for these
purposes any approval requirement which is a prerequisite for exemptive
relief under Section 16(b) of the Exchange Act. Notwithstanding anything
to the contrary contained herein, the Committee may amend the Plan in
such manner as may be necessary so as to have the Plan conform with
local rules and regulations. The Chief Executive Officer shall be
authorized to make minor or administrative modifications to the Plan as
well as modification to the Plan which may be dictated by requirements
of federal or state statutes applicable to the Corporation or authorized
or made desirable by such statutes. No modification or termination of
the Plan shall, without the optionee's consent, alter or impair any of
his or her rights or obligations under any Option, Stock Appreciation
Right or Limited Right theretofore granted to him or her under the Plan.
(h) Amendment of Award. The Committee may amend, modify or terminate any
outstanding Award with the Participant's consent at any time prior to
payment or exercise in any manner not inconsistent with the terms of the
Plan, including without
limitation, (i) to change the date or dates as of which (A) an Option,
Stock Appreciation Right or Limited Right becomes exercisable; (B)
Restricted Stock becomes nonforfeitable; or (ii) to cancel and reissue
an Award under such different terms and conditions as it determines
appropriate.
(i) Hardship Distributions. In no event shall any Option granted under this
Plan be exercisable through payment of the Option Price in cash during
the period of one year following a hardship distribution under the UNUM
Employees Retirement Savings Plan and Trust, as defined therein.
(j) Adjustments and Assumption. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares,
merger, consolidation, distribution of assets, or any other change in
the corporate structure or shares of the Corporation, the Committee
shall make such adjustments as it deems appropriate in the number and
kind of shares authorized by the Plan, in the number and kind of shares
covered by the Awards granted, and in the purchase price of outstanding
Options. In the event of any merger, consolidation or other
reorganization in which the Corporation is not the surviving or
continuing corporation, all Awards granted hereunder and outstanding on
the date of such event shall be assumed by the surviving or continuing
corporation with appropriate adjustment as to the number and kind of
shares and purchase price of the shares.
(k) In addition to the purposes set forth in Section 1, the Committee may
grant Awards to eligible Participants in order to compensate such
Participants to surrender existing rights to receive benefits from the
Employer under this or any other benefit plan or arrangement.