Exhibit 4(a)
THE PROGRESSIVE CORPORATION
2003 DIRECTORS EQUITY INCENTIVE PLAN
SECTION 1. ESTABLISHMENT; PURPOSE; DEFINITIONS.
(a) The Progressive Corporation, an Ohio corporation (the "Company"),
hereby establishes an incentive compensation plan for Eligible Directors, to be
known as "The Progressive Corporation 2003 Directors Equity Incentive Plan" (the
"Plan"), as set forth in this document. The Plan permits the grant of Restricted
Stock and Stock Options to Eligible Directors of the Company.
(b) The purpose of the Plan is to enable the Company to attract,
retain and reward directors of the Company and to strengthen the mutuality of
interests between such directors and the Company's shareholders by offering such
directors equity or equity-based incentives.
(c) For purposes of the Plan, the following terms shall have the
meanings set forth below:
"Award" means any award of Restricted Stock or Stock Options under the
Plan.
"Award Agreement" means an agreement setting forth the terms and
conditions applicable to an Award granted to a Participant under the Plan.
"Board" means the Board of Directors of the Company.
"Book Value" means, as of any given date, on a per share basis (1) the
shareholders' equity in the Company as of the end of the immediately
preceding fiscal year as reflected in the Company's audited consolidated
balance sheet as of such year-end date, subject to such adjustments as the
Committee shall specify at or after grant, divided by (2) the number of
outstanding shares of Stock as of such year-end date, subject to such
adjustments as the Committee shall specify for events subsequent to such
year-end date.
"Change in Control" has the meaning assigned to it in Section 7(b).
"Change in Control Price" has the meaning assigned to it in Section
7(d).
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.
"Committee" means the Compensation Committee of the Board.
"Company" means The Progressive Corporation, an Ohio corporation, or
any successor corporation.
"Disability" means a mental or physical condition which, in the
opinion of the Committee, renders a Participant unable or incompetent to
carry out the responsibilities held by such Participant as a Board member
and which is expected to be permanent or for an indefinite duration.
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"Eligible Directors" has the meaning assigned to it in Section 4.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date" means the date upon which an Award, or any portion
thereof, is scheduled to expire or terminate if not exercised or vested
prior thereto, as determined by the Committee.
"Fair Market Value" means, as of any given date, the mean between the
highest and lowest quoted selling price of the Stock on such date on the
New York Stock Exchange or, if no such sale of the Stock occurs on the New
York Stock Exchange on such date, then such mean price on the next
preceding day on which the Stock was traded. If the Stock is no longer
traded on the New York Stock Exchange, then the Fair Market Value of the
Stock shall be determined by the Committee in good faith.
"Family Member" means a Participant's child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law
or sister-in-law, including adoptive relationships, a trust in which any of
these persons (and/or the Participant) holds more than 50% of the
beneficial interest, a foundation in which any of these persons (and/or the
Participant) controls the management of assets and any other entity in
which any of these persons (and/or the Participant) owns more than 50% of
the voting interests.
"Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option", which satisfies the requirements
of Section 422 of the Code or any successor section thereto.
"Non-Employee Director" shall have the meaning set forth in Rule
16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under
the Exchange Act, or any successor definition adopted by the Commission.
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option Exercise Price" means the price at which a share of Stock may
be purchased by a Participant pursuant to the exercise of an Option, as
determined by the Committee and set forth in the related Option Award
Agreement.
"Option Term" has the meaning assigned to it in Section 6(b)(2).
"Participant" means an Eligible Director who holds an outstanding
Award granted under the Plan.
"Plan" means The Progressive Corporation 2003 Directors Equity
Incentive Plan, as amended from time to time.
"Potential Change in Control" has the meaning assigned to it in
Section 7(c).
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"Restricted Stock" means an Award of shares of Stock that is made
pursuant to Section 5 and is subject to restrictions.
"Restriction Period" and "Minimum Restriction Period" shall have the
meanings assigned to them in Section 5(b)(7).
"Stock" means the Common Shares, $1.00 par value per share, of the
Company.
"Stock Option" or "Option" means any option to purchase shares of
Stock that is granted pursuant to Section 6.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall
consist of not less than three directors of the Company, all of whom shall be
Non-Employee Directors. Committee members shall be appointed by the Board and
shall serve on the Committee at the pleasure of the Board. The functions of the
Committee specified in the Plan shall be exercised by the Board if and to the
extent that no Committee exists which has the authority to so administer the
Plan.
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 Awards to be granted to each
Participant, the consideration, if any, to be paid for such Awards, the timing
of such Awards, the terms and conditions of Awards granted under the Plan and
the terms and conditions of the related Award Agreements which will be entered
into with Participants.
The Committee shall have the authority to adopt, alter, change and
repeal such rules, regulations, guidelines and practices governing the Plan,
from time to time, as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award issued under the Plan (and any Award
Agreement relating thereto); to direct employees of the Company or other
advisors to prepare such materials or perform such analyses 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 and determinations of the Committee, shall be final, binding and
conclusive on the Company, its shareholders, all Participants in the Plan, their
respective legal representatives, successors and assigns and 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 3. STOCK SUBJECT TO THE PLAN.
(a) Aggregate Stock Subject to the Plan. Subject to adjustment as
provided in Section 3(c) below, the total number of shares of Stock
reserved and available for Awards under the Plan is 350,000. Any Stock
issued hereunder may consist, in whole or in part, of authorized and
unissued shares or treasury shares.
(b) Forfeiture or Termination of Awards or Stock. If any Stock subject
to any Award granted hereunder is forfeited or an Award otherwise
terminates or expires without the
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issuance of Stock, the Stock that is subject to such Award shall again be
available for distribution in connection with future Awards under the Plan
as set forth in Section 3(a), unless the Participant who had been awarded
such forfeited Stock or the expired or terminated Award has theretofor
received dividends or other benefits of ownership with respect to such
Stock. For purposes hereof, a Participant shall not be deemed to have
received a benefit of ownership with respect to such Stock by the exercise
of voting rights or the accumulation of dividends which are not realized
due to the forfeiture of such Stock or the expiration or termination of the
related Award without issuance of such Stock.
(c) Adjustment. In the event of any merger, reorganization,
consolidation, recapitalization, share dividend, share split, reverse share
split, combination of shares or other change in the corporate or capital
structure of the Company affecting the Stock, such substitution or
adjustment shall be made in the aggregate number of shares of Stock
reserved for issuance under the Plan, in the maximum number of shares that
may be subject to Awards granted to any Participant during any calendar
year or other period, in the number and Option Exercise Price of shares
subject to outstanding Options granted under the Plan and in the number of
shares subject to Restricted Stock Awards granted under the Plan as may be
approved by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights; provided that the number of shares subject to any
Award shall always be a whole number. Any fractional shares shall be
eliminated.
(d) Annual Award Limitation. No Participant may be granted Awards
under the Plan with respect to an aggregate of more than 6,000 shares of
Stock (subject to adjustment as provided in Section 3(c) hereof) during any
calendar year.
SECTION 4. ELIGIBILITY.
All directors of the Company who are not full time employees of the
Company or any of its subsidiaries ("Eligible Directors") are eligible to be
granted Awards under the Plan.
SECTION 5. RESTRICTED STOCK.
(a) Grant. Subject to the terms and conditions of the Plan, Restricted
Stock may be awarded to Eligible Directors at any time and from time to
time as shall be determined by the Committee. The Committee shall determine
the individuals to whom, and the time or times at which, grants of
Restricted Stock will be made; the number of shares of Restricted Stock to
be awarded to each Participant; the price (if any) to be paid by the
Participant (subject to Section 5(b)); the date or dates or conditions upon
which Restricted Stock Awards will vest; the period or periods within which
such Restricted Stock Awards may be subject to restrictions and forfeiture;
and the other terms and conditions of such Awards in addition to those set
forth in Section 5(b).
The Committee may condition the grant or vesting of Restricted Stock
upon the lapse of time or such other factors as the Committee may determine
in its sole discretion.
(b) Terms and Conditions. Restricted Stock awarded under the Plan
shall be subject to the following terms and conditions and shall contain
such additional terms and conditions, not inconsistent with the provisions
of the Plan, as the Committee shall deem desirable. A Participant who
receives a Restricted Stock Award shall not have any rights with respect to
such Award, unless and until such Participant has executed an Award
Agreement evidencing the Award in the
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form approved from time to time by the Committee and has delivered a fully
executed copy thereof to the Company, and has otherwise complied with the
applicable terms and conditions of such Award.
(1) The purchase price for shares of Restricted Stock shall be
determined by the Committee at the time of grant and may be equal to
their par value or zero.
(2) Awards of Restricted Stock must be accepted by executing the
related Restricted Stock Award Agreement, delivering an executed copy
of such Restricted Stock Award Agreement to the Company and paying
whatever price (if any) is required under Section 5(b)(1).
(3) Subject to Section 5(b)(5), each Participant receiving a
Restricted Stock Award shall be issued a stock certificate in respect
of such shares of Restricted Stock. Such certificate shall be
registered in the name of such Participant, and shall bear an
appropriate legend referring to the terms, conditions and restrictions
applicable to such Award.
(4) Subject to Section 5(b)(5), the stock certificates evidencing such
shares of Restricted Stock shall be delivered to and held in custody
by the Company, or its designee, until the restrictions thereon shall
have lapsed or any conditions to the vesting of such Award have been
satisfied. As a condition of any Restricted Stock Award, the
Participant shall deliver to the Company a stock power, endorsed in
blank, relating to the Stock covered by such Award.
(5) At the discretion of the Company, any shares of Restricted Stock
awarded to any Participant may be issued and held in book entry form.
In such event, no stock certificates evidencing such shares will be
issued to the Participant and the applicable restrictions may be noted
in the records of the Company's stock transfer agent and in the book
entry system.
(6) Awards of Restricted Stock will vest and all restrictions thereon
will terminate upon the lapse of a period of time specified by the
Committee at the time of grant, provided all other conditions to
vesting have been met.
(7) Subject to the provisions of this Plan and the related Restricted
Stock Award Agreement, during the period set by the Committee
commencing with the date of a Restricted Stock Award (the "Restriction
Period"), the Participant who has received such Award shall not be
permitted to sell, transfer, pledge, assign or otherwise encumber the
shares of Restricted Stock which are subject to such Award. The
Restriction Period shall not be less than six months and one day in
duration ("Minimum Restriction Period"). Subject to these limitations
and the Minimum Restriction Period requirement, the Committee, in its
sole discretion, may provide for the lapse of such restrictions in
installments and may accelerate or waive such restrictions, in whole
or in part, based on service, performance or such other factors and
criteria as the Committee may determine, in its sole discretion.
(8) Except as provided in this Section 5(b)(8), Section 5(b)(7) or
Section 5(b)(9), the Participant shall have, with respect to the
shares of Restricted Stock awarded, all of the rights of a shareholder
of the Company, including the right to vote the Stock and the right
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to receive any dividends. The Committee, in its sole discretion, as
determined at the time of award, may permit or require the payment of
cash dividends to be deferred and, if the Committee so determines,
reinvested, subject to Section 10(c), in additional Restricted Stock
to the extent shares are available under Section 3, or otherwise
reinvested. Stock dividends issued with respect to Restricted Stock
shall be treated as additional shares of Restricted Stock that are
subject to the same restrictions and other terms and conditions that
apply to the shares with respect to which such dividends are issued.
(9) No Restricted Stock shall be transferable by any Participant other
than by will or by the laws of descent and distribution, except that,
if determined by the Committee at the time of grant and so provided in
the applicable Award Agreement, a Participant may transfer Restricted
Stock during his or her lifetime to one or more of his or her Family
Members, provided that no consideration is paid for the transfer and
that the transfer would not result in the loss of any exemption under
Rule 16b-3 of the Exchange Act with respect to any Restricted Stock.
The transferee of Restricted Stock will be subject to all
restrictions, terms and conditions applicable to the Restricted Stock
prior to its transfer, except that the Restricted Stock will not be
further transferable by the transferee other than by will or by the
laws of descent and distribution.
(10) Subject to Section 5(b)(5), if a Participant dies while serving
as a member of the Board, his or her estate shall be entitled to
receive any shares of Restricted Stock held by such Participant at the
time of death and such Restricted Stock shall thereafter vest, or any
restrictions lapse, on the vesting date or dates specified in the
related Award Agreements.
(11) If a Participant resigns or is removed from the Board by reason
of a Disability, he or she shall be entitled to retain any Restricted
Stock held by him or her at the time of such resignation or removal
and such Restricted Stock shall thereafter vest, or any restrictions
lapse, on the vesting date or dates specified in the related Award
Agreements.
(12) Unless otherwise determined by the Committee at or after the time
of granting any Restricted Stock Award, if a Director resigns or is
removed from the Board for any reason other than death or Disability
or does not stand for re-election, all Restricted Stock held by such
Participant which is unvested or subject to restriction at the time of
such resignation or removal, or at the time such Director leaves the
Board, shall thereupon be forfeited.
SECTION 6. STOCK OPTIONS.
(a) Grant. Subject to the terms and conditions of the Plan, Stock
Options may be granted to Eligible Directors at any time and from time to
time, as shall be determined by the Committee. The Committee shall
determine the individuals to whom, and the time or times at which, grants
of Stock Options will be made; the number of shares purchasable under each
Stock Option; the time or times at which Stock Options will vest and become
exercisable; and the other terms and conditions of the Stock Options (and
the related Option Award Agreements) in addition to those set forth in
Sections 6(b) and 6(c). All Stock Options granted under the Plan shall be
Non-Qualified Stock Options.
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(b) Terms and Conditions. Options granted under the Plan shall be
evidenced by Option Award Agreements, shall be subject to the following
terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the Committee
shall deem desirable:
(1) Option Exercise Price. The Option Exercise Price per share of
Stock purchasable under a Stock Option shall be determined by the
Committee at the time of grant and shall not be less than 100% of the
Fair Market Value of the Stock on the date of grant.
(2) Option Term. The term of each Stock Option ("Option Term") shall
be determined by the Committee at the time of grant and may not exceed
ten years from the date the Option is granted.
(3) Exercise. Stock Options shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the
Committee at or after grant; provided, however, that, except as
provided in Section 6(b)(6) and unless otherwise determined by the
Committee at or after grant, no Stock Option shall be exercisable
prior to six months and one day following the date of grant. If any
Stock Option is exercisable only in installments or only after a
specified vesting date, the Committee may accelerate or waive, in
whole or in part, such installment exercise provisions or vesting
date, at any time at or after grant based on such factors as the
Committee shall determine, in its sole discretion.
(4) Method of Exercise. Subject to whatever installment exercise
provisions apply with respect to such Stock Option, and the six month
and one day holding period set forth in Section 6(b)(3) and any other
conditions to vesting, Stock Options may be exercised in whole or in
part, at any time during the Option Term, by giving to the Company
written notice of exercise specifying the number of shares of Stock to
be purchased.
Such notice shall be accompanied by payment in full of the Option
Exercise Price of the shares of Stock for which the Option is
exercised, in cash or by check or such other instrument as the
Committee may accept. Subject to the prior approval of the Committee,
in its sole discretion, at or after grant, payment, in full or in
part, of the Option Exercise Price may be made in the form of
unrestricted Stock then owned by the Participant or Stock that is part
of the Non-Qualified Stock Option being exercised. The value of each
such share surrendered or withheld shall be equal to the Fair Market
Value of the Stock on the date the Option is exercised.
No Stock shall be issued pursuant to an exercise of an Option
until full payment has been made therefor. A Participant shall not
have rights to dividends or any other rights of a shareholder with
respect to any Stock subject to an Option unless and until the
Participant has given written notice of exercise, has paid in full for
such shares, has given, if requested, the representation described in
Section 10(a) and such shares have been issued to the Participant.
(5) Non-Transferability of Options. Subject to the following sentence,
no Stock Option shall be transferable by the Participant other than by
will or by the laws of descent and distribution, and all Stock Options
shall be exercisable, during the Participant's lifetime, only by the
Participant or, subject to Section 6(b)(3), by the Participant's
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authorized legal representative if the Participant is unable to
exercise an Option as a result of the Participant's Disability.
Notwithstanding the foregoing, if determined by the Committee at the
time of grant and so provided in the applicable Award Agreement, a
Participant may transfer a Non-Qualified Stock Option during his or
her lifetime to one or more of his or her Family Members, provided
that no consideration is paid for the transfer and that the transfer
would not result in the loss of any exemption under Rule 16b-3 of the
Exchange Act with respect to any Stock Option. The transferee of a
Stock Option will be subject to all restrictions, terms and conditions
applicable to the Stock Option prior to its transfer, except that the
Stock Option will not be further transferable by the transferee other
than by will or by the laws of descent and distribution.
(6) Termination by Death. If any Participant dies, any Stock Option
held by such Participant at the time of his or her death may
thereafter be exercised, to the extent such Option was exercisable at
the time of death or would have become exercisable within one year
from the time of death had the Participant continued to fulfill all
conditions of the Option during such period (or on such accelerated
basis as the Committee may determine at or after grant), by the estate
of the Participant (acting through its fiduciary) for a period of one
year (or such other period as the Committee may specify at or after
grant) from the date of such death. The balance of the Stock Option
shall be forfeited.
(7) Termination by Reason of Disability. Subject to Section 6(b)(3),
if a Participant resigns or is removed from the Board by reason of a
Disability, any Stock Option then held by such Participant may
thereafter be exercised, to the extent such Option is exercisable at
the time of such resignation or removal or would have become
exercisable within one year from the time of such resignation or
removal had the Participant continued to fulfill all conditions of the
Option during such period (or on such accelerated basis as the
Committee may determine at or after grant), by the Participant or by
the Participant's duly authorized legal representative if the
Participant is unable to exercise the Option as a result of the
Participant's Disability, for a period of one year (or such other
period as the Committee may specify at or after grant) from the date
of such resignation or removal; provided that if the Participant dies
within such one-year period (or such other period as the Committee
shall specify at or after grant), any unexercised Stock Option held by
such Participant shall thereafter be exercisable by the estate of the
Participant (acting through its fiduciary) to the same extent to which
it was exercisable at the time of death for a period of one year from
the date of such termination of employment. The balance of the Stock
Option shall be forfeited.
(8) Other Termination. Unless otherwise determined by the Committee at
or after the time of granting any Stock Option, if a Participant
resigns or is removed from the Board for any reason other than death
or Disability, all Stock Options held by such Participant shall
thereupon immediately terminate.
(c) Buyout Provisions. The Committee may at any time buy out, for a payment
in cash, Stock or Restricted Stock, any Option previously granted, based on
such terms and conditions as the Committee shall establish and agree upon
with the Participant, provided that no such transaction involving a
Participant shall be structured or effected in a manner that would violate,
or result in any liability on the part of the Participant under, Section 16
of the Exchange Act or the rules and regulations promulgated thereunder.
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SECTION 7. CHANGE IN CONTROL PROVISION.
(a) Impact of Event. In the event of and upon: (1) a "Change in
Control" as defined in Section 7(b) or (2) a "Potential Change in Control"
as defined in Section 7(c), the following acceleration and valuation
provisions shall apply:
(1) Any Stock Options awarded under the Plan not previously
exercisable and vested shall become fully exercisable and vested;
(2) All restrictions and limitations, if any, applicable to any
Restricted Stock or Stock Options shall terminate and such Stock or
Stock Options shall be deemed fully vested; and
(3) The value of all outstanding Awards, in each case to the
extent vested, shall, unless otherwise determined by the Committee in
its sole discretion at or after grant but prior to any Change in
Control or Potential Change in Control, be cashed out on the basis of
the "Change in Control Price", as defined in Section 7(d), as of the
date such Change in Control or such Potential Change in Control is
determined to have occurred.
(b) Definition of Change in Control. For purposes of Section 7(a), a
"Change in Control" means the happening of any of the following:
(1) When any "person" as defined in Section 3(a)(9) of the Exchange
Act and as used in Sections 13(d) and 14(d) thereof, including a
"group" as defined in Section 13(d) of the Exchange Act, but excluding
the Company and any Subsidiary and any employee benefit plan sponsored
or maintained by the Company or any Subsidiary (including any trustee
of such plan acting as trustee), directly or indirectly, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act,
as amended from time to time), of securities of the Company
representing 20 percent or more of the combined voting power of the
Company's then outstanding securities; provided, however, that the
terms "person" and "group" shall not include any "Excluded Director",
and the term "Excluded Director" means any director who, on the
effective date of the Plan, is the beneficial owner of or has the
right to acquire an amount of Stock equal to or greater than five
percent of the number of shares of Stock outstanding on such effective
date; and further provided that, unless otherwise determined by the
Board or any committee thereof, the terms "person" and "group" shall
not include any entity or group of entities which has acquired Stock
of the Company in the ordinary course of business for investment
purposes only and not with the purpose or effect of changing or
influencing the control of the Company, or in connection with or as a
participant in any transaction having such purpose or effect,
("Investment Intent"), as demonstrated by the filing by such entity or
group of a statement on Schedule 13G (including amendments thereto)
pursuant to Regulation 13D under the Exchange Act, as long as such
entity or group continues to hold such Stock with an Investment
Intent;
(2) When, during any period of 24 consecutive months during the
existence of the Plan, the individuals who, at the beginning of such
period, constitute the Board (the "Incumbent Directors") cease for any
reason other than death to constitute at least a majority thereof;
provided, however, that a director who was not a director at the
beginning of such 24-month period shall be deemed to have satisfied
such 24-month
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requirement (and be an Incumbent Director) if such director was
elected by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent
Directors either actually (because they were directors at the
beginning of such 24-month period) or by prior operation of this
Section 7(b)(2); or
(3) The occurrence of a transaction requiring shareholder approval for
the acquisition of the Company, or any portion of the outstanding
equity securities or voting power of the Company, by an entity other
than the Company or a Subsidiary through purchase of Stock or assets,
by merger or otherwise;
provided, however, a change in control shall not be deemed to be a Change
in Control for purposes of the Plan if the Board approves such change prior
to either (i) the commencement of any of the events described in Section
7(b)(l), (2), or (3) or 7(c)(l) or (ii) the commencement by any person
other than the Company of a tender offer for Stock.
(c) Definition of Potential Change in Control. For purposes of Section
7(a), a "Potential Change in Control" means the happening of any one of the
following:
(1) The approval by shareholders of an agreement by the Company, the
consummation of which would result in a Change in Control of the
Company as defined in Section 7(b); or
(2) The acquisition of beneficial ownership, directly or indirectly,
by any entity, person or group (other than the Company or a Subsidiary
or any Company employee benefit plan (including any trustee of such
plan acting as such trustee)) of securities of the Company
representing five percent or more of the combined voting power of the
Company's outstanding securities and the adoption by the Board of a
resolution to the effect that a Potential Change in Control of the
Company has occurred for purposes of this Plan.
(d) Change in Control Price. For purposes of this Section 7, "Change
in Control Price" means the highest price per share paid in any transaction
reported on the New York Stock Exchange Composite Index, or paid or offered
in any bona fide transaction related to a Change in Control or Potential
Change in Control of the Company, at any time during the 60-day period
immediately preceding the occurrence of the Change in Control (or, where
applicable, the occurrence of the Potential Change in Control event), in
each case as determined by the Committee.
SECTION 8. AMENDMENTS AND TERMINATION.
The Board may at any time, in its sole discretion, amend, alter or
discontinue the Plan, but no such amendment, alteration or discontinuation shall
be made which would impair the rights of a Participant under an Award
theretofore granted, without the Participant's consent. The Company shall submit
to the shareholders of the Company for their approval any amendments to the Plan
which are required to be approved by shareholders, either by law or the rules
and regulations of any governmental authority or any stock exchange upon which
the Stock is then traded.
Subject to changes in law or other legal requirements that would
permit otherwise, the Plan may not be amended without the approval of the
shareholders, to (a) increase the total number of
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shares of Stock that may be issued under the Plan or to any Participant during
any calendar year (except for adjustments pursuant to Section 3(c)), (b) permit
the granting of Stock Options with exercise prices lower than those specified in
Section 6(b)(1) or (c) modify the Plan's eligibility requirements.
The Committee may at any time, in its sole discretion, amend the terms
of any outstanding Award, but no such amendment shall be made which would impair
the rights of a Participant under an Award theretofore granted, without the
Participant's consent; nor, in the case of any Award of a Stock Option, shall
any such amendment reduce the Option Exercise Price relating to such Stock
Option or, in any other case, reduce the purchase price (if any) of the Stock
which is subject to an outstanding Award; nor shall any such amendment be made
which would make the applicable exemptions provided by Rule 16b-3 under the
Exchange Act unavailable to any Participant holding an Award without the
Participant's consent.
Subject to the above provisions, the Board shall have all necessary
authority to amend the Plan to take into account changes in applicable
securities and tax laws and accounting rules, as well as other developments.
SECTION 9. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.
SECTION 10. GENERAL PROVISIONS.
(a) The Committee may require each Participant acquiring Stock
pursuant to an Award under the Plan to represent to and agree with the
Company in writing that the Participant is acquiring the Stock without a
view to distribution thereof. Any certificates for such shares may include
any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
All shares of Stock or other securities issued under the Plan
shall be subject to such stop-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange
upon which the Stock is then listed, and any applicable federal or state
securities laws, and the Committee may cause a legend or legends to be
placed on any certificates for such shares to make appropriate reference to
such restrictions or to cause such restrictions to be noted in the records
of the Company's stock transfer agent and any applicable book entry system.
(b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such arrangements
may be either generally applicable or applicable only in specific cases.
(c) The actual or deemed reinvestment of dividends in additional Stock
or Restricted Stock at the time of any dividend payment shall only be
permissible if sufficient shares of Stock are available under Section 3 for
such reinvestment (taking into account the then outstanding and previously
granted Restricted Stock and Stock Options).
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(d) The Plan, all Awards made and all actions taken thereunder and any
agreements relating thereto, shall be governed by and construed in
accordance with the laws of the State of Ohio.
(e) In the event any Award is transferred or assigned pursuant to a
court order, such transfer or assignment shall be without liability to the
Company and the Company shall have the right to offset against such Award
any expenses (including attorneys' fees) incurred by the Company in
connection with such transfer or assignment.
(f) All Award Agreements entered into with Participants pursuant to
the Plan shall be subject to the Plan. A Participant who receives an Award
under the Plan shall not have any rights with respect to such Award, unless
and until such Participant has executed an Award Agreement evidencing the
Award, in form approved by the Committee; has delivered a fully-executed
copy of such Award Agreement to the Company; and has otherwise complied
with the applicable terms and conditions of such Award.
(g) The provisions of Awards need not be the same with respect to each
Participant.
SECTION 11. SHAREHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.
The Plan was adopted by the Board on January 31, 2003 and is subject
to approval by the holders of the Company's outstanding Stock, in accordance
with applicable law. The Plan will become effective on the date of such
approval.
SECTION 12. TERM OF PLAN.
No Award shall be granted pursuant to the Plan on or after January 31,
2013, but Awards granted prior to such date may extend beyond that date.
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