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EXHIBIT 10(L)
THE PROGRESSIVE CORPORATION
1995 INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of The Progressive Corporation 1995 Incentive
Plan (the "Plan") is to enable The Progressive Corporation (the "Company") to
attract, retain and reward key employees of the Company and its Subsidiaries and
Affiliates and strengthen the mutuality of interests between such key employees
and the Company's shareholders by offering such key employees equity or
equity-based incentives.
For purposes of the Plan, the following terms shall be defined
as set forth below:
(a) "Affiliate" means any entity (other than the Company and
its Subsidiaries) that is designated by the Board as a participating
employer under the Plan.
(b) "Award" means any award of Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock, Stock Purchase
Rights and Other Stock-Based Awards under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "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.
(e) "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.
(f) "Committee" means the Committee referred to in
Section 2 of the Plan.
(g) "Company" means The Progressive Corporation, an
Ohio corporation, or any successor corporation.
(h) "Deferred Stock" means an award of the right to
receive Stock at the end of a specified deferral period granted
pursuant to Section 8.
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(i) "Disability" means disability as determined under
procedures established by the Committee for purposes of the Plan.
(j) "Disinterested Person" shall have the meaning set
forth in Rule 16b-3(c)(2)(i) as promulgated by the Securities and
Exchange Commission under the Exchange Act, or any successor definition
adopted by the Commission.
(k) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(l) "Fair Market Value" means, as of any given date, the
mean between the highest and lowest quoted selling price, regular way,
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.
(m) "Incentive Stock Option" means any Stock Option
intended to be and designated as an "Incentive Stock Option", within
the meaning of Section 422 of the Code or any successor section
thereto.
(n) "Non-Qualified Stock Option" means any Stock Option
that is not an Incentive Stock Option.
(o) "Other Stock-Based Award" means an award granted
pursuant to Section 10 that is valued, in whole or in part, by
reference to, or is otherwise based on, Stock.
(p) "Plan" means The Progressive Corporation 1995
Incentive Plan, as amended from time to time.
(q) "Restricted Stock" means an award of shares that is
granted pursuant to Section 7 and is subject to restrictions.
(r) "Section 16 participant" means a participant under
the Plan who is then subject to Section 16 of the Exchange Act.
(s) "Stock" means the Common Shares, $1.00 par value
per share, of the Company.
(t) "Stock Appreciation Right" means an award of
rights that is granted pursuant to Section 6.
(u) "Stock Option" or "Option" means any option to
purchase shares of Stock (including Restricted Stock and Deferred
Stock, if the Committee so determines) that is granted pursuant to
Section 5.
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(v) "Stock Purchase Right" means an award of the right to
purchase Stock that is granted pursuant to Section 9.
(w) "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the
Company if each of the corporations (other than the last corporation in
the unbroken chain) owns stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
In addition, the terms "Change in Control," "Potential Change
in Control" and "Change in Control Price" shall have the meanings set forth,
respectively, in Sections 11(b), (c) and (d) and the term "Cause" shall have the
meaning set forth in Section 5(b)(8) below.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by the Executive Compensation
Committee of the Board (the "Committee"). The Committee shall consist of not
less than three directors of the Company, all of whom shall be Disinterested
Persons and "outside directors", as defined in Section 162(m) of the Code and
the regulations promulgated thereunder. Such directors shall be appointed by the
Board and shall serve as 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 Award(s) to be granted
to each participant, the consideration, if any, to be paid for such Award(s),
the timing of such Award(s), the terms and conditions of Awards granted under
the Plan and the terms and conditions of the related agreements which will be
entered into with participants. As to the selection of and grant of Awards to
participants who are not Section 16 participants, 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 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 Commit-
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tee, shall be final, binding and conclusive on the Company, its shareholders,
Subsidiaries, Affiliates, all participants in the Plan, 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 3. STOCK SUBJECT TO THE PLAN.
(a) Aggregate Stock Subject to the Plan. Subject to
adjustment as provided below in Section 3(c), the total number of
shares of Stock reserved and available for Awards under the Plan is
5,000,000. 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 of Stock. If
any Stock subject to any Award granted hereunder is forfeited or an
Award otherwise terminates or expires without the issuance of Stock,
the Stock 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 theretofore
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, combination of shares or other change in corporate 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 number and option price of shares
subject to outstanding Options granted under the Plan, in the number
and purchase price of shares subject to outstanding Stock Purchase
Rights granted under the Plan, and in the number of shares subject to
Restricted Stock Awards, Deferred Stock Awards and any other
outstanding Awards granted under the Plan as may be approved by the
Committee, in its sole discretion; 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 Limit. No participant may be granted
Stock Options or other Awards under the Plan with respect to
an aggregate of more than 300,000 shares of Stock (subject
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to adjustment as provided in Section 3(c) hereof) during any
calendar year.
SECTION 4. ELIGIBILITY.
Officers and other key employees of the Company and its
Subsidiaries and Affiliates (but excluding members of the Committee and any
person who serves only as a director) who are responsible for or contribute to
the management, growth or profitability of the business of the Company or its
Subsidiaries or Affiliates are eligible to be granted Awards under the Plan.
SECTION 5. STOCK OPTIONS.
(a) Grant. Stock Options may be granted alone, in addition to
or in tandem with other Awards granted under the Plan or cash awards
made outside of the Plan. However, no Incentive Stock Option shall be
issued in tandem with any other Award other than a Stock Appreciation
Right as provided for in Section 6. 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 and the other terms and conditions of the Stock Options
in addition to those set forth in Sections 5(b) and 5(c). Any Stock
Option granted under the Plan shall be in such form as the Committee
may from time to time approve.
Stock Options granted under the Plan may be of two types which
shall be indicated on their face: (i) Incentive Stock Options and (ii)
Non-Qualified Stock Options. Subject to Section 5(c) hereof, the
Committee shall have the authority to grant to any participant
Incentive Stock Options, Non-Qualified Stock Options or both types of
Stock Options.
(b) Terms and Conditions. Options granted under the Plan shall
be evidenced by Option 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 Price. The option price per share of Stock
purchasable under a Non-Qualified Stock Option shall be
determined by the Committee at the time of grant and shall not
be less than fifty percent of the Fair Market Value of the
Stock at the date of grant. The option price per share of
Stock purchasable under an Incentive Stock Option shall be
determined by the Committee at the time of grant and shall be
not less than 100% of the Fair Market Value of the Stock at
the date of grant (or 110% of the Fair Market Value of the
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Stock at the date of grant in the case of a participant who at
the date of grant owns shares possessing more than ten percent
of the total combined voting power of all classes of stock of
the Company or its parent or subsidiary corporations (as
determined under Section 424(d), (e) and (f) of the Code)).
(2) Option Term. The term of each Stock Option shall
be determined by the Committee and may not exceed ten years
from the date the Option is granted (or, with respect to
Incentive Stock Options, five years in the case of a
participant who at the date of grant owns shares possessing
more than ten percent of the total combined voting power of
all classes of stock of the Company or its parent or
subsidiary corporations (as determined under Section 424(d),
(e) and (f) of the Code)).
(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 5(b)(6)
and Section 11, 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 5(b)(3), Stock Options may be exercised
in whole or in part, at any time during the option period, 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 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
following sentence, unless otherwise determined by the
Committee, in its sole discretion, at or after grant, payment,
in full or in part, of the option price of (i) Incentive Stock
Options may be made in the form of unrestricted Stock then
owned by the participant and (ii) Non-Qualified Stock Options
may be made in the form of unrestricted Stock then owned by
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the participant or Stock that is part of the Non-Qualified
Stock Option being exercised. Notwithstanding the foregoing,
any election by a Section 16 participant to satisfy such
payment obligation, in whole or in part, with Stock that is
part of the Non-Qualified Stock Option being exercised shall
be subject to approval by the Committee, in its sole
discretion. The value of each such share surrendered or
withheld shall be 100% of 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. 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
14(a) and such shares have been issued to him.
(5) Non-Transferability of Options. 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 Sections
5(b)(3) and 5(c), by the participant's authorized legal
representative if the participant is unable to exercise an
Option as a result of the participant's Disability.
(6) Termination by Death. Subject to Section 5(c), if
any participant's employment by the Company or any Subsidiary
or Affiliate terminates by reason of death, any Stock Option
held by such participant 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
Sections 5(b)(3) and 5(c), if a participant's employment by
the Company or any Subsidiary or Affiliate terminates by
reason of Disability, any Stock Option held by such
participant may thereafter be exercised, to the extent such
Option was exercisable at the time of termination or would
have become exercisable within
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one year from the time of termination 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 termination of employment;
provided, however, that in no event may any such Option be
exercised prior to six months and one day from the date of
grant; and provided, further, 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's employment by the Company or any
Subsidiary or Affiliate terminates for any reason other than
death or Disability, all Stock Options held by such
participant shall thereupon immediately terminate, except
that if the participant is involuntarily terminated by the
Company or any Subsidiary or Affiliate without Cause, any
such Stock Option may be exercised, to the extent otherwise
exercisable at the time of such termination, at any time
during the lesser of two months from the date of such
termination or the balance of such Stock Option's term. For
purposes of this Plan, "Cause" means a felony conviction of
a participant or the failure of a participant to contest
prosecution for a felony, or a participant's willful
misconduct or dishonesty, any of which, in the judgment of the
Committee, is harmful to the business or reputation of the
Company or any Subsidiary or Affiliate.
(c) Incentive Stock Options. Notwithstanding Section 4, only
key employees of the Company or any Subsidiary shall be eligible to
receive Incentive Stock Options. Notwithstanding Sections 5(b)(6) and
(7), an Incentive Stock Option shall be exercisable by (i) a
participant's authorized legal representative (if the participant is
unable to exercise the Incentive Stock Option as a result of the
participant's Disability) only if, and to the extent, permitted by
Section 422 of the Code and Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder and (ii) by the
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participant's estate, in the case of death, or authorized legal
representative, in the case of Disability, no later than 10 years from
the date the Incentive Stock Option was granted (in addition to any
other restrictions or limitations which may apply). Anything in the
Plan to the contrary notwithstanding, no term or provision of the
Plan relating to Incentive Stock Options shall be interpreted, amended
or altered, nor shall any discretion or authority granted under the
Plan be exercised, so as to disqualify the Plan under Section 422 of
the Code, or, without the consent of the participant(s) affected, to
disqualify any Incentive Stock Option under such Section 422 or any
successor Section thereto.
(d) Buyout Provisions. The Committee may at any time buy out
for a payment in cash, Stock, Deferred Stock or Restricted Stock an
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 Section 16 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.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Grant. Stock Appreciation Rights may be granted alone, in
addition to or in tandem with other Awards granted under the Plan or
cash awards made outside of the Plan. The Committee shall determine
the individuals to whom, and the time or times at which, grants of
Stock Appreciation Rights will be made and the other terms and
conditions of the Stock Appreciation Rights in addition to those set
forth in Section 6(b). Any Stock Appreciation Right granted under the
Plan shall be in such form as the Committee may from time to time
approve. In the case of Non-Qualified Stock Options, such rights may
be granted either at or after the time of the grant of the related
Non-Qualified Stock Options. In the case of Incentive Stock Options,
such rights may be granted in tandem with Incentive Stock Options only
at the time of the grant of such Incentive Stock Options and exercised
only when the Fair Market Value of the Stock subject to the Option
exceeds the option price of the Option.
Stock Appreciation Rights issued in tandem with Stock
Options ("Tandem SARs") shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, subject
to such provisions as the Committee may specify at grant if a Stock
Appreciation Right is granted with respect to less than the full number
of shares of Stock subject to the related Stock Option.
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All Stock Appreciation Rights granted hereunder shall
be exercised, subject to Section 6(b), in accordance with the
procedures established by the Committee for such purpose. Upon such
exercise, the participant shall be entitled to receive an amount
determined in the manner prescribed in Section 6(b).
(b) Terms and Conditions. Stock Appreciation Rights granted
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:
(1) Tandem SARs shall be exercisable only at such time or
times and to the extent that the Stock Options to which they
relate shall be exercisable in accordance with the provisions
of Section 5 and this Section 6, and Stock Appreciation Rights
granted separately ("Freestanding SARs") shall be exercisable
as the Committee shall determine; provided, however, that any
Stock Appreciation Right granted to a Section 16 participant
shall not be exercisable at any time prior to six months and
one day from the date of the grant of such Stock Appreciation
Right, except that this limitation shall not apply in the
event of the death of the participant prior to the expiration
of the six-month and one-day period.
(2) Upon the exercise of a Stock Appreciation Right,
a participant shall be entitled to receive an amount in cash
or shares of Stock, as determined by the Committee, equal in
value to the excess of the Fair Market Value of one share of
Stock on the date of exercise of the Stock Appreciation Right
over (i) the option price per share specified in the related
Stock Option in the case of Tandem SARs, which price shall be
fixed no later than the date of grant of the Tandem SARs, or
(ii) the price per share specified in the related Stock
Appreciation Rights Agreement in the case of Freestanding
SARs, which price shall be fixed at the date of grant and
shall be not less than fifty percent of the Fair Market Value
of the Stock on the date of grant, multiplied by the number of
shares of Stock in respect of which the Stock Appreciation
Right shall have been exercised. The Committee, in its sole
discretion, shall have the right to determine the form of
payment (i.e. cash, Stock or any combination thereof) and to
approve any election by the participant to receive cash, in
whole or in part, upon exercise of the Stock Appreciation
Right. When payment is to be made in Stock, the number of
shares of Stock to be paid shall be calculated on the basis of
the Fair Market Value of the Stock on the date of exercise.
Notwithstanding the foregoing, the Committee may
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unilaterally limit the appreciation in value of any Stock
Appreciation Right at any time prior to exercise.
(3) Upon the exercise of a Tandem SAR, the Stock
Option or part thereof to which such Tandem SAR is related
shall be deemed to have been exercised.
(4) In its sole discretion, the Committee may grant
"Limited" Stock Appreciation Rights under this Section 6; that
is, Freestanding SARs that become exercisable only in the
event of a Change in Control or a Potential Change in Control,
subject to such terms and conditions as the Committee may
specify at grant. Such Limited Stock Appreciation Rights shall
be settled solely in cash.
(5) Stock Appreciation Rights shall not be
transferable by the participant other than by will or by the
laws of descent and distribution, and all Stock Appreciation
Rights shall be exercisable, during the participant's
lifetime, only by the participant or, subject to Section
6(b)(6), by the participant's authorized legal representative
if the participant is unable to exercise a Stock Appreciation
Right as a result of the participant's Disability.
(6) Unless varied by the Committee, Stock
Appreciation Rights shall be subject to the terms and
conditions specified for Stock Options in Sections 5(b)(6),
(7) and (8) and 5(d), except that the terms and conditions
applicable to any Stock Appreciation Right held by a Section
16 participant shall not be varied in a manner that would
cause the exercise or cancellation of such Stock Appreciation
Right to fail to qualify for any applicable exemption from
Section 16(b) of the Exchange Act provided by Rule 16b-3
thereunder.
SECTION 7. RESTRICTED STOCK.
(a) Grant. Shares of Restricted Stock may be issued alone, in
addition to or in tandem with other Awards under the Plan or cash
awards made outside of the Plan. 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 7(b)), the date or dates upon which
Restricted Stock Awards will vest and the period or periods within
which such Restricted Stock Awards may be subject to forfeiture, and
the other terms and conditions of such Awards in addition to those set
forth in Section 7(b).
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The Committee may condition the grant of Restricted Stock
upon the attainment of specified performance goals 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 agreement evidencing the Award in the 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 a Restricted Stock Award agreement and paying
whatever price (if any) is required under Section 7(b)(1).
(3) 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) The Committee shall require that the stock
certificates evidencing such shares be held in custody by the
Company until the restrictions thereon shall have lapsed, and
that, as a condition of any Restricted Stock Award, the
participant shall have delivered to the Company a stock power,
endorsed in blank, relating to the Stock covered by such
Award.
(5) Subject to the provisions of this Plan and the
Restricted Stock Award agreement, during a period set by the
Committee commencing with the date of such Award (the
"Restriction Period"), the participant shall not be permitted
to sell, transfer, pledge, assign or otherwise encumber the
shares of Restricted Stock awarded under the Plan. 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
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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.
(6) Except as provided in this Section 7(b)(6),
Section 7(b)(5) and Section 7(b)(7), 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 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 14(f), 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.
(7) No Restricted Stock shall be transferable by
a participant otherwise than by will or by the laws of
descent and distribution.
(8) If a participant's employment by the Company or
any Subsidiary or Affiliate terminates by reason of death, any
Restricted Stock held by such participant shall thereafter
vest or any restriction lapse, to the extent such Restricted
Stock would have become vested or no longer subject to
restriction within one year from the time of death had the
participant continued to fulfill all of the conditions of the
Restricted Stock Award during such period (or on such
accelerated basis as the Committee may determine at or after
grant). The balance of the Restricted Stock shall be
forfeited.
(9) If a participant's employment by the Company or
any Subsidiary or Affiliate terminates by reason of
Disability, any Restricted Stock held by such participant
shall thereafter vest or any restriction lapse, to the extent
such Restricted Stock would have become vested or no longer
subject to restriction within one year from the time of
termination had the participant continued to fulfill all of
the conditions of the Restricted Stock Award during such
period (or on such accelerated basis as the Committee may
determine at or after grant), subject in all cases to the
Minimum Restriction Period requirement. The balance of the
Restricted Stock shall be forfeited.
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(10) Unless otherwise determined by the Committee at
or after the time of granting any Restricted Stock, if a
participant's employment by the Company or any Subsidiary or
Affiliate terminates for any reason other than death or
Disability, the Restricted Stock held by such participant
which is unvested or subject to restriction at the time of
termination shall thereupon be forfeited.
(c) Minimum Value Provisions. In order to better ensure that
award payments actually reflect the performance of the Company and
service of the participant, the Committee may provide, in its sole
discretion, for a tandem performance-based or other award designed to
guarantee a minimum value, payable in cash or Stock to the recipient of
a Restricted Stock Award, subject to such performance, future service,
deferral and other terms and conditions as may be specified by the
Committee.
SECTION 8. DEFERRED STOCK.
(a) Grant. Deferred Stock may be awarded alone, in addition to
or in tandem with other Awards granted under the Plan or cash awards
made outside of the Plan. The Committee shall determine the individuals
to whom, and the time or times at which, Deferred Stock shall be
awarded, the number of shares of Deferred Stock to be awarded to any
participant, the duration of the period (the "Deferral Period") during
which, and the conditions under which, receipt of the Stock will be
deferred, and the other terms and conditions of the Award in addition
to those set forth in Section 8(b).
The Committee may condition the grant of Deferred
Stock upon the attainment of specified performance goals or such other
factors as the Committee shall determine, in its sole discretion.
(b) Terms and Conditions. Deferred Stock Awards 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) The purchase price for shares of Deferred Stock
shall be determined at the time of grant and may be equal to
their par value or zero, as determined by the Committee.
Subject to the provisions of the Plan and the Award agreement
referred to in Section 8(b)(9), Deferred Stock Awards may not
be sold, assigned, transferred, pledged or otherwise
encumbered during the Deferral Period. At the expiration of
the Deferral Period (or the Elective Deferral Period referred
to in
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Section 8(b)(8), where applicable), share certificates shall
be delivered to the participant, or his legal representative,
for the shares covered by the Deferred Stock Award. The
Deferral Period applicable to any Deferred Stock Award shall
not be less than six months and one day ("Minimum Deferral
Period").
(2) Unless otherwise determined by the Committee at
grant, amounts equal to any dividends declared during the
Deferral Period with respect to the number of shares covered
by a Deferred Stock Award will be paid to the participant
currently, or deferred and deemed to be reinvested in
additional Deferred Stock, or otherwise reinvested, all as
determined at or after the time of the Award by the Committee,
in its sole discretion.
(3) No Deferred Stock shall be transferable by a
participant otherwise than by will or by the laws of descent
and distribution.
(4) If a participant's employment by the Company or
any Subsidiary or Affiliate terminates by reason of death, any
Deferred Stock held by such participant shall thereafter vest
or any restriction lapse, to the extent such Deferred Stock
would have become vested or no longer subject to restriction
within one year from the time of death had the participant
continued to fulfill all of the conditions of the Deferred
Stock Award during such period (or on such accelerated basis
as the Committee may determine at or after grant). The balance
of the Deferred Stock shall be forfeited.
(5) If a participant's employment by the Company or
any Subsidiary or Affiliate terminates by reason of
Disability, any Deferred Stock held by such participant shall
thereafter vest or any restriction lapse, to the extent such
Deferred Stock would have become vested or no longer subject
to restriction within one year from the time of termination
had the participant continued to fulfill all of the conditions
of the Deferred Stock Award during such period (or on such
accelerated basis as the Committee may determine at or after
grant), subject in all cases to the Minimum Deferral Period
requirement. The balance of the Deferred Stock shall be
forfeited.
(6) Unless otherwise determined by the Committee at
or after the time of granting any Deferred Stock Award, if a
participant's employment by the Company or any Subsidiary or
Affiliate terminates for any reason other than death or
Disability, all Deferred Stock held by such participant which
is unvested or subject to restriction shall thereupon be
forfeited.
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(7) Based on service, performance or such other
factors or criteria as the Committee may determine, the
Committee may, at or after grant, accelerate the vesting of
all or any part of any Deferred Stock Award or waive a portion
of the Deferral Period for all or any part of such Award,
subject in all cases to the Minimum Deferral Period
requirement.
(8) A participant may elect to further defer receipt
of a Deferred Stock Award (or an installment of an Award) for
a specified period or until a specified event (the "Elective
Deferral Period"), subject in each case to the Committee's
approval and the terms of this Section 8 and such other terms
as are determined by the Committee, all in its sole
discretion. Subject to any exceptions approved by the
Committee, such election must be made at least 12 months prior
to completion of the Deferral Period for such Deferred Stock
Award (or such installment).
(9) Each such Award shall be confirmed by, and
subject to the terms of, a Deferred Stock Award agreement
evidencing the Award in the form approved from time to time by
the Committee.
(c) Minimum Value Provisions. In order to better ensure that
award payments actually reflect the performance of the Company and
service of the participant, the Committee may provide, in its sole
discretion, for a tandem performance-based or other Award designed to
guarantee a minimum value, payable in cash or Stock to the recipient of
a Deferred Stock Award, subject to such performance, future service,
deferral and other terms and conditions as may be specified by the
Committee.
SECTION 9. STOCK PURCHASE RIGHTS.
(a) Grant. Stock Purchase Rights may be granted alone, in
addition to or in tandem with other Awards granted under the Plan or
cash awards made outside the Plan. The Committee shall determine the
individuals to whom, and the time or times at which, grants of Stock
Purchase Rights will be made, the number of shares of Stock which may
be purchased pursuant to the Stock Purchase Rights, and the other terms
and conditions of the Stock Purchase Rights in addition to those set
forth in Section 9(b). The Stock subject to the Stock Purchase Rights
may be purchased, as determined by the Committee at the time of grant:
(1) at the Fair Market Value of such Stock on
the date of grant;
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(2) at 50% of the Fair Market Value of such Stock
on the date of grant;
(3) at an amount equal to the Book Value of such
Stock on the date of grant; or
(4) at an amount equal to the par value of such
Stock on the date of grant.
Subject to Section 9(b) hereof, the Committee may
also impose such deferral, forfeiture or other terms and conditions as
it shall determine, in its sole discretion, on such Stock Purchase
Rights or the exercise thereof.
Each Stock Purchase Right Award shall be confirmed
by, and be subject to the terms of, a Stock Purchase Rights Agreement
which shall be in form approved by the Committee.
(b) Terms and Conditions. Stock Purchase Rights may contain
such additional terms and conditions not inconsistent with the terms of
the Plan as the Committee shall deem desirable, and shall generally be
exercisable for such period as shall be determined by the Committee.
However, Stock Purchase Rights granted to Section 16 participants shall
not become exercisable earlier than six months and one day after the
grant date. Stock Purchase Rights shall not be transferable by a
participant other than by will or by the laws of descent and
distribution.
SECTION 10. OTHER STOCK-BASED AWARDS.
(a) Grant. Other Awards of Stock and other Awards that are
valued, in whole or in part, by reference to, or are otherwise based
on, Stock, including, without limitation, performance shares,
convertible preferred stock, convertible debentures, exchangeable
securities and Stock Awards or options valued by reference to Book
Value or subsidiary performance, may be granted alone, in addition to
or in tandem with other Awards granted under the Plan or cash awards
made outside of the Plan.
At the time the Stock or Other Stock-Based Award is
granted, the Committee shall determine the individuals to whom and the
time or times at which such Stock or Other Stock-Based Awards shall be
awarded, the number of shares of Stock to be used in computing an Award
or which are to be awarded pursuant to such Awards, the consideration,
if any, to be paid for such Stock or Other Stock-Based Awards, and all
other terms and conditions of the Awards in addition to those set forth
in Section 10(b).
The provisions of Other Stock-Based Awards need not
be the same with respect to each participant.
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(b) Terms and Conditions. Other Stock-Based Awards 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) Subject to the provisions of this Plan and the
Award agreement referred to in Section 10(b)(5) below, Stock
awarded or subject to Awards made under this Section 10 may
not be sold, assigned, transferred, pledged or otherwise
encumbered prior to the date on which the Stock is issued, or,
if later, the date on which any applicable restriction,
performance, holding or deferral period or requirement is
satisfied or lapses. All Stock or Other Stock Based Awards
granted under this Section 10 shall be subject to a minimum
holding period (including any applicable restriction,
performance and/or deferral periods) of six months and one day
("Minimum Holding Period").
(2) Subject to the provisions of this Plan and the
Award agreement and unless otherwise determined by the
Committee at the time of grant, the recipient of an Other
Stock-Based Award shall be entitled to receive, currently or
on a deferred basis, interest or dividends or interest or
dividend equivalents with respect to the number of shares of
Stock covered by the Award, as determined at the time of the
Award by the Committee, in its sole discretion, and the
Committee may provide that such amounts (if any) shall be
deemed to have been reinvested in additional Stock or
otherwise reinvested.
(3) Subject to the Minimum Holding Period, any Other
Stock-Based Award and any Stock covered by any such Award
shall vest or be forfeited to the extent, at the times and
subject to the conditions, if any, provided in the Award
agreement, as determined by the Committee, in its sole
discretion.
(4) In the event of the participant's Disability or
death, or in cases of special circumstances, the Committee
may, in its sole discretion, waive, in whole or in part, any
or all of the remaining limitations imposed hereunder or under
any related Award agreement (if any) with respect to any part
or all of any Award under this Section 10, provided that the
Minimum Holding Period requirement may not be waived, except
in case of a participant's death.
(5) Each Award shall be confirmed by, and subject to
the terms of, an agreement or other instrument evidencing the
Award in the form approved from time to time by the Committee,
the Company and the participant.
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(6) Stock (including securities convertible into
Stock) issued on a bonus basis under this Section 10 shall be
issued for no cash consideration. Stock (including securities
convertible into Stock) purchased pursuant to a purchase right
awarded under this Section 10 shall bear a price of at least
50% of the Fair Market Value of the Stock on the date of
grant. The purchase price of such Stock, and of any Other
Stock Based Award granted hereunder, or the formula by which
such price is to be determined, shall be fixed by the
Committee at the time of grant.
(7) In the event that any "derivative security", as
defined in Rule 16a-1(c) (or any successor thereto)
promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act, is awarded pursuant to this
Section 10 to any Section 16 participant, such derivative
security shall not be transferrable other than by will or by
the laws of descent and distribution.
SECTION 11. CHANGE IN CONTROL PROVISION.
(a) Impact of Event. In the event of: (1) a "Change
in Control" as defined in Section 11(b) or (2) a "Potential Change in
Control" as defined in Section 11(c), the following acceleration and
valuation provisions shall apply:
(1) Any Stock Appreciation Rights and any Stock
Options awarded under the Plan not previously exercisable and
vested shall become fully exercisable and vested;
(2) The restrictions and deferral limitations
applicable to any Restricted Stock, Deferred Stock, Stock
Purchase Rights and Other Stock-Based Awards shall lapse and
such shares and awards 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 11(d) as of the date such Change in Control
or such Potential Change in Control is determined to have
occurred;
provided, however, that the provisions of Sections 11(a)(1)-(3) shall
not apply with respect to Awards granted to any Section 16 participant
which have been held by such participant for less than six months and
one day as of the
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date that such Change in Control or Potential Change in Control is
determined to have occurred.
(b) Definition of Change in Control. For purposes of
Section 11(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 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
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either actually (because they were directors at the beginning
of such 24-month period) or by prior operation of this Section
11(b)(2); or
(3) The occurrence of a transaction requiring
shareholder approval for the acquisition of the Company by an
entity other than the Company or a Subsidiary through purchase
of 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 (b)(l), (2), or (3) or (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 11(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 11(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 5% 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
11, "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, except that, in the case of Incentive Stock Options and
Stock Appreciation Rights relating to Incentive Stock Options, such
price shall be based only on transactions reported for the date on
which the participant exercises such Stock Appreciation Rights or,
where applicable, the date on which a cashout occurs under Section
11(a)(3).
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SECTION 12. 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 by Section 16 of the Exchange Act, or
the rules and regulations thereunder, to be approved by the shareholders.
The Committee may at any time, in its sole discretion, amend
the terms of any 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 shall any such amendment be made which would make the
applicable exemptions provided by Rule 16b-3 under the Exchange Act unavailable
to any Section 16 participant holding the Award without the participant's
consent. The Committee may also substitute new Stock Options for previously
granted Stock Options (on a one-for-one or other basis), including previously
granted Stock Options having a higher option price.
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 13. 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 14. 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. The 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 delivered 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
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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 put on any
certificates for such shares to make appropriate reference to such
restrictions.
(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) Neither the adoption of the Plan, nor its operation, nor
any document describing, implementing or referring to the Plan, or any
part thereof, shall confer upon any participant under the Plan any
right to continue in the employ, or as a director, of the Company or
any Subsidiary or Affiliate, or shall in any way affect the right and
power of the Company or any Subsidiary or Affiliate to terminate the
employment, or service as a director, of any participant under the Plan
at any time with or without assigning a reason therefor, to the same
extent as the Company or any Subsidiary or Affiliate might have done if
the Plan had not been adopted.
(d) For purposes of this Plan, a transfer of a participant
between the Company and its Subsidiaries and Affiliates shall not be
deemed a termination of employment.
(e) No later than the date as of which an amount first becomes
includable in the gross income of the participant for federal income
tax purposes with respect to any Award under the Plan, the participant
shall pay to the Company, or make arrangements satisfactory to the
Committee regarding the payment of, any federal, state or local taxes
or other items of any kind required by law to be withheld with respect
to such amount. Subject to the following sentence, unless otherwise
determined by the Committee, withholding obligations may be settled
with Stock, including unrestricted Stock previously owned by the
participant or Stock that is part of the Award that gives rise to the
withholding requirement. Notwithstanding the foregoing, any election by
a Section 16 participant to settle such tax withholding obligation with
Stock that is part of such Award shall be subject to approval by the
Committee, in its sole discretion. The obligations of the Company under
the Plan shall be conditional on such payment or arrangements and the
Company and its Subsidiaries and Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant.
(f) The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Stock (or in
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Deferred Stock or other types of Awards) 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
then outstanding Stock Options, Stock Purchase Rights and other Plan
Awards).
(g) The Plan, all Awards made and actions taken thereunder and
any agreements relating thereto shall be governed by and construed in
accordance with the laws of the State of Ohio.
(h) All agreements entered into with participants pursuant to
the Plan shall be subject to the Plan.
(i) The provisions of Awards need not be the same with respect
to each participant.
SECTION 15. SHAREHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.
The Plan was adopted by the Board on February 10, 1995 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 16. TERM OF PLAN.
No Award shall be granted pursuant to the Plan on or after
February 10, 2005, but Awards granted prior to such date may extend beyond that
date.
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