EXHIBIT 4.3
UNITED FIRE & CASUALTY COMPANY
EMPLOYEE STOCK OPTION PLAN
UNITED FIRE & CASUALTY COMPANY, INC.
NONQUALIFIED EMPLOYEE STOCK OPTION PLAN
August 21, 1998
1. PURPOSE. United Fire & Casualty Company, Inc. (the
"Company") is implementing this Nonqualified Employee Stock Option Plan (the
"Plan") to promote the growth and general prosperity of the Company and its
Affiliated Companies. The Plan will permit the Company to grant options
("Options") to purchase shares of its common stock ("Common Stock"). The
granting of Options will help to attract and retain the best available
persons for positions of substantial responsibility and will provide certain
employees with an additional incentive to contribute to the success of the
Company and its Affiliated Companies. The options are "nonstatutory stock
options" that are not intended to qualify as incentive stock options within
the meaning of Section 422A of the Internal Revenue Code, as amended
(the"Code"). For purposes of this Plan, the term "Affiliated Companies"
shall mean any component member of a controlled group of corporations, as
defined under Section 1563 of the Code, in which the Company is also a
component member.
2. ADMINISTRATION. The Plan shall be implemented and administered
by the Board of Directors of the Company (the "Board"). The Board shall have
the authority, in its absolute discretion, and subject to the express provisions
and restrictions of this Plan, to determine: (i) which of the employees of the
Company and its Affiliated Companies shall receive Options ("Optionees"), (ii)
when Options shall be granted, (iii) the terms and conditions of an Option other
than those terms and conditions fixed under this Plan, and (iv) the number of
shares which may be issued upon the exercise of an Option. The Board may also
adopt and revise rules and regulations, and take any other action it deems
necessary or appropriate to administer the Plan. The Board's actions, including
any interpretation or construction of any provisions of the Plan or any Option
granted hereunder, shall be final, conclusive and binding. No member of the
Board shall be liable for any action or determination made in good faith with
respect to the Plan or any Option granted under it. The Board may appoint a
Stock Option Committee (the "Committee") of two or more directors of the Company
which may act on behalf of the Board in administering the Plan. The Committee
may be delegated any authority of the Board in the administration of the Plan.
3. ELIGIBILITY, PARTICIPATION, SPECIAL LIMITATIONS. The Board (or
the Committee, if so authorized by the Board), may, in its discretion, grant one
or more Options to any employee of the Company or its Affiliated Companies,
including any employee who is a Director of the Company or of any of its
Affiliated Companies presently existing or hereinafter organized or acquired and
who is designated by the Board as eligible to participate in the Plan. Such
Options may be granted to one or more such persons without being granted to
other eligible persons, as the Board may deem fit.
4. SHARES OF STOCK SUBJECT TO THE PLAN. The number of shares that
may be issued pursuant to all Options granted under the Plan shall not exceed
five hundred thousand (500,000) shares of Common Stock, subject to adjustment as
herein provided. Any shares of Common Stock that: (i) are repurchased by the
Company after issuance hereunder pursuant to the exercise of an Option, or (ii)
are not purchased by the Optionee prior to the expiration or termination of the
applicable Option, shall again become available to be covered by Options to be
issued hereunder and shall not, as of the effective date of such repurchase or
expiration, be counted as covered by an outstanding Option for purposes of the
above-described maximum number of shares which may be optioned hereunder.
5. TERMS AND CONDITIONS OF OPTIONS.
a. OPTION AGREEMENT. Each Option granted pursuant to the Plan
shall be evidenced by an agreement ("Option Agreement") between the Company
and the Optionee. The Option Agreement shall state that the Option is a
nonstatutory stock Option, shall designate the number of shares and the
exercise price of the Option, shall set forth the vesting schedule of the
Option or state that the Option vests immediately, shall include a
provision incorporating therein this Plan by reference and shall include
any other restriction (in addition to those established under this Plan) as
may be established by the Board (or the Committee) with respect to the
exercise of the Option and/or the transfer of the shares purchased by
exercise of the Option, provided that such restrictions are not in conflict
with this Plan. The Option Agreement shall be in writing, dated as of the
date the Option is granted, shall be executed on behalf of the Company by
such officers as the Board shall authorize, and shall generally be in such
form and contain such additional provisions as the Board shall prescribe.
b. EXERCISE OF OPTIONS. Subject to the specific provisions of this
Section 5, Options shall become exercisable at such times and in such
installments (which may be cumulative) as the Board shall provide in the
terms of each Option; provided, however, each Option granted under the Plan
shall become exercisable in installments of not less than twenty percent
(20%) of the number of shares covered by such Option each year from the
date the Option is granted; and provided, further, that by a resolution
adopted after an Option is granted the Board may, on such terms and
conditions as it may determine to be appropriate and subject to the
specific provisions of this Section 5, accelerate the time at which such
Option or installment thereof may be exercised. For purposes of this Plan
any accrued installment of an option granted hereunder shall be referred to
as an "Accrued Installment". An Option may be exercised when Accrued
Installments accrue, as provided in the terms under which such Option was
granted, for a period of up to ten (10) years from the date the Option is
granted. In no event shall any Option be exercised on or after the
expiration of said maximum applicable period, regardless of the
circumstances then existing (including but not limited to the death or
termination of employment of the Optionee).
Optionees may exercise Options granted pursuant to the Plan by
delivering to the Company at its principal office written notice of such
exercise (i) stating the Optionee's election to exercise such Option and
the number of shares of Common Stock being purchased thereby; (ii) signed
by the Optionee, and (iii) specifying a date, not less than ten (10) nor
more than thirty (30) days from the date of such notice, as the date on
which such shares will be purchased.
As soon as practicable following the receipt of such written notice,
the Company shall deliver to the Optionee exercising an option a
certificate or certificates representing such shares, providing that
payment has been made therefor at the principal office of the Company, and
that the Optionee has made appropriate arrangements with the Company for
any federal, state or local taxes required to be withheld. An Option may
be exercised as to all or any portion of the shares covered by any Accrued
Installment of the Option from time to time during the applicable Option
Period, but shall not be exercisable with respect to fractions of a share.
The time of issuance and delivery of the shares may be postponed by the
Company for such period as may be required for it with reasonable diligence
to comply
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with any applicable listing requirements of any national or regional
securities exchange and any law or regulation applicable to the issuance
and delivery of such shares.
c. OPTION PRICE. The price for shares of Common Stock to be issued
under this Plan shall be such amount as determined by the Board of
Directors of the Company on the date on which the Option covering such
shares is granted by the Board (or the Committee, if authorized by the
Board). The price of shares of common Stock for all purposes of this Plan
is to be determined by the Board (or the Committee, if so authorized by the
Board) in its sole discretion, exercised in good faith.
d. TERMINATION OF OPTIONS. Subject to earlier termination as may be
provided herein, Options shall expire and all rights granted under Option
Agreements shall become null and void upon the termination dates specified
by the Board and set forth in the related Option Agreements, provided that
such termination dates shall not exceed ten (10) years after the date the
Options are granted.
e. NONTRANSFERABILITY OF OPTIONS. Options granted pursuant to this
Plan may not be sold, pledged, hypothecated, assigned, encumbered or
otherwise transferred in any manner, either voluntarily or involuntarily by
operation of law, except by will or the laws of descent and distribution,
and each Option shall be exercisable during the Optionee's lifetime only by
him. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of such Options or of such rights contrary to the
provisions hereof, or to subject such Options or such rights to execution,
attachment or similar process, such Options and such rights shall
immediately terminate and become null and void.
f. ADJUSTMENT PROVISIONS. In the event of changes in the Common
Stock by reason of any stock split, combination of shares, stock dividend,
reclassification, merger, consolidation, reorganization, recapitalization
or similar adjustment, or by reason of the dissolution or liquidation of
the Company, appropriate adjustments may be made in (i) the aggregate
number and class of shares available under the Plan, and (ii) the number,
class and exercise price of shares remaining subject to all outstanding
options. Whether any adjustment or modification is to be made as a result
of the occurrence of any of the events specified in this Section, and the
extent thereof, shall be determined by the Board, whose determination shall
be binding and conclusive. Existence of the Plan or of Option Agreements
pursuant to the Plan shall in no way impair the right of the Company or its
stockholders to make or effect any adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger, consolidation, dissolution or liquidation of the
Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock of the Company, or any grant
of Options on its stock not pursuant to the Plan.
6. RULES APPLICABLE TO CERTAIN DISPOSITIONS.
a. Notwithstanding the foregoing provisions of Section 5, in the
event the Company or the Stockholders of the Company enter into an
agreement to dispose of all or substantially all of the assets or capital
stock of the Company by means of a sale, merger, consolidation,
reorganization, liquidation, or otherwise, an Option shall become
immediately exercisable with respect to the full number of shares subject
to that Option during the period
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commencing as of the later of (x) date of execution of such agreement or
(y) six (6) months after the date the Option is granted, and ending as of
the earlier of:
(i) the Option Expiration Date; or
(ii) the date on which the disposition of assets or capital stock
contemplated by the agreement is consummated. The exercise
of any Option that was made exercisable solely by reason of
this Subsection 6(a) shall be conditioned upon the
consummation of the disposition of assets or stock under the
above referenced agreement. Upon the consummation of any
such disposition of assets or stock, this Plan and any
unexercised Options issued hereunder (or any unexercised
portion thereof) shall terminate and cease to be effective.
b. Notwithstanding the foregoing, in the event that any such
agreement shall be terminated without consummating the disposition of said
stock or assets:
(i) any unexercised non-vested installments that had become
exercisable solely by reason of the provisions of Subsection
6(a) shall again become non-vested and unexercisable as of
said termination of such agreement, and
(ii) the exercise of any option that had become exercisable
solely by reason of this Subsection 6(a) shall be deemed
ineffective and such installments shall again become
non-vested and unexercisable as of said termination of such
agreement.
c. Notwithstanding the provisions set forth in Subsection 6(a), the
Board (or the Committee, if so authorized by the Board) may, at its
election and subject to the approval of the corporation purchasing or
acquiring the stock or assets of the Company (the "surviving corporation"),
arrange for the Optionee to receive upon surrender of Optionee's Option a
new option covering shares of the surviving corporation in the same
proportion, at an equivalent option price and subject to the same terms and
conditions as the old Option. For purposes of the preceding sentence, the
excess of the aggregate fair market value of the shares subject to such new
option immediately after consummation of such disposition of stock or
assets over the aggregate option price of such shares of the surviving
corporation shall not be more than the excess of the aggregate fair market
value of all shares subject to the old Option immediately before
consummation of such disposition of stock and assets over the aggregate
Option Price of such shares of the Company, and the new option shall not
give the Optionee additional benefits which such Optionee did not have
under the old Option or deprive the Optionee of benefits which the Optionee
had under the old Option. If such substitution of options is effectuated,
the Optionee's rights under the old Option shall thereupon terminate.
7. MERGERS AND ACQUISITIONS.
a. If the Company at any time should succeed to the business of
another corporation through a merger or consolidation, or through the
acquisition of stock or assets
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of such corporation, Options may be granted under the Plan to option
holders of such corporation or its subsidiaries, in substitution for
options or rights to purchase stock of such corporation held by them at
the time of succession. The Board (or the Committee, if so authorized
by the Board) shall have sole and absolute discretion to determine the
extent to which substitute Options shall be granted (if at all), the
person or persons within the eligible group to receive such substitute
Options (who need not be all option holders of such corporation), the
number of Options to be received by each such person, the Option price
of such Option, and the terms and conditions of such substitute Options;
provided, however, that the terms and conditions of the substitute
Options shall comply with the provisions of Section 424 of the Code,
such that the excess of the aggregate fair market value of the shares
subject to such substitute Option immediately after the substitution or
assumption over the aggregate option price of such shares is not more
than the excess of aggregate fair market value of all shares subject to
the substitute Option immediately before such substitution or assumption
over the aggregate option price of such shares, and the substitute
Option or the assumption of the old option does not give the holder
thereof additional benefits which he or she did not have under such old
option.
b. Notwithstanding anything to the contrary herein, no Option
shall be granted, nor any action taken, permitted or omitted, which could
cause the Plan, or any Options granted hereunder as to which Rule 16b-3
under the Securities Exchange Act of 1934 may apply, not to comply with
such Rule.
8. TERMINATION OF EMPLOYMENT.
a. In the event that the Optionee's employment with the Company
(or Affiliated Company) is terminated for any reason other than death or
disability, any unexercised Accrued Installments of the Option granted
hereunder to such terminated Optionee shall expire and become unexercisable
as of the earlier of:
(i) the applicable Option Expiration Date; or
(ii) a date 30 days after such termination occurs, provided
however, that the Board (or the Committee if empowered
to so act) may, in the exercise of its discretion,
extend said date up to and including a date one year
following such termination.
b. In the event that the Optionee's employment with the Company
is terminated due to the death or disability of the Optionee, any
unexercised Accrued Installments of the Option granted hereunder to such
Optionee shall expire and become unexercisable as of the earlier of:
(i) the applicable Option Expiration Date; or
(ii) the first anniversary of the date of death of such
Optionee (if applicable). Any such Accrued
Installments of a deceased Optionee may be exercised
prior to their expiration by (and only by) the person
or persons to whom the Optionee's Option right
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shall pass by will or by the laws of descent and
distribution, if applicable, subject, however, to all
of the terms and conditions of this Plan and the
applicable Stock Option Agreement governing the
exercise of Options granted hereunder; or
(iii) the first anniversary of the date of the termination
of employment by reason of disability (if applicable).
c. For purposes of this Section 8, an Optionee shall be deemed
employed by the Company (or affiliated Company) during any period of leave
of absence from active employment as authorized by the Company (or
Affiliated Company).
9. RIGHTS AS A SHAREHOLDER. Optionees shall not have any of the
rights and privileges of shareholders of the Company in respect of any of the
shares subject to any option granted pursuant to the Plan unless and until a
certificate representing such shares shall have been issued and delivered.
10. PAYMENT OF EXERCISE PRICE WITH COMPANY STOCK. The Board (or the
Committee, if so authorized) may provide that, upon exercise of the Option, the
Optionee may elect to pay for all or some of the shares of Common Stock
underlying the Option with shares of Common Stock of the Company previously
acquired and owned at the time of exercise by the Optionee, subject to all
restrictions and limitations of applicable laws, rules and regulations,
including Section 424(c)(3) of the Code, and provided that the Optionee will
make representations and warranties satisfactory to the Company regarding his or
her title to the shares used to effect the purchase, including without
limitation representations and warranties that the Optionee has good and
marketable title to such shares free and clear of any and all liens,
encumbrances, charges, equities, claims, security interests, options or
restrictions and has full power to deliver such shares without obtaining the
consent or approval of any person or governmental authority other than those
which have already given consent or approved in a form satisfactory to the
Company. The equivalent dollar value of the shares used to effect the purchase
shall be the fair market value of the shares on the date of the purchase as
determined by the Board (or the Committee, if so authorized) in its sole
discretion, exercised in good faith.
11. WITHHOLDING OF TAXES. The grant of Options hereunder and the
issuance of Common Stock pursuant to the exercise of such Options is conditioned
upon the Company's reservation of the right to withhold, in accordance with any
applicable law, from any compensation payable to the Optionee any taxes required
to be withheld by federal, state or local law as a result of the grant or
exercise of any such Option.
12. RESTRICTIONS ON ISSUANCE OF SHARES. The Company, during the term
of this Plan, will use its best efforts to seek to obtain from the appropriate
regulatory agencies any requisite authorization in order to grant Options or
issue and sell such number of shares of its Common Stock as shall be sufficient
to satisfy the requirements of the Plan. The inability of the Company to obtain
from any such regulatory agency having jurisdiction thereof the authorization
deemed by the Company's counsel to be necessary to the lawful grant of Options
or the issuance and sale of any shares of its stock hereunder or the inability
of the Company to confirm to its satisfaction that any grant of Options or
issuance and sale of any shares of such stock will meet applicable legal
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requirements shall relieve the Company of any liability in respect to the
non-issuance or sale of such stock as to which such authorization or
confirmation have not been obtained.
13. NOTICES. Any notice to be given to the Company pursuant to the
provisions of this Plan shall be addressed to the Company in care of its
Secretary at its principal office, and any notice to be given to a person to
whom an Option is granted hereunder shall be addressed to him or her at the
address given beneath his or her signature on his or her Stock Option Agreement,
or at such other address as such person or his or her transferee (upon the
transfer of Optioned Stock) may hereafter designate in writing to the Company.
Any such notice shall be deemed duly given when enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, registered or certified, and
deposited, postage and registry or certification fee prepaid, in a post office
or branch post office regularly maintained by the United States Postal Service.
It shall be the obligation of each Optionee and each transferee holding Optioned
Stock to provide the Secretary of the Company, by letter mailed as provided
hereinabove, with written notice of his or her correct mailing address.
14. REPRESENTATIONS AND WARRANTIES. As a condition to the grant of
any Option hereunder or the exercise of any portion of an Option, the Company
may require the person to be granted or exercising such Option to make any
representation and/or warranty to the Company as may, in the judgment of counsel
to the Company, be required under any applicable law or regulation, including,
but not limited to, a representation and warranty that the Option and/or shares
issuable or issued upon exercise of such Option are being acquired only for
investment, for such person's own account and without any present intention to
sell or distribute such Option or shares, as the case may be, if, in the opinion
of counsel for the Company, such representation is required under Securities Act
of 1933, or any other applicable law, regulation or rule of any governmental
agency.
15. NO ENLARGEMENT OF EMPLOYEE RIGHTS. This Plan is purely voluntary
on the part of the Company, and while the Company hopes to continue it
indefinitely, the continuance of the Plan shall not be deemed to constitute a
contract between the Company and any employee, or to be consideration for or a
condition of the employment of any employee. Nothing contained in the Plan
shall be deemed to give any employee the right to be retained in the employ of
the Company or its Affiliated Companies, or to interfere with the right of the
Company or an Affiliated Company to discharge or retire any employee thereof at
any time. No employee shall have any right to or interest in Options authorized
hereunder prior to the grant of such an Option to such employee, and upon such
grant he or she shall have only such rights and interests as are expressly
provided herein, subject, however, to all applicable provisions of the Company's
Articles of Incorporation, as the same may be amended from time to time.
Except as otherwise provided in Section 8, any change of an Optionee's
duties or position with the Company shall not affect his right to exercise any
Options granted pursuant to the Plan, provided, however, that nothing contained
in the Plan, or in any option granted pursuant to the Plan, shall confer upon
any Employee the right to continued employment or shall interfere in any way
with the right of the Company to terminate the employment of such Employee at
any time, with or without cause, subject to any Employment Agreement that may be
in effect at such time.
16. SUCCESSORS. The provisions of the Plan shall be binding upon,
and inure to the benefit of all successors of any Optionee, including, without
limitation, his/her estate and the executors, administrators or trustees
thereof, his/her heirs and legatees, and any receiver, trustee in bankruptcy or
representative of creditors of such Optionee.
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17. TERMINATION AND AMENDMENT OF THE PLAN. Unless sooner terminated
as hereinafter provided, the Plan shall remain in effect for ten (10) years from
the date hereof. The Board shall have complete power and authority at any time
to terminate the Plan or to make such modification or amendment thereof as it
deems advisable and may from time to time suspend, discontinue or abandon the
Plan, except that no such action by the Board shall adversely affect any right
or obligation with respect to any grant theretofore made.
18. NO RESTRICTIONS ON TRANSFER OF STOCK. Common Stock issued
pursuant to the exercise of an Option granted under this Plan (hereinafter
"Optioned Stock"), or any interest in such Optioned Stock, may be sold,
assigned, gifted, pledged, hypothecated, encumbered or otherwise transferred or
alienated in any manner by the holder(s) thereof, subject, however, to any
representations or warranties requested under Section 14 of this Plan and also
subject to compliance with any applicable federal, state or other local law,
regulation or rule governing the sale or transfer of stock or securities.
19. INVALID PROVISION. In the event that any provision of this Plan
is found to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid or unenforceable provision was not contained herein.
20. APPLICABLE LAW. This Plan shall be governed by and construed and
enforced in accordance with the laws of the State of Iowa.
21. SUCCESSORS AND ASSIGNS. This Plan shall be binding on and inure
to the benefit of the Company and the Optionees to whom an Option is granted
hereunder, and such Optionees' heirs, executors, administrators, legatees,
personal representatives, assignees and transferees.
IN WITNESS WHEREOF, pursuant to the due authorization and adoption of
this Plan by the Board on ___________________________, 1998, the Company has
caused this Plan to be duly executed by its duly authorized officer.
UNITED FIRE & CASUALTY COMPANY, INC.
By: _______________________________________
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