<PAGE>
As filed with the Securities and Exchange Commission on March 12, 1999
Registration No. 333-72521.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Amendment No. 2
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
STANCORP FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Oregon 6719 93-1253576
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Identification No.)
incorporation or Classification Code
organization) Number)
1100 S.W. Sixth Avenue
Portland, Oregon 97204
(503) 321-7000
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
J. Gregory Ness
Vice President and Secretary
StanCorp Financial Group, Inc.
1100 S.W. Sixth Avenue
Portland, Oregon 97204
(503) 321-7000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------
With copies to:
James C. Scoville, Esq. Jeffrey C. Carey, Esq. Andrew S. Rowen, Esq.
Debevoise & Plimpton Vice President and John L. Savva, Esq.
875 Third Avenue Associate Counsel Sullivan & Cromwell
New York, New York 10022 Standard Insurance 1888 Century Park East
(212) 909-6000 Company Los Angeles, California
1100 S.W. Sixth Avenue 90067
Portland, Oregon 97204 (310) 712-6600
(503) 321-7000
---------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
number for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
---------------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses expected to be incurred in
connection with the issuance and distribution of the common stock registered
hereby, all of which expenses, except for the SEC registration fee, the New
York Stock Exchange listing fee and the NASD filing fee, are estimates:
<TABLE>
<CAPTION>
Description Amount
----------- --------
<S> <C>
SEC registration fee............................................. $133,971
New York Stock Exchange listing fee and expenses................. *
NASD filing fee.................................................. *
Blue Sky fees and expenses (including legal fees)................ *
Printing and engraving expenses.................................. *
Legal fees and expenses (other than Blue Sky).................... *
Accounting fees and expenses..................................... *
Transfer Agent and Registrar's fee............................... *
Miscellaneous.................................................... *
--------
TOTAL.......................................................... $ *
========
</TABLE>
- --------
* To be furnished by amendment
Item 14. Indemnification of Directors and Officers.
Article 6 of StanCorp's Articles of Incorporation (the "Articles"), to be
effective upon completion of the offering, permits indemnification of current
or former directors and officers of StanCorp to the fullest extent not
prohibited by the Oregon Business Corporation Act (the "Oregon Act"). The Act
permits or requires indemnification of current or former directors and officers
in certain circumstances. The effects of the Articles and the Act (the
"Indemnification Provisions") are summarized as follows:
(a) The Indemnification Provisions grant a right of indemnification in
respect of any proceeding (other than an action by or in the right of
StanCorp), if the person concerned acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of
StanCorp, was not adjudged liable on the basis of receipt of an improper
personal benefit and, with respect to any criminal action or proceeding,
had no reasonable cause to believe the conduct was unlawful.
(b) The Indemnification Provisions grant a right of indemnification in
respect of any proceeding by or in the right of StanCorp against the
expenses (including attorney fees) actually and reasonably incurred if the
person concerned acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of StanCorp, except
that no right of indemnification will be granted if the person is adjudged
to be liable to StanCorp.
(c) Every person who has been wholly successful, on the merits or
otherwise, in the defense of any proceeding to which the person was a party
because of the person's status as a director or officer of a controversy
described in (a) or (b) above is entitled to indemnification as a matter of
right.
(d) Because the limits of permissible indemnification under Oregon law
are not clearly defined, the Indemnification Provisions may provide
indemnification broader than that described in (a) and (b).
II-1
<PAGE>
(e) StanCorp may advance to a director or officer the expenses incurred
in defending any proceeding in advance of its final disposition if the
director or officer affirms in writing in good faith that he or she has met
the standard of conduct to be entitled to indemnification as described in
(a) or (b) above and undertakes to repay any amount advanced if it is
determined that the person did not meet the required standard of conduct.
StanCorp has entered into indemnification agreements with each of StanCorp's
directors, a form of which is attached as an exhibit hereto and is incorporated
herein by reference.
StanCorp may obtain insurance for the protection of its directors and
officers against any liability asserted against them in their official
capacities. The rights of indemnification described above are not exclusive of
any other rights of indemnification to which the persons indemnified may be
entitled under any bylaw, agreement, vote of shareholders or directors or
otherwise.
Item 15. Recent Sales of Unregistered Securities.
None.
II-2
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits. See Exhibit Index following the signature pages to this
registration statement.
(b) Financial Statement Schedules. The following consolidated financial
statement schedules are set forth below: Schedule III--Supplementary Insurance
Information; and Schedule IV--Valuation and Qualifying Accounts. All other
schedules are omitted because the information is not required or because the
information is included in the Consolidated Financial Statements or Notes
thereto.
Schedule III
Supplementary Insurance Information
<TABLE>
<CAPTION>
Amortiza-
tion of
Deferred Future Other Benefits, deferred Other
policy policy policy- Net claims, and policy operating
acquisition benefits holder Premium investment interest acquisition expenses
Segment costs and claims funds(1) revenue income expense(2) costs (3)
------- ----------- ---------- ---------- -------- ---------- ----------- ----------- ---------
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1998:
Group................... $ 15,813 $1,329,112 $ 69,333 $784,515 $143,682 $666,518 $ 6,654 $176,312
Retirement Plans........ -- 68,562 582,619 13,970 54,032 46,605 -- 22,117
Individual.............. 99,067 667,487 803,552 92,455 123,983 163,949 6,914 32,666
-------- ---------- ---------- -------- -------- -------- ------- --------
Total.................. $114,880 $2,065,161 $1,455,504 $890,940 $321,697 $877,072 $13,568 $231,095
======== ========== ========== ======== ======== ======== ======= ========
1997:
Group................... $ 14,342 $1,180,761 $ 70,552 $717,136 $131,415 $625,530 $ 5,786 $156,162
Retirement Plans........ -- 66,185 571,562 11,178 54,266 46,959 -- 17,957
Individual.............. 92,581 631,314 800,365 96,862 119,825 159,783 6,445 31,773
-------- ---------- ---------- -------- -------- -------- ------- --------
Total.................. $106,923 $1,878,260 $1,442,479 $825,176 $305,506 $832,272 $12,231 $205,892
======== ========== ========== ======== ======== ======== ======= ========
1996:
Group................... $ 12,312 $1,025,331 $ 63,001 $629,374 $113,886 $561,860 $ 4,672 $137,807
Retirement Plans........ -- 65,192 583,741 10,317 58,655 50,926 -- 14,924
Individual.............. 92,298 602,878 785,683 105,450 117,430 169,529 7,745 29,535
-------- ---------- ---------- -------- -------- -------- ------- --------
Total.................. $104,610 $1,693,401 $1,432,425 $745,141 $289,971 $782,315 $12,417 $182,266
======== ========== ========== ======== ======== ======== ======= ========
</TABLE>
- --------
(1) Includes pension and annuity funds, dividend accumulation funds, universal
life cash values and unearned and advance premiums.
(2) Includes policyholder benefits, interest paid on policyholder funds and
policyholder dividends.
(3) Includes operating expenses, state and local taxes, commissions and
deferred policy acquisition costs.
II-3
<PAGE>
Schedule IV
Valuation and Qualifying Accounts
<TABLE>
<CAPTION>
Charged to
Balance at Charged to other Balance
beginning of costs and accounts-- Deductions at end
Description period expenses describe --describe of period
----------- ------------ ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
1998:
Mortgage Loans....... $4,027.0 $269.7 $-- $-- $4,296.7
1997:
Mortgage Loans....... 3,812.0 215.0 -- -- 4,027.0
1996:
Mortgage Loans....... 3,718.0 94.0 -- -- 3,812.0
</TABLE>
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(a) To provide to the underwriters at the closing specified in the
underwriting agreements, certificates in such denominations and registered
in such names as required by the underwriters to permit prompt delivery to
each purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to
directors, officers and controlling persons of the registrant pursuant to
the foregoing provisions described under Item 14 above, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(d) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 2 to the registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Portland,
Oregon on March 12, 1999.
STANCORP FINANCIAL GROUP, INC.
/s/ Ronald E. Timpe
By: _________________________________
Name:Ronald E. Timpe
Title:Chairman of the Board,
President,
Chief Executive Officer
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the registration statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, March 12, 1999
______________________________________ President, Chief
Ronald E. Timpe Executive Officer and
Director (Principal
Executive Officer)
/s/ Eric E. Parsons Senior Vice President, March 12, 1999
______________________________________ Chief Financial Officer
Eric E. Parsons (Principal Financial
Officer) and Director
* Vice President, Corporate March 12, 1999
______________________________________ Secretary and Directors
J. Gregory Ness
* Assistant Vice President March 12, 1999
______________________________________ and Controller (Principal
Patricia J. Brown Accounting Officer)
/s/ Eric E. Parsons
*By: ____________________________
Eric E. Parsons
Attorney-In-Fact
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
1.1 Form of Underwriting Agreement*
2.1 Plan of Reorganization
3.1 Articles of Incorporation of StanCorp
3.2 Bylaws of StanCorp
4.1 Form of Certificate for the Common Stock, no par value
5.1 Opinion of Stoel Rives LLP*
8.1 Opinion of Debevoise & Plimpton*
10.1 Form of Amended and Restated Retention Agreement
10.2 Form of Change of Control Agreement
10.3 1999 Omnibus Stock Incentive Plan
10.4 1999 Employee Share Purchase Plan
10.5 Long Term Incentive Compensation Plan*
10.6 Defined Benefit Plan for Home Office Employees
10.7 Amended and Restated Supplemental Retirement Plan for Executive
Officers
10.8 Amended and Restated Deferred Contribution Plan for Executive
Officers
10.9 Form of Shareholder Rights Agreement
21.1 Subsidiaries of the Registrant
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Milliman & Robertson, Inc.*
23.3 Consent of Stoel Rives LLP (included in Exhibit 5.1)*
23.4 Consent of Debevoise & Plimpton (included in Exhibit 8.1)*
23.5 Consent of Virginia L. Anderson
23.6 Consent of Frederick W. Buckman
23.7 Consent of John E. Chapoton
23.8 Consent of Barry J. Galt
23.9 Consent of Richard Geary
23.10 Consent of Peter T. Johnson
23.11 Consent of Peter O. Kohler
23.12 Consent of Jerome J. Meyer
23.13 Consent of Ralph R. Peterson
23.14 Consent of E. Kay Stepp
23.15 Consent of William Swindells
23.16 Consent of Michael G. Thorne
23.17 Consent of Franklin E. Ulf
23.18 Consent of Benjamin R. Whiteley
24.1 Powers of Attorney+
</TABLE>
- --------
*To be filed by amendment.
+Previously filed.
<PAGE>
EXHIBIT 2.1
================================================================================
PLAN OF REORGANIZATION
OF
STANDARD INSURANCE COMPANY
Under Oregon Revised Statutes
Sections 732.600 through 732.630
Dated September 28, 1998,
as amended December 14, 1998
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I: DEFINITIONS...................................................... 2
ARTICLE II: APPROVAL BY THE DIRECTOR........................................ 5
2.1 Application..................................................... 5
2.2 Director's Public Hearing; Director's Order..................... 5
2.3 Date of Public Hearing.......................................... 6
2.4 Notice of Public Hearing........................................ 6
ARTICLE III: APPROVAL BY MEMBERS............................................ 6
3.1 Member Vote..................................................... 6
3.2 Notice of Members' Meeting...................................... 6
ARTICLE IV: THE REORGANIZATION.............................................. 7
4.1 Effect of Reorganization on Holding Company..................... 7
4.2 Effectiveness of Plan........................................... 7
ARTICLE V: POLICIES......................................................... 10
5.1 Policies........................................................ 10
5.2 Determination of Ownership...................................... 10
5.3 In Force........................................................ 12
5.4 Certain Group Policies and Contracts............................ 13
ARTICLE VI: ALLOCATION OF MEMBER CONSIDERATION.............................. 13
6.1 Allocation of Allocable Shares.................................. 13
6.2 Allocation of Aggregate Variable Shares......................... 14
6.3 Payment of Consideration........................................ 15
6.4 Commission-Free Program......................................... 17
6.5 ERISA Plans..................................................... 17
ARTICLE VII: CLOSED BLOCK................................................... 18
7.1 Establishment of the Closed Block............................... 18
7.2 Operation of the Closed Block................................... 18
7.3 Guaranteed Benefits............................................. 21
ARTICLE VIII: ADDITIONAL PROVISIONS......................................... 21
8.1 Continuation of Corporate Existence; Company Name............... 21
8.2 Valuation....................................................... 21
8.3 Initial Public Offering......................................... 21
8.4 Officers and Boards of Directors................................ 22
i
<PAGE>
8.5 Stock Plans; Acquistion of Securities by Certain Officers,
Directors and Employees........................................ 22
8.6 Notices........................................................ 23
8.7 Adjustment of Share Numbers.................................... 23
8.8 Authority to Remedy Errors..................................... 24
8.9 Corrections.................................................... 24
8.10 Amendment and Abandonment of the Plan.......................... 24
8.11 Costs and Expenses............................................. 24
8.12 Governing Law.................................................. 24
ii
<PAGE>
SCHEDULE 1 Closed Block Business
SCHEDULE 2 Directors and Officers of the Holding Company
EXHIBIT A Form of Articles of Incorporation of the Holding Company
EXHIBIT B Form of Bylaws of the Holding Company
EXHIBIT C Form of Amended and Restated Articles of Incorporation of the
Company
EXHIBIT D Form of Amended and Restated Bylaws of the Company
EXHIBIT E Actuarial Contribution Memorandum
EXHIBIT F Closed Block Memorandum
iii
<PAGE>
PLAN OF REORGANIZATION
OF
STANDARD INSURANCE COMPANY
Under Oregon Revised Statutes
Sections 732.600 through 732.630
This Plan of Reorganization, which has been adopted by the Board of
Directors (the "Board") of Standard Insurance Company, a mutual life insurance
company organized under the laws of the State of Oregon (the "Company"), at a
meeting duly called and held on September 28, 1998 (the "Adoption Date"), and
amended by the Board at a meeting duly called and held on December 14, 1998,
provides for the reorganization of the Company from a mutual life insurance
company into a stock life insurance company in accordance with the requirements
of Sections 732.600 through 732.630 of the Oregon Revised Statutes ("ORS").
The principal purpose of the reorganization, known as a "demutualization,"
is to enhance the Company's strategic and financial flexibility by, among other
things, creating a corporate structure that will provide the Company with
opportunities for obtaining additional capital from sources that are
unavailable to it in its current form and that will support the Company's
future growth. The demutualization will also provide Eligible Members with an
opportunity to convert their illiquid interests as members of the Company into
publicly traded shares of common stock, cash or Policy Credits. The Company's
management believes that its growth and financial flexibility might be
constrained in the future due to the limitations of its mutual company form.
The Company is, therefore, pursuing the demutualization to provide the
financial flexibility to grow while enhancing the Company's financial strength
for the benefit of its policyholders.
Demutualization will not, in any way, change premiums or reduce policy
benefits, values, guarantees or other policy obligations of the Company to its
policyholders. Also, policy dividends will continue to be paid as declared
(although, as always, dividends may vary from year to year).
The Board of Directors believes that the Plan will provide the Company
with financial flexibility to support future growth and strength and, through
the Closed Block and other provisions, ensures that policyholder interests
collectively are properly preserved and protected. The Board, therefore, has
unanimously determined that the Plan is fair and equitable to policyholders.
At present, the Company can increase its capital primarily through
retained surplus contributed by its business or through the issuance of surplus
notes. However, management believes that in the long term these sources will
not be sufficient to support future growth and strength. Upon demutualization,
the Company will have a corporate structure that will enable it to access the
capital markets through the Holding Company, through an initial public offering
of Holding Company Stock to occur simultaneously with the effectiveness of the
demutualization and through other offerings of equity or debt securities. This
access to the capital markets will provide the Company with increased
flexibility to strengthen its capital position. In addition, the new corporate
structure may facilitate potential acquisitions by, among other things,
permitting the issuance of securities to consummate acquisitions. Acquisitions
by the Holding Company would also benefit from the more advantageous accounting
rules applicable to acquisitions by non-insurance companies, and such
acquisitions would not be subject to limitations on investments by insurance
companies, as acquisitions by the Company would now be.
The Plan provides that, on the Effective Date, the Company will distribute
its real estate management and mortgage subsidiaries and certain other non-
insurance subsidiaries (the "Non-Insurance Subsidiaries") to the Holding
Company. As a result, such companies will, immediately after the Effective
Date, be direct or indirect subsidiaries of the Holding Company, rather than
subsidiaries
1
<PAGE>
of the Company. This distribution will separate Standard's non-insurance
businesses from its insurance businesses and will permit the Non-Insurance
Subsidiaries to pursue growth strategies free of the restrictions that they are
currently subject to as subsidiaries of an insurance company. In connection
with the distribution, the Holding Company will contribute to the Company, out
of proceeds from the Initial Public Offering, an amount equal to the statutory
book value of the Non-Insurance Subsidiaries, as shown on the audited financial
statements of the Company filed with the Department for the fiscal year
immediately preceding this distribution.
The Plan provides that Eligible Members are Owners of one or more Eligible
Policies on December 17, 1997. Only Eligible Members will be entitled to vote
on, and to receive consideration under, the Plan. Persons who become Owners of
policies after December 17, 1997 will not be Eligible Members and thus,
pursuant to the ORS, will not be entitled to vote on or receive consideration
under the Plan. On the Effective Date, the Membership Interests of all members,
including Persons who are not Eligible Members, will be extinguished.
ARTICLE I: DEFINITIONS
As used in this Plan of Reorganization the following terms have the
following meanings:
"Actuarial Contribution" has the meaning specified in Section 6.2(ii).
"Actuarial Contribution Memorandum" has the meaning specified in
Section 6.1(b).
"Adoption Date" has the meaning specified in the first paragraph
hereof.
"Aggregate Fixed Shares" has the meaning specified in Section 6.1(b).
"Aggregate Variable Shares" has the meaning specified in Section
6.1(b).
"Allocable Shares" means 30,000,000 shares of Holding Company Stock.
"Application" has the meaning specified in Section 2.1.
"Board" has the meaning specified in the first paragraph hereof.
"Cash Election Amount" has the meaning specified in Section
6.3(a)(vi).
"Closed Block" has the meaning specified in Section 7.1(a).
"Closed Block Assets" has the meaning specified in Section 7.1(b).
"Closed Block Business" means Policies within the classes of Policies
specified in Schedule 1 (which Policy classes include, except as specified
on Schedule 1, all of the classes of individual Policies for which the
Company had an experience-based dividend scale in effect for 1998 and
certain other classes of individual Policies), but only to the extent such
Policies are In Force on the Effective Date.
"Closed Block Financial Statements" has the meaning specified in
Section 7.2(e)(i).
"Closed Block Funding Date" has the meaning specified in Section
7.1(b).
"Closed Block Memorandum" has the meaning specified in Section 7.1(a).
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the shares of common stock of the Company.
"Company" means, at all times prior to the Effective Date, Standard
Insurance Company, a mutual life insurance company organized under the laws
of Oregon, and at all times on and after the Effective Date, Standard
Insurance Company, a stock life insurance company organized under the laws
of Oregon.
2
<PAGE>
"Department" means the Department of Consumer and Business Services of
the State of Oregon.
"Directed Share Members" means Eligible Members and such other members
of the Company that own, on the Directed Share Offering Record Date, one or
more Policies that are In Force (without regard to Sections 5.3(a)(i)(B),
5.3(a)(i)(C) and 5.3(a)(ii)(B)) on such date.
"Directed Share Offering" has the meaning specified in Section 8.3(b).
"Directed Share Offering Record Date" has the meaning specified in
Section 8.3(b).
"Director" means the Director of the Department of Consumer and
Business Services of the State of Oregon, or such governmental officer,
body or authority as may succeed to or act for such Director as the primary
regulator of the Company's insurance business under applicable law.
"Effective Date" has the meaning specified in Section 4.2(a).
"Eligible Member" means the Owner on the Record Date of one or more
Eligible Policies.
"Eligible Policy" means a Policy that is In Force on the Record Date.
"Equity Share" has the meaning specified in Section 6.2(i).
"Holding Company" means StanCorp Financial Group, Inc., a corporation
organized under the laws of the State of Oregon.
"Holding Company Stock" means the shares of common stock of the
Holding Company.
"In Force" has the meaning specified in Section 5.3.
"Initial Public Offering" means the initial public offering by the
Holding Company of shares of Holding Company Stock as provided in Section
8.3.
"IPO Price" means the price per share at which Holding Company Stock
is initially offered to the public in the Initial Public Offering.
"member" means the Owner of one or more Policies.
"Members' Meeting" has the meaning specified in Section 3.1.
"Membership Interests" means all the rights or interests of members of
the Company arising under the articles of incorporation or bylaws of the
Company or otherwise by law in respect of each Policy, including, but not
limited to, any right to vote and any rights which may exist with regard to
the surplus of the Company not apportioned or declared by the Board for
policyholder dividends, including any such rights in liquidation or
reorganization of the Company, but shall not include any other right or
interest expressly conferred by a Policy.
"Non-Insurance Subsidiaries" has the meaning specified in the fifth
paragraph hereof.
"ORS" has the meaning specified in the first paragraph hereof.
"Owner" means, with respect to any Policy, the Person or Persons
specified or determined pursuant to Section 5.2 or 5.4.
"Person" means an individual, corporation, limited liability company,
joint venture, partnership, association, trust, trustee, unincorporated
entity or any other form of entity, organization or government or any
department or agency thereof. A Person who is the Owner of Policies in more
than one legal capacity (e.g., a trustee under separate trusts) shall be
deemed to be a separate Person in each such capacity.
"Plan of Reorganization" or the "Plan" means this Plan of
Reorganization (including all Schedules and Exhibits hereto), as it may be
corrected or amended from time to time in accordance with Sections 8.9 or
8.10.
3
<PAGE>
"Policy" has the meaning specified in Section 5.1.
"Policy Credit" means an increase in accumulation account value (to
which no surrender or similar charges will be applied) or an increase in a
dividend accumulation on a Policy.
"Public Cash Election Amount" has the meaning specified in Section
6.3(a)(v).
"Public Eligible Members" shall mean any government authority, agency,
department, board, commission or instrumentality of the United States, any
State or any political subdivision thereof that is an Eligible Member.
"Public Hearing" has the meaning specified in Section 2.2.
"Record Date" shall mean December 17, 1997.
"State" means the District of Columbia and any state, territory or
insular possession of the United States of America.
ARTICLE II: APPROVAL BY THE DIRECTOR
2.1 Application. The Company shall file with the Director an application
(the "Application") to reorganize as a stock life insurance company owned by a
stock holding company. The Application shall include the following:
(a) this Plan of Reorganization;
(b) the form of notice of the Members' Meeting;
(c) the form of proxies to be solicited from Eligible Members;
(d) the information required by ORS Section 732.523; and
(e) any other information or documentation required by the Director.
[(S)732.606(2)]
2.2 Director's Public Hearing; Director's Order. This Plan of
Reorganization is subject to the approval of the Director. The Director may
hold a hearing for the purposes of receiving comment on whether the Plan should
be approved and on any other matter relating to the reorganization (the "Public
Hearing"). All Eligible Members shall have the right to appear at the Public
Hearing. The Director or a hearing officer designated by the Director shall
conduct the Public Hearing. The Director shall establish the manner in which
the Public Hearing is held. The Director shall approve, conditionally approve
or disapprove this Plan of Reorganization not later than the 60th day after the
completed filing of the Plan and all other information requested by the
Director with the Director, or not later than the 30th day after the completion
of the Public Hearing, whichever date is later. The effective date of such
action shall be the date the Director issues the order approving, conditionally
approving or disapproving the Plan. [(S)(S)732.606(2), (3), 732.626(5)]
2.3 Date of Public Hearing. The Director has informed the Company that he
will conduct a Public Hearing, to be held within 60 days after the Director has
received a completed filing of the Plan and all information requested by the
Director. [(S) 732.626(5)]
2.4 Notice of Public Hearing. Notice by the Company of such Public
Hearing, in a form satisfactory to the Director, shall be mailed to each
Eligible Member by first-class mail, postage prepaid, and published twice in
The Oregonian, once in The Seattle Times and once in the Los Angeles Times.
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ARTICLE III: APPROVAL BY MEMBERS
3.1 Member Vote. (a) Following the Director's approval or conditional
approval of this Plan of Reorganization, the Company shall hold a special
meeting of members (the "Members' Meeting"). At the Members' Meeting, the
Eligible Members shall be entitled to vote on the proposal to approve this Plan
of Reorganization in person or by proxy. Only proxies specifically relating to
the Plan may be used to vote by proxy at the Members' Meeting. [(S)732.606(5)]
(b) This Plan of Reorganization shall be approved by a majority of the
Eligible Members voting thereon in person or by proxy at the Members' Meeting.
[(S)732.606(5)(b)(C)]
(c) Based upon the Company's records, each Eligible Member shall be
entitled to one vote pursuant to ORS Section 732.470 and the Articles of
Incorporation of the Company, regardless of the number of policies or amount of
insurance and benefits held by such Eligible Member. The Eligible Member under
a group policy or group annuity (as determined in accordance with Article V)
shall have only one vote regardless of the number of individuals insured or
benefited thereunder. Two or more persons who qualify as Eligible Members under
a single policy shall be deemed one Eligible Member for purposes of voting and
collectively shall be entitled to one vote. [(S) 732.470]
(d) Pursuant to ORS Section 732.630(1), dissenters' rights provided in ORS
Sections 60.551 to 60.594 shall not be available to any member, whether or not
an Eligible Member, of the Company. [(S)732.630(1)]
3.2 Notice of Members' Meeting. (a) The Company shall mail notice of the
Members' Meeting to all Eligible Members. The notice shall set forth the
reasons for the vote and the time and place of the Members' Meeting. Such
notice shall be sent by first class mail to the last known address of each
Eligible Member as it appears on the records of the Company not later than 45
days after approval or conditional approval of this Plan of Reorganization by
the Director and at least 30 days prior to the Members' Meeting. The notice
shall be in a form satisfactory to the Director. [(S)732.606(5)(a)]
(b) Such notice of the Members' Meeting shall be accompanied by
information relevant to the Members' Meeting, including a copy or a summary of
this Plan of Reorganization and any other explanatory information, all of which
shall be in form satisfactory to the Director. With the approval of the
Director, the Company may also mail supplemental information to Eligible
Members before the date of the Members' Meeting. [(S)732.606(5)(a)]
ARTICLE IV: THE REORGANIZATION
4.1 Effect of Reorganization on Holding Company. (a) Prior to the
Effective Date, the Holding Company (i) shall be duly organized as an Oregon
corporation and (ii) shall not issue any shares of its stock other than shares
of common stock issued to the Company. Upon the Effective Date, the articles of
incorporation and bylaws of the Holding Company shall be substantially in the
form set forth as Exhibits A and B, respectively, and the amended and restated
articles of incorporation and bylaws of the Company shall be substantially in
the form set forth as Exhibits C and D, respectively. The Company shall become
a wholly-owned subsidiary of the Holding Company as a result of the
transactions contemplated by this Plan of Reorganization upon the Effective
Date.
4.2 Effectiveness of Plan. (a) Conditions to the Plan Becoming Effective.
The following conditions must be met before this Plan becomes effective:
(i) the Company shall have received, on or prior to the Effective Date
and the completion of the Initial Public Offering, the opinions of special
tax counsel to the Company, addressed to the Board and in form and
substance satisfactory to the Board, substantially to the effect that:
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(1) Policies issued by the Company prior to the Effective Date will
not be deemed newly issued, issued in exchange for existing policies or
newly purchased for any material federal income tax purpose as a result
of the consummation of this Plan of Reorganization;
(2) With respect to any Policy described in Section 6.3(a)(i) or
(ii), the crediting of consideration in the form of Policy Credits to
such Policy will not:
(A) constitute a distribution to the employee or beneficiary of
the arrangement under section 72 or 403(b)(11) of the Code, or a
designated distribution that is subject to withholding under section
3405(e)(1)(A) of the Code;
(B) adversely affect the favorable tax status of any such
Policy which qualifies as a "tax sheltered annuity" or an
"individual retirement annuity" within the meaning of section 403(b)
or 408(b) of the Code;
(C) result in the imposition of a penalty for a premature
distribution under section 72(t) of the Code or a penalty for excess
contributions to certain qualified retirement plans under section
4973 or 4979 of the Code; or
(D) otherwise adversely affect the tax-favored status accorded
such Policies under the Code or result in penalties to the holders
of such Policies under the Code;
(3) Eligible Members receiving solely Holding Company Stock
pursuant to Section 6.3 will not recognize gain or loss for federal
income tax purposes as a result of the consummation of this Plan of
Reorganization; and
(4) the summary of the principal federal income tax consequences to
Eligible Members resulting from their receipt of consideration pursuant
to Section 6.3, set forth in the information provided to Eligible
Members pursuant to Section 3.2, was correct and complete in all
material respects as of the date thereof and remains correct and
complete as of the Effective Date, except for any changes in law,
regulations or official interpretations occurring after the date thereof
and before the Effective Date, the effect of which the Board, in its
discretion, has determined (taking into account any remedial action the
Board may authorize or direct) to be not materially adverse to the
interests of the Eligible Members; and
(ii) simultaneously with the effectiveness of the Plan, the Initial
Public Offering shall have occurred, and the Holding Company shall have
received proceeds therefrom (net of underwriting commissions and expenses
relating to the Initial Public Offering) in an amount not less than the
amount required for the Company to make the cash payments and fund the
crediting of Policy Credits to Eligible Members in accordance with Section
6.3 and to make the contribution to the Company pursuant to Section 4.2(f).
The effective date of this Plan of Reorganization (the "Effective Date") shall
be the date on which the closing of the Initial Public Offering occurs, which
shall be a date occurring after approval of this Plan of Reorganization by the
Director and the Eligible Members; provided that in no event shall the
Effective Date be more than 12 months after the date on which the Director
approved or conditionally approved this Plan of Reorganization, unless such
period is extended by the Director for good cause. This Plan of Reorganization
shall be deemed to have become effective at 12:01 a.m., Pacific Standard Time
or Pacific Daylight Time, as the case may be, on the Effective Date.
[(S)(S)732.600(4), 732.626(2)]
(b) Actions upon the Plan Becoming Effective. Upon this Plan of
Reorganization becoming effective:
(i) the Company shall become a stock life insurance company by
operation of the ORS;
(ii) all Membership Interests shall be extinguished;
(iii) Eligible Members shall be entitled to receive in exchange for
their Membership Interests shares of Holding Company Stock, cash or Policy
Credits in accordance with Section 6.3 [(S)(S)732.610(12), 732.612];
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(iv) the Company shall have filed the amended and restated articles of
incorporation of the Company substantially in the form of Exhibit C with
the Director, and such articles of incorporation shall become effective
[(S)732.614(2)];
(v) the certificate of authority of the Company shall, if necessary,
be amended by the Director [(S)732.614(2)];
(vi) the Company shall issue to the Holding Company shares of Common
Stock;
(vii) the Company shall surrender to the Holding Company, and the
Holding Company shall cancel, for no consideration, all of the Holding
Company Stock previously issued by the Holding Company to the Company and
held by the Company immediately prior to the Effective Date;
(viii) the Holding Company shall sell shares of Holding Company Stock
in the Initial Public Offering for cash; and
(ix) the Holding Company shall contribute, as capital to the Company,
cash proceeds of the Initial Public Offering in an amount at least equal to
the amount required for the Company to pay cash and fund the crediting of
Policy Credits to Eligible Members pursuant to Section 6.3.
All Policies In Force on the Effective Date will remain In Force under the
terms of such Policies. [(S)732.610(12)] As a result of Sections 4.2(b)(i)-(ix)
hereof, on the Effective Date, the Holding Company shall acquire all of the
outstanding shares of Common Stock of the Company and the Company shall thereby
become a wholly-owned subsidiary of the Holding Company. [(S)732.614]
(c) As soon as reasonably practicable after the Effective Date, the
Holding Company shall (i) issue to the Eligible Members entitled to receive
Holding Company Stock pursuant to Section 6.3(a), a number of shares of Holding
Company Stock determined in accordance with Article VI registered in the
respective names of such Eligible Members, and (ii) pay or cause the Company to
pay or credit the other consideration to be paid or credited to Eligible
Members in accordance with Article VI.
(d) The Holding Company shall arrange for the listing or quotation of the
Holding Company Stock on a national securities exchange or on the National
Association of Securities Dealers Automated Quotations National Market System
(the "NASDAQ NMS") and shall use its best efforts to keep the Holding Company
Stock listed or quoted on a national securities exchange or on NASDAQ NMS for
so long as the Holding Company is a publicly-traded company. Such listing or
quotation and such efforts by the Holding Company to keep such listing or
quotation shall be in satisfaction of any duty the Company or the Holding
Company may have to encourage and assist in the establishment of a public
market for shares of Holding Company Stock. Except as provided in Section 6.4,
neither the Company nor the Holding Company shall have any obligation to
provide a procedure for the sale of shares of Holding Company Stock.
(e) Any proceeds of the Initial Public Offering in excess of the amount
required to make the contribution of cash to the Company described in Sections
4.2(b)(ix) and 4.2(f) may be retained by the Holding Company and used for such
purposes, including capital contributions to subsidiaries of the Holding
Company, as the Board of Directors of the Holding Company may determine.
(f) On the Effective Date, and following the completion of the
transactions described in Section 4.2(b), (i) the Company shall distribute to
the Holding Company all of the shares of capital stock and membership interests
it owns in Standard Mortgage Investors, LLC, Standard Real Estate Investors,
LLC and Standard Management, Inc., currently subsidiaries of the Company, and
(ii) the Holding Company will contribute to the Company, out of proceeds from
the Initial Public Offering, an amount equal to the statutory book value of
such companies, as shown on the audited financial statements of the Company
filed with the Department for the fiscal year immediately preceding the
transfer.
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ARTICLE V: POLICIES
5.1 Policies. (a) (i) Each individual and group life insurance policy
(including, without limitation, a pure endowment contract), annuity contract or
health insurance policy that has been issued by the Company, including each
supplemental contract, and (ii) each other interest referred to in Section 5.4,
is deemed to be a Policy for purposes of this Plan of Reorganization.
(b) The following policies and contracts shall not be deemed to be
Policies for purposes of this Plan of Reorganization:
(i) any certificate issued to an insured pursuant to a group life or
health insurance policy, except as set forth in Section 5.4(a);
(ii) any certificate issued pursuant to a group annuity contract; and
(iii) any reinsurance assumed on an indemnity basis (but certificates
of assumption constitute Policies if they otherwise fall within the
definition of Policies).
5.2 Determination of Ownership. Unless otherwise stated herein, the Owner
of any Policy as of any date specified in this Plan of Reorganization shall be
determined on the basis of the Company's records as of such date in accordance
with the following provisions:
(a) The Owner of a Policy shall be as shown on the Company's records.
(b) Except as specified in Section 5.4, the Owner of a Policy that is
a group insurance policy or group annuity contract shall be the Person or
Persons specified in the master policy or master contract as the holder
thereof, unless no holder is so specified, in which case the Owner shall be
the Person or Persons to whom or in whose name the master policy or master
contract shall have been issued, as shown on the Company's records.
(c) Notwithstanding subsections (a) and (b) of this Section 5.2, if on
or prior to the specified date in the Plan, a Policy has been assigned to
another Person by an assignment of ownership thereof absolute on its face
and filed with the Company, in accordance with the provisions of such
Policy and the Company's rules with respect to the assignment of such
Policy in effect at the time of such assignment, then the Owner of such
Policy shall be deemed to be the assignee of such Policy as shown on the
records of the Company for purposes of this Plan of Reorganization. Unless
an assignment satisfies the requirements specified for such an assignment
in this subsection (c), the determination of the Owner of a Policy shall be
made without giving effect to such assignment.
(d) Notwithstanding subsections (a), (b) and (c) of this Section 5.2,
with respect to a Policy that funds an employee benefit plan and that has
been assigned by an assignment that is absolute on its face, after the
Record Date and before the Effective Date as provided above, to a trust for
such plan that is qualified under section 401(a), 403(a) or 501(c)(9) of
the Code, such trust shall be deemed to have been the Owner on the Record
Date for purposes of Sections 6.1(b) and 6.2 and the definition of Eligible
Member set forth in Article I hereof.
(e) If a Person jointly owns a Policy with one or more other Persons,
they will constitute a single Owner with respect to the Policy.
(f) Except as otherwise set forth in this Article V, the identity of
the Owner of a Policy shall be determined without giving effect to any
interest of any other Person in such Policy.
(g) In any situation not expressly covered by the foregoing provisions
of this Section 5.2, the policyholder, as reflected on the records of, and
as determined in good faith by, the Company, shall conclusively be presumed
to be the Owner of such Policy for purposes of this Section 5.2, and the
Company shall not be required to examine or consider any other facts or
circumstances.
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(h) The mailing address of an Owner as of any date for purposes of
this Plan of Reorganization shall be the Owner's last known address as
shown on the records of the Company as of such date.
(i) Any dispute as to the identity of the Owner of a Policy or the
right to vote or receive consideration shall be determined by the Company
in good faith. [(S)732.600(7)(a)]
5.3 In Force. (a) A Policy shall be deemed to be in force ("In Force") as
of any date specified in this Plan of Reorganization if the Company's records
show the Policy to be In Force and the Policy has not matured by death or
otherwise or been surrendered or otherwise terminated, as follows:
(i) a Policy is In Force as of any date specified in this Plan of
Reorganization, if the Company's records show any of the following:
(A) the Policy has been issued and is in force on the Company's
records on the specified date in the Plan,
(B) the Company's administrative office has received by the
specified date in the Plan, with respect to the Policy, an application
that is complete on its face, together with payment of the full initial
premium (unless submission of such premium is not required by the
Company's underwriting rules), and the Policy is issued and the status
of the Policy has been changed from pending to in force on the
Company's records either (1) on or before June 30, 1998, with respect
to the Record Date, or (2) on or before the last day of the third month
following the date specified in the Plan, with respect to all other
dates specified in the Plan, or
(C) with respect to the determination of Policies that are In
Force as of the Record Date,
(1) an agent of the Company has received by the Record Date,
with respect to the Policy, an application that is complete on its
face, together with payment of the full initial premium (unless
submission of such premium is not required by the Company's
underwriting rules),
(2) the application has been received by the Company's
administrative office by December 22, 1997, and
(3) the Policy is issued and the status of the Policy has been
changed from pending to in force on the Company's records on or
before June 30, 1998;
(ii) A Policy shall not be deemed to have been surrendered or
otherwise terminated under either of the following circumstances:
(A) a Policy that has lapsed for nonpayment of premiums following
the expiration of any applicable grace period (or other similar period
however designated in such Policy) shall nevertheless be deemed to have
been continuously In Force during such grace or other period, and
(B) a Policy that has been reinstated after lapse for nonpayment
of premium either (1) on or before June 30, 1998, with respect to the
Record Date, or (2) on or before the last day of the third month
following the date specified in the Plan, with respect to all other
dates specified in the Plan, shall be deemed to have been continuously
In Force during the period ending on or prior to the date of
reinstatement.
(b) A Policy shall not be deemed to be In Force merely because, prior to
the date on which such Policy was issued, insurance coverage may have been
provided by a conditional receipt.
(c) A Policy shall not be deemed to have matured by death as of any date
unless notice of such death has been received by the Company on or prior to
such date, as shown on the Company's records. The date of the surrender or
lapse of a Policy shall be as shown on the Company's records.
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(d) A Policy shall not be deemed to be In Force as of any date if the
Policy is returned to the Company and all premiums are refunded within 30 days
after such date.
(e) Any dispute as to whether a Policy is In Force shall be determined by
the Company in good faith.
5.4 Certain Group Policies and Contracts. (a) Subject to Section 5.3(a),
and except as provided in Section 5.4(b), each Person who signs a participation
agreement to participate in any trust established by the Company for the
purpose of securing group life or group health insurance coverage shall be
deemed to be an Owner of a Policy that shall be deemed to be In Force as of any
date, if such Person's participation agreement is in effect as of such date as
shown in the Company's records. Neither the trustee of any such trust
established by the Company nor the individual insured certificateholder shall
be an Eligible Member or an Owner.
(b) Subject to Section 5.3(a), the trustee of the Standard LTD Conversion
Insurance Trust (the "LTD Conversion Trust"), as holder of the group LTD
Conversion Insurance Policy or Policies issued to the LTD Conversion Trust,
shall be deemed to be the Owner of such Policy or Policies. Each Person who is
a participant in the LTD Conversion Trust shall not be deemed to be an Eligible
Member or an Owner.
ARTICLE VI: ALLOCATION OF MEMBER CONSIDERATION
6.1 Allocation of Allocable Shares. (a) The consideration to be given to
Eligible Members in exchange for their Membership Interests shall be shares of
Holding Company Stock, cash or Policy Credits as provided in this Article VI.
Solely for purposes of calculating the amount of such consideration, each
Eligible Member will be allocated (but not necessarily issued) shares of
Holding Company Stock in accordance with this Article VI.
(b) Each Eligible Member shall be paid consideration based on the
allocation to such Eligible Member of a number of shares of Holding Company
Stock equal to the sum of:
(i) a fixed component of consideration equal to 52 shares of Holding
Company Stock (subject to proportional adjustment as provided in Section
8.7) for such Eligible Member; and
(ii) a variable component of consideration equal to the portion, if
any, of the Aggregate Variable Shares allocated with respect to each
Eligible Policy of which such Eligible Member is the Owner on the Record
Date.
The Allocable Shares shall be allocated first to provide for the number of
shares required for the aggregate fixed component of consideration allocable in
respect of all Eligible Members (the "Aggregate Fixed Shares"), and the
remainder of the Allocable Shares shall constitute the aggregate variable
component of consideration (the "Aggregate Variable Shares"). The Aggregate
Variable Shares shall be allocated in respect of the Eligible Policies in
accordance with the principles set forth in Section 6.2 and the calculation of
actuarial contribution described in the Actuarial Contribution Memorandum (the
"Actuarial Contribution Memorandum") attached as Exhibit E.
6.2 Allocation of Aggregate Variable Shares. The Aggregate Variable Shares
shall be allocated among Eligible Members with respect to Eligible Policies of
which they are Owners on the Record Date as follows:
(i) The Company shall make reasonable determinations of the equity
share for each Eligible Policy, which shall be equal to the ratio of
Actuarial Contribution (defined below) to the sum of all Actuarial
Contributions of all Eligible Policies (the "Equity Share"). If the
Actuarial Contribution of an Eligible Policy is negative or zero, the
Equity Share for such Eligible Policy shall be zero.
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(ii) The dollar amount of actuarial contribution ("Actuarial
Contribution") for each Eligible Policy, which shall be zero or a positive
number, shall be calculated according to the principles and methodologies
set forth in detail in the Actuarial Contribution Memorandum.
(iii) The number of shares of Holding Company Stock allocated with
respect to each Eligible Policy shall be calculated by multiplying an
Equity Share for such Eligible Policy by the number of shares of Holding
Company Stock constituting the Aggregate Variable Shares.
(iv) The number of shares of Holding Company Stock constituting the
variable component of consideration (referred to in Section 6.1(b)(ii))
allocated with respect to each Eligible Member shall be the sum of the
number of shares of Holding Company Stock allocated in respect of each
Eligible Policy as provided in clauses (i)--(iii) of this Section 6.2 of
which such Eligible Member is the Owner on the Record Date, after rounding
such sum to the nearest integral number of shares (with one-half being
rounded upward). Because of such rounding, the aggregate of Eligible
Members' variable components will not necessarily be precisely equal to the
Aggregate Variable Shares.
6.3 Payment of Consideration. (a) The Company shall issue to each Eligible
Member a number of shares of Holding Company Stock equal to the number of such
shares allocated to such Eligible Member, provided, however, that an Eligible
Member shall not be issued such shares of Holding Company Stock and shall
instead be paid cash or credited Policy Credits (in an amount determined
pursuant to subsection (b) of this Section 6.3) based on the number of shares
of Holding Company Stock allocated to such Eligible Member as provided in this
Article VI as follows:
(i) Policy Credits in the form of an increase in accumulation account
value or, if the policy does not provide for an accumulation account value,
then an increase in the dividend accumulation, to the extent shares of
Holding Company Stock are allocable with respect to a Policy that is an
individual retirement annuity contract within the meaning of section 408 of
the Code or a tax sheltered annuity contract within the meaning of section
403(b) of the Code (including any such contracts issued under the Company's
"group retirement annuity contract" arrangements);
(ii) Policy Credits in the form of an increase in accumulation account
value or, if the policy does not provide for an accumulation account value,
then an increase in the dividend accumulation, to the extent shares of
Holding Company Stock are allocable with respect to a Policy that is an
individual life insurance policy or an individual annuity contract
(including any such contracts issued under the Company's "group retirement
annuity contract" arrangements) that has been issued pursuant to a plan
qualified under section 401(a) of the Code directly to the plan
participant;
(iii) except as provided in clauses (i) or (ii) of this Section
6.3(a), cash, to the extent that shares of Holding Company Stock are
allocable to an Eligible Member whose address for mailing purposes as shown
on the records of the Company is located outside the States of the United
States of America (since any registration, qualification, filing or other
compliance with or under the laws of such foreign country or other
jurisdiction would be impractical or unduly burdensome) or is shown on the
Company's records to be an address at which mail to such Eligible Member is
undeliverable;
(iv) except as provided in clauses (i) or (ii) of this Section 6.3(a),
cash, to the extent that shares of Holding Company Stock are allocable with
respect to a Policy and such Policy is known to the Company to be subject
to a bankruptcy proceeding;
(v) with respect to Public Eligible Members, except as provided in
clauses (i) through (iv) of this Section 6.3(a), cash, unless the Public
Eligible Member has affirmatively indicated, on a form provided to such
Public Eligible Member that has been properly completed and received by the
Company prior to a date set by the Company, a preference to receive stock
in lieu of
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cash; provided, however, if the cash available is insufficient to pay cash
to all such Public Eligible Members or for any other reason determined by
the Board, cash shall be distributed only to those Public Eligible Members
which are allocated an integral number of shares of Holding Company Stock
that is less than or equal to a number specified by the Board (or a
committee of the Board) on or prior to the Effective Date (after excluding
shares of Holding Company Stock allocated to such Public Eligible Member
where the consideration is to be paid in the form of Policy Credits) (the
"Public Cash Election Amount"). In the event a Public Cash Election Amount
is so specified, the Company shall pay cash to each Public Eligible Member
who (A) has not so expressed a preference to receive stock and (B) has been
allocated a number of shares of Holding Company Stock equal to or less than
the Public Cash Election Amount. Public Eligible Members receiving cash
will be able to deposit such funds in a Policyholder Deposit Account for
future premium payments, subject to the Company's customary policies
regarding such accounts.
(vi) with respect to Eligible Members other than Public Eligible
Members, except as provided in clauses (i) through (iv) of this Section
6.3(a), stock if such Eligible Member is allocated (after excluding shares
of Holding Company Stock allocated to such Eligible Member where the
consideration is to be paid in the form of Policy Credits) 99 shares of
Holding Company Stock or less, unless the Eligible Member has affirmatively
indicated, on a form provided to such Eligible Member that has been
properly completed and received by the Company prior to a date set by the
Company, a preference to receive cash in lieu of stock; provided, however,
if the cash available is insufficient to pay cash to all such Eligible
Members or for any other reason determined by the Board, cash shall be
distributed only to those Eligible Members which are allocated an integral
number of shares of Holding Company Stock that is less than or equal to a
number, less than 99, specified by the Board (or a committee of the Board)
on or prior to the Effective Date (after excluding shares of Holding
Company Stock allocated to such Eligible Member where the consideration is
to be paid in the form of Policy Credits); provided, further, that no cash
shall be paid to Eligible Members pursuant to this clause (vi) if less than
all Public Eligible Members receive cash due to the effect of the proviso
to the first sentence of clause (v) of this Section 6.3. The number of
shares entitling an Eligible Member to receive cash under this clause (vi)
is referred to herein as the "Cash Election Amount". Subject to the
foregoing provisos, the Company shall pay cash to each Eligible Member who
(A) has so expressed a preference to receive cash and (B) has been
allocated a number of shares of Holding Company Stock equal to or less than
the Cash Election Amount.
The total amount of cash to be distributed to all such Eligible Members
under clauses (v) and (vi) shall not exceed the proceeds of the Initial Public
Offering (net of underwriting commissions and expenses related to the Initial
Public Offering) after deducting the aggregate amounts to be paid or credited
under clauses (i) through (iv) of this Section 6.3(a) and the contribution to
the Company required under Section 4.2(f). In the event that an Eligible Member
who is the Owner of more than one Eligible Policy is entitled to receive
consideration under this Article VI both in the form of Policy Credits and in
the form of cash or shares of Holding Company Stock, (a) the fixed component of
consideration payable to such Eligible Member shall be payable only with
respect to those Eligible Policies for which only cash or shares of Holding
Company Stock are paid, and (b) such fixed component of consideration shall be
paid in cash or shares of Holding Company Stock, as applicable under this Plan
of Reorganization.
(b) If consideration is to be paid or credited to an Eligible Member in
cash or Policy Credits, as the case may be, pursuant to this Plan of
Reorganization, the amount of such consideration shall be equal to the number
of shares of Holding Company Stock allocable to such Eligible Member as
provided in this Article VI multiplied by the IPO Price. Payment shall be made
by check, net of any applicable withholding tax, or the crediting of a Policy
Credit, as the case may be, as soon as reasonably practicable after the
Effective Date.
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(c) In the event that more than one Person constitutes a single Owner of a
Policy, consideration allocated pursuant to this Article VI may be distributed
jointly to such Persons or their designated agent.
(d) As soon as reasonably practicable after the Effective Date, the
Holding Company shall (i) issue to each Eligible Member, in book-entry form as
uncertificated shares, the shares of Holding Company Stock allocated to such
Eligible Member for which such Eligible Member will not receive compensation
from the Company in the form of cash or Policy Credits, and (ii) mail to each
such Eligible Member an appropriate notice that a designated number of shares
of Holding Company Stock have been registered in the name of such Eligible
Member. Upon the request of the registered holder of any such shares issued in
book-entry form as uncertificated shares, the Holding Company shall promptly
mail a stock certificate representing such shares.
6.4 Commission-Free Program. The Holding Company shall establish a
commission-free program which shall begin at such time after the 180th day
following the Effective Date and before the 12-month anniversary of the
Effective Date, and shall continue for 3 months or for such longer period of
time, as the Board of Directors of the Holding Company may determine to be
appropriate and in the best interest of the Holding Company and its
shareholders. Pursuant to such program, each Eligible Member who receives under
this Plan of Reorganization a number of shares of Holding Company Stock that is
less than or equal to a number specified by the Board of Directors of the
Holding Company (which number shall not be more than 99 or less than the Cash
Election Amount) shall be entitled to sell at prevailing market prices all, but
not less than all, the shares of Holding Company Stock received hereunder by
such Eligible Member, without paying brokerage commissions, mailing charges,
registration fees or other administrative or similar expenses. Record holders
of a number of shares of Holding Company Stock that is less than or equal to a
number specified by the Board of Directors of the Holding Company (which number
shall not be more than 99) shall be entitled to purchase at prevailing market
prices additional shares to round-up their holdings to 100 shares, without
paying brokerage commissions, mailing charges, registration fees or other
administrative or similar expenses. The Holding Company shall establish
administrative procedures for the delivery of requests to sell or purchase
shares of Holding Company Stock and for the sale or purchase of such shares of
Holding Company Stock through such program. The Holding Company may, in its
discretion, institute one or more commission-free programs in the future, but
is not required to do so.
6.5 ERISA Plans. The Company has applied to the Department of Labor for an
exemption from Section 406(a) of the Employee Retirement Income Security Act of
1974 and Section 4975 of the Code with respect to the receipt of consideration
pursuant to the Plan of Reorganization by employee benefit plans subject to the
provisions of such sections. Notwithstanding any other provision of the Plan of
Reorganization, if such exemption is not received prior to the Effective Date,
the Company may delay payment of such consideration to such Eligible Members
and may place such consideration in an escrow or similar arrangement subject to
terms and conditions approved by the Director. Any such escrow or arrangement
shall provide for payment to Eligible Members of such consideration not later
than the third anniversary of the Effective Date and all costs and expenses of
such escrow or arrangement shall be borne by the Company.
ARTICLE VII: CLOSED BLOCK
7.1 Establishment of the Closed Block. (a) The Company shall establish,
conditioned upon this Plan of Reorganization becoming effective pursuant to
Section 4.2, an accounting mechanism and procedure with respect to a closed
block (the "Closed Block") as described in the Closed Block Memorandum attached
as Exhibit F (the "Closed Block Memorandum") for the purpose of giving
reasonable assurance to holders of certain individual policies included therein
of the continued payment of dividends as experience justifies. The
establishment and operation of the Closed Block shall not modify or amend the
terms or provisions of the policies included therein. As
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set forth in the Closed Block Memorandum, assets of the Company will be
allocated to the Closed Block in an amount that produces cash flows which,
together with anticipated revenue from the Closed Block Business, are expected
to be sufficient to support the Closed Block Business including, but not
limited to, provisions for payment of claims and certain expenses and taxes,
and to provide for continuation of dividend scales in effect for 1998, if the
experience underlying such scales (including the portfolio interest rate)
continues, and for appropriate adjustments in such scales if the experience
changes.
(b) The Closed Block Memorandum sets forth how certain of the Company's
assets (collectively, the "Closed Block Assets") will be allocated to the
Closed Block as of January 1, 1999 (the "Closed Block Funding Date"). Cash and
policy loans, accrued interest and due and deferred premiums will be allocated
to the Closed Block as of the Closed Block Funding Date as described in the
Closed Block Memorandum. The amount of the Company's assets allocated to the
Closed Block as of the Closed Block Funding Date will be determined as set
forth in the Closed Block Memorandum.
7.2 Operation of the Closed Block. (a) After the Closed Block Funding
Date, insurance and investment cash flows from operations of the Closed Block
Business, the Closed Block Assets, the cash allocated to the Closed Block and,
as described in the Closed Block Memorandum, all other assets acquired by or
allocated to the Closed Block shall be received by or withdrawn from the Closed
Block in accordance with the principles set forth in this Section 7.2(a).
(i) With respect to insurance cash flows:
(A) Cash premiums, cash repayments of policy loans and policy loan
interest paid in cash on Closed Block Business shall be received by the
Closed Block. Death, surrender, withdrawal and maturity benefits (including
any interest allowed for delayed payment of benefits) paid in cash, policy
loans taken in cash and dividends paid in cash on Closed Block Business
shall be withdrawn from the Closed Block. Cash payments with respect to
reinsurance, not including charges as a result of surplus relief insurance,
on Closed Block Business shall be withdrawn from or received by the Closed
Block.
(B) Cash shall be withdrawn from the Closed Block in the amount of
foreign, State and local premium taxes (including retaliatory and franchise
and excise taxes to the extent measured solely by premiums), payroll taxes
and other taxes, licenses and fees in accordance with the tax allocation
procedure described in Sections III.D-F of the Closed Block Memorandum.
(C) Cash payments shall be received by or withdrawn from the Closed
Block for foreign, federal, State or local taxes in accordance with the tax
sharing procedure described in Section IV of the Closed Block Memorandum.
(D) Cash shall be withdrawn from the Closed Block for commissions and
other expenses of administering Closed Block Business in accordance with
the formulas described in Sections III.A-C of the Closed Block Memorandum.
(E) With respect to Closed Block Business issued after the Closed
Block Funding Date and to and including the Effective Date, cash shall be
withdrawn from the Closed Block for sales commissions and other expenses of
selling and issuing such business (in addition to those commissions and
other expenses referred to in subsection (D) of this Section 7.2(a)(i)) in
accordance with the formulas described in Section III of the Closed Block
Memorandum.
(ii) With respect to investment cash flows:
(A) Investment cash flows from operations of the Closed Block Business
shall be received by or withdrawn from the Closed Block.
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(B) Cash received on dispositions of investments shall be net of all
reasonable and customary brokerage and other transaction expenses that are
deducted in reporting gross proceeds of such sales in the Company's Annual
Statement to the Director. With respect to any Closed Block assets that are
investments in equity real estate, cash payments for reasonable and
customary operating expenses and taxes (as reported in such Annual
Statement) shall be withdrawn from the Closed Block.
(C) Cash paid for expenses in acquiring an investment shall be
withdrawn from the Closed Block to the extent included in the cost of such
investment in the Company's Annual Statement to the Director.
(D) Cash shall be withdrawn from the Closed Block for investment
management expenses in accordance with the formulas described in the Closed
Block Memorandum.
(b) New investments acquired after the Closed Block Funding Date with
Closed Block cash flows shall be allocated to the Closed Block upon acquisition
and shall consist only of investments permitted by the investment policy for
the Closed Block as from time to time in effect.
(c) No amounts shall be withdrawn from or received by the Closed Block for
any taxes, including federal, State, local or foreign taxes, resulting from the
operations of the Company or any of its subsidiaries prior to the Closed Block
Funding Date. No asset valuation reserve, interest maintenance reserve or any
similar reserve, or any increases or decreases therein shall be charged or
credited to the Closed Block, because such reserves are noncash items. The
Company may, however, consider potential investment defaults in apportioning
dividends on Closed Block Business.
(d)(i) Dividends on Closed Block Business shall be apportioned by the
Board in accordance with applicable law and with the objective of minimizing
tontine effects and exhausting assets allocated to the Closed Block with the
final payment under the last Policy contained in the Closed Block.
(ii) Subject to the provisions of clause (i) of this subsection (d),
dividends on Closed Block Business shall be apportioned, and shall be allocated
among policies in the Closed Block, so as to reflect the underlying experience
of the Closed Block, and the degree to which the various classes of policies
constituting the Closed Block Business have contributed to such experience.
(e)(i) The Company shall prepare, on an annual basis, an income statement
and balance sheet for the Closed Block (the "Closed Block Financial
Statements"). The Closed Block Financial Statements shall be prepared in a
manner consistent with the preparation of the financial statements of the
Company submitted annually to the Director.
(ii) The Closed Block Financial Statements shall be reported annually to
the Board, together with a recommendation of the management of the Company as
to dividends on Closed Block Business. The Closed Block Financial Statements
and the Board's dividend resolution regarding the Closed Block Business shall
be reported annually to the Director.
(iii) The Closed Block shall be subject to the internal and external audit
processes established by the Company for its operations generally.
(iv) Beginning as of December 31, 2001, and thereafter not less frequently
than every three years, the Company shall retain an independent consulting
actuary to review the operation of the Closed Block and dividend determinations
and to report his or her findings to the Board and to the Director.
(f) The Company may, with the prior approval of the Director, cease to
maintain the Closed Block, upon such terms and conditions as the Director may
approve, but the Policies then constituting the Closed Block Business shall
remain obligations of the Company and dividends on such Policies shall be
apportioned by the Board in accordance with applicable law.
15
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(g) Except as provided in subsection (f) of this Section 7.2, none of the
assets, including the revenue therefrom, allocated to the Closed Block or
acquired by the Closed Block shall revert to the benefit of the shareholders of
the Company.
7.3 Guaranteed Benefits. The Company shall pay all guaranteed benefits for
Closed Block Business in accordance with the terms of the Policies contained in
the Closed Block. The assets allocated to the Closed Block are the Company's
assets and are subject to the same liabilities (in the same priority) as all
assets in the Company's general account.
ARTICLE VIII: ADDITIONAL PROVISIONS
8.1 Continuation of Corporate Existence; Company Name. Upon the
reorganization of the Company under the terms of this Plan of Reorganization
and the ORS, (a) the Company's corporate existence as a stock life insurance
company shall be a continuation of its corporate existence as a mutual life
insurance company and (b) the Company's name shall remain Standard Insurance
Company. [(S)732.614(3)]
8.2 Valuation. On or prior to the Public Hearing, the Company shall obtain
from a nationally-recognized investment bank a valuation of the Company as a
mutual insurer immediately before the Effective Date. Such valuation shall be
subject to the approval of the Director.
8.3 Initial Public Offering. (a) The Company shall cause the Holding
Company to conduct an initial public offering of Holding Company Stock to be
completed on the Effective Date. The Holding Company shall select as managing
underwriters for the Initial Public Offering investment banking firms of
substantial national and/or regional reputation. The managing underwriters
shall conduct the Initial Public Offering in a manner generally consistent with
customary practices for initial public offerings of a type, size and nature
comparable to the Initial Public Offering. The final pricing decision on the
Initial Public Offering shall be made by a committee of the Board of Directors
of the Holding Company consisting of directors, the majority of whom are not
officers or employees of the Company or the Holding Company.
(b) In order to facilitate the acquisition of Holding Company Stock by
members in the Initial Public Offering, the Holding Company will reserve
1,000,000 shares sold in the Initial Public Offering for sale at the IPO Price
to Eligible Members and such other members of the Company that own, on the
Directed Share Offering Record Date (as defined below), one or more Policies
that are In Force (without regard to Sections 5.3(a)(i)(B), 5.3(a)(i)(C) and
5.3(a)(ii)(B)) on such date ("Directed Share Members") in a Directed Share
Offering (the "Directed Share Offering"). For purposes hereof, "Directed Share
Offering Record Date" shall mean December 31, 1998 or, if the preliminary
prospectuses for the Initial Public Offering are distributed after June 1,
1999, such other date as is specified by the Holding Company with the consent
of the Director. Directed Share Members which have properly and timely
completed and returned to Standard Insurance a card to be mailed to them prior
to a date specified by the Holding Company will receive further information,
including a detailed prospectus, describing the Directed Share Offering. Each
Directed Share Member shall be entitled to acquire a minimum of 100 shares and
up to a maximum of 2,500 shares of Holding Company Stock in the Directed Share
Offering, provided that if the aggregate number of shares subscribed for by all
Directed Share Members is greater than the maximum 1,000,000 shares that are
available, the 1,000,000 available shares will be allocated to the subscribing
Directed Share Members on a pro rata basis according to the number of shares
subscribed for by each such Directed Share Member, subject to a minimum
allocation of 100 shares (or, if the number of shares available is insufficient
to allow for allocations of 100 shares to all such subscribing Directed Share
Members, such lower number, as determined by the Holding Company, as may allow
shares to be sold to all subscribing Directed Share Members. The Holding
Company will direct one or more of the underwriters for the Initial Public
Offering or the transfer agent for its stock to administer the Directed Share
Offering. Subject to the provisions of this Section 8.3(b), all decisions
regarding the conduct of the Directed
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Share Offering will be the responsibility of the underwriters or such transfer
agent. The right to subscribe for shares of common stock in the Directed Share
Offering may not be transferred. The Company may limit the availability of the
Directed Share Offering to any class of Directed Share Members if it deems it
necessary or advisable to do so for legal, tax or other reasons. Shares not
subscribed for by Directed Share Members may be sold to other investors in the
Initial Public Offering. Notwithstanding the foregoing, officers and directors
of the Company and its affiliates may not subscribe for shares in the Directed
Share Offering.
(c) The Department and its advisors may monitor the conduct of the Initial
Public Offering and compliance with the conditions set forth in this Section
8.3.
(d) The Holding Company and its subsidiaries may make other offerings
(whether by public offering, private placement or otherwise) of securities on
and after the Effective Date in accordance with applicable law.
8.4 Officers and Boards of Directors. The directors and officers of the
Company shall serve as directors and officers of the Company after the
Effective Date until new directors and officers have been duly elected and
qualified pursuant to its articles of incorporation and bylaws. On the
Effective Date, the directors and officers of the Holding Company shall be the
persons set forth in Schedule 2. [(S)732.616(5)]
8.5 Stock Plans; Acquisition of Securities by Certain Officers, Directors
and Employees. (a) The Board of Directors of the Holding Company will adopt,
conditioned upon this Plan of Reorganization becoming effective pursuant to
Section 4.2, a stock option plan (the "Stock Option Plan"). The Stock Option
Plan will provide that a number of shares of Holding Company Stock equal to 5%
of the total number of shares of Holding Company Stock issued and outstanding
immediately after the Initial Public Offering (the "Authorized Option Shares")
shall be available to be issued pursuant to the Stock Option Plan. Under the
Stock Option Plan, the committee of the Board of Directors of the Holding
Company responsible for administering the Stock Option Plan (the "Plan
Committee") may grant officers and employees of the Company and its affiliates
nonqualified and incentive stock options having an exercise price at least
equal to the fair market value of a share of stock on the effective date of the
grant of such stock option.
The Plan Committee expects to make an initial grant of options, pursuant
to and in accordance with the terms of the Stock Option Plan, to all eligible
employees and officers of the Company and its affiliates to purchase an
aggregate amount of shares up to an amount not to exceed 40% of the Authorized
Option Shares, to be apportioned among employees and officers of the Company
and its affiliates at the discretion of the Plan Committee. The options shall
be granted to officers of the Company and its affiliates not earlier than six
months following the Effective Date, and to non-officer employees of the
Company and its affiliates at the Effective Date. Subject to the grantees'
continued employment with the Company and its affiliates, these stock options
shall have a term of ten years and shall generally vest and become exercisable
following three years from the effective date of the grant.
In addition, the Board of Directors of the Holding Company intends to
adopt an employee stock purchase plan (the "Stock Purchase Plan") satisfying
the requirements of section 423 of the Code. Pursuant to the Stock Purchase
Plan, employees, officers and directors of the Company and its affiliates shall
have the opportunity to purchase Holding Company Stock at a price 15% less than
the fair market value of a share of stock on the effective date specified in
the Stock Purchase Plan. Notwithstanding the foregoing, officers and directors
of the Company and its affiliates shall not be permitted to purchase Holding
Company Stock under the Stock Purchase Plan for six months after the Effective
Date. The Board of Directors of the Holding Company also intends to amend its
retirement and savings plan, established pursuant to section 401(k) of the
Code, and its nonqualified
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defined contribution plan that supplements the benefits available under this
plan to highly compensated employees (including officers of the Company), to
provide that employer matching contributions may be in the form of Holding
Company Stock.
(b) Officers, Directors and employees of the Company or its affiliates who
are themselves Eligible Members or who are participants in any of the Company's
employee benefit plans that are Eligible Members may receive shares of Holding
Company Stock distributed to such officers, directors, employees or plans
pursuant to this Plan of Reorganization.
8.6 Notices. If the Company complies substantially and in good faith with
the requirements of the ORS and the terms of this Plan of Reorganization with
respect to the giving of any required notice to members, its failure in any
case to give such notice to any person or persons entitled thereto shall not
impair the validity of the actions and proceedings taken under the ORS and this
Plan of Reorganization or entitle such person to any injunctive or other
equitable relief with respect thereto.
8.7 Adjustment of Share Numbers. Subject to the Director's approval, by
vote of the Board or a duly authorized committee thereof at any time before the
Effective Date, the Company may adjust the number of shares of Holding Company
Stock set forth in the definition of Allocable Shares. Upon such an adjustment,
the following numbers of shares of Holding Company Stock in this Plan of
Reorganization shall be adjusted proportionately: (a) the number of shares set
forth in the definition of Allocable Shares in Article I; (b) the number of
shares set forth in Section 6.1(b)(i) as the fixed component of consideration;
(c) the number of shares set forth in Section 8.3(b) to be reserved by the
Holding Company to facilitate the acquisition of Holding Company Stock by
Directed Share Members; and (d) the maximum number of shares set forth in
Section 8.3(b) that Directed Share Members are entitled to acquire. The number
of shares resulting from any such adjustment shall be rounded up to the next
higher whole share; provided that no such adjustment will be made unless it
would result, without any such rounding, in the number of Allocable Shares to
be allocated in respect of each Eligible Policy as the fixed component of
consideration pursuant to Section 6.1(b)(i) being a whole number.
8.8 Authority to Remedy Errors. Subject to the terms of this Plan of
Reorganization and with the prior approval of the Director, at or after the
Effective Date, the Holding Company may issue additional shares of Holding
Company Stock and take any other action it deems appropriate to remedy errors
or miscalculations made in connection with this Plan of Reorganization,
provided that this Plan of Reorganization is carried out in accordance with its
terms. [(S)732.606(6)]
8.9 Corrections. The Company may make such modifications as are
appropriate to correct errors, clarify existing items or make additions,
provided that this Plan of Reorganization is carried out in accordance with its
terms. [(S)732.606(6)] After the conclusion of the Public Hearing, any such
modification shall be made only with the prior approval of the Director.
8.10 Amendment and Abandonment of the Plan. Prior to the approval by the
Director of this Plan of Reorganization, this Plan of Reorganization may be
amended or abandoned by the Board. [(S)732.606(4)]
8.11 Costs and Expenses. All reasonable out-of- pocket costs of the
Director related to the review of this Plan of Reorganization, including those
costs attributable to the use of experts, shall be paid by the Company.
[(S)732.626(4)]
8.12 Governing Law. The terms of this Plan of Reorganization shall be
governed by and construed in accordance with the laws of the State of Oregon.
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IN WITNESS WHEREOF, Standard Insurance Company, by authority of its Board
of Directors, has caused this Plan of Reorganization, as herein amended, to be
duly executed this 14th day of December, 1998.
Standard Insurance Company
/s/ Ronald E. Timpe
By: _________________________________
Ronald E. Timpe
Chairman, President and Chief
Executive Officer
Attest:
/s/ Eric E. Parsons
- -------------------------------------
Eric E. Parsons
Senior Vice President and Chief
Financial and Investment Officer
/s/ J. Gregory Ness
- -------------------------------------
J. Gregory Ness
Vice President and Corporate
Secretary
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EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
STANCORP FINANCIAL GROUP, INC.
ARTICLE 1.
Name
----
The name of the Corporation is StanCorp Financial Group, Inc.
ARTICLE 2.
Capital Stock
-------------
A. The Corporation is authorized to issue a total of Four Hundred Million
(400,000,000) shares, consisting of Three Hundred Million (300,000,000) shares
of Common Stock and One Hundred Million (100,000,000) shares of Preferred Stock.
B. Holders of Common Stock are entitled to one vote per share. On
dissolution of the Corporation, after any preferential amount with respect to
the Preferred Stock has been paid or set aside, the holders of Common Stock and
the holders of any series of Preferred Stock entitled to participate in the
distribution of assets are entitled to receive the net assets of the
Corporation.
C. The Board of Directors is authorized, subject to limitations
prescribed by the Oregon Business Corporation Act, as amended from time to time
(the "Act"), and by the provisions of this Article, to provide for the issuance
of shares of Preferred Stock in series, to establish from time to time the
number of shares to be included in each series and to determine the
designations, relative rights, preferences and limitations of the shares of each
series. The authority of the Board of Directors with respect to each series
includes determination of the following:
(1) The number of shares in and the distinguishing designation of that
series;
(2) Whether shares of that series shall have full, special,
conditional, limited or no voting rights, except to the extent otherwise
provided by the Act;
(3) Whether shares of that series shall be convertible and the terms
and conditions of the conversion, including provision for adjustment of the
conversion rate in circumstances determined by the Board of Directors;
(4) Whether shares of that series shall be redeemable and the terms
and conditions of redemption, including the date or dates upon or after which
they shall be
<PAGE>
redeemable and the amount per share payable in case of redemption, which amount
may vary under different conditions or at different redemption dates;
(5) The dividend rate, if any, on shares of that series, the manner of
calculating any dividends and the preferences of any dividends;
(6) The rights of shares of that series in the event of voluntary or
involuntary dissolution of the Corporation and the rights of priority of that
series relative to the Common Stock and any other series of Preferred Stock on
the distribution of assets on dissolution; and
(7) Any other rights, preferences and limitations of that series that
are permitted by law to vary.
ARTICLE 3
Number and Tenure of Directors
------------------------------
A. The initial number of directors of the Corporation shall be not less
than three (3). At such time as the Corporation has more than one shareholder
the number of directors of the Corporation shall be not less than nine (9) nor
more than twenty-one (21), and within such limits the exact number shall be
fixed and increased or decreased from time to time by resolution of the Board of
Directors. At such time as the number of directors is first increased to nine
or more, the directors shall be divided into three classes, as nearly equal in
number as possible, with the term of office of the first class ("Class I") to
expire at the first annual meeting of shareholders, the term of office of the
second class ("Class II") to expire at the second annual meeting of shareholders
following the classification and the term of office of the third class ("Class
III") to expire at the third annual meeting of shareholders following the
classification. At each annual meeting of shareholders following such initial
classification and election, directors elected to succeed those directors whose
terms expire shall be elected to serve three-year terms and until their
successors are elected and qualified, so that the term of one class of directors
will expire each year. When the number of directors is changed within the
limits provided herein, any newly created directorships, or any decrease in
directorships, shall be so apportioned among the classes as to make all classes
as nearly equal as possible, provided that no decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.
B. Directors of the Company may be removed only for cause at a meeting of
shareholders called expressly for that purpose.
C. Any vacancy on the Board of Directors, including a vacancy resulting
from an increase in the number of directors, may be filled by the Board of
Directors, the remaining directors if less than a quorum (by the vote of a
majority thereof) or by a sole remaining director. If the vacancy is not so
filled, it shall be filled by the shareholders at the next annual
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meeting of shareholders. A vacancy that will occur at a specified later date, by
reason of a resignation or otherwise, may be filled before the vacancy occurs,
but the new director may not take office until the vacancy occurs.
D. This Article 3 may not be amended, altered, changed or repealed unless
the amendment is approved by the vote of holders of 70 percent of the shares
then entitled to vote at an election of directors.
ARTICLE 4
Amendment of Bylaws
-------------------
Both the Board of Directors and the shareholders shall have the power to
alter, amend or repeal the Bylaws of the Corporation. Any repeal or change of
the Bylaws by the shareholders shall require the affirmative vote of not less
than 70 percent of the votes entitled to be cast on the matter. This Article 4
may not be amended, altered, changed or repealed unless the amendment is
approved by the vote of holders of 70 percent of the shares then entitled to
vote at an election of directors.
ARTICLE 5
No Personal Liability
---------------------
No director of the Corporation shall be personally liable to the
Corporation or its shareholders for monetary damages for conduct as a director;
provided that this Article shall not eliminate the liability of a director for
any act or omission for which such elimination of liability is not permitted
under the Oregon Business Corporation Act. No amendment to the Oregon Business
Corporation Act that further limits the acts or omissions for which elimination
of liability is permitted shall affect the liability of a director for any act
or omission which occurs prior to the effective date of such amendment.
ARTICLE 6
Indemnification
---------------
The Corporation may indemnify to the fullest extent permitted by law
any person who is made, or threatened to be made, a party to an action, suit or
proceeding, whether civil, criminal, administrative, investigative, or otherwise
(including an action, suit or proceeding by or in the right of the Corporation)
by reason of the fact that the person is or was a director, officer or employee
of the Corporation or a fiduciary within the meaning of the Employee Retirement
Income Security Act of 1974 with respect to any employee benefit plan of the
Corporation, or serves or served at the request of the Corporation as a
director, officer or employee, or as a fiduciary of an employee benefit plan, of
another Corporation, partnership, joint venture, trust or other enterprise.
This Article shall not be deemed exclusive of any other provisions for
indemnification of directors, officers and fiduciaries that may be
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<PAGE>
included in any statute, bylaw, agreement, resolution of shareholders or
directors or otherwise, both as to action in any official capacity and action in
another capacity while holding office.
ARTICLE 7
Fair Price Provision
--------------------
A. Whether or not a vote of stockholders is otherwise required, the vote
of the holders of not less than 70 percent of the outstanding shares of "Voting
Stock" (as hereinafter defined) of the Corporation shall be required for the
approval or authorization of any "Business Combination" (as hereinafter defined)
with any "Substantial Shareholder" (as hereinafter defined) or any Business
Combination in which a Substantial Shareholder has an interest (except
proportionately as a stockholder of the Corporation); provided, however, that
the 70 percent voting requirement shall not be applicable if either:
(1) The "Continuing Directors" (as hereinafter defined) of the
Corporation by at least a two-thirds vote (a) have expressly approved in advance
the acquisition of the outstanding shares of Voting Stock that caused such
Substantial Shareholder to become a Substantial Shareholder, or (b) have
expressly approved such Business Combination; or
(2) The cash or fair market value (as determined by at least a
majority of the Continuing Directors) of the property, securities or other
consideration to be received per share by holders of Voting Stock of the
Corporation (other than the Substantial Shareholder) in the Business Combination
is not less than the "Highest Per Share Price" or the "Highest Equivalent Price"
(as those terms are hereinafter defined) paid by the Substantial Shareholder
involved in the Business Combination in acquiring any of its holdings of the
Corporation's Voting Stock acquired in the last two years.
B. For purposes of this Article 7:
(1) The term "Business Combination" shall include, without limitation,
(a) any merger, exchange or consolidation of the Corporation, or any entity
controlled by or under common control with the Corporation, with or into any
Substantial Shareholder, or any entity controlled by or under common control
with such Substantial Shareholder, (b) any merger, exchange or consolidation of
a Substantial Shareholder, or any entity controlled by or under common control
with such Substantial Shareholder, with or into the Corporation or any entity
controlled by or under common control with the Corporation, (c) any sale, lease,
exchange, transfer or other disposition (in one transaction or a series of
transactions), including without limitation a mortgage or any other security
device, of all or any "Substantial Part" (as hereinafter defined) of the
property and assets of the Corporation, or any entity controlled by or under
common control with the Corporation, to a Substantial Shareholder, or any entity
controlled by or under common control with such Substantial Shareholder, (d) any
purchase, lease, exchange, transfer or other acquisition (in one transaction or
a series of transactions), including without limitation a mortgage or any other
security device, of all or
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<PAGE>
any Substantial Part of the property and assets of a Substantial Shareholder or
any entity controlled by or under common control with such Substantial
Shareholder, by the Corporation, or any entity controlled by or under common
control with the Corporation, (e) any recapitalization of the Corporation that
would have the effect of increasing the voting power of a Substantial
Shareholder, (f) the issuance, sale, exchange or other disposition of any
securities of the Corporation, or of any entity controlled by or under common
control with the Corporation, by the Corporation or by any entity controlled by
or under common control with the Corporation, (g) any liquidation, spinoff,
splitoff, splitup or dissolution of the Corporation, and (h) any agreement,
contract or other arrangement providing for any of the transactions described in
this definition of Business Combination.
(2) The term "Substantial Shareholder" shall mean and include (a) any
"Person" (as that term is defined in Section 2(2) of the Securities Act of 1933,
as in effect on the date these Articles of Incorporation become effective (the
"Effective Date")) which, together with its "Affiliates" (as hereinafter
defined) and "Associates" (as hereinafter defined), "Beneficially Owns" (as
defined in Rule 13d-3 of the General Rules and Regulations under the Securities
Exchange Act of 1934 as in effect on the Effective Date) in the aggregate 15
percent or more of the outstanding Voting Stock of the Corporation, and (b) any
Affiliate or Associate (other than the Corporation or a wholly owned subsidiary
of the Corporation) of any such Person. Two or more Persons acting in concert
for the purpose of acquiring, holding or disposing of Voting Stock of the
Corporation shall be deemed a "Person."
(3) Without limitation, any share of Voting Stock of the Corporation
that any Substantial Shareholder has the right to acquire at any time
(notwithstanding that Rule 13d-3 deems such shares to be beneficially owned if
such right may be exercised within 60 days) pursuant to any agreement, contract,
arrangement or understanding, or upon exercise of conversion rights, warrants or
options, or otherwise, shall be deemed to be Beneficially Owned by such
Substantial Shareholder and to be outstanding for purposes of subparagraph B(2)
above.
(4) For the purposes of subparagraph A(2) of this Article, the term
"other consideration to be received" shall include, without limitation, Common
Stock or other capital stock of the Corporation retained by its existing
shareholders, other than any Substantial Shareholder or other Person who is a
party to such Business Combination, in the event of a Business Combination in
which the Corporation is the survivor.
(5) The term "Voting Stock" shall mean all of the outstanding shares
of capital stock of the Corporation entitled to vote generally in the election
of directors, considered as one class, and each reference to a proportion of
shares of Voting Stock shall refer to such proportion of the votes entitled to
be cast by such shares.
(6) The term "Continuing Director" shall mean a director of the
Corporation who was a member of the board of directors of the Corporation
immediately prior to the time
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that the Substantial Shareholder involved in a Business Combination became a
Substantial Shareholder.
(7) A Substantial Shareholder shall be deemed to have acquired a share
of the Voting Stock of the Corporation at the time when such Substantial
Shareholder became the Beneficial Owner thereof. With respect to the shares
owned by Affiliates, Associates or other Persons whose ownership is attributed
to a Substantial Shareholder under the foregoing definition of Substantial
Shareholder, if the price paid by such Substantial Shareholder for such shares
is not determinable by a majority of the Continuing Directors, the price so paid
shall be deemed to be the higher of (a) the price paid upon the acquisition
thereof by the Affiliate, Associate or other Person or (b) the market price of
the shares in question at the time when such Substantial Shareholder became the
Beneficial Owner thereof.
(8) The terms "Highest Per Share Price" and "Highest Equivalent Price"
as used in this Article shall mean the following: If there is only one class of
capital stock of the Corporation issued and outstanding, the Highest Per Share
Price shall mean the highest price that can be determined to have been paid at
any time by the Substantial Shareholder involved in the Business Combination for
any share or shares of that class of capital stock. If there is more than one
class of capital stock of the Corporation issued and outstanding, the Highest
Equivalent Price shall mean, with respect to each class and series of capital
stock of the Corporation, the amount determined by a majority of the Continuing
Directors, on whatever basis they believe is appropriate, to be the highest per
share price equivalent to the highest price that can be determined to have been
paid at any time by the Substantial Shareholder for any share or shares of any
class or series of capital stock of the Corporation. The Highest Per Share Price
and the Highest Equivalent Price shall include any brokerage commissions,
transfer taxes and soliciting dealers' fees paid by a Substantial Shareholder
with respect to the shares of capital stock of the Corporation acquired by such
Substantial Shareholder. In the case of any Business Combination with a
Substantial Shareholder, the Continuing Directors shall determine the Highest
Per Share Price or the Highest Equivalent Price for each class and series of the
capital stock of the Corporation. The Highest Per Share Price and Highest
Equivalent Price shall be appropriately adjusted to reflect the occurrence of
any reclassification, recapitalization, stock split, reverse stock split or
other readjustment in the number of outstanding shares of capital stock of the
Corporation, or the declaration of a stock dividend thereon, between the last
date upon which the Substantial Shareholder paid the Highest Per Share Price of
Highest Equivalent Price and the effective date of the merger or consolidation
or the date of distribution to stockholders of the Corporation of the proceeds
from the sale of all or substantially all of the assets of the Corporation.
(9) The term "Substantial Part" shall mean 15 percent or more of the
fair market value of the total assets of the Person in question, as reflected on
the most recent balance sheet of such Person existing at the time the
stockholders of the Corporation would be required to approve or authorize the
Business Combination involving the assets constituting any such Substantial
Part.
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(10) The term "Affiliate," used to indicate a relationship with a
specified Person, shall mean a Person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified.
(11) The term "Associate," used to indicate a relationship with a
specified Person, shall mean (a) any entity of which such specified Person is an
officer or partner or is, directly or indirectly, the beneficial owner of 10
percent or more of any class of equity securities, (b) any trust or other estate
in which such specified Person has a substantial beneficial interest or as to
which such specified Person serves as trustee or in a similar fiduciary
capacity, (c) any relative or spouse of such specified Person, or any relative
of such spouse, who has the same home as such specified Person or who is a
director or officer of the Corporation or any of its subsidiaries, and (d) any
Person who is a director or officer of such specified entity or any of its
parents or subsidiaries (other than the Corporation or an entity controlled by
or under common control with the Corporation).
C. For the purposes of this Article, a majority of the Continuing
Directors shall have the power to make a good faith determination, on the basis
of information known to them, of: (a) the number of shares of Voting Stock that
any Person Beneficially Owns, (b) whether a Person is an Affiliate or Associate
of another, (c) whether a Person has an agreement, contract, arrangement or
understanding with another as to the matters referred to in subparagraph B(1)(h)
or B(3) hereof, (d) whether the assets subject to any Business Combination
constitute a Substantial Part, (e) whether any Business Combination is one in
which a Substantial Shareholder has an interest (except proportionately as a
stockholder of the Corporation), and (f) such other matters with respect to
which a determination is required under this Article.
D. The provisions set forth in this Article may not be amended, altered,
changed or repealed in any respect unless such action is approved by the
affirmative vote of the holders of not less than a majority of the outstanding
shares of Voting Stock of the Corporation at a meeting of the shareholders duly
called for the consideration of such amendment, alteration, change or repeal;
provided, however, that if there is a Substantial Shareholder who is not a
Continuing Director, such action must also be approved by the affirmative vote
of the holders of not less than 70 percent of the outstanding shares of Voting
Stock.
ARTICLE 8
The street address and the mailing address of the initial registered
office of the Corporation is 1100 SW Sixth Avenue, Portland, OR 97204 and the
name of its initial registered agent at that address is J. Greg Ness.
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ARTICLE 9
The name of the incorporator is Ruth A. Beyer and the address of the
incorporator is 900 SW Fifth Avenue, Suite 2300, Portland OR 97204.
ARTICLE 10
The mailing address for the Corporation for notices is 1100 SW Sixth
Avenue, Portland OR 97204.
Executed: September 22, 1998.
_________________________________
Ruth A. Beyer, Incorporator
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EXHIBIT 3.2
BYLAWS
OF
STANCORP FINANCIAL GROUP, INC.
ARTICLE 1.
SHAREHOLDERS MEETINGS AND VOTING
1.1 Annual Meeting.
--------------
1.1.1 The annual meeting of the shareholders shall be held at such
date and time fixed by the Board of Directors and stated in the notice of the
meeting.
1.1.2 To be properly brought before the meeting, business must be
either (a) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board of Directors, (b) otherwise properly brought
before a meeting by or at the direction of the Board of Directors, or (c)
otherwise properly brought before the meeting by a shareholder. In addition to
any other applicable requirements, for business to be properly brought before an
annual meeting by a shareholder, the shareholder must have given timely notice
thereof in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice must be delivered to or mailed and received at the
principal executive office of the Corporation, not less than 50 days nor more
than 75 days prior to the meeting; provided, however, that in the event that
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less than 65 days' notice or prior public disclosure of the date of the meeting
is given or made to shareholders, notice by the shareholder to be timely must be
so received not later than the close of business on the 15th day following the
day on which such notice of the date of the annual meeting was mailed or such
public disclosure was made, whichever first occurs.
1.1.3 A shareholder's notice to the Secretary shall set forth (a)
one or more matters appropriate for shareholder action that the shareholder
proposes to bring before the meeting, (b) a brief description of the matters
desired to be brought before the meeting and the reasons for conducting such
business at the meeting, (c) the name and record address of the shareholder, (d)
the class and number of shares of the Corporation which shareholder owns or is
entitled to vote, and (e) any material interest of the shareholder in such
matters.
1.1.4 Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at the annual meeting except in accordance with the
procedure set forth in this Section 1.1; provided, however, that nothing in this
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Section 1.1 shall be deemed to preclude discussion by any shareholder of any
business properly brought before the annual meeting.
<PAGE>
1.1.5 The presiding officer shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 1.1, and if the
presiding officer should so determine, the presiding officer shall so declare to
the meeting and any such business not properly brought before the meeting shall
not be transacted.
1.2 Special Meetings. Special meetings of the shareholders, for any
----------------
purposes, unless otherwise prescribed by statute, may be called by the Chairman,
the President or the Board of Directors and shall be called by the Chairman or
the President upon the written demand of the holders of not less than one-tenth
of all the votes entitled to be cast on any issue proposed to be considered at
the meeting. The demand shall describe the purposes for which the meeting is to
be held and shall be signed, dated and delivered to the Secretary.
1.3 Place of Meetings. Meetings of the shareholders shall be held at any
-----------------
place in or out of Oregon designated by the Board of Directors. If a meeting
place is not designated by the Board of Directors, the meeting shall be held at
the Corporation's principal office.
1.4 Notice of Meetings. Written or printed notice stating the date, time
------------------
and place of the shareholders meeting and, in the case of a special meeting or a
meeting for which special notice is required by law, the purposes for which the
meeting is called, shall be delivered by the Corporation to each shareholder
entitled to vote at the meeting and, if required by law, to any other
shareholders entitled to receive notice, not earlier than 60 days nor less than
10 days before the meeting date. If mailed, the notice shall be deemed
delivered when it is mailed to the shareholder with postage prepaid at the
shareholder's address shown in the Corporation's record of shareholders.
1.5 Waiver of Notice. A shareholder may at any time waive any notice
----------------
required by law, these Bylaws or the Articles of Incorporation. The waiver
shall be in writing, be signed by the shareholder entitled to the notice and be
delivered to the Corporation for inclusion in the minutes for filing with the
corporate records. A shareholder's attendance at a meeting waives objection to
(i) lack of notice or defective notice of the meeting, unless the shareholder at
the beginning of the meeting objects to holding the meeting or transacting
business at the meeting, and (ii) consideration of a particular matter at the
meeting that is not within the purposes described in the meeting notice, unless
the shareholder objects to considering the matter when it is presented.
1.6 Fixing of Record Date. The Board of Directors may fix a future date
---------------------
as the record date to determine the shareholders entitled to notice of a
shareholders meeting, demand a special meeting, vote, take any other action or
receive payment of any share or cash dividend or other distribution. This date
shall not be earlier than 70 days or, in the case of a meeting, later than 10
days before the meeting or action requiring a determination of shareholders.
The record date for any meeting, vote or other action of the shareholders shall
be the same for all voting groups. If not otherwise fixed by the Board of
Directors, the record date to determine
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shareholders entitled to notice of and to vote at an annual or special
shareholders meeting is the close of business on the day before the notice is
first mailed or otherwise transmitted to shareholders. If not otherwise fixed by
the Board of Directors, the record date to determine shareholders entitled to
receive payment of any share or cash dividend or other distribution is the close
of business on the day the Board of Directors authorizes the share or cash
dividend or other distribution.
1.7 Shareholders List for Meeting. After a record date for a meeting is
-----------------------------
fixed, the Corporation shall prepare an alphabetical list of all shareholders
entitled to notice of the shareholders meeting. The list shall be arranged by
voting group and, within each voting group, by class or series of shares, and it
shall show the address of and number of shares held by each shareholder. The
shareholders list shall be available for inspection by any shareholder, upon
proper demand as may be required by law, beginning two business days after
notice of the meeting is given and continuing through the meeting, at the
Corporation's principal office or at a place identified in the meeting notice in
the city where the meeting will be held. The Corporation shall make the
shareholders list available at the meeting, and any shareholder or the
shareholder's agent or attorney shall be entitled to inspect the list at any
time during the meeting or any adjournment. Refusal or failure to prepare or
make available the shareholders list does not affect the validity of action
taken at the meeting.
1.8 Quorum; Adjournment.
-------------------
1.8.1 Shares entitled to vote as a separate voting group may take
action on a matter at a meeting only if a quorum of those shares exists with
respect to that matter. A majority of the votes entitled to be cast on the
matter by the voting group constitutes a quorum of that voting group for action
on that matter.
1.8.2 A majority of votes represented at the meeting, although
less than a quorum, may adjourn the meeting from time to time to a different
time and place without further notice to any shareholder of any adjournment,
except that notice is required if a new record date is or must be set for the
adjourned meeting. At an adjourned meeting at which a quorum is present, any
business may be transacted that might have been transacted at the meeting
originally held.
1.8.3 Once a share is represented for any purpose at a meeting, it
shall be present for quorum purposes for the remainder of the meeting and for
any adjournment of that meeting unless a new record date is or must be set for
the adjourned meeting. A new record date must be set if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting.
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1.9 Voting Requirements; Action Without Meeting.
-------------------------------------------
1.9.1 If a quorum exists, action on a matter, other than the
election of directors, by a voting group is approved if the votes cast within
the voting group favoring the action exceed the votes cast opposing the action,
unless a greater number of affirmative votes is required by law or the Articles
of Incorporation. Unless otherwise provided in the Articles of Incorporation,
directors are elected by a plurality of the votes cast by the shares entitled to
vote in the election at a meeting at which a quorum is present.
1.9.2 Action required or permitted by law to be taken at a
shareholders meeting may be taken without a meeting if the action is taken by
all the shareholders entitled to vote on the action. The action must be
evidenced by one or more written consents describing the action taken, signed by
all the shareholders entitled to vote on the action and delivered to the
Secretary for inclusion in the minutes for filing with the corporate records.
Shareholder action taken by written consent is effective when the last
shareholder signs the consent, unless the consent specifies an earlier or later
effective date.
1.10 Proxies. A shareholder may vote shares in person or by proxy. A
-------
shareholder may appoint a proxy by signing an appointment form either personally
or by the shareholder's attorney-in-fact. An appointment of a proxy is
effective when received by the Secretary or other officer of the Corporation
authorized to tabulate votes. An appointment is valid for 11 months unless a
different period is provided in the appointment form. An appointment is
revocable by the shareholder unless the appointment form conspicuously states
that it is irrevocable and the appointment is coupled with an interest that has
not been extinguished.
1.11 Meeting by Telephone Conference. Shareholders may participate in an
-------------------------------
annual or special meeting by, or conduct the meeting through, use of any means
of communications by which all shareholders participating may simultaneously
hear each other during the meeting, except that no meeting for which a written
notice is sent to shareholders may be conducted by this means unless the notice
states that participation in this manner is permitted and describes how any
shareholder desiring to participate in this manner may notify the Corporation.
Participation in a meeting by this means shall constitute presence in person at
the meeting.
ARTICLE 2.
BOARD OF DIRECTORS
2.1 Duties of Board of Directors. All corporate powers of the Corporation
----------------------------
shall be exercised by or under the authority of its Board of Directors; the
business and affairs of the Corporation shall be managed under the direction of
its Board of Directors.
2.2 Number, Term and Qualification. The initial number of directors of
------------------------------
the Corporation shall be at least three (3). At such time as the corporation
has more than one
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shareholder the number of directors shall be not less than nine (9) and no more
than twenty-one (21). Within this range, the number of directors shall be
determined from time to time by the Board of Directors. At such time as the
number of directors is first increased to nine or more, the directors shall be
divided into three classes, as nearly equal in number as possible, with the term
of office of the first class ("Class I") to expire at the first annual meeting
of shareholders, the term of office of the second class ("Class II") to expire
at the second annual meeting of shareholders following the classification and
the term of office of the third class ("Class III") to expire at the third
annual meeting of shareholders following the classification. At each annual
meeting of shareholders following such initial classification and election,
directors elected to succeed those directors whose terms expire shall be elected
to serve three-year terms and until their successors are elected and qualified,
so that the term of one class of directors will expire each year. When the
number of directors is changed pursuant to this Section 2.2, any newly created
directorships, or any decrease in directorships, shall be so apportioned among
the classes so as to make all classes as nearly equal as possible, provided that
no decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director. Directors need not be residents of
the State of Oregon or shareholders of the Corporation. No reduction in the
number of directors shall shorten the term of any incumbent director.
2.3 Shareholder Nomination of Directors.
-----------------------------------
2.3.1 Not less than 50 days nor more than 75 days prior to the
date of any annual meeting of shareholders, any shareholder who intends to make
a nomination at the annual meeting shall deliver a notice to the Secretary of
the Corporation setting forth (a) as to each nominee whom the shareholder
proposes to nominate for election or reelection as a director, (i) the name,
age, business address and residence address of the nominee, (ii) the principal
occupation or employment of the nominee, (iii) the class and number of shares of
capital stock of the Corporation which are beneficially owned by the nominee and
(iv) any other information concerning the nominee that would be required, under
the rules of the Securities and Exchange Commission, in a proxy statement
soliciting proxies for the election of such nominee; and (b) as to the
shareholder giving the notice, (i) the name and record address of the
shareholder and (ii) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the shareholder; provided, however,
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that in the event that less than 65 days' notice or prior public disclosure of
the date of the annual meeting is given or made to shareholders, notice by the
shareholder to be timely must be so delivered not later than the close of
business on the 15th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made, whichever first
occurs. Such notice shall include a signed consent to serve as a director of
the Corporation, if elected, of each such nominee. The Corporation may require
any proposed nominee to furnish such other information as may reasonably be
required by the Corporation to determine the eligibility of such proposed
nominee to serve as a director of the Corporation.
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2.3.2 Any shareholder who intends to make a nomination at any
special meeting of shareholder who intends to make a nomination at any special
meeting of shareholders held for the purpose of electing directors shall deliver
a timely notice to the Secretary of the corporation setting for (a) as to each
nominee whom the shareholder proposes to nominate for election or reelection as
a director, (i) the name, age, business address and residence address of the
nominee, (ii) the principal occupation or employment of the nominee, (iii) the
class and number of shares of capital stock of the corporation that are
beneficially owned by the nominee and (iv) any other information concerning the
nominee that would be required, under the rules of the Securities and Exchange
Commission, in a proxy statement soliciting proxies for the election of such
nominee; and (b) as to the shareholder giving the notice, (i) the name and
record address of the shareholder and (ii) the class and number of shares of
capital stock of the corporation that are beneficially owned by the shareholder.
To be timely for these purposes, such notice must be given (a) if given by the
shareholder (or any of the shareholders) who or that made a demand for a meeting
pursuant to which such meeting is to be held concurrently with the delivery of
such demand, and (b) otherwise, not later than the close of business on the 10th
day following the day on which the notice of the special meeting was mailed.
Such notice shall include a signed consent to serve as a director of the
corporation, if elected, of each such nominee. The Corporation may require any
proposed nominee to furnish such other information as may reasonably be required
by the Corporation to determine the eligibility of such proposed nominee to
serve as a director of the Corporation.
2.4 Regular Meetings. A regular meeting of the Board of Directors shall
----------------
be held without notice other than this Bylaw immediately after, and at the same
place as, the annual meeting of shareholders. The Board of Directors may
provide by resolution the time and place for the holding of additional regular
meetings in or out of Oregon without notice other than the resolution.
2.5 Special Meetings. Special meetings of the Board of Directors may be
----------------
called by or at the request of the Chairman, the Chief Executive Officer, the
President or any three directors. The person or persons authorized to call
special meetings of the Board of Directors may fix any place in or out of Oregon
as the place for holding any special meeting of the Board of Directors called by
them.
2.6 Notice. Notice of the date, time and place of any special meeting of
------
the Board of Directors shall be given at least 24 hours prior to the meeting by
notice communicated in person, by telephone, telegraph, teletype, other form of
wire or wireless communication, mail or private carrier. If written, notice
shall be effective at the earliest of (a) when received, (b) three days after
its deposit in the United States mail, as evidenced by the postmark, if mailed
postpaid and correctly addressed, or (c) on the date shown on the return
receipt, if sent by registered or certified mail, return receipt requested and
the receipt is signed by or on behalf of the addressee. Notice by all other
means shall be deemed effective when received by or on behalf of the director.
Notice of any regular or special meeting need not describe the purposes of the
meeting unless required by law or the Articles of Incorporation.
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2.7 Waiver of Notice. A director may at any time waive any notice
----------------
required by law, these Bylaws or the Articles of Incorporation. Except as set
forth below, the waiver must be in writing, be signed by the director entitled
to the notice, specify the meeting for which notice is waived and be filed with
the minutes or corporate records. A director's attendance at or participation
in a meeting waives any required notice to the director of the meeting unless
the director at the beginning of the meeting, or promptly upon the director's
arrival, objects to holding the meeting or transacting business at the meeting
and does not thereafter vote for or assent to action taken at the meeting.
2.8 Quorum. A majority of the number of directors fixed in accordance
------
with Section 2.2 of these Bylaws shall constitute a quorum for the transaction
of business at any meeting of the Board of Directors. If less than a quorum is
present at a meeting, a majority of the directors present may adjourn the
meeting from time to time without further notice.
2.9 Manner of Acting. The act of the majority of the directors present at
----------------
a meeting at which a quorum is present shall be the act of the Board of
Directors, unless a different number is provided by law, the Articles of
Incorporation or these Bylaws.
2.10 Meeting by Telephone Conference; Action Without Meeting.
-------------------------------------------------------
2.10.1 Directors may participate in a regular or special meeting by,
or conduct the meeting through, use of any means of communications by which all
directors participating may simultaneously hear each other during the meeting.
Participation in a meeting by this means shall constitute presence in person at
the meeting.
2.10.2 Any action that is required or permitted to be taken at a
meeting of the Board of Directors may be taken without a meeting if one or more
written consents describing the action taken are signed by all of the directors
entitled to vote on the matter and included in the minutes or filed with the
corporate records reflecting the action taken. The action shall be effective
when the last director signs the consent, unless the consent specifies an
earlier or later effective date.
2.11 Vacancies. Any vacancy on the Board of Directors, including a vacancy
---------
resulting from an increase in the number of directors, may be filled by the
Board of Directors, the remaining directors if less than a quorum (by the vote
of a majority thereof) or by a sole remaining director. If the vacancy is not
so filled, it shall be filled by the shareholders at the next annual meeting of
shareholders. A vacancy that will occur at a specified later date, by reason of
a resignation or otherwise, may be filled before the vacancy occurs, but the new
director may not take office until the vacancy occurs.
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2.12 Compensation. By resolution of the Board of Directors, the directors
------------
may be paid reasonable compensation for services as directors and their expenses
of attending meetings of the Board of Directors.
2.13 Presumption of Assent. A director who is present at a meeting of the
---------------------
Board of Directors or a committee of the Board of Directors shall be deemed to
have assented to the action taken at the meeting unless (a) the director's
dissent or abstention from the action is entered in the minutes of the meeting,
(b) the director delivers a written notice of dissent or abstention to the
action to the presiding officer of the meeting before any adjournment or to the
Corporation immediately after the adjournment of the meeting or (c) the director
objects at the beginning of the meeting or promptly upon the director's arrival
to the holding of the meeting or transacting business at the meeting. The right
to dissent or abstain is not available to a director who voted in favor of the
action.
2.14 Removal. The shareholders may remove one or more directors only for
-------
cause at a meeting called expressly for that purpose.
2.15 Resignation. Any director may resign by delivering written notice to
-----------
the Board of Directors, its chairperson or the Corporation. Unless the notice
specifies a later effective date, a resignation notice shall be effective upon
the earlier of (a) receipt, (b) five days after its deposit in the United States
mails, if mailed postpaid and correctly addressed, or (c) on the date shown on
the return receipt, if sent by registered or certified mail, return receipt
requested, and the receipt is signed by addressee. Once delivered, a
resignation notice is irrevocable unless revocation is permitted by the Board of
Directors.
ARTICLE 3.
COMMITTEES OF THE BOARD
3.1 Committees. The Board of Directors may create one or more committees
----------
and appoint members of the Board of Directors to serve on them. Each committee
shall have two or more members. The creation of a committee and appointment of
members to it must be approved by a majority of all directors in office when the
action is taken. Subject to any limitation imposed by the Board of Directors or
by law, each committee may exercise all the authority of the Board of Directors
in the management of the Corporation. A committee may not take any action that
a committee is prohibited from taking by the Oregon Business Corporation Act.
3.2 Changes of Size and Function. Subject to the provisions of law, the
----------------------------
Board of Directors shall have the power at any time to change the number of
committee members, fill committee vacancies, change any committee members and
change the functions and terminate the existence of a committee.
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3.3 Conduct of Meetings. Each committee shall conduct its meetings in
-------------------
accordance with the applicable provisions of these Bylaws relating to meetings
and action without meetings of the Board of Directors. Each committee shall
adopt any further rules regarding its conduct, keep minutes and other records
and appoint subcommittees and assistants as it deems appropriate.
3.4 Compensation. By resolution of the Board of Directors, committee
------------
members may be paid reasonable compensation for services on committees and their
expenses of attending committee meetings.
ARTICLE 4.
OFFICERS
4.1 Number. The officers of the Corporation shall be a President, one or
------
more Vice Presidents, Secretary and a Treasurer. Such other officers and
assistant officers as may be deemed necessary may be elected or appointed by the
Board of Directors and shall have such powers and duties as may be prescribed by
the Board of Directors. Any two or more offices may be held by the same person.
4.2 Election and Term of Office. The officers of the Corporation shall be
---------------------------
elected annually by the Board of Directors at the first meeting of the Board of
Directors held after the annual meeting of the shareholders. If the election of
officers shall not be held at the meeting, it shall be held as soon thereafter
as is convenient. Each officer shall hold office until a successor shall have
been duly elected and shall have qualified or until the officer's death,
resignation or removal in the manner hereinafter provided.
4.3 President. Unless otherwise determined by the Board of Directors
---------
pursuant to Section 4.7 of these Bylaws, the President shall be the chief
executive officer of the Corporation and, subject to the control of the Board of
Directors, shall be responsible for the general operation of the Corporation.
The President shall vote all shares of stock in other corporations owned by the
Corporation, and shall be empowered to execute proxies, waivers of notice,
consents and other instruments in the name of the Corporation with respect to
such stock. The President shall perform such other duties as may be required by
the Board of Directors.
4.4 Vice Presidents. In the absence of the President or in the event of
---------------
the President's death, inability or refusal to act, the Vice President (or in
the event there be more than one Vice President, the Vice Presidents in the
order designated at the time of their election, or in the absence of any
designation, then in the order of their election) shall perform the duties of
the President, and when so acting, shall have all the powers of and be subject
to all the restrictions upon the President. Any Vice President shall perform
such other duties as
9
<PAGE>
may be assigned from time to time by the Chairman, the President or by the Board
of Directors.
4.5 Secretary. The Secretary shall keep the minutes of all meetings of
---------
the directors and shareholders, and shall have custody of the minute books and
other records pertaining to the corporate business. The Secretary shall
countersign all stock certificates and other instruments requiring the seal of
the Corporation and shall perform such other duties as may be required by the
Board of Directors.
4.6 Chairman of the Board. The Board of Directors may designate a
---------------------
Chairman of the Board from within its membership. The Chairman of the Board
shall preside at all meetings of shareholders and directors, and shall perform
such other duties as may be required by the Board of Directors. In the absence
of the Chairman, or in the event of the Chairman's death, inability or refusal
to act, the duties of the Chairman shall be performed by the chief executive
officer or by such other officer as is designated by the Board of Directors,
who, when so acting, shall have all the powers and be subject to all the
restrictions upon the Chairman.
4.7 Chief Executive Officer, Chief Operating Officer, and Chief Financial
---------------------------------------------------------------------
Officer. The Board of Directors may designate a chief executive officer, a chief
- -------
operating officer, and a chief financial officer. The chief executive officer,
if one is designated, shall have general supervision, direction and control of
the business and affairs of the Corporation, subject to the control of the Board
of Directors. The chief operating officer, if one is designated, shall have
such general supervision, direction and control of the business and affairs of
the Corporation as shall be delegated to the chief operating officer by the
chief executive officer or by the Board of Directors. The chief financial
officer, if one is designated, shall be the principal financial accounting
officer of the Corporation and shall perform such other duties as the Board of
Directors may require.
4.8 Compensation. The Corporation may pay its officers reasonable
------------
compensation for their services as fixed from time to time by the Board of
Directors.
4.9 Removal. Any officer elected or appointed by the Board of Directors
-------
may be removed by the Board of Directors whenever in its judgment the best
interests of the Corporation would be served thereby, but removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer shall not of itself create contract
rights.
4.10 Vacancies. A vacancy in any office because of death, resignation,
---------
removal, disqualification or otherwise, may be filled by the Board of Directors
for the unexpired portion of the term.
10
<PAGE>
ARTICLE 5.
INDEMNIFICATION
The Corporation shall indemnify to the fullest extent not prohibited
by law, any current or former director or officer of the Corporation who is
made, or threatened to be made, a party to an action, suit or proceeding,
whether civil, criminal, administrative, investigative or other (including an
action, suit or proceeding by or in the right of the Corporation) by reason of
the fact that such person is or was a director or officer of the Corporation or
a fiduciary within the meaning of the Employee Retirement Income Security Act of
1974 with respect to any employee benefit plan of the Corporation, or serves or
served at the request of the Corporation as a director, officer, employee or
agent, or as a fiduciary of an employee benefit plan, of another corporation,
partnership, joint venture, trust or other enterprise. The Corporation shall
pay for or reimburse the reasonable expenses incurred by any such current or
former director or officer in any such proceeding in advance of the final
disposition of the proceeding if the person sets forth in writing (i) the
person's good faith belief that the person is entitled to indemnification under
this Article and (ii) the person's agreement to repay all advances if it is
ultimately determined that the person is not entitled to indemnification under
this Article. No amendment to these Bylaws that limits the Corporation's
obligation to indemnify any person shall have any effect on such obligation for
any act or omission that occurs prior to the later to occur of the effective
date of the amendment or the date notice of the amendment is given to the
person. This Article shall not be deemed exclusive of any other provisions for
indemnification or advancement of expenses of directors, officers, employees,
agents and fiduciaries that may be included in the Articles of Incorporation or
any statute, bylaw, agreement, general or specific action of the Board of
Directors, vote of shareholders or other document or arrangement.
ARTICLE 6.
ISSUANCE OF SHARES
6.1 Adequacy of Consideration. Before the Corporation issues shares, the
-------------------------
Board of Directors shall determine that the consideration received or to be
received for the shares to be issued is adequate. The authorization by the
Board of Directors of the issuance of shares for stated consideration shall
evidence a determination by the Board that such consideration is adequate.
6.2 Certificates for Shares.
-----------------------
6.2.1 Certificates representing shares of the Corporation shall be in
any form determined by the Board of Directors consistent with the requirements
of the Oregon Business Corporation Act and these Bylaws. The certificates shall
be signed, either manually or in
11
<PAGE>
facsimile, by two officers of the Corporation, at least one of whom shall be the
President or a Vice President, and may be sealed with the seal of the
Corporation, if any, or a facsimile thereof. All certificates for shares shall
be consecutively numbered or otherwise identified. The signatures of officers
upon a certificate may be facsimiles if the certificate is countersigned by a
transfer agent or any assistant transfer agent or registered by a registrar,
other than the Corporation itself or an employee of the Corporation.
6.2.2 Every certificate for shares of stock that are subject to any
restriction on transfer or registration of transfer pursuant to the Articles of
Incorporation, the Bylaws, securities laws, a shareholders agreement or any
agreement to which the Corporation is a party shall have conspicuously noted on
the face or back of the certificate either the full text of the restriction or a
statement of the existence of the restriction and that the Corporation retains a
copy of the full text. Every certificate issued when the Corporation is
authorized to issue more than one class or series within a class of shares shall
set forth on its face or back either (a) a summary of the designations, relative
rights, preferences and limitations of the shares of each class and the
variations in rights, preferences and limitations for each series authorized to
be issued and the authority of the Board of Directors to determine variations
for future series or (b) a statement of the existence of those designations,
relative rights, preferences and limitations and a statement that the
Corporation will furnish a copy thereof to the holder of the certificate upon
written request and without charge.
6.2.3 All certificates surrendered to the Corporation for transfer
shall be canceled. The Corporation shall not issue a new certificate for
previously issued shares until the former certificate or certificates for those
shares are surrendered and canceled; except that in case of a lost, destroyed or
mutilated certificate, a new certificate may be issued on terms prescribed by
the Board of Directors.
6.3 Transfer Agent and Registrar. The Board of Directors may from time to
----------------------------
time appoint one or more transfer agents and one or more registrars for the
shares of the Corporation, with powers and duties determined by the Board of
Directors.
6.4 Officer Ceasing to Act. If the person who signed a share certificate,
----------------------
either manually or in facsimile, no longer holds office when the certificate is
issued, the certificate is nevertheless valid.
ARTICLE 7.
CONTRACTS, LOANS, CHECKS AND OTHER INSTRUMENTS
7.1 Contracts. Except as otherwise provided by law, any officers may
---------
execute and deliver, in the name of and on behalf of the Corporation, any
contract or instrument (including but not limited to notes, bonds, stocks or
other securities standing in or registered in the name of the Corporation and
all transfers and conveyances of real estate, assignments of mortgages,
12
<PAGE>
extensions of mortgages, release of mortgages, powers of attorney to satisfy
mortgage of record, leases and assignments of leases and generally all
instruments touching or affecting the title to real estate held or owned by the
Corporation); provided however, that the Board of Directors may at any time
limit the authority of any officer to execute and deliver any contract or
instrument or any type of contract or instrument.
7.2 Loans. The Corporation shall not borrow money and no evidence of
-----
indebtedness shall be issued in its name unless authorized by the Board of
Directors. This authority may be general or confined to specific instances.
7.3 Checks, Drafts, Etc. All checks, drafts or other orders for the
--------------------
payment of money and notes or other evidences of indebtedness issued in the name
of the Corporation shall be signed in the manner and by the officers or agents
of the Corporation designated by the Board of Directors.
7.4 Deposits. All funds of the Corporation not otherwise employed shall
--------
be deposited to the credit of the Corporation in those banks, trust companies or
other depositaries as the Board of Directors or officers of the Corporation
designated by the Board of Directors select, or be invested as authorized by the
Board of Directors.
ARTICLE 8.
MISCELLANEOUS PROVISIONS
8.1 Corporate Seal. The seal of the Corporation shall be an escutcheon
--------------
identical to that of the State of Oregon, with the following legend surrounding
it: "StanCorp Financial Group, Inc., Corporate Seal."
8.2 Severability. A determination that any provision of these Bylaws is
------------
for any reason inapplicable, invalid, illegal or otherwise ineffective shall not
affect or invalidate any other provision of these Bylaws.
8.3 Amendments. Both the Board of Directors and the shareholders shall
----------
have the power to alter, amend or repeal the Bylaws of the Corporation. Any
repeal or change of the Bylaws by the shareholders shall require the affirmative
vote of not less than 70 percent of the votes entitled to be cast on the matter.
Adopted: _______________
13
<PAGE>
Exhibit 4.1
<TABLE>
<S> <C>
LISAM 11-19-98 12-2-98 12-21-98 1-29-99 2-3-99 2-4-99 2-8-99 3-2-99 RMV ETHER 33 H 59535-G
===================================================================================================
</TABLE>
[NUMBER SFG] [ARTWORK] THE WILL TO ACHIEVE [SHARES]
StanCorp Financial Group, Inc.
COMMON COMMON
INCORPORATED UNDER THE LAWS THIS CERTIFICATE IS TRANSFERABLE IN
OF THE STATE OF OREGON NEW YORK, NY, RIDGEFIELD PARK, NJ
AND SEATTLE, WA
CUSIP 852891 10 0
SEE REVERSE FOR CERTAIN DEFINITIONS
- --------------------------------------------------------------------------------
THIS CERTIFIES THAT
IS THE OWNER OF
- --------------------------------------------------------------------------------
FULLY-PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
StanCorp Financial Group, Inc., transferable on the books of the Corporation in
person or by duly authorized attorney upon surrender of this certificate
properly endorsed. This certificate is not valid until countersigned by the
Transfer Agent and registered by the Registrar.
<TABLE>
<S> <C> <C>
Witness the corporate seal of said Corporation [Corporate Seal 1998] and the signatures of its duly authorized officers.
STANCORP FINANCIAL GROUP, INC.
STATE OF OREGON
/s/ J. Gray Dan /s/ Ronald E. Timpe
VICE PRESIDENT AND CORPORATE SECRETARY CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
================================================================================
AMERICAN BANK NOTE COMPANY
<PAGE>
The Corporation shall furnish without charge to each shareholder who so
requests a statement of the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock of the
Corporation or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Such requests shall be made to
the Corporation's Secretary at the principal office of the Corporation.
This certificate also evidences and entitles the holder hereof to
certain rights set forth in a Rights Agreement between StanCorp Financial Group,
Inc. (the "Company") and ChaseMellon Shareholder Services, L.L.C. dated as of
January 19, 1999 (the "Rights Agreement"), the terms of which are incorporated
herein by reference and a copy of which is on file at the principal executive
offices of the Company. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Company will mail to the holder of
this certificate a copy of the Rights Agreement without charge after receipt of
a written request thereof. Under certain circumstances, Rights beneficially
owned by Acquiring Persons or their Affiliates or Associates (as such terms are
defined in the Rights Agreement), and Rights previously owned by such Persons,
may become null and void.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT-..............Custodian...............
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act..................................
in common (State)
UNIF TRF MIN ACT-...............Custodian (until age....)
(Cust)
...............under Uniform Transfers
(Minor)
to Minors Act..........................
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED,_______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
| |
| |
- --------------------------------------
<TABLE>
<S> <C>
_______________________________________________________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
_______________________________________________________________________________________________________________________________
_______________________________________________________________________________________________________________________________
_________________________________________________________________________________________________________________________Shares
of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
_______________________________________________________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.
Dated________________________________
X_______________________________________________________________________________________
X_______________________________________________________________________________________
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE
NOTICE: FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED: ________________________________________________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBOKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMEBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad 15.
</TABLE>
KEEP THIS CERTIFICATE IN A SAFE PLACE. IF IT IS LOST, STOLEN, MUTILATED OR
DESTROYED, THE CORPORATION WILL REQUIRE A BOND OF INDEMNITY AS A CONDITION TO
THE ISSUANCE OF A REPLACEMENT CERTIFICATE.
<TABLE>
<S> <C>
- -------------------------------------------- ---------------------------------------------------
| AMERICAN BANK NOTE COMPANY | |PRODUCTION COORDINATOR: LISA MARTIN: 215-830-2155|
| 680 BLAIR MILL ROAD | | PROOF OF JANUARY 29, 1999 |
| HORSHAM, PA 19044 | | STANCORP FINANCIAL GROUP, INC. |
| (215) 657-3480 | | H 59535 bk |
............................................ ...................................................
| SALES: B. WARNER 1-708-599-0404 | | OPERATOR: JW/koshy/HJ/eg |
............................................ ...................................................
| /NET/BANKNOTE/HOME 14/STANCORP 59535 | | REV. 3 |
- -------------------------------------------- ---------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 10.1
AMENDED AND RESTATED RETENTION AGREEMENT
This Amended and Restated Retention Agreement is entered into on
___________, 1999, between STANDARD INSURANCE COMPANY, an Oregon corporation,
with its principal place of business located at Portland, Oregon, referred to as
the Company, and (Employee) (Address), Oregon, referred to as the Employee.
This agreement amends and restates the Retention Agreement dated April __, 1998
between the Company and the Employee.
Recitals:
A. The Company is evaluating the possibility of demutualizing and
restructuring itself as a publicly held stock holding company. Becoming a
public company could lead to the possible acquisition of the Company's
securities by another company or companies, the possible merger of the Company
with or into another company or companies, a purchase of its assets or some
other form of change of control of the Company.
B. The Company intends to ask certain key management employees such as
Employee to undertake new responsibilities in connection with the development of
a possible plan of demutualization and new business strategies for a
demutualized insurance company business, including but not limited to a new
business plan and a new organization plan.
C. It is in the best interests of the Company and its policyholders that
employees selected to perform these new responsibilities remain committed to
these important new tasks throughout the anticipated demutualization process and
resulting implementation of the newly adopted organization and business plans,
all while continuing to perform the responsibilities of their present positions.
D. To achieve these objectives, the Company and the Employee desire to
enter into an agreement providing the Employee with certain benefits for
undertaking the new responsibilities under the conditions provided in this
Agreement.
AGREEMENT:
Therefore, and in consideration of the recitals and the mutual covenants
and agreements set forth below, and intending to be legally bound by this
agreement, the parties agree as follows:
1. Term of Agreement. The Agreement shall continue in full force and
effect from the date stated above until December 31, 2000 (the "Bonus Maturity
Date").
2. Duties. The Employee shall cooperate with Company and work in good
faith to perform such duties and discharge such responsibilities on a full-time
basis as may be reasonably assigned to the Employee from time to time by the
Company.
1
<PAGE>
3. Bonus Compensation Formula.
A. For purposes of this Agreement, the Employee's base salary shall be the
Employee's annual rate of pay in effect January 1, 1998, excluding any
compensation from Company incentive plans, other bonuses, or employee benefit
plans ("Base Salary"). Employee's Base Salary is set forth in Exhibit "A".
B. As part of this Agreement, Company has assigned Employee the
participation factor set forth in Exhibit "A" (the "Participation Factor").
C. At the end of each calendar quarter beginning March 31, 1998, Company
shall determine the rate of return on equity which the Company has achieved over
the immediately previous calendar quarter ("Return on Equity"). The Return on
Equity for each calendar quarter shall then be converted into a Return on Equity
Factor ("ROE Factor") as determined by the ROE Factor Chart in Exhibit "B".
D. In the event that the Company becomes a publicly held stock company or
part of a publicly held insurance holding company during the term of this
Agreement, the Company shall determine the percentage change in the closing
price of the publicly held stock from the last business day of the full calendar
quarter immediately after the first calendar quarter in which a market price for
the stock of the publicly held company is first established, through the close
of business on the Maturity Date (the "Stock Price Factor").
E. On the Bonus Maturity Date, Company shall calculate the average ROE
Factor for all of the calendar quarters commencing January 1, 1998 through the
calendar quarter immediately after the first calendar quarter in which a market
price for the stock of the publicly held company is first established (the
"Average ROE Factor").
F. If Employee remains continuously in the employ of Company until the
Bonus Maturity Date, the bonus compensation payable to Employee ("Bonus
Compensation") shall be determined by (i) multiplying Employee's Base Salary by
the Employee's Participation Factor; (ii) multiplying the amount thus determined
by the Average ROE Factor; and (iii) multiplying the amount thus determined by
the Stock Price Factor. If a Stock Price Factor is not established by the Bonus
Maturity Date, Bonus Compensation shall be determined without consideration of
the Stock Price Factor. An example of the Bonus Compensation formula is set
forth in Exhibit "B".
G. The resulting Bonus Compensation shall immediately vest and be payable
to Employee on or before April 1, 2001. At the option of Company, up to sixty
percent (60%) of the amount which vests on the Bonus Maturity Date may be paid
in voting stock of the Company or of any insurance holding company of which the
Company may become a part. For purposes of this Agreement, such stock shall be
valued at the closing price for the stock as of the Bonus Maturity Date. At
least forty percent (40%) of the amounts which vests on the
2
<PAGE>
Bonus Maturity Date shall be paid in cash.
H. The Board of Directors of the Company shall retain the right, in its
sole discretion, to adjust any Bonus Compensation, up or down, by up to fifty
percent (50%) to recognize positive or negative events deemed to be beyond the
normal control of management which may affect an Employee's Bonus Compensation.
I. The Employee shall have no right to receive payment of any Bonus
Compensation unless the Employee remains in the employment of the Company at all
times from the date of this agreement through the Bonus Maturity Date.
Notwithstanding the foregoing, in the event of Employee's death or total
disability during the term of this Agreement or termination of Employee's
employment within 24 months following a Change of Control (as defined in the
Change of Control Agreement dated April __, 1998 between the Company and
Employee, as amended) which termination entitles Employee to the benefits
provided in Section 5 of the Change of Control Agreement), Company shall
calculate a prorated Bonus Compensation based upon the full calendar quarters
accrued prior to the calendar quarter in which the Employee's death, total
disability or termination of employment occurs. "Total Disability" means
complete and permanent inability by reason of illness or accident to perform the
duties of the occupation at which Employee was employed by Company when such
disability commenced.
J. Notwithstanding anything herein to the contrary, if the Chairman,
President and Chief Executive Officer of the Company, in his sole discretion,
concludes that the Employee has failed to fulfill the Employee's assigned duties
in a satisfactory manner, the Chairman, President and Chief Executive Officer
may terminate this Agreement in whole or in part.
4. General Restriction on Stock. If the Company elects to award any
portion of the Bonus Compensation in the form of stock, Employee shall represent
and warrant to and agree with the Company to take such shares for investment
only and not for purposes of sale and to also take for investment only and not
for purposes of sale of any rights, warrants, shares, or securities which may be
issued to Employee on account of ownership of such shares and that Employee will
not sell or transfer any shares received as Bonus Compensation or any rights,
shares, or securities issued on account of the shares received without first
having obtained an opinion of counsel for the Company that such shares, rights,
warrants, or other securities may be disposed of without registration or other
action under the Securities Act of 1933.
5. Legal Fees and Expenses. If the Employee asserts any claim in any
contest (whether initiated by the Employee or by the Company) as to the
validity, enforceability or interpretation of any provision of this agreement,
the Company shall pay the Employee's legal expenses (or cause such expenses to
be paid) including, without limitation, his reasonable attorney's fees, on a
quarterly basis, upon presentation of proof of such expenses, PROVIDED THAT the
Employee shall reimburse the Company for such amounts, plus simple interest
3
<PAGE>
thereon at the 90-day United States Treasury Bill rate as in effect from time to
time, compounded annually, if the Employee shall not prevail, in whole or in
part, as to any material issue as to the validity, enforceability or
interpretation of any provision of this Agreement.
6. Successors.
A. This agreement is personal to the Employee and without the prior
written consent of the Company, shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This agreement
shall inure to the benefit of and be enforceable by the Employee's legal
representatives.
B. This agreement shall inure to the benefit of and be binding upon the
Company and its successors. The Company shall require any successor to all or
substantially all of the business and/or assets of the Company, whether direct
or indirect, by purchase, merger, consolidation, acquisition of stock, or
otherwise, by an agreement in form and substance satisfactory to the Employee,
expressly to assume and agree to perform this agreement in the same manner and
to the same extent as the Company would be required to perform if no such
succession had taken place.
7. Miscellaneous.
A. Applicable Law. This agreement shall be governed by and construed and
conferred in accordance with the laws of the State of Oregon applied without
reference to principles of conflict of laws.
B. No Right to Employment. Neither this agreement nor rights and
interests hereby created shall be construed as giving Employee any right to be
retained by Company as an employee; and the Company, acting through its
Chairman, President and Chief Executive Officer, may terminate Employee at any
time and without cause.
C. Employee Termination. Except for termination due to Employee's death
or Total Disability, the provisions of this agreement shall not apply if the
Employee is terminated for any cause, including but not limited to:
(i) dishonesty;
(ii) the conviction of a felony;
(iii) gross misconduct which results or is intended to result in
material damage to the Company's business or reputation;
(iv) a breach of this Agreement, including any voluntary termination
of this Agreement by the Employee; or
(v) discretionary decision of Chairman, President and Chief
Executive Officer.
4
<PAGE>
D. Arbitration. Any dispute or controversy arising under or in
connection with this agreement shall be resolved by binding arbitration. The
arbitration shall be held at a site selected by the arbitrators and except to
the extent inconsistent with this agreement, shall be conducted in accordance
with the Expedited Employment Arbitration Rules of the American Arbitration
Association then in effect at the time of the arbitration, and otherwise in
accordance with principles which would be applied by a court of law or equity.
The arbitrator shall be acceptable to both the Company and the Employee. If the
parties cannot agree on an acceptable arbitrator, the dispute shall be heard by
a panel of three arbitrators, one appointed by each of the parties and the third
appointed by the other two arbitrators.
E. Amendments. During the term of this agreement, it may only be
amended or modified by agreement of the Board of Directors and the Employee.
F. Prior Rights. No prior rights granted the Employee under any of
the Company's employee benefit plans or other compensation arrangements shall be
altered, extinguished or affected by this agreement.
G. Entire Agreement. This agreement shall constitute the entire
agreement between the parties hereto with respect to the matters referred to
herein. There are no promises, representations, inducements or statements
between the parties other than those that are expressly contained herein. In
the event any provision of this agreement is invalid or unenforceable, the
validity and enforceability of the remaining provisions hereof shall not be
affected. The Employee acknowledges that he is entering into this agreement of
his own free will and accord, and with no duress, that he has read this
agreement and that he understands it and its legal consequences.
In witness whereof, the parties have executed this agreement
-----------------------------------------
at Portland, Oregon the day and year first above written.
- ---------------------------------------------------------
COMPANY EMPLOYEE
STANDARD INSURANCE COMPANY,
an Oregon corporation _________________________
By:_________________________________
Its Chairman, President and
Chief Executive Officer
ATTEST:
By:_________________________________
Its Corporate Secretary
5
<PAGE>
EXHIBIT "B"
ROE FACTOR CHART
--------------------------------------
Average of Quarterly
Return on Equity Factor
--------------------------------------
4.0% and Below .0
5.0 .4
6.0 .7
7.0 .9
8.0 1.0
9.0 1.1
10.0 1.3
11.0 1.5
12.0 1.7
13.0 1.9
14.0 and Above 2.0
--------------------------------------
BONUS COMPENSATION FORMULA:
- --------------------------
(1998 Base Salary)(Participation Factor)(Average ROE Factor)(Stock Price
Factor)= BONUS COMPENSATION
CALCULATION EXAMPLE
- -------------------
($200,000)(.5)(.9)($22/$20) = $99,000
Where: - $200,000 is the 1998 base pay
- .5 is the participation factor
- Hypothetical quarterly returns on equity are, as shown below,
producing an average ROE of 7% and a .9 factor from the table
- Hypothetical demutualization date occurs in sixth calendar quarter
6
<PAGE>
-----------------------------------------
Period Hypothetical
ROE
-----------------------------------------
1998 Quarter 1 9%
1998 Quarter 2 5
1998 Quarter 3 6
1998 Quarter 4 10
1999 Quarter 1 7
1999 Quarter 2 7
1999 Quarter 3 5
Total 49%
Average Over 7 7%
Quarters
Factor from Table .9
-----------------------------------------
- Hypothetical stock price is $22.00 as of 12/31/00 and $20.00 as of
9/30/99 (end of calendar quarter which starts after the
demutualization date)
Payout would occur as $39,600 in cash and 2,700 shares of stock ($59,400/22) at
the current price assuming the Company elects to pay out up to 60% in stock.
7
<PAGE>
EXHIBIT 10.2
AMENDED AND RESTATED CHANGE OF CONTROL AGREEMENT
This Amended and Restated Change of Control Agreement (the "Agreement") is
entered into on ______, 1999, by and between STANDARD INSURANCE COMPANY, an
Oregon corporation (the "Company"), having it principal place of business at
1100 SW Sixth Avenue, Portland, Oregon 97204, and [insert Executive's name]
("Executive"), [insert Executive's address]. This agreement amends and restates
the Employment Continuation Agreement dated April __, 1998 between the Company
and Executive.
RECITALS
A. The Company is evaluating the possibility of demutualizing and
restructuring as a stock company and a subsidiary of a public company. The
Company recognizes that, as is the case with many publicly held corporations,
the possibility of a change of control may exist, and that such possibility, and
the uncertainty and questions it may raise among management, may result in the
departure or distraction of key management personnel to the detriment of the
Company.
B. It is in the best interests of the Company and its policyholders that key
management personnel, including Executive, continue to be employed by the
Company, perform the responsibilities of their positions without undue
distraction and exercise their judgment without bias or concern due to their
personal circumstances.
C. Accordingly, the Company has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and dedication of key
members of the Company's management to their assigned duties without distraction
resulting from the possibility of a change of control of the Company.
D. To induce Executive to remain employed by the Company in the face of
uncertainties and a possible change of control, this Agreement, which has been
approved by the Board of Directors of the Company (the "Board"), sets forth the
severance benefits that the Company will provide to Executive in the event that
Executive's employment is terminated subsequent to a "Change of Control" under
the circumstances described below. Capitalized terms not otherwise defined in
this Agreement have the meanings given to such terms in Section 10.
AGREEMENT
THEREFORE, in consideration of the foregoing recitals and the mutual covenants
and agreements set forth below, the parties agree as follows:
1. Employment Relationship. Executive is currently employed by the Company as
[insert Executive's current position]. Executive and the Company acknowledge
that the Company may terminate Executive's employment for any or no reason at
any time, subject to
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the obligation (if any) of the Company to provide the severance benefits
specified in this Agreement in accordance with the terms hereof.
2. Release of Claims. In consideration for and as a condition precedent to
receiving the severance benefits outlined in this Agreement, Executive agrees to
execute a Release in the form attached as Exhibit A (the "Release"). Executive
promises to execute and deliver the Release to the Company within the later of
(a) 45 days after the date Executive receives the Release or (b) the last day of
Executive's active employment. Any payments required under this Agreement will
be payable only after receipt by the Company of a signed Release from Executive.
3. Term and Termination of Agreement. This Agreement shall commence on
December 1, 1999 (the "Effective Date") and shall continue in effect through
December 3l, 2001 (the "Expiration Date"); provided, however, that commencing on
January 1, 2002, and each January 1 thereafter, the term of this Agreement shall
automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Company shall have given notice that it
does not wish to extend this Agreement; provided, that no such notice may be
given during the pendency of a potential Change of Control, as defined in
Section 10.2; provided, further, that if a Change of Control shall have occurred
during the original or extended term of this Agreement, this Agreement shall
continue in effect for a period of 24 months beyond the month in which such
Change of Control occurred.
3.1 Notwithstanding the foregoing, this Agreement shall terminate
immediately if:
3.1.1 Executive voluntarily terminates employment with the Company other
than for Good Reason;
3.1.2 Executive's employment by the Company is terminated by reason of
Executive's death, Disability or voluntary retirement under any of the
Company's retirement plans; or
3.1.3 the Company terminates Executive's employment prior to a Change of
Control.
3.2 The Company may terminate this Agreement during Executive's
employment, if, prior to a Change of Control, Executive ceases to hold
Executive's current position with the Company (other than as a result of a
promotion).
3.3 If a Change of Control shall have occurred at any time after the first
anniversary of the Effective Date, this Agreement shall continue in effect for
a period of 24 months beyond the month in which such Change of Control
occurred.
3.4 If on or before the Expiration Date, the Company or a holding company
formed to hold the Company's stock has entered into an agreement or announced
publicly its intent to enter into an agreement the consummation of which would
constitute a Change
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of Control, this Agreement shall continue in effect for 24 months beyond the
effective date of the Change of Control.
4. Duties. The Executive shall cooperate with the Company and shall promptly
and fully perform such duties and discharge such responsibilities on a full-time
basis as may reasonably be assigned by the Company to Executive from time to
time.
5. Termination Following Change of Control. If any of the events described in
Section 10.2 constituting a Change of Control of the Company shall have
occurred, Executive shall be entitled to the benefits provided for in this
Section 5 upon the subsequent termination of Executive's employment within 24
months after a Change of Control unless such termination is (a) because of
Executive's death, Disability or voluntary retirement under any of the Company's
retirement plans, (b) by the Company for Cause, or (c) by Executive other than
for Good Reason. If Executive's employment with the Company is terminated for
any reason and subsequently a Change of Control of the Company occurs, Executive
shall not be entitled to any benefits under this Agreement.
5.1 As severance pay and in lieu of any other compensation for periods
subsequent to the Termination Date, as defined in Section 10.5, the Company
shall pay Executive an amount in cash equal to three times the sum of (a)
Executive's annual base salary in effect at the time the Change of Control
occurs and (b) the incentive compensation payable to Executive under the
Company's Short Term Incentive Plan at the target bonus for the year in which
the Change of Control occurs.
5.2 For the thirty-month period commencing with the Termination Date, the
Company shall arrange to provide Executive with group health, dental and life
insurance benefits substantially similar to those which Executive was
receiving immediately prior to the Change of Control, and paid for by the
Company and the Executive in the same manner as immediately prior to the
Change of Control. Notwithstanding the foregoing, the Company shall not
provide any benefit otherwise receivable by Executive pursuant to this Section
5.2 to the extent that a similar benefit is actually received by Executive
from a subsequent employer during such thirty-month period, and any such
benefit actually received by Executive shall be promptly reported by Executive
to the Company.
5.3 All benefits to which Executive is entitled under the Company's
Defined Benefit Retirement Plan, the Senior Officers Deferred Compensation
Plan, Senior Officers Supplemental Retirement Plan and any other retirement or
deferred compensation plan shall immediately vest.
5.4 All outstanding stock options, stock bonuses or other stock awards
held by Executive under all stock option and stock incentive plans of the
Company shall become immediately vested and exercisable in full and all
outstanding stock options shall remain exercisable until the earlier of (a)
the first anniversary of the Termination Date (or, with respect to any
incentive stock option, the date that is three months after the Termination
Date) or (b) the option expiration date as set forth in the applicable option
agreement.
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5.5 The Company shall pay Executive an amount in cash equal to the target
bonus payable to Executive under any cash long term incentive plan in
operation immediately prior to the Change of Control, which amount shall be
prorated based on the number of months of operation prior to the Change of
Control; except, that if Executive received payment under such plan before the
Termination Date, then Executive shall not receive any payment under this
Section 5.5.
5.6 If and to the extent the Company has not adopted and implemented the
1999 StanCorp Financial Group Omnibus Stock Incentive Plan and made the
planned stock option grants to Executive under such plan as set forth on
Exhibit B (the "Planned Grant Options"), then the Company shall pay Executive
an amount in cash equal to (a) the Planned Grant Factor set forth on Exhibit B
(the "Grant Factor"), multiplied by (b) the positive difference, if any,
between (x) the aggregate consideration paid by the acquiring Person and (y)
the Base Value of the Company as determined hereinafter (the "Base Value").
The Base Value shall be the midpoint of the range of values of the Company
provided by Goldman, Sachs & Co. immediately before the effective date of the
Company's demutualization. If no such range of values shall have been
provided, then the Base Value shall be (a) the Retained Earnings of the
Company as reported in the audited GAAP financial statements of the Company
for the year which ended immediately prior to the year in which the Change of
Control occurs, multiplied by (b) 0.85.
5.7 Notwithstanding anything in this Agreement to the contrary, whether
or not Executive becomes entitled to any benefits under this Section 5, if any
of the benefits under this Section 5 or any other payment or benefit received
or to be received by Executive in connection with a Change of Control of the
Company (collectively, "Severance Payments") will be subject to the tax (the
"Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986,
amended (the "Code") (or any similar tax that may hereafter be imposed) the
Company shall pay to Executive at the time specified in Section 8 an
additional amount (the "Gross-Up Payment") such that the net amount retained
by Executive, after deduction of any Excise Tax on the Severance Payments and
any federal, state and local income tax and Excise Tax upon the payment
provided for by this subsection (i.e., upon the components of the Gross-Up
Payment), shall be equal to the Severance Payments.
For purposes of determining whether any amounts will be subject to the
Excise Tax and the amount of such Excise Tax, (a) all amounts representing the
Severance Payments shall be treated as "parachute payments" within the meaning
of Section 280G(b)(2) of the Code, and all "excess parachute payments" within
the meaning of Section 280G(b)(1) of the Code shall be treated as subject to
the Excise Tax, unless in the opinion of tax counsel selected by the Company's
independent auditors and acceptable to Executive, the Severance Payments (in
whole or in part) do not constitute parachute payments, or such excess
parachute payments (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of the
Code in excess of the base amount within the meaning of Section 280G(b)(3) of
the Code, or are otherwise not
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subject to the Excise Tax, (b) the amount of the Severance Payments which
shall be treated as subject to the Excise Tax shall be equal to the lesser of
(1) the total amount of the Severance Payments or (2) the amount of excess
parachute payments within the meaning of Section 280G(b)(1) of the Code (after
applying clause (a), above), and (c) the value of any non-cash benefits or any
deferred payment or benefit shall be determined by the Company's independent
auditors in accordance with the principles of Sections 280G(d)(3) and (4) of
the Code.
For purposes of determining the amount of the Gross-Up Payment, Executive
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross-Up Payment is
to be made and state and local income taxes at the highest marginal rate of
taxation in the state and locality of Executive's residence on the Termination
Date, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local taxes.
In the event that the Excise Tax is subsequently determined to be less than
the amount taken into account hereunder at the time of termination of
Executive's employment, Executive shall repay to the Company at the time that
the amount of such reduction in Excise Tax is finally determined the portion
of the Gross-Up Payment attributable to such reduction (plus the portion of
the Gross-Up Payment attributable to the Excise Tax and federal and state and
local income tax imposed on the Gross-Up Payment being repaid by Executive if
such repayment results in a reduction in Excise Tax and/or a federal and state
and local income tax deduction) plus interest on the amount of such repayment
at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that
the Excise Tax is determined to exceed the amount taken into account hereunder
at the time of the termination of Executive's employment (including by reason
of any payment the existence or amount of which cannot be determined at the
time of the Gross-Up Payment), the Company shall make an additional gross-up
payment in respect of such excess (plus any interest payable with respect to
such excess) at the time that the amount of such excess is finally determined.
6. Conditions on Eligibility for Severance Benefits. Executive shall not be
eligible to receive the benefits provided for in Section 5 if any of the
following applies:
6.1 Executive fails to execute and deliver the Release in the time period
set forth in Section 2, or, if applicable, Executive executes and later
revokes the Release within the revocation period; or
6.2 Executive fails to comply with Section 12 hereof.
7. Tax Withholding; Subsequent Employment.
7.1 All compensation, benefits and payments provided for in this
Agreement shall be paid after any withholding for taxes or other charges and
authorized deductions required (or permitted) to be withheld by the Company,
including but not
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limited to any federal income taxes, any applicable state taxes, FICA,
Medicare and any similar state or federal taxes or required state or federal
withholdings.
7.2 Except as provided in Section 5.2, the amount of any payment or
benefit provided for in this Agreement shall not be reduced, offset or subject
to recovery by the Company by reason of any compensation earned by Executive
as the result of employment by another employer after termination.
8. Payments. All amounts to be paid by the Company to Executive pursuant to
Section 5 shall be made not later than thirty days following the Termination
Date; provided, however, that if the amounts of such payments cannot be fully
determined on or before such date, the Company shall pay to Executive on such
day an estimate, as determined in good faith by the Company, of the minimum
amount of such payments and shall pay the remainder of such payments (together
with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon
as reasonably practicable after the amount thereof can be determined, but in no
event later that the ninetieth day after the Termination Date. If the amount of
the estimated payment exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to the Executive payable
on the fifth business day after demand therefor by the Company (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code).
9. Other Agreements. This Agreement shall supersede any prior change of
control agreement or employment continuation agreement between Company and
Executive.
10. Definitions.
10.1 "Cause" shall mean termination of Executive in any of the following
circumstances:
10.1.1 In the reasonable judgment of the Board, Executive has neglected
or willfully failed or refused to perform substantially Executive's
reasonably assigned duties with the Company (other than any such failure
resulting from Executive's Disability) and such failure continues for
thirty days after a demand for substantial performance is delivered to
Executive by the Board, the Chief Executive Officer or the President of the
Company which specifically identifies the manner in which the Board
believes that Executive has neglected or willfully failed or refused to
perform substantially Executive's duties;
10.1.2 In the reasonable judgment of the Board, Executive has engaged in
dishonesty in connection with or related to the performance of Executive's
material duties with the Company;
10.1.3 Executive is found guilty by a court or regulatory body of having
committed fraud or theft against the Company or any governmental entity or
of having committed a felony;
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10.1.4 Executive breaches in any material respect or voluntarily
terminates this Agreement; or
10.1.5 In the reasonable judgment of the Board, Executive engaged in
gross negligence or willful misconduct that causes or may reasonably be
expected to cause material harm to the business, operations or reputation
of the Company or any of its subsidiaries or affiliates.
10.2 "Change of Control" shall mean that one of the following events has
taken place (for the purposes of this Section 10.2 only all references to "the
Company" mean and include either the Company or any newly formed holding
company formed for the purpose of holding the Company's stock):
10.2.1 Any "Person," as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act") (other
than the Company, any trustee or other fiduciary holding securities under
an employee benefit plan of the Company, or any company owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then outstanding
securities;
10.2.2 The shareholders of the Company approve a merger or other
consolidation of the Company with any other company, other than (a) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) 51% or more of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (b) a merger
or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person acquires more than 30% of the
combined voting power of the Company's then outstanding securities;
10.2.3 The shareholders of the Company approve an agreement for the sale
or disposition by the Company of all or substantially all of its assets;
10.2.4 A tender or exchange offer is made for Common Stock (or
securities convertible into Common Stock) of the Company and such offer
results in a portion of those securities being purchased and the offeror
after the consummation of the offer is the beneficial owner (as determined
pursuant to Section 13(d) of the Exchange Act), directly or indirectly, of
securities representing at least 30% of the voting power of outstanding
securities of the Company; or
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10.2.5 During any period of twelve months or less, individuals who at
the beginning of such period constituted a majority of the Board cease for
any reason to constitute a majority of the Board unless the nomination or
election of such new directors was approved by a vote of at least two-
thirds of the directors then still in office who were directors at the
beginning of such period.
10.2.6 Any other event or combination of events which the Board, acting
in its sole discretion, determines to be a "Change of Control" for purposes
of this Agreement.
Notwithstanding anything set forth in this Section 10.2, no Change of Control
shall be deemed to have occurred for purposes of this Agreement by virtue of
any transaction which results in (a) Executive, or a group of Persons which
includes Executive, acquiring, directly or indirectly, 25% or more of the
combined voting power of the Company's voting securities; or (b) the
demutualization of the Company from a mutual company to a stock company, the
restructuring of the Company such that its stock is held by a newly formed
holding company or the initial sale of stock of the Company or any newly
formed holding company to the public.
10.3 "Disability" shall mean disability as determined under the Company's
long-term disability plans.
10.4 "Good Reason" shall mean and include any of the following:
10.4.1 The assignment of Executive to a different title, job or
responsibilities that results in a material decrease in the level of
responsibility of Executive or in the nature or status of Executive's
position with respect to the surviving company after the Change of Control
when compared to Executive's level of responsibility for the Company's
operations or the nature or status of Executive's position prior to the
Change of Control; provided, that Good Reason shall not exist if Executive
continues to have the same or a greater general level of responsibility
with respect to the former Company operations or a position of the same or
greater nature or status after the Change of Control as Executive had prior
to the Change of Control even if the former the Company operations are a
subsidiary or division of the surviving company.
10.4.2 A reduction by the Company or the surviving company in
Executive's annual base salary as in effect immediately prior to the Change
of Control.
10.4.3 A material reduction by the Company or the surviving company in
total benefits available to Executive under cash incentive, stock incentive
and other employee benefit plans after the Change of Control compared to
the total package of such benefits as in effect prior to the Change of
Control.
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10.4.4 The failure by the Company to obtain from any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business or assets of the Company the assent to
this Agreement contemplated by Section 11 hereof.
10.4.5 The Company or the surviving company requires Executive to be
based more than fifty miles from where Executive's office is located
immediately prior to the Change of Control, except for required travel on
company business to an extent substantially consistent with the business
travel obligations which Executive undertook on behalf of the Company prior
to the Change of Control.
Notwithstanding anything to the contrary set forth herein, the acceptance of
any of the aforementioned reductions, modifications or relocation for not
longer than three months shall not be deemed to be a waiver of the Executive's
right to terminate for Good Reason.
10.5 "Termination Date" shall mean the final day of Executive's active
employment by the Company or the surviving company after a Change of Control.
11. Successors; Binding Agreement.
11.1 The Company will require any successor (whether direct or indirect,
by purchase, merger, reorganization, consolidation or otherwise, including
without limitation any newly formed holding company formed for the purpose of
holding the Company's stock) to all or substantially all of the business or
assets of the Company ("Successor") expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession had taken place. As
used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any Successor which assumes and agrees to perform this Agreement
by operation of law, or otherwise.
11.2 This Agreement is personal to Executive and may not be transferred or
assigned by Executive other than by will or the laws of descent and
distribution without the prior written consent of the Company. This Agreement
shall inure to the benefit of and be enforceable by Executive and Executive's
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If Executive should die while any
amount would still be payable to Executive hereunder had Executive continued
to live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Executive's devisee, legatee or
other designee or, if there is no such designee, to Executive's estate.
12. Resignation of Corporate Offices. Executive will resign Executive's
office, if any, as a director, officer or trustee of the Company, its
subsidiaries or affiliates and of any other corporation or trust of which
Executive serves as such at the request of the Company, effective as of the
Termination Date. Executive agrees to provide the Company such written
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resignation(s) upon request and that no severance will be paid until after such
resignation(s) are provided.
13. Legal Fees and Expenses. If Executive asserts any claim in any contest
(whether initiated by Executive or by the Company) as to the validity,
enforceability or interpretation of any provision of this Agreement, the Company
shall pay Executive's legal expenses (or cause such expenses to be paid)
including, without limitation, reasonable attorney's fees, on a quarterly basis,
upon presentation of proof of such expenses; provided, that Executive shall
reimburse the Company for such amounts, plus simple interest thereon at the 90-
day United States Treasury Bill rate as in effect at the relevant time,
compounded annually, if Executive shall not prevail, in whole or in part, as to
any material issue as to the validity, enforceability or interpretation of any
provision of this Agreement.
14. Governing Law, Arbitration. This Agreement shall be construed in
accordance with and governed by the laws of the State of Oregon applied without
reference to conflicts of laws principles. Any dispute or controversy arising
under or in connection with this Agreement or the Release or the breach thereof,
shall be settled exclusively by binding arbitration. The arbitration shall be
held at a site selected by the arbitrator(s) and shall be conducted in
accordance with the Expedited Employment Arbitration Rules of the American
Arbitration Association then in effect. The arbitrator shall be selected by the
mutual consent of the Company and Executive. If the parties cannot agree on an
arbitrator, the dispute shall be heard by a panel of three arbitrators, one
appointed by each of the parties and the third appointed by the other two
arbitrators. Judgment may be entered on the award of the arbitrator(s) in any
court having jurisdiction.
15. Miscellaneous. No provision of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Executive and the Company. No waiver by either party
hereto at any time of any breach by the other party hereto of, or compliance
with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions
at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
16. Severability. If any of the provisions or terms of this Agreement
shall for any reason be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other terms of this Agreement, and this
Agreement shall be construed as if such unenforceable term had never been
contained in this Agreement.
17. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and during
the term of the Agreement supersedes the provisions of all prior agreements,
promises, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any officer, employee or representative
of any party hereto with respect to the subject matter hereof.
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Executive acknowledges that Executive is entering into this Agreement of his or
her own free will and accord and with no duress. Executive has read the
Agreement and the Release, and Executive understands the legal consequences of
the Agreement and the Release.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
STANDARD INSURANCE COMPANY
By:_____________________________
Name:___________________________
Title: Chairman, President and
Chief Executive Officer
Attest:
By:_____________________________
Name:__________________________
Title: Corporate Secretary
[EXECUTIVE]
_________________________________
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EXHIBIT A
RELEASE
1. PARTIES.
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The parties to this Release (hereinafter "Release") are
___________________________________________________________ and Standard
Insurance Company, an Oregon corporation.
1.1 Executive.
---------
For the purposes of this Release, "Executive" means
_______________________________________________________, and his or her
attorneys, heirs, executors, administrators, assigns, and spouse.
1.2 The Company.
------------
For purposes of this Release, the "Company" means Standard Insurance
Company, an Oregon corporation, its predecessors and successors, corporate
affiliates, and all of each corporation's officers, directors, employees,
insurers, agents, or assigns, in their individual and representative
capacities.
2. BACKGROUND AND PURPOSE.
----------------------
Executive was employed by the Company. Executive's employment is ending
effective __________ following a Change of Control as defined in Section 10.2
("Change of Control") of the Change of Control Agreement ("Agreement").
The purpose of this Release is to settle, and the parties hereby settle, fully
and finally, any and all claims Executive may have against the Company, whether
asserted or not, known or unknown, including, but not limited to, claims arising
out of or related to Executive's employment, any claim for reemployment, or any
other claims whether asserted or not, known or unknown, past or future, that
relate to Executive's employment, reemployment, or application for reemployment.
3. RELEASE.
-------
Except as reserved in paragraphs 3 or 3.1, Executive waives, acquits and
forever discharges the Company from any obligations the Company has and all
claims Executive may have including but not limited to obligations and/or claims
arising from the Agreement or any other document or oral agreement relating to
employment compensation, benefits severance or post-employment issues. Except
as reserved in Paragraph 3.1 or where expressly prohibited by law, Executive
hereby releases the Company from any and all claims, demands, actions, or causes
of action, whether known or unknown, arising from or
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related in any way to any employment of or past or future failure or refusal to
employ Executive by the Company, or any other past or future claim that relates
in any way to Executive's employment, compensation, benefits, reemployment, or
application for employment, with the exception of any claim Executive may have
against the Company for enforcement of this Release. This Release includes any
and all claims, direct or indirect, which might otherwise be made under any
applicable local, state or federal authority, including but not limited to any
claim arising under the Oregon statutes dealing with employment, discrimination
in employment, Title VII of the Civil Rights Act of 1964, the Civil Rights Act
of 1991, the Americans With Disabilities Act, the Family and Medical Leave Act
of 1993, the Equal Pay Act of 1963, Executive Order 11246, the Rehabilitation
Act of 1973, the Uniformed Services Employment and Reemployment Rights Act of
1994, the Age Discrimination in Employment Act, the Fair Labor Standards Act and
Oregon wage and hour statutes, all as amended, any regulations under such
authorities, and any applicable contract, tort, or common law theories.
3.1 Reservations of Rights.
----------------------
This Release shall not affect any rights which Executive may have under any
medical insurance, disability plan, workers' compensation, unemployment
compensation, applicable Company stock incentive plan(s), indemnifications,
401(k) plan, defined benefit plan, supplemental retirement plan, deferred
compensation plan or other employee benefit plan maintained by the Company in
which Executive is entitled to participate by law or by the terms of that plan
following a termination of employment.
3.2 No Admission of Liability.
-------------------------
It is understood and agreed that the acts done and evidenced hereby and the
release granted hereunder is not an admission of liability on the part of
Executive or the Company.
4. CONSIDERATION TO EXECUTIVE.
--------------------------
The consideration to Executive for execution and delivery of this Release to
the Company is the obligations of the Company to provide severance payments to
Executive on the terms specified in the Agreement.
5. NO DISPARAGEMENT.
----------------
Executive agrees that, after the date of this Release, Executive will not
disparage or make false or adverse statements about the Company. The Company
shall report to Executive any actions or statements that are attributed to
Executive that the Company believes are disparaging. The Company may take
actions consistent with breach of this Release should it determine that
Executive has disparaged or made false or adverse statements about the Company.
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6. CONFIDENTIALITY, PROPRIETARY, TRADE SECRET AND RELATED INFORMATION.
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In addition to Executive's obligations under any other confidentiality
agreements with respect to information about the Company, Executive agrees not
to make unauthorized use or disclosure of any confidential, proprietary or trade
secret information learned as an employee about the Company, its products,
customers and suppliers, and covenants not to breach that duty. Should
Executive, Executive's attorney or agents be requested in any judicial,
administrative, or other proceeding to disclose confidential, proprietary or
trade secret information Executive learned as an employee of the Company,
Executive shall promptly notify the Company of such request by the most
expeditious means in order to enable the Company to take any reasonable and
appropriate action to limit such disclosure.
7. SCOPE OF RELEASE.
----------------
The provisions of this Release shall be deemed to obligate, extend to, and
inure to the benefit of the parties; the Company's parents, subsidiaries,
affiliates, successors, predecessors, assigns, directors, officers, and
employees; and each parties insurers, transferees, grantees, legatees, agents
and heirs, including those who may assume any and all of the above-described
capacities subsequent to the execution and effective date of this Release.
8. OPPORTUNITY FOR ADVICE OF COUNSEL.
---------------------------------
Executive acknowledges that Executive has been encouraged to seek advice of
counsel with respect to this Release and has had the opportunity to do so.
9. ENTIRE RELEASE.
--------------
This Release and the Agreement signed by Executive contain the entire
agreement and understanding between the parties and, except as reserved in
paragraph 3 and 3.1, supersede and replace all prior agreements written or oral.
Executive and the Company acknowledge that no other party, nor agent nor
attorney of any other party, has made any promise, representation, or warranty,
express or implied, not contained in this Release concerning the subject matter
of this Release to induce this Release, and Executive and the Company
acknowledge that they have not executed this Release in reliance upon any such
promise, representation, or warranty not contained in this Release.
10. SEVERABILITY.
------------
Every provision of this Release is intended to be severable. In the event any
term or provision of this Release is declared to be illegal or invalid for any
reason whatsoever by a court of competent jurisdiction or by final and
unappealed order of an administrative agency of competent jurisdiction, such
illegality or invalidity should not affect the balance of the
A-3
<PAGE>
terms and provisions of this Release, which terms and provisions shall remain
binding and enforceable.
11. PARTIES MAY ENFORCE RELEASE.
---------------------------
Nothing in this Release shall operate to release or discharge any parties to
this Release or their successors, assigns, legatees, heirs, or personal
representatives from any rights, claims, or causes of action arising out of,
relating to, or connected with a breach of any obligation of any party contained
in this Release.
12. COSTS AND ATTORNEY'S FEES.
-------------------------
If Executive asserts any claim in any contest (whether initiated by Executive
or by the Company) as to the validity, enforceability or interpretation of any
provision of this Release, the Company shall pay Executive's legal expenses (or
cause such expenses to be paid) including, without limitation, reasonable
attorney's fees, on a quarterly basis, upon presentation of proof of such
expenses; provided, that Executive shall reimburse the Company for such amounts,
plus simple interest thereon at the 90-day United States Treasury Bill rate as
in effect at the relevant time, compounded annually, if Executive shall not
prevail, in whole or in part, as to any material issue as to the validity,
enforceability or interpretation of any provision of this Release.
13. ACKNOWLEDGMENTS.
---------------
Executive acknowledges that the Agreement provides severance pay and benefits
which the Company would otherwise have no obligation to provide.
Executive acknowledges that the Company has provided the following
information: (a) the class or group of employees offered the opportunity to
obtain severance benefits similar to those in the Release, (b) the eligibility
factors required to obtain severance benefits similar to those in the Release,
(c) the time limits required to obtain severance benefits similar to those in
the Release, (d) the job titles and ages of employees eligible or selected for
severance benefits similar to those in the Release, and (e) the ages of
employees in the same classification either not eligible or not selected.
14. REVOCATION.
----------
As provided by the Older Workers Benefit Protection Act, Executive's is
entitled to have forty-five days to consider this Release. For a period of
seven days from execution of this Release, Executive may revoke this Release.
Upon receipt of Executive's signed Release and the end of the revocation period,
payment by the Company as described in paragraph 4 above will be forwarded by
mail in a timely manner as provided herein.
Dated: __________ __, 1998
A-4
<PAGE>
____________________________
[Name of Executive]
STATE OF OREGON )
) ss.
County of _________ )
Personally appeared the above named ____________________________ and
acknowledged the foregoing instrument to be his or her voluntary act and deed.
Before me ____________________________
Notary Public for
My commission expires:
Dated:_________________________
Standard Insurance Company
By:____________________________
Name:__________________________
Title:___________________________
A-5
<PAGE>
EXHIBIT B
PLANNED STOCK OPTION GRANTS
1999 STANCORP FINANCIAL GROUP STOCK INCENTIVE PLAN
B-1
<PAGE>
EXHIBIT 10.3
STANCORP FINANCIAL GROUP, INC.
1999 OMNIBUS STOCK INCENTIVE PLAN
1. Purpose. The purpose of this Stock Incentive Plan (the "Plan") is to
enable StanCorp Financial Group, Inc. an Oregon corporation (the "Company") to
attract and retain the services of (a) employees, officers and directors of the
Company or of any subsidiary of the Company, (b) selected nonemployee agents,
consultants, advisors, persons involved in the sale or distribution of the
products of the Company or any subsidiary and independent contractors of the
Company or any subsidiary, (c) non-employee directors of the Company, and (d)
non-employees to whom an offer of employment has been extended.
2. Shares Subject to the Plan. The shares to be offered under the Plan
shall consist of Common Stock of the Company. Subject to adjustment as provided
below and in Section 14, the total number of shares of Common Stock that may be
issued under the Plan shall not exceed 5% of the number of shares outstanding
after the closing of the Company's initial public offering (including shares
issued on exercise of the underwriter's overallotment option). The shares
issued under the Plan may be authorized and unissued shares or reacquired
shares. If an option, stock appreciation right or performance unit granted
under the Plan expires, terminates or is cancelled, the unissued shares subject
to such option, stock appreciation right or performance unit shall again be
available under the Plan. If shares sold or awarded as a bonus under the Plan
are forfeited to the Company or repurchased by the Company, the number of shares
forfeited or repurchased shall again be available under the Plan.
3. Effective Date and Duration of Plan.
3.1 Effective Date. The Plan shall become effective when adopted by
the Board of Directors of the Company, but no Incentive Stock Option granted
under the Plan shall become exercisable until the Plan is approved by the
affirmative vote of the holders of a majority of the shares of Common Stock
represented at a shareholders meeting at which a quorum is present. Any
Incentive Stock Options granted under the Plan prior to the receipt of
shareholder approval shall be conditioned on and subject to such approval.
Subject to the foregoing limitations, options, stock appreciation rights and
performance units may be granted and shares may be awarded as bonuses or sold
under the Plan at any time after the effective date and before termination of
the Plan.
3.2 Duration. The Plan shall continue in effect until all shares
available for issuance under the Plan have been issued and all restrictions on
such shares have lapsed. The Board of Directors may suspend or terminate the
Plan at any time except with respect to options, performance units and shares
subject to restrictions then outstanding under the Plan. Termination shall not
affect any outstanding options, any right of the Company to repurchase shares or
the forfeitability of shares issued under the Plan.
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<PAGE>
4. Administration.
4.1 Board of Directors. The Plan shall be administered by the Board
of Directors of the Company, which shall determine and designate from time to
time the individuals to whom awards shall be made, the amount of the awards and
the other terms and conditions of the awards. Subject to the provisions of the
Plan, the Board of Directors may from time to time adopt and amend rules and
regulations relating to administration of the Plan, advance the lapse of any
waiting period, accelerate any exercise date, waive or modify any restriction
applicable to shares (except those restrictions imposed by law) and make all
other determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the Plan. The Board of Directors may correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any related agreement in the manner and to the extent it shall deem expedient
to carry the Plan into effect, and it shall be the sole and final judge of such
expediency.
Any action taken by, or inaction of, the Company or any of its
subsidiaries or the Board of Directors relating or pursuant to this Plan,
including but not limited to the interpretation and construction of the
provisions of the Plan and related agreements by the Board of Directors, shall
be within the absolute discretion of that entity or body and shall be conclusive
and binding upon all persons. Subject only to the express provisions of the
Plan, the Board of Directors may act in its absolute discretion in matters
within its authority related to the Plan. In making any determination or in
taking or not taking any action under the Plan, the Board of Directors may
obtain and rely upon the advice of experts, including professional advisors to
the Company. No director, officer or agent of the Company will be liable for
any such action or determination taken or made or omitted in good faith.
4.2 Committee. The Board of Directors may delegate to a committee
comprised solely of two or more members of the Board of Directors (the
"Committee") any or all authority for administration of the Plan. If authority
is delegated to a Committee, all references to the Board of Directors in the
Plan shall mean and relate to the Committee except (i) as otherwise provided by
the Board of Directors, and (ii) that only the Board of Directors may amend or
terminate the Plan as provided in Sections 3 and 17.
5. Types of Awards. The Board of Directors may, from time to time, take
the following actions, separately or in combination, under the Plan:
5.1 Grant Incentive Stock Options, as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), as provided in Sections
7.1 and 7.2;
5.2 Grant options other than Incentive Stock Options ("Non-Statutory
Stock Options") as provided in Sections 7.1 and 7.3;
5.3 Award stock bonuses as provided in Section 8;
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5.4 Sell shares subject to restrictions as provided in Section 9;
5.5 Grant stock appreciation rights as provided in Section 10;
5.6 Grant cash bonus rights as provided in Section 11;
5.7 Grant performance units as provided in Section 12; and
5.8 Grant foreign qualified awards as provided in Section 13.
6. Eligibility. Awards may be made to regular employees in good standing,
working at least 20 hours per week and do not have a status of "Inactive
Disability", including employees who are officers or directors, and to other
individuals described in Section 1 who the Board of Directors believes have made
or will make an important contribution to the Company or any subsidiary of the
Company; provided, however, that only employees of the Company shall be eligible
to receive Incentive Stock Options under the Plan. The Board of Directors shall
select the individuals to whom awards shall be made and shall specify the action
taken with respect to each individual to whom an award is made. At the
discretion of the Board of Directors, an individual may be given an election to
surrender an award in exchange for the grant of a new award.
7. Option Grants.
7.1 General Rules Relating to Options.
7.1.1 Terms of Grant. The Board of Directors may grant options
--------------
under the Plan. With respect to each option grant, the Board of Directors
shall determine the number of shares subject to the option, the option
price, the period of the option, the time or times at which the option may
be exercised and whether the option is an Incentive Stock Option or a Non-
Statutory Stock Option. At the time of the grant of an option or at any
time thereafter, the Board of Directors may provide that an optionee who
exercised an option with Common Stock of the Company shall automatically
receive a new option to purchase additional shares equal to the number of
shares surrendered and may specify the terms and conditions of such new
options.
7.1.2 Exercise of Options. Except as provided in Section 7.1.4
-------------------
or as determined by the Board of Directors, no option granted under the
Plan may be exercised unless at the time of such exercise the optionee is
employed on a regular basis, working at least 20 hours or more per week or
in the service of the Company or any subsidiary of the Company and shall
have been so employed or provided such service continuously since the date
such option was granted. Absence on authorized leave or on account of
illness or disability under rules established by the Board of Directors
shall not, however, be deemed an interruption of employment or service
3
<PAGE>
for this purpose. Unless otherwise determined by the Board of Directors,
vesting of options shall continue during an absence on authorized leave
(including an extended illness) or on account of disability. Except as
provided in Sections 7.1.4, 14 and 15, options granted under the Plan may
be exercised from time to time over the period stated in each option in
such amounts and at such times as shall be prescribed by the Board of
Directors; provided, that options shall not be exercised for fractional
shares. Unless otherwise determined by the Board of Directors, if the
optionee does not exercise an option in any one year with respect to the
full number of shares to which the optionee is entitled in that year, the
optionee's rights shall be cumulative and the optionee may purchase those
shares in any subsequent year during the term of the option.
7.1.3 Nontransferability. Each Incentive Stock Option and,
------------------
unless otherwise determined by the Board of Directors, each other option
granted under the Plan by its terms shall be nonassignable and
nontransferable by the optionee, either voluntarily or by operation of law,
except by will or by the laws of descent and distribution of the state or
country of the optionee's domicile at the time of death.
7.1.4 Termination of Employment or Service.
------------------------------------
7.1.4.1 General Rule. Unless otherwise determined by the
Board of Directors, if the employment or service with the Company or a
subsidiary of an optionee terminates for any reason other than Total
Disability, death, Retirement, resignation or termination by the
Company without cause (each as set forth below), any options (or
portion thereof) held by such optionee shall immediately terminate.
7.1.4.2 Termination By Reason of Total Disability. Unless
otherwise determined by the Board of Directors, if an optionee's
employment or service terminates by reason of the optionee's Total
Disability (as defined below), any options held by such optionee shall
become fully exercisable and may be exercised at any time prior to the
expiration date of the option(s) or the expiration of 12 months after
the date of such termination, whichever is the shorter period. "Total
Disability" means a physical or mental impairment which is expected to
result in death or which has lasted or is expected to last for a
continuous period of 12 months or more and which causes the optionee
to be unable, in the opinion of the Company, to perform his or her
duties as an employee, director, officer or consultant of the Company
or any subsidiary and to be engaged in any substantial gainful
activity. Total Disability shall be deemed to have occurred on the
first day after the Company has made a determination of Total
Disability.
7.1.4.3 Termination by Reason of Death. Unless otherwise
determined by the Board of Directors, if an optionee dies while
employed by
4
<PAGE>
or providing service to the Company or a subsidiary, any options held
by such optionee shall become fully exercisable and may be exercised
at any time prior to the expiration date of the option(s) or the
expiration of 12 months after the date of death, whichever is the
shorter period, only by the person or persons to whom such optionee's
rights under the option(s) shall pass by the optionee's will or by the
laws of descent and distribution of the state or country of the
optionee's domicile at the time of death.
7.1.4.4 Termination by Reason of Resignation. If an
optionee resigns from employment or providing services to the Company
or a subsidiary, such optionee may exercise his or her option(s) at
any time prior to the expiration date of the option(s) or the
expiration of 90 days after the date of termination, whichever is the
shorter period, but only if and to the extent the optionee was
entitled to exercise the option(s) at the date of termination;
provided, however, the Board of Directors may in its sole discretion
at the time of grant, at the time of termination or at any other time
shorten, extend or otherwise modify or terminate such exercise period.
7.1.4.5 Termination by the Company Without Cause. If the
Company or a subsidiary terminates the employment of or the provision
of services by an optionee without cause, such optionee may exercise
his or her option(s) at any time prior to the expiration date of the
option(s) or the expiration 90 days after the date of termination,
whichever is the shorter period; provided, however, that the Board of
Directors may in its sole discretion at the time of grant, the time of
termination or any other time shorten, extend or otherwise modify or
terminate such exercise period. The Board of Directors shall determine
in its sole and absolute discretion whether an optionee has been
terminated without cause.
7.1.4.6 Termination by Reason of Retirement. Unless
otherwise determined by the Board of Directors and except as provided
in Section 7.2.6, if an optionee terminates employment by or service
with the Company by reason of "Retirement", such optionee may exercise
his or her option(s) at any time prior to the expiration date of the
option(s) or the expiration of three years after the date of
termination, whichever is the shorter period. Any options held by
such optionee shall continue to vest according to the terms of their
grant, except as provided in Section 7.2.6. "Retirement" means
voluntary retirement with the consent of the Company under any of the
Company's retirement plans.
7.1.4.7 Amendment of Exercise Period Applicable to
Termination. The Board of Directors, at the time of grant or at any
time thereafter, may extend the above-described exercise periods any
length of time not longer than the original expiration date of the
option, and may
5
<PAGE>
increase the portion of an option that is exercisable, subject to such
terms and conditions as the Board of Directors may determine.
7.1.4.8 Failure to Exercise Option. To the extent that the
option of any deceased optionee or of any optionee whose employment or
service terminates is not exercised within the applicable period, all
further rights to purchase shares pursuant to such option shall cease
and terminate.
7.1.5 Purchase of Shares. Unless the Board of Directors
------------------
determines otherwise, shares may be acquired pursuant to an option granted
under the Plan only upon receipt by the Company of notice in writing from
the optionee of the optionee's intention to exercise, specifying the number
of shares as to which the optionee desires to exercise the option and the
date on which the optionee desires to complete the transaction, and if
required in order to comply with the Securities Act of 1933, as amended,
containing a representation that it is the optionee's present intention to
acquire the shares for investment and not with a view to distribution. In
addition, unless the Board of Directors determines otherwise, any shares
acquired by the optionee shall be subject to any stock transfer
restrictions in any agreement then in effect among the holders of the
Company's Common Stock, and the exercise of an option shall not be
effective until the optionee has signed and delivered a signature page to
such stock transfer restriction agreement.
7.1.6 Payment of Exercise Price. Unless the Board of Directors
-------------------------
determines otherwise, on or before the date specified for completion of the
purchase of shares pursuant to an option, the optionee must have paid the
Company the full purchase price of such shares in cash or, with the consent
of the Board of Directors, in whole or in part, in Common Stock of the
Company valued at fair market value, restricted stock, performance units or
other contingent awards denominated in either stock or cash, promissory
notes and other forms of consideration. The fair market value of Common
Stock provided in payment of the purchase price shall be determined by the
Board of Directors. If the Common Stock of the Company is not publicly
traded on the date the option is exercised, the Board of Directors may
consider any valuation methods it deems appropriate and may, but is not
required to, obtain one or more independent appraisals of the Company. If
the Common Stock of the Company is publicly traded on the date the option
is exercised, the fair market value of Common Stock provided in payment of
the purchase price shall be the closing price of a share of Common Stock
shown in the New York Stock Exchange Composite Transactions Listing as
published in The Wall Street Journal on the trading day preceding the date
-----------------------
the option is exercised, or such other reported value of the Common Stock
as shall be specified by the Board of Directors.
With the consent of the Board of Directors, an optionee may request
the Company to apply automatically the shares to be received upon the
exercise of a
6
<PAGE>
portion of an option (even though stock certificates have not yet been
issued) to satisfy the purchase price for additional portions of the
option.
In addition to the payment methods described above, the Board of
Directors may provide that an option may be exercised and payment made by
delivering a properly executed exercise notice together with irrevocable
instructions to a broker to deliver promptly to the Company the amount of
sale proceeds necessary to pay the exercise price and, unless otherwise
prohibited by the Board of Directors or applicable law, any applicable tax
withholding under Section 7.1.7. The Company will not be obligated to
deliver certificates for the shares or make book entries denoting ownership
of the shares unless and until it receives full payment of the exercise
price therefor and any related withholding obligations have been satisfied.
7.1.7 Payment of Applicable Withholding. Each optionee who has
---------------------------------
exercised an option shall immediately upon notification of the amount due,
if any, pay to the Company in cash amounts necessary to satisfy any
applicable federal, state and local tax withholding requirements. If
additional withholding is or becomes required beyond any amount deposited
before delivery of the certificates, the optionee shall pay such amount to
the Company on demand. If the optionee fails to pay the amount demanded,
the Company may withhold that amount from other amounts payable by the
Company to the optionee, including salary, subject to applicable law. With
the consent of the Board of Directors an optionee may satisfy this
obligation, in whole or in part, by having the Company withhold from the
shares to be issued upon the exercise that number of shares that would
satisfy the withholding amount due or by delivering to the Company Common
Stock to satisfy the withholding amount.
7.1.8 Effect of Exercise. Upon the exercise of an option, the
------------------
number of shares reserved for issuance under the Plan shall be reduced by
the number of shares issued upon exercise of the option.
7.2 Incentive Stock Options. Incentive Stock Options shall be
subject to the following additional terms and conditions:
7.2.1 Limitation on Amount of Grants. No employee may be
------------------------------
granted Incentive Stock Options under the Plan if the aggregate fair market
value, on the date of grant, of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by that employee
during any calendar year under the Plan and under any other incentive stock
option plan (within the meaning of Section 422 of the Code) of the Company
or any parent or subsidiary of the Company exceeds $100,000.
7.2.2 Limitations on Grants to 10% Shareholders. An Incentive
-----------------------------------------
Stock Option may be granted under the Plan to an employee possessing more
than
7
<PAGE>
10% of the total combined voting power of all classes of stock of the
Company or of any parent or subsidiary of the Company only if the option
price is at least 110% of the fair market value of the Common Stock subject
to the option on the date it is granted, as described in Section 7.2.4, and
the option by its terms is not exercisable after the expiration of five
years from the date it is granted.
7.2.3 Duration of Options. Subject to Sections 7.1.2, 7.1.4 and
-------------------
7.2.2, Incentive Stock Options granted under the Plan shall continue in
effect for the period fixed by the Board of Directors, except that no
Incentive Stock Option shall be exercisable after the expiration of 10
years from the date it is granted.
7.2.4 Option Price. The option price per share shall be
------------
determined by the Board of Directors at the time of grant. Except as
provided in Section 7.2.2, the option price shall not be less than 100% of
the fair market value of the Common Stock at the date the option is
granted. The fair market value shall be determined by the Board of
Directors. If the Common Stock of the Company is not publicly traded on
the date the option is granted, the Board of Directors may consider any
valuation methods it deems appropriate and may, but is not required to,
obtain one or more independent appraisals of the Company. If the Common
Stock of the Company is publicly traded on the date the option is granted,
the fair market value shall be deemed to be the closing price of a share of
Common Stock as shown on the New York Stock Exchange Composite Transactions
Listing, as published in The Wall Street Journal on the day preceding the
-----------------------
date the option is granted, or if there has been no sale on that date, on
the last preceding date on which a sale occurred, or such other value of
the Common Stock as shall be specified by the Board of Directors.
7.2.5 Limitation on Time of Grant. No Incentive Stock Option
---------------------------
shall be granted on or after the tenth anniversary of the effective date of
the Plan.
7.2.6 Exercise Period Upon Termination By Reason of Retirement.
--------------------------------------------------------
Notwithstanding the provisions of Section 7.1.4.5, unless otherwise
determined by the Board of Directors, if an optionee holding an Incentive
Stock Option terminates employment by or service with the Company by reason
of Retirement, such optionee may exercise his or her Incentive Stock
Option(s) at any time prior to the expiration date of the option(s) or the
expiration of 90 days after the date of termination, whichever is the
shorter period.
7.2.7 Conversion of Incentive Stock Options. The Board of
-------------------------------------
Directors may at any time without the consent of the optionee convert an
Incentive Stock Option to a Non-Statutory Stock Option.
8
<PAGE>
7.3 Non-Statutory Stock Options. Non-Statutory Stock Options shall
be subject to the following terms and conditions in addition to those set forth
in Section 7.1 above:
7.3.1 Option Price. The option price for Non-Statutory Stock
------------
Options shall be determined by the Board of Directors at the time of grant
and may be any amount determined by the Board of Directors.
7.3.2 Duration of Options. Non-Statutory Stock Options granted
-------------------
under the Plan shall continue in effect for the period fixed by the Board
of Directors.
8. Stock Bonuses. The Board of Directors may award shares under the Plan
as stock bonuses. Shares awarded as a bonus shall be subject to the terms,
conditions, and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability and forfeiture
of the shares awarded, together with such other restrictions as may be
determined by the Board of Directors. If shares are subject to forfeiture, all
dividends or other distributions paid by the Company with respect to the shares
shall be retained by the Company until the shares are no longer subject to
forfeiture, at which time all accumulated amounts shall be paid to the
recipient. The Board of Directors may require the recipient to sign an
agreement as a condition of the award, but may not require the recipient to pay
any monetary consideration other than amounts necessary to satisfy tax
withholding requirements. The agreement may contain any terms, conditions,
restrictions, representations and warranties required by the Board of Directors.
The certificates representing the shares awarded shall bear any legends required
by the Board of Directors. The Company may require any recipient of a stock
bonus to pay to the Company in cash upon demand amounts necessary to satisfy any
applicable federal, state or local tax withholding requirements. If the
recipient fails to pay the amount demanded, the Company may withhold that amount
from other amounts payable by the Company to the recipient, including salary or
fees for services, subject to applicable law. With the consent of the Board of
Directors, a recipient may deliver Common Stock to the Company to satisfy this
withholding obligation. Upon the issuance of a stock bonus, the number of
shares reserved for issuance under the Plan shall be reduced by the number of
shares issued.
9. Restricted Stock. The Board of Directors may issue shares under the
Plan for such consideration (including promissory notes and services) as
determined by the Board of Directors. Shares issued under the Plan shall be
subject to the terms, conditions and restrictions determined by the Board of
Directors. The restrictions may include restrictions concerning
transferability, repurchase by the Company and forfeiture of the shares issued,
together with such other restrictions as may be determined by the Board of
Directors. If shares are subject to forfeiture or repurchase by the Company,
all dividends or other distributions paid by the Company with respect to the
shares shall be retained by the Company until the shares are no longer subject
to forfeiture or repurchase, at which time all accumulated amounts shall be paid
to the recipient. All Common Stock issued pursuant to this Section 9 shall be
subject to a purchase agreement, which shall be executed by the
9
<PAGE>
Company and the prospective recipient of the shares prior to the delivery of
certificates representing such shares to the recipient. The purchase agreement
may contain any terms, conditions, restrictions, representations and warranties
required by the Board of Directors. The certificates, if any, representing the
shares shall bear any legends required by the Board of Directors. The Company
may require any purchaser of restricted stock to pay to the Company in cash upon
demand amounts necessary to satisfy any applicable federal, state or local tax
withholding requirements. If the purchaser fails to pay the amount demanded, the
Company may withhold that amount from other amounts payable by the Company to
the purchaser, including salary, subject to applicable law. With the consent of
the Board of Directors, a purchaser may deliver Common Stock to the Company to
satisfy this withholding obligation. Upon the issuance of restricted stock, the
number of shares reserved for issuance under the Plan shall be reduced by the
number of shares issued.
10. Stock Appreciation Rights.
10.1 Grant. Stock appreciation rights may be granted under the Plan
by the Board of Directors, subject to such rules, terms, and conditions as the
Board of Directors prescribes.
10.2 Exercise.
10.2.1 Each stock appreciation right shall entitle the holder,
upon exercise, to receive from the Company in exchange therefor an amount
equal in value to the excess of the fair market value on the date of
exercise of one share of Common Stock of the Company over its fair market
value on the date of grant (or, in the case of a stock appreciation right
granted in connection with an option, the excess of the fair market value
of one share of Common Stock of the Company over the option price per share
under the option to which the stock appreciation right relates), multiplied
by the number of shares covered by the stock appreciation right or the
option, or portion thereof, that is surrendered. No stock appreciation
right shall be exercisable at a time that the amount determined under this
subsection is negative. Payment by the Company upon exercise of a stock
appreciation right may be made in Common Stock valued at fair market value,
in cash, or partly in Common Stock and partly in cash, all as determined by
the Board of Directors.
10.2.2 A stock appreciation right shall be exercisable only at
the time or times established by the Board of Directors. If a stock
appreciation right is granted in connection with an option, the following
rules shall apply: (1) the stock appreciation right shall be exercisable
only to the extent and on the same conditions that the related option could
be exercised; (2) upon exercise of the stock appreciation right, the option
or portion thereof to which the stock appreciation right relates
terminates; and (3) upon exercise of the option, the related stock
appreciation right or portion thereof terminates.
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10.2.3 The Board of Directors may withdraw any stock
appreciation right granted under the Plan at any time and may impose any
conditions upon the exercise of a stock appreciation right or adopt rules
and regulations from time to time affecting the rights of holders of stock
appreciation rights. Such rules and regulations may govern the right to
exercise stock appreciation rights granted prior to adoption or amendment
of such rules and regulations as well as stock appreciation rights granted
thereafter.
10.2.4 For purposes of this Section 10, the fair market value of
the Common Stock shall be determined as of the date the stock appreciation
right is exercised, under the methods set forth in Section 7.2.4.
10.2.5 No fractional shares shall be issued upon exercise of a
stock appreciation right. In lieu thereof, cash may be paid in an amount
equal to the value of the fraction or, if the Board of Directors shall
determine, the number of shares may be rounded downward to the next whole
share.
10.2.6 Each stock appreciation right granted in connection with
an Incentive Stock Option, and unless otherwise determined by the Board of
Directors, each other stock appreciation right granted under the Plan by
its terms shall be nonassignable and nontransferable by the holder, either
voluntarily or by operation of law, except by will or by the laws of
descent and distribution of the state or country of the holder's domicile
at the time of death, and each stock appreciation right by its terms shall
be exercisable during the holder's lifetime only by the holder.
10.2.7 Each participant who has exercised a stock appreciation
right shall, upon notification of the amount due, pay to the Company in
cash amounts necessary to satisfy any applicable federal, state and local
tax withholding requirements. If the participant fails to pay the amount
demanded, the Company may withhold that amount from other amounts payable
by the Company to the participant including salary, subject to applicable
law. With the consent of the Board of Directors a participant may satisfy
this obligation, in whole or in part, by having the Company withhold from
any shares to be issued upon the exercise that number of shares that would
satisfy the withholding amount due or by delivering Common Stock to the
Company to satisfy the withholding amount.
10.2.8 Upon the exercise of a stock appreciation right for
shares, the number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued. Cash payments of stock
appreciation rights shall not reduce the number of shares of Common Stock
reserved for issuance under the Plan.
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11. Cash Bonus Rights.
11.1 Grant. The Board of Directors may grant cash bonus rights under
the Plan in connection with (i) options granted or previously granted, (ii)
stock appreciation rights granted or previously granted, (iii) stock bonuses
awarded or previously awarded and (iv) shares sold or previously sold under the
Plan. Cash bonus rights will be subject to rules, terms and conditions as the
Board of Directors may prescribe. Unless otherwise determined by the Board of
Directors, each cash bonus right granted under the Plan by its terms shall be
nonassignable and nontransferable by the holder, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution of
the state or country of the holder's domicile at the time of death. The payment
of a cash bonus shall not reduce the number of shares of Common Stock reserved
for issuance under the Plan.
11.2 Cash Bonus Rights in Connection With Options. A cash bonus
right granted in connection with an option will entitle an optionee to a cash
bonus when the related option is exercised (or terminates in connection with the
exercise of a stock appreciation right related to the option) in whole or in
part. If an optionee purchases shares upon exercise of an option and does not
exercise a related stock appreciation right, the amount of the bonus shall be
determined by multiplying the excess of the total fair market value of the
shares to be acquired upon the exercise over the total option price for the
shares by the applicable bonus percentage. If the optionee exercises a related
stock appreciation right in connection with the termination of an option, the
amount of the bonus shall be determined by multiplying the total fair market
value of the shares and cash received pursuant to the exercise of the stock
appreciation right by the applicable bonus percentage. The bonus percentage
applicable to a bonus right shall be determined from time to time by the Board
of Directors but shall in no event exceed 75%.
11.3 Cash Bonus Rights in Connection With Stock Bonus. A cash bonus
right granted in connection with a stock bonus will entitle the recipient to a
cash bonus payable when the stock bonus is awarded or restrictions, if any, to
which the stock is subject lapse. If bonus stock awarded is subject to
restrictions and is repurchased by the Company or forfeited by the holder, the
cash bonus right granted in connection with the stock bonus shall terminate and
may not be exercised. The amount and timing of payment of a cash bonus shall be
determined by the Board of Directors.
11.4 Cash Bonus Rights in Connection With Stock Purchases. A cash
bonus right granted in connection with the purchase of stock pursuant to Section
9 will entitle the recipient to a cash bonus when the shares are purchased or
restrictions, if any, to which the stock is subject lapse. Any cash bonus right
granted in connection with shares purchased pursuant to Section 9 shall
terminate and may not be exercised in the event the shares are repurchased by
the Company or forfeited by the holder pursuant to applicable restrictions. The
amount of any cash bonus to be awarded and timing of payment of a cash bonus
shall be determined by the Board of Directors.
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11.5 Taxes. The Company shall withhold from any cash bonus paid
pursuant to Section 11 the amount necessary to satisfy any applicable federal,
state and local withholding requirements.
12. Performance Units. The Board of Directors may grant performance units
consisting of monetary units which may be earned in whole or in part if the
Company achieves certain goals established by the Board of Directors over a
designated period of time, but not in any event more than 10 years. The goals
established by the Board of Directors may include earnings per share, return on
shareholders' equity, return on invested capital, and such other goals as may be
established by the Board of Directors. In the event that the minimum
performance goal established by the Board of Directors is not achieved at the
conclusion of a period, no payment shall be made to the participants. In the
event the maximum corporate goal is achieved, 100% of the monetary value of the
performance units shall be paid to or vested in the participants. Partial
achievement of the maximum goal may result in a payment or vesting corresponding
to the degree of achievement as determined by the Board of Directors. Payment
of an award earned may be in cash or in Common Stock or in a combination of
both, and may be made when earned, or vested and deferred, as the Board of
Directors determines. Deferred awards shall earn interest on the terms and at a
rate determined by the Board of Directors. Unless otherwise determined by the
Board of Directors, each performance unit granted under the Plan by its terms
shall be nonassignable and nontransferable by the holder, either voluntarily or
by operation of law, except by will or by the laws of descent and distribution
of the state or country of the holder's domicile at the time of death. Each
participant who has been awarded a performance unit shall, upon notification of
the amount due, pay to the Company in cash amounts necessary to satisfy any
applicable federal, state and local tax withholding requirements. If the
participant fails to pay the amount demanded, the Company may withhold that
amount from other amounts payable by the Company to the participant, including
salary or fees for services, subject to applicable law. With the consent of the
Board of Directors a participant may satisfy this obligation, in whole or in
part, by having the Company withhold from any shares to be issued that number of
shares that would satisfy the withholding amount due or by delivering Common
Stock to the Company to satisfy the withholding amount. The payment of a
performance unit in cash shall not reduce the number of shares of Common Stock
reserved for issuance under the Plan. The number of shares reserved for
issuance under the Plan shall be reduced by the number of shares issued upon
payment of an award.
13. Foreign Qualified Grants. Awards under the Plan may be granted to
such officers and employees of the Company and its subsidiaries and such other
persons described in Section 1 residing in foreign jurisdictions as the Board of
Directors may determine from time to time. The Board of Directors may adopt
such supplements to the Plan as may be necessary to comply with the applicable
laws of such foreign jurisdictions and to afford participants favorable
treatment under such laws; provided, however, that no award shall be granted
under any such supplement with terms which are more beneficial to the
participants than the terms permitted by the Plan.
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14. Stock Splits; Combinations; Dividends. If the outstanding Common
Stock of the Company is hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of any stock split, combination of shares, reorganization,
recapitalization, reclassification, or dividend payable in shares, appropriate
adjustment shall be made by the Board of Directors in the number and kind of
shares available for awards under the Plan. In addition, the Board of Directors
shall make appropriate adjustment in the number and kind of shares as to which
outstanding options and stock appreciation rights, or portions thereof then
unexercised, shall be exercisable, so that the optionee's proportionate interest
before and after the occurrence of the event is maintained. Notwithstanding the
foregoing, the Board of Directors shall have no obligation to effect any
adjustment that would or might result in the issuance of fractional shares, and
any fractional shares resulting from any adjustment may be disregarded or
provided for in any manner determined by the Board of Directors. Any such
adjustments made by the Board of Directors shall be conclusive.
15. Acceleration of Awards upon Change in Control.
15.1 Unless prior to a Change in Control Event (as defined in Section
15.2), the Board of Directors determines that, upon its occurrence benefits
under awards made pursuant to this Plan will not accelerate or determines that
only certain or limited benefits under awards made pursuant to this Plan will be
accelerated and the extent to which they will be accelerated, or establishes a
different time in respect of such event for such acceleration, then upon the
occurrence of a Change in Control Event:
15.1.1 Each option and stock appreciation right will become
immediately exercisable;
15.1.2 Restricted stock will immediately vest free of restrictions;
15.1.3 Each performance share award will become payable to the
participant;
provided, however, that in no event will any award be accelerated as to any
Section 16 Person to a date less than six months after the award date of such
award. A "Section 16 Person" means a person subject to Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
The Board of Directors may override the limitations on acceleration in
this Section 15 by express provision in the award agreement of any participant
and may accord any participant a right to refuse any acceleration, whether
pursuant to an award agreement or otherwise, in such circumstances as the Board
of Directors may approve. Any acceleration of awards will comply with all
applicable legal requirements.
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15.2 "Change in Control Event" shall have occurred if:
15.2.1 Any "Person," as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any company
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of stock of the
Company ), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of the
Company's then outstanding securities;
15.2.2 The shareholders of the Company approve a merger or other
consolidation of the Company with any other company, other than (a) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) 51% or more of the combined voting
power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (b) a merger
or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person acquires more than 30% of the
combined voting power of the Company's then outstanding securities;
15.2.3 The shareholders of the Company approve an agreement for
the sale or disposition by the Company of all or substantially all of its
assets;
15.2.4 A tender or exchange offer is made for Common Stock (or
securities convertible into Common Stock) of the Company and such offer
results in a portion of those securities being purchased and the offeror
after the consummation of the offer is the beneficial owner (as determined
pursuant to Section 13(d) of the Exchange Act), directly or indirectly, of
securities representing at least 30% of the voting power of outstanding
securities of the Company;
15.2.5 During any period of twelve months or less, individuals
who at the beginning of such period constituted a majority of the Board
cease for any reason to constitute a majority of the Board unless the
nomination or election of such new directors was approved by a vote of at
least two-thirds of the directors then still in office who were directors
at the beginning of such period;
15.2.6 Any other event or combination of events which the Board,
acting in its sole discretion, determines to be a "Change of Control" for
purposes of this Agreement;
15.3 If any option or other right to acquire Common Stock under this
Plan has been fully accelerated as permitted by Section 15.1 but is not
exercised prior to (a) a
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dissolution of the Company, (b) an event described in Section 15.2 that the
Company does not survive or (c) the consummation of an event described in
Section 15.2 that results in a change in control approved by the Board of
Directors, such option or right will terminate, subject to any provision that
has been expressly made for the assumption, conversion, substitution, survival,
exchange or other settlement of such option or right.
16. Corporate Mergers, Acquisitions, etc. The Board of Directors may also
grant options, stock appreciation rights, performance units, stock bonuses and
cash bonuses and issue restricted stock under the Plan having terms, conditions
and provisions that vary from those specified in this Plan provided that any
such awards are granted in substitution for, or in connection with the
assumption of, existing options, stock appreciation rights, stock bonuses, cash
bonuses, restricted stock and performance units granted, awarded or issued by
another corporation and assumed or otherwise agreed to be provided for by the
Company pursuant to or by reason of a transaction (other than a Change of
Control Event as defined in Section 15.2) involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which the Company or a subsidiary is a party.
17. Amendment of Plan. The Board of Directors may at any time, and from
time to time, modify or amend the Plan in such respects as it shall deem
advisable because of changes in the law while the Plan is in effect or for any
other reason; provided, however, that except as provided in Sections 7.1.4,
7.2.6, 10, 14 and 15, no change in an award already granted shall be made
without the written consent of the holder of such award.
18. Approvals. The obligations of the Company under the Plan are subject
to the approval of state and federal authorities or agencies with jurisdiction
in the matter. The Company will use its best efforts to take steps required by
state or federal law or applicable regulations, including rules and regulations
of the Securities and Exchange Commission and any stock exchange on which the
Company's shares may then be listed, in connection with the grants under the
Plan. The foregoing notwithstanding, the Company shall not be obligated to
issue or deliver Common Stock under the Plan if such issuance or delivery would
violate applicable state or federal securities laws. Any securities delivered
under this Plan will be subject to such restrictions, and to any restrictions
the Board of Directors may require to preserve a pooling of interests under
generally accepted accounting principles, and the person acquiring such
securities will, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements.
19. Employment and Service Rights. Nothing in the Plan or any award
pursuant to the Plan shall (i) confer upon any employee any right to be
continued in the employment of the Company or any subsidiary or interfere in any
way with the right of the Company or any subsidiary by whom such employee is
employed to terminate such employee's employment at any time, for any reason,
with or without cause, or to decrease such employee's compensation or benefits,
or (ii) confer upon any person engaged by the
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Company any right to be retained or employed by the Company or to the
continuation, extension, renewal, or modification of any compensation, contract,
or arrangement with or by the Company.
20. Rights as a Shareholder. The recipient of any award under the Plan
shall have no rights as a shareholder with respect to any Common Stock until the
date of issue of such shares. Except as otherwise expressly provided in the
Plan, no adjustment shall be made for dividends or other rights for which the
record date occurs prior to the date such stock certificate is issued.
21. Plan Not Funded. Awards payable under this Plan will be payable in
shares or from the general assets of the Company, and no special or separate
reserve, fund or deposit will be made to assure payment of such awards. No
participant, beneficiary or other person will have any right, title or interest
in any fund or in any specific asset (including shares of Common Stock, except
as expressly otherwise provided) of the Company by reason of any award
hereunder. Neither the provisions of this Plan (or of any related documents),
nor the creation or adoption of this Plan, nor any action taken pursuant to the
provisions of this Plan will create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Company and any participant,
beneficiary or other person. To the extent that a participant, beneficiary or
other person acquires a right to receive payment pursuant to any award
hereunder, such right will be no greater than the right of any unsecured general
creditor of the Company.
22. Notices. Any notices required or permitted to be given to holders of
awards pursuant to the Plan shall be in writing, addressed to the most recent
address on the Company's records, and shall be deemed to be effectively given
when (a) mailed by registered or certified mail with postage and fees prepaid,
(b) sent by overnight delivery service, (c) personally delivered, or (d) sent by
facsimile with confirmed transmission.
Date adopted by the Board of Directors:
---------------------
Date approved by the Shareholders:
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EXHIBIT 10.4
STANCORP FINANCIAL GROUP, INC.
1999 EMPLOYEE SHARE PURCHASE PLAN
1. Purpose of the Plan. StanCorp Financial Group, Inc. (the "Company")
believes that ownership of shares of its Common Stock by employees of the
Company and its Participating Subsidiaries (hereinafter defined) is desirable as
an incentive to better performance and improvement of profits, and as a means by
which employees may share in the rewards of growth and success. The purpose of
the 1999 Employee Share Purchase Plan (the "Plan") is to provide a convenient
means by which employees of the Company and Participating Subsidiaries may
purchase the Company's shares through payroll deductions and a method by which
the Company may assist and encourage such employees to become share owners.
2. Shares Reserved for the Plan. There are 1,000,000 shares of the
Company's authorized Common Stock reserved for issuance under the Plan. The
number of shares reserved for issuance under the Plan is subject to adjustment
in the event of any stock dividend, stock split, combination of shares,
recapitalization or other change in the outstanding Common Stock of the Company.
The determination of whether an adjustment shall be made and the manner of any
such adjustment shall be made by the Board of Directors of the Company, which
determination shall be conclusive.
3. Administration of the Plan. The Plan shall be administered by the
Board of Directors of the Company (the "Board of Directors"). The Board of
Directors may promulgate rules and regulations for the operation of the Plan,
adopt forms for use in connection with the Plan, and decide any question of
interpretation of the Plan or rights arising thereunder. The Board of Directors
may consult with counsel for the Company on any matter arising under the Plan.
All determinations and decisions of the Board of Directors shall be conclusive.
Notwithstanding the foregoing, the Board of Directors, if it so desires, may
delegate to the Compensation Committee of the Board the authority for general
administration of the Plan.
4. Eligible Employees. Except as indicated below all regular employees
of the Company and of each of the Company's subsidiary corporations which is
designated by the Board of Directors as a participant in the Plan (such
participating subsidiary being hereinafter called a "Participating Subsidiary")
are eligible to participate in the Plan. Any employee who would, after a
purchase of shares under the Plan, own or be deemed (under Section 424(d) of the
Internal Revenue Code of 1986, as amended (the "Code") to own stock (including
stock subject to any outstanding options held by the employee) possessing 5% or
more of the total combined voting power or value of all classes of stock of the
Company or any parent or subsidiary of the Company, shall be ineligible to
participate in the Plan. A "regular employee" is a person who has been in the
employ of the Company or a Participating Subsidiary for at least one calendar
month and whose employment relationship has not terminated (as determined under
Section 1.421-7(h)(2) of U.S. Treasury Regulations or a successor
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regulations), excluding, however, any employee whose customary employment is
less than 20 hours per week.
5. Offerings.
(a) Offering Periods. The Plan shall be implemented by a series
of offering periods of approximately six months' duration or such other duration
as the Board of Directors shall determine ("Offering Periods"), commencing on
January 1 of each year and July 1 of each year. An Offering Period commencing
on or about January 1 shall end on or about the next June 30. An Offering
Period commencing on or about July 1 shall end on or about the next December 31.
During 1999 there shall be two Offering Periods as follows: the initial
Offering Period shall commence 15 days after the effective date of the Company's
initial public offering and shall end on the date that is 180 days after the
effective date of the Company's initial public offering, and the second Offering
Period shall commence on the first day following the end of the initial Offering
Period and shall end on December 31, 1999. Notwithstanding the foregoing, the
Board of Directors may establish a different duration for one or more future
Offering Periods; provided, however, that no Offering Period may have a duration
exceeding twenty-seven (27) months.
The first day of each Offering Period is an "Offering Date" and the
last day of each Offering Period is a "Purchase Date" for the Offering Period.
If an Offering Date or a Purchase Date falls on a day on which the public equity
securities markets in the United States are not open for trading, the Company
shall, by announcement at least ten days before the date on which the Offering
Date or Purchase Date would otherwise fall, specify the trading day that will be
deemed that Offering Date or Purchase Date, as the case may be.
(b) Offerings. As of each Offering Date, the Board of Directors may
make an option grant under the Plan to all, but not fewer than all, eligible
employees. Options granted pursuant to the Plan shall give each eligible
employee a right under the Plan to purchase shares of Common Stock on the
Purchase Date for the price determined under paragraph 7 of the Plan exclusively
through payroll deductions authorized under paragraph 6 of the Plan; provided,
however, that no such right shall, for each calendar year in which such right is
outstanding, (a) permit the purchase of more than 5,000 shares, or (b) allow an
employee's right to purchase shares under all stock purchase plans of the
Company and its parents and subsidiaries to which Section 423 of the Code
applies to accrue at a rate that exceeds $25,000 of fair market value of shares
(determined at the Offering Date).
6. Participation in the Plan.
(a) Initiating Participation. An eligible employee may participate in
an Offering Period under the Plan by filing with the Company no later than ten
days prior to the Offering Date, on forms furnished by the Company, a
subscription and
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payroll deduction authorization. Once filed, a subscription and payroll
deduction authorization shall remain in effect for subsequent Offering Periods
unless amended or terminated. The payroll deduction authorization will take
effect on the Offering Date and will authorize the employing entity to make
payroll deductions in the specified amount from each paycheck of the
participating employee. Payroll deductions for any Offering Period may not
exceed 10% of the gross amount of total cash compensation in the aggregate
payable to the employee for such Offering Period. Total cash compensation does
not include amounts paid under disability plans. If a payroll deduction is made
by a Participating Subsidiary, that entity will promptly remit the amount of the
deduction to the Company.
(b) Amending or Terminating Participation. A participating employee
may amend his or her payroll deduction authorization once during any Offering
Period, to reduce the amount of future payroll deductions, with effect during
the remaining part of the Offering Period. Other amendments to the payroll
deduction authorization will not become effective until the next following
Offering Period. A permitted change in payroll deductions shall be effective
for any pay period only if written notice is received by the Company at least
five business days prior to any month end. After an employee has begun
participating in the Plan, he or she may terminate participation in the Plan by
written notice received by the Company at any time up to the tenth day before a
Purchase Date. Participation in the Plan shall also terminate when a
participant ceases to be an eligible employee for any reason, including death or
retirement. Determination of when the employment relationship terminates for
this purpose shall be made under Section 1.421-7 of U.S. Treasury Regulations or
successor regulations. A participant may not reinstate participation in the
Plan with respect to a particular Offering Period after once terminating
participation in the Plan with respect to that Offering Period. Upon
termination of a participant's participation in the Plan, all amounts deducted
from the participant's pay and not previously used to purchase shares under the
Plan shall be returned to the participant, without interest.
7. Option Price. The price at which shares shall be purchased in a
Offering Period shall be the lower of (a) 85% of the fair market value of a
share of Common Stock on the Offering Date of the applicable Offering Period or
(b) 85% of the fair market value of a share of Common Stock on the Purchase
Date. The fair market value of a share of Common Stock on any date shall be the
closing price of a share of Common Stock as shown on the New York Stock Exchange
Composite Transactions Listing for such date, as published in The Wall Street
Journal. In the event that the Common Stock is not listed on the New York Stock
Exchange or the price is no longer shown on the New York Stock Exchange
Composite Transactions Listing, the Board of Directors shall substitute a
comparable source of closing price information.
8. Newly Eligible Employees. A person who becomes an eligible employee
after the Offering Date of an Offering Period shall not be eligible to
participate in such Offering Period but may participate in any subsequent
Offering
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Period provided he or she is still an eligible employee as of the Offering Date
of such subsequent Offering Period.
9. Purchase of Shares. All amounts withheld from the pay of a participant
shall be credited to his or her account under the Plan by the Custodian
appointed under paragraph 10. No interest will be paid on such accounts unless
the Board of Directors determines otherwise. On each Purchase Date of an
Offering Period, the amount of the account of each participant will be applied
to the purchase of whole shares by such participant from the Company at the
price determined under paragraph 7. Any cash balance remaining in a
participant's account after a Purchase Date because it was less than the amount
required to purchase a full share shall be retained in the participant's account
for the next Offering Period.
10. Delivery and Custody of Shares. Shares purchased by participants
pursuant to the Plan will be held in the custody of such investment or financial
firm (the "Custodian") as shall be appointed by the Board of Directors. The
Custodian may hold shares purchased pursuant to the Plan in book entry form and
may commingle shares in its custody pursuant to the Plan in a single account
without identification as to individual participants. By appropriate
instructions to the Custodian on forms to be provided for that purpose, a
participant may from time to time obtain (a) transfer into the participant's own
name of some or all of the shares held by the Custodian for the participant's
account and delivery of such shares to the participant; (b) transfer of some or
all of the shares held for the participant's account by the Custodian to a
regular individual brokerage account in the participant's own name, either with
the firm then acting as Custodian or with another firm, or (c) sale of some or
all of the shares held by the Custodian for the participant's account at the
market price at the time the order is executed and remittance of the net
proceeds of sale to the participant. Upon termination of participation in the
Plan, a participant may elect to have the shares held by the Custodian for his
or her account transferred and delivered in accordance with (a) above,
transferred to a brokerage account in accordance with (b), or sold in accordance
with (c).
11. Records and Statements. The Custodian will maintain the records of the
Plan. As soon as practicable after each Purchase Date the Custodian will
furnish to each participant a statement showing the activity in the
participant's account for the period covered by the statement and the cash and
share balances in the account as of the Purchase Date. Participants will be
furnished such other reports and statements, and at such intervals, as the Board
of Directors shall determine from time to time.
12. Expense of the Plan. The Company will pay all expenses incident to
operation of the Plan, including costs of record keeping, accounting fees, legal
fees, commissions and issue or transfer taxes on purchases pursuant to the Plan
and on delivery of shares to a participant or into his or her brokerage account.
The Company will not pay expenses, commissions or taxes incurred in connection
with sales of shares
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by the Custodian at the request of a participant. Expenses to be paid by a
participant will be deducted from the proceeds of sale prior to remittance.
13. Rights Not Transferable. The right to purchase shares under this Plan
is not transferable by a participant, and such right is exercisable during the
participant's lifetime only by the participant. Upon the death of a
participant, any cash or shares held for the participant's account shall be
transferred to the persons entitled thereto under the laws of the state of
domicile of the participant upon a proper showing of authority.
14. Dividends and Other Distributions. Cash dividends and other cash
distributions, if any, on shares held by the Custodian will be paid currently to
the participants entitled thereto unless the Company subsequently adopts a
dividend reinvestment plan and the participant directs that his or her cash
dividends be invested in accordance with such plan. Stock dividends and other
distributions in shares of the Company on shares held by the Custodian shall be
issued to the Custodian and held by it for the account of the respective
participants entitled thereto.
15. Voting and Shareholder Communications. In connection with voting on
any matter submitted to the shareholders of the Company, the Custodian will
furnish to each participant a proxy authorizing the participant to vote the
shares held by the custodian for his account. Copies of all general
communications to shareholders of the Company will be sent to participants in
the Plan.
16. Tax Withholding. Each participant who has purchased shares under the
Plan shall immediately upon notification of the amount due, if any, pay to the
Company in cash amounts necessary to satisfy any applicable federal, state,
local, national or other governmental tax withholding determined by the Company
to be required in any country having taxing jurisdiction. If the Company
determines that additional withholding is required beyond any amount deposited
at the time of purchase, the participant shall pay such amount to the Company on
demand. If the participant fails to pay the amount demanded, the Company may
withhold that amount from other amounts payable by the Company to the
participant, including salary, subject to applicable law.
17. Responsibility and Indemnity. Neither the Company, its Board of
Directors, the Custodian, any Participating Subsidiary, nor any member, officer,
agent, or employee of any of them, shall be liable to any participant under the
Plan for any mistake of judgment or for any omission or wrongful act unless
resulting from gross negligence, willful misconduct or intentional misfeasance.
The Company will indemnify and save harmless its Board of Directors, the
Custodian and any such member, officer, agent or employee against any claim,
loss, liability or expense arising out of the Plan, except such as may result
from the gross negligence, willful misconduct or intentional misfeasance of such
entity or person.
5
<PAGE>
18. Conditions and Approvals. The obligations of the Company under the
Plan shall be subject to and conditioned upon compliance with all applicable
state, federal and foreign laws and regulations, compliance with the rules of
any stock exchange or market on which the Company's securities may be listed,
and approval of such federal, state and foreign authorities or agencies as may
have jurisdiction over the Plan or the Company. The Company will use its best
effort to comply with such laws, regulations and rules and to obtain such
approvals.
19. Amendment of the Plan. The Board of Directors of the Company may from
time to time amend the Plan in any and all respects, except that without the
approval of the shareholders of the Company, the Board of Directors may not
increase the number of shares reserved for the Plan or decrease the purchase
price of shares offered pursuant to the Plan.
20. Termination of the Plan. The Plan shall terminate when all of the
shares reserved for purposes of the Plan have been purchased, provided that the
Board of Directors in its sole discretion may at any time terminate the Plan
without any obligation on account of such termination, except as hereinafter in
this paragraph provided. Upon termination of the Plan, the cash and shares, if
any, held in the account of each participant shall forthwith be distributed to
the participant or to the participant's order, provided that if prior to the
termination of the Plan, the Board of Directors and shareholders of the Company
shall have adopted and approved a substantially similar plan, the Board of
Directors may in its discretion determine that the account of each participant
under this Plan shall be carried forward and continued as the account of such
participant under such other plan, subject to the right of any participant to
request distribution of the cash and shares, if any, held for his account.
21. Effective Date of the Plan. The Plan shall become effective on
[_________], 1999 subject to approval by the affirmative vote, in person or by
proxy, of the holders of at least a majority of the shares of the Company
represented and voting on the approval of the Plan at a validly held meeting of
the shareholders.
6
<PAGE>
EXHIBIT 10.6
THE STANDARD RETIREMENT PLAN
FOR HOME OFFICE PERSONNEL
RESTATEMENT
(1992)
By:/s/ Ronald E. Timpe Title: Senior Vice President
--------------------------- -----------------------------
(Signature)
Ronald E. Timpe Date Adopted: 11-16-92
- ------------------------------- ----------------------
(Name Printed or Typed)
<PAGE>
TABLE OF CONTENTS
ARTICLE I STATEMENT OF PURPOSE AND INTENTIONS
1.1 Purpose............................................. Page 1
1.2 Intent to Qualify....................................... 1
1.3 Effect of Amendment and Restatement..................... 1
ARTICLE II DEFINITIONS
2.1 Actuarial Value......................................... 2
2.2 Actuary................................................. 2
2.3 Agent................................................... 2
2.4 Anniversary Date........................................ 2
2.5 Annuity Starting Date................................... 2
2.6 Basic Monthly Earnings.................................. 3
2.7 Beneficiary............................................. 3
2.8 Break in Service Year................................... 3
2.9 Code.................................................... 3
2.10 Company................................................. 3
2.11 Compensation............................................ 3
2.12 Date of Employment...................................... 4
2.13 Date of Re-employment................................... 4
2.14 Effective Date.......................................... 5
2.15 Employee................................................ 5
2.16 Employer................................................ 8
2.17 Hour of Service......................................... 8
2.18 Insurance Company....................................... 10
2.19 Limitation Year......................................... 10
2.20 Normal Retirement Age, Normal Retirement Benefit, and
Normal Retirement Date................................. 10
2.21 Participant............................................. 10
2.22 Plan.................................................... 10
2.23 Plan Administrator...................................... 10
2.24 Plan Year............................................... 10
2.25 Required Beginning Date................................. 10
2.26 Retirement and Retirement Date.......................... 11
2.27 Service................................................. 11
2.28 Social Security Retirement Age.......................... 11
2.29 Total and Permanent Disability.......................... 12
2.30 Trustees................................................ 12
2.31 Years of Service........................................ 12
ARTICLE III PARTICIPATION
3.1 Commencement of Participation........................... 15
3.2 Minimum Participation Standards......................... 15
3.3 Active Participation; Inactive Participation............ 15
3.4 Cessation of Participation.............................. 15
3.5 Participation on Resumption of Employment............... 15
<PAGE>
ARTICLE IV CONTRIBUTIONS AND FUNDING
4.1 Employer Contributions.................................. 16
4.2 Non-Diversion of Funds.................................. 16
4.3 Application of Funds Released........................... 16
4.4 Funding................................................. 16
ARTICLE V ACCRUAL AND VESTING OF BENEFITS
5.1 Accrual of Normal Retirement Benefit.................... 17
5.2 Vesting of Normal Retirement Benefit.................... 18
5.3 General Limitation on Accrual of Benefits............... 18
5.4 Special Limitation on Accrued Benefits.................. 25
5.5 Top-Heavy Provisions.................................... 30
ARTICLE VI RETIREMENT BENEFITS
6.1 Retirement.............................................. 35
6.2 Retirement Benefit in the Case of Normal Retirement..... 36
6.3 Retirement Benefit in the Case of Early or
Deferred Retirement.................................... 37
6.4 Retirement Benefit in the Case of Re-employment
Formerly Retired Participant........................... 37
6.5 Form of Retirement Benefit.............................. 38
6.6 Election of Forms and Commencement of Payments.......... 39
6.7 Post-Retirement Cost-of-Living Adjustment............... 45
ARTICLE VII INCIDENTAL BENEFITS
7.1 Termination of Employment Before Attainment
of Retirement Age...................................... 48
7.2 Surviving Spouse Benefit................................ 49
7.3 Disability of a Participant............................. 49
ARTICLE VIII GENERAL PROVISIONS
8.1.1 Plan Modification: Authority............................ 51
8.1.2 Plan Modification: Merger............................... 51
8.1.3 Plan Modification: Termination.......................... 51
8.2.1 Duties: Plan Administrator.............................. 51
8.2.2 Duties: Employer........................................ 51
8.3 Claims Procedure........................................ 52
8.4 Review Procedure........................................ 52
8.5 Termination of the Plan................................. 53
8.6 Qualification of the Plan and
Conditions of Contributions............................ 53
8.7 Beneficiaries........................................... 53
8.8 Spendthrift Clause...................................... 54
8.9 Annuities............................................... 54
8.10 Limitations of the Employer's Liability................. 55
8.11 Non-Guarantee of Employment............................. 55
8.12 Applicable Law.......................................... 55
8.13 USERRA Requirement...................................... 55
ARTICLE IX DIRECT ROLLOVERS
9.1 General Rule............................................ 56
9.2 Definitions............................................. 56
SIXTH AMENDMENT
TOC
Effective 10/13/96
<PAGE>
ARTICLE I
STATEMENT OF PURPOSE AND
INTENTIONS
1.1 Purpose
- --- -------
The Trustees adopt this Plan as a defined benefit retirement plan. The
primary purpose of this Plan is to provide retirement benefits to certain
Employees who qualify for such benefits as more particularly provided
herein. Any death or other nonretirement benefits payable pursuant to this
Plan shall be incidental to the Plan's primary purpose.
1.2 Intent to Qualify
- --- -----------------
It is the Trustees' intent that this Plan be a qualified plan in the
meaning of sec. 401 of the Internal Revenue Code of 1986, as amended, that
any trust that may become part hereof be exempt from tax under sec. 501(a)
of the Code, and that contributions made by the Employer be deductible
under sec. 404 of the Code. This Plan shall be interpreted, applied and
administered in a manner consistent with this intent to qualify. All
amounts contributed to, accumulated and/or held pursuant to this Plan shall
not be diverted to or used for other than the exclusive benefit of the
Participants or their beneficiaries until after such amounts have been
distributed from this Plan.
1.3 Effect of Amendment and Restatement
- --- -----------------------------------
This Plan is an amendment and restatement of the Standard Retirement Plan
for Home Office Personnel. As such, it is effective only with respect to
Employees who terminate employment with the Employer on or after the date
the restated Plan was adopted, so that the rights to benefits from the
Plan, if any, of former Employees who terminated employment before that
date shall be determined according to the Plan as it was on the date they
terminated employment, except to the extent that it may cause this Plan's
document to more accurately reflect both the intent of the Employer and the
ongoing administration of the Plan, and except as may be otherwise
specifically provided in this Plan, and except to the extent required by
law.
1
<PAGE>
ARTICLE II
DEFINITIONS
For the purposes of this Plan, when the following terms appear in this Plan in
boldface type, they shall have the meanings indicated in this Article unless a
different meaning is clearly required by the context.
Whenever required by the context, masculine pronouns shall include the feminine,
and singular the plural.
2.1 Actuarial Value means, as of the Annuity Starting Date, the net single
- --- ---------------
premium to provide a benefit. In computing the net single premium, all
mortality rates for both males and females are from the 1984 Unisex Pension
mortality table (UP-84) with no adjustment. The interest rates used shall
be the interest rates which would be used (as of January 1 in the pertinent
calendar year in which occurs the Annuity Starting Date) by the Pension
Benefit Guaranty Corporation (PBGC) for purposes of determining the present
value of a lump sum distribution on plan termination.
Also, regarding any benefits that become payable due to a Participant's
retirement (pursuant to Article VI), in computing the net single premium
that is necessary to provide such a benefit, an annual post-retirement
cost-of-living increase shall be assumed. The amount of the annual increase
shall be assumed to be three percent (3%), and shall be based on the amount
of benefit that is payable immediately prior to the first application of
the cost-of-living increase. However, where (pursuant to Section 6.7(b))
two separate portions of a benefit are to become subject to cost-of-living
increases at different times, the net single premium to provide the entire
benefit shall be determined by (1) treating the two separate portions as
each being a separate benefit, (2) calculating the net single premium
necessary to provide each separate benefit, and then (3) adding together
those two premiums, resulting in the net single premium for the entire
benefit.
However, in no event shall the benefit payable in any optional form or at
any time other than Normal Retirement Age be less than the benefit payable
in such optional form or at such other time based on (a) the Participant's
accrued Normal Retirement Benefit, and (b) the definition of Actuarial
Value in the Plan, as each existed on the date prior to the date this
amendment and restatement was adopted (as set forth on the signature page
of this document).
2.2 Actuary means an enrolled actuary in the meaning of sec. 7701 (a)(35) of
- --- -------
the Code, as amended, who has been retained by the Employer either directly
or through an Insurance Company in connection with the Plan.
2.3 Agent means an agency manager, district manager, associate manager, agency
- --- -----
supervisor, career agent, general agent, or senior agent engaged as such
pursuant to a contract with Standard. Agent does not mean any person not
described in the foregoing sentence except as may be provided by amendment
to the Plan.
2.4 Anniversary Date means each January 1.
- --- ----------------
2.5 Annuity Starting Date means the first day of the first period for which an
- --- ---------------------
amount is payable as an annuity or any other form.
FIRST AMENDMENT
Art. II Section 2.1
Effective 1/1/93 2
<PAGE>
2.6 Basic Monthly Earnings means the average monthly Compensation paid to a
- --- ----------------------
Participant during the 60-consecutive-month period within the most recent
120 consecutive months of Service performed as an Eligible Employee which
will produce the highest such average.
For the purposes of this Section, two months shall be considered
"consecutive" even if there were intervening months during which the
Participant accrued no Hours of Service. Also, if as of the time of
computation the Participant has accrued Hours of Service as an Eligible
Employee in fewer than 60 months, his Compensation shall be averaged over
as many months as there are.
Similarly, employment before and after a Break in Service Year will be
counted as consecutive if the number of the Participant's consecutive Break
in Service Years at that time is less than the aggregate number of Years of
Vesting Service that are credited before the Break in Service Year.
Finally, if there is more than one period of employment as an Eligible
Employee within the Participant's most recent 120 months of such
employment, but none of those periods contains at least 60 consecutive
months, then the period of longest duration shall be used.
2.7 Beneficiary is defined in Section 8.7, except as specifically provided to
- --- -----------
the contrary elsewhere in this Plan.
2.8 Break in Service Year means a twelve-consecutive-month period commencing on
- --- ---------------------
an Anniversary Date and during which an Employee (or former Employee) is
credited with not more than 500 Hours of Service.
2.9 Code means the Internal Revenue Code of 1986, as amended, and all
- --- ----
regulations promulgated thereunder.
2.10 Company means Standard Insurance Company.
- ---- -------
2.11 Compensation means wages, salary, and/or other remuneration that is
- ---- ------------
received by an individual during a Plan Year for Service performed while
an Eligible Employee and that is required to be reported as income on the
individual's Form W-2 for federal income tax purposes, EXCEPT that
Compensation shall not include amounts attributable to Company-wide profit
sharing bonuses, officers' hiring or relocation bonuses, other
individualized bonuses paid to officers, long-term incentive compensation
plans, reimbursement for unused vacation at the time of termination of
Service, severance pay, taxable fringe benefits, tax reimbursements,
awards and prizes, club dues, noncash compensation, or contributions to
and benefits from any other employee benefit plan maintained by the
Company except as provided in (a) below. However, officers' incentive pay
(other than amounts excluded above) shall be included for the Plan Year in
which the Service was performed rather than the Plan Year in which paid.
FIFTH AMENDMENT
Section 2.11
Effective 1/1/95 3
<PAGE>
(a) In addition, Compensation shall include the following amounts:
(1) all elective deferrals (as defined by Code sec. 402(g)(3)) made by the
Participant during the Plan Year pursuant to a cash or deferred
arrangement sponsored by the Employer; and
(2) all Compensation accrued by the Participant during the Plan Year but
which is not then included as taxable income of the Participant
pursuant to a "cafeteria" or other such plan maintained by the
Employer according to Code sec. 125.
(b) In addition to other applicable limitations set forth in the Plan, and
notwithstanding any other provision of the Plan to the contrary, for Plan
Years beginning on or after January 1, 1994, the annual Compensation of
each Employee taken into account under the Plan shall not exceed the OBRA
'93 annual compensation limit. The OBRA '93 annual compensation limit is
$150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Code sec. 401 (a)(17)(B). The cost-of-living
adjustment in effect for a calendar year applies to any period, not
exceeding 12 months, over which Compensation is determined (determination
period) beginning in such calendar year. If a determination period consists
of fewer than 12 months, the OBRA '93 annual compensation limit will be
multiplied by a fraction, the numerator of which is the number of months in
the determination period, and the denominator of which is 12.
For Plan Years beginning on or after January 1, 1994, any reference in this
Plan to the limitation under Code sec. 401(a)(17) shall mean the OBRA '93
annual compensation limit set forth in this provision.
If Compensation for any prior determination period is taken into account in
determining an Employee's benefits accruing in the current Plan Year, the
Compensation for that prior determination period is subject to the OBRA '93
annual compensation limit in effect for that prior determination period.
For this purpose, for determination periods beginning before the first day
of the first Plan Year beginning on or after January 1, 1994, the OBRA '93
annual compensation limit is $150,000.
Any provision of this Section to the contrary notwithstanding, the amount
of Compensation for each Participant taken into account under this Plan in
any Plan Year beginning after 1988 and before 1994 may not exceed $200,000,
or such greater amount as the Secretary of the Treasury or his delegate may
have authorized pursuant to Code sec. 401(a)(17). The adjusted limit in
effect on January 1 of any calendar year shall be effective for any Plan
Year beginning in that calendar year. The first such dollar adjustment
became effective as of January 1, 1990.
FIFTH AMENDMENT
Section 2.11
Effective 1/1/95 3a
<PAGE>
In applying the limit described in this subsection, the family aggregation
rules of Code sec. 414(q)(6) shall apply, except that for such purpose, the
term "family" shall include only the spouse of the Employee and any lineal
descendants of the Employee who have not attained age 19 before the close
of the Plan Year. If as a result of the application of these family
aggregation rules the adjusted limitation is exceeded, then (except for
purposes of determining the portion of Compensation up to the integration
level if this Plan provides or is amended to provide for permitted
disparity) the limitation shall be prorated among the affected individuals
in proportion to each such individual's Compensation as determined under
this Section prior to the application of this limitation.
(c) Formula with extended wear-away:
Unless otherwise provided under the Plan, each section 401(a)(17)
Employee's accrued benefit under this Plan will be the greater of the
accrued benefit determined for the Employee under (1) or (2) below:
(1) the Employee's accrued benefit determined with respect to the benefit
formula applicable for the Plan Year beginning on or after January 1,
1994, as applied to the Employee's total Years of Service taken into
account under the Plan for the purposes of benefit accruals, or
(2) the sum of:
(A) the Employee's accrued benefit as of the last day of the last
Plan Year beginning before January 1, 1994, frozen in accordance
with section 1.401 (a)(4)-13 of the regulations, and
(B) the Employee's accrued benefit determined under the benefit
formula applicable for the Plan Year beginning on or after
January 1, 1994, as applied to the Employee's Years of Service
credited to the Employee for Plan Years beginning on or after
January 1, 1994, for purposes of benefit accruals.
A "section 401(a)(17) Employee" means an Employee whose current accrued
benefit as of a date on or after the first day of the first Plan Year
beginning on or after January 1, 1994, is based on Compensation for a year
beginning prior to the first day of the first Plan Year beginning on or
after January 1, 1994, that exceeded $150,000.
2.12 Date of Employment means the date on which an Employee has his first Hour
- ---- ------------------
of Service.
Date of Engagement means the date on which an Agent has his first Hour of
------------------
Service.
2.13 Date of Re-employment means the first date as of which an Employee has an
- ---- ---------------------
Hour of service after his most recent termination of Service.
Date of Re-engagement means the first date as of which an Agent has an Hour
---------------------
of Service after his most recent termination of Service.
FOURTH AMENDMENT
Section 2.11
Effective 1/1/95 4
<PAGE>
2.14 Effective Date means July 1, 1955. The effective date of this amendment and
- ---- --------------
restatement is:
(1) January 1, 1987, for those Plan provisions required to be made
effective for Plan Years beginning after December 31, 1986, pursuant
to the Tax Reform Act of 1986 ("TRA '86") and subsequent legislation;
(2) January 1, 1989, for those Plan provisions required to be made
effective for Plan Years beginning after December 31, 1988, pursuant
to TRA '86 and subsequent legislation; and for all other Plan
provisions,
(3) January 1, 1993, except as may be otherwise required by law for
particular Plan provisions.
2.15 Employee means a natural person who performs Service for the Employer in
- ---- --------
exchange for Compensation, but excluding any independent contractor. For
the purposes of this Plan, Employee shall be further described as follows.
(a) Eligible Employee means any Employee whose Service is not performed
-----------------
as a Leased Employee and whose Service is at the Company's Home
Office or at any agency office of the Company, including but not
limited to the Group Field Force; however, Eligible Employee
specifically does not mean any person who is an Agent. Effective
November 30, 1993, the definition of Eligible Employee shall exclude
any Employee who is a participant in a plan which was neither
established nor maintained by the Company but to which the Company
made contributions on behalf of such Employee.
(b) Highly Compensated Employee ("HCE") means:
(1) The group of HCEs includes any Employee who during the Plan Year
performs services for the Employer and who (i) is a 5-percent
owner, (ii) receives compensation for the Plan Year in excess of
the sec. 414(q)(1)(B) amount for the Plan Year, (iii) receives
compensation for the Plan Year in excess of the sec.
414(q)(1)(C) amount for the Plan Year and is a member of the top
paid group of Employees within the meaning of sec. 414(q)(4), or
(iv) is an officer and receives compensation during the Plan
Year that is greater than 50 percent of the dollar limitation in
effect under sec. 415(b)(1)(A). If no officer satisfies the
compensation requirement during the Plan Year, the highest paid
officer for such year shall be treated as an HCE.
For purposes of determining who is an HCE, compensation means
compensation within the meaning of sec. 415(c)(3) as set forth
in the Plan for purposes of determining the (s)415 limits,
except that amounts excluded pursuant to sections 125,
402(e)(3), 402(h)(1)(B) and 403(b) are included. If compensation
used for purposes of
FIFTH AMENDMENT
Section 2.15
Effective 1/1/95 5
<PAGE>
determining the (s)415 limits under the Plan is not defined as
total compensation as provided under sec. 415(c)(3) and the
regulations thereunder, then for purposes of determining who is
an HCE, compensation means compensation within the meaning of
sec. 1.415-2(d)(1 1)(1) of the Income Tax Regulations, except
that amounts excluded pursuant to sections 125, 402(e)(3),
402(h)(1)(B) and 403(b) are included.
(2) If an Employee is a family member of either a 5-percent owner
(whether active or former) or an HCE who is one of the 10 most
highly compensated Employees ranked on the basis of compensation
paid by the Employer during such year, then the family member
and the 5-percent owner or top-ten HCE shall be aggregated. In
such case, the family member and 5-percent owner or top-ten HCE
shall be treated as a single Employee receiving compensation and
plan contributions or benefits equal to the sum of the
compensation and benefits of the family member and 5-percent
owner or top-ten HCE. For purposes of this section, family
member includes the spouse, lineal ascendants and descendants of
the Employee or former Employee, and the spouses of such lineal
ascendants and descendants.
(3) The determination of who is an HCE, including the determination
of the number and identity of Employees in the top paid group,
the number of Employees treated as officers and the compensation
that is taken into account, shall be made in accordance with the
sec. 414(q) and sec. 1.414(q)-lT of the temporary Income Tax
Regulations to the extent they are not inconsistent with the
method established above.
(c) Key Employee means (solely for the purposes of Section 5.5 an Employee
------------
who, at any time during the Plan Year or 4 preceding Plan Years, was:
(1) an officer of the Employer having an annual Compensation greater
than 50% of the amount in effect under Code sec. 415(b)(1)(A)
for any such Plan Year; or
(2) one of the ten Employees having annual Compensation greater than
the limitation in effect under Code sec. 415(c)(1)(A) and owning
(or considered as owning within the meaning of Code sec. 318)
the largest interests of the Employer; or
(3) a 5 percent owner of the Employer; or
(4) a 1 percent owner of the Employer having an annual Compensation
of more than $150,000.
FIFTH AMENDMENT
Section 2.15
Effective 1/1/95 6
<PAGE>
For the purposes of this Plan, Key Employee shall be described more
particularly by (and in any event, interpreted consistent with) Code
sec. 416(l)(1) and regulations promulgated thereunder.
(d) Leased Employee means a person who is employed (either as a common law
---------------
employee or an independent contractor) by a leasing organization (but
not by the Employer) and who performs services for the Employer on a
substantially full-time basis for a period of at least one year, where
such services are of a type historically performed by Employees within
the business field of the Employer, and where such services are
provided pursuant to a contract between the leasing organization and
the Employer, EXCEPT that if such person is covered under a money
purchase pension plan maintained by the leasing organization and which
provides (1) a nonintegrated employer contribution rate of at least
7 1/2% of compensation for services performed prior to January 1,
1987, and at least 10% of compensation for services performed after
December 31, 1986, with compensation being determined according to
Code sec. 415(c)(3), but including amounts contributed by the Employer
pursuant to a salary reduction agreement which are excludable from the
Employee's gross income under Code sec. 125, 402(a)(8), 402(h), or
403(b); (2) immediate participation; and (3) full and immediate
vesting, AND if the sum of all such persons is not more than 20% of
the Employer's "nonhighly compensated workforce" (as defined in 26 CFR
1.414(n)-2(f)(3)(ii)), then for the purposes of this Plan such person
is not a Leased Employee, and is at that time ineligible to a benefit
or any vested interest in this Plan.
Any provisions of this Section and this Plan to the contrary
notwithstanding, the term "Leased Employee" shall be more specifically
defined by, and Leased Employees shall be treated under this Plan
consistent with, Code sec. 414(n) and 26 CFR 1.414(n)-2.
FIFTH AMENDMENT
Section 2.15
Effective 1/1/95 7
<PAGE>
2.16 Employer means Standard Insurance Company and any other person or business
- ---- --------
organization which has adopted and maintains this Plan on behalf of its
Employees with the consent of Standard Insurance Company.
In addition, to the extent required for this Plan's qualification for
special tax treatment under the Code (including, for example, meeting the
requirements of Code sec. 415), and to the extent otherwise required by
applicable law, including for example the determination of a Participant's
Years of Vesting Service, Employer also means any predecessor organization
which previously maintained this Plan on behalf of its employees (but only
with regard to that period of time during which the Plan was maintained by
such organization (s)), and any employer which, together with the Employer
(as otherwise defined in this Section), is a member of a controlled group
of corporations in the meaning of Code sec. 414(b), or is a member of a
group of trades or business (whether or not incorporated) under common
control in the meaning of Code sec. 414(c), or is a member of an
affiliated service group in the meaning of Code sec. 414(m), or is
otherwise required to be aggregated by Code sec. 414(o), EXCEPT that for
the purpose of determining this Plan's compliance with the requirements of
Code sec. 415, Code secs. 414(b) and (c) shall be applied by substituting
the phrase "more than 50 percent" for the phrase "at least 80 percent"
each place it appears in Code sec. 1563(a)(1) defining "a parent-
subsidiary controlled group".
2.17 Hour of Service means:
---------------
(a) each hour for which an Employee is paid, or entitled to payment, by
the Employer for the performance of duties;
(b) each hour for which an Employee is directly or indirectly paid, or
entitled to payment, by the Employer on account of a period of time
during which
FIFTH AMENDMENT
Section 2.16
Effective 1/1/95 8
<PAGE>
no duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness,
incapacity (including disability), layoff, jury duty, military duty
or leave of absence except with respect to payments made or due under
a plan maintained solely for the purpose of complying with applicable
workers' compensation or unemployment compensation or disability
insurance laws or which are solely in reimbursement to the Employee
for medical or medically-related expenses incurred by the Employee;
however, no more than 501 Hours of Service shall be credited pursuant
to this paragraph to an Employee on account of any single continuous
period during which the Employee performs no duties (whether or not
such period occurs in a single Plan Year); and
(c) each hour for which back pay, irrespective of mitigation of damages,
is either awarded or agreed to by the Employer; however, an Hour of
Service shall not be credited under both this paragraph and paragraph
(a) or (b), above.
Hours of Service credited under paragraphs (b) and (c), above, shall be
credited in accordance with Department of Labor Regulations found at 29CFR
sec. 2530.200b-2(b). Hours of Service shall be credited to the appropriate
Plan Year in accordance with 29CFR sec. 2530.200b-2(c).
Hours of Service included pursuant to paragraph (a) shall be determined
according to records of employment maintained by the Employer. If such
records do not provide an adequate basis for determining the actual number
of Hours of Service accrued by a particular Employee (e.g. a salaried
Employee), then Hours of Service under paragraph (a) shall be credited to
the Employee on a weekly basis and the Employee shall be credited with 45
Hours of Service for every week in which he has accrued at least one Hour
of Service as otherwise described in paragraph (a).
Special Rule for Maternity or Paternity Absences
------------------------------------------------
If an Employee is absent from work due to
(1) the pregnancy of the Employee,
(2) the birth of a child to the Employee,
(3) the placement of a child with the Employee pursuant to the Employee's
adoption of the child, or
(4) the care of such child described in (2) or (3) above immediately
following its birth or placement,
the Employee shall nonetheless be credited with the number of Hours of
Service which normally would have been credited to the Employee but for
said absence (or, if the Plan Administrator is unable to determine said
number, with eight (8) Hours of Service for each regularly scheduled
workday the Employee is absent), to a maximum of 501 Hours of Service,
PROVIDED that this special crediting of Hours of Service occurs during only
one Plan Year, and
Art. II 9
<PAGE>
PROVIDED that the Plan Year in which such Hours of Service are credited is
the Plan Year in which the absence begins, unless such crediting would not
be necessary to avoid a Break in Service Year in said Plan Year, in which
case such Hours of Service shall be credited as they accrue in the Plan
Year immediately following the Plan Year in which the absence begins, and
PROVIDED that the crediting of such Hours of Service shall be solely for
the purpose of avoiding a Break in Service Year, and shall not operate to
increase any Employee's or former Employee's vested percentage or
retirement benefit, nor shall the crediting have any other operative effect
regarding this Plan, and
PROVIDED that, under rules established by the Plan Administrator, the
Employee may be required to provide to the Plan Administrator written
certification from the Employee's attending doctor or other professional
attendant at birth or representative of the relevant adoption agency to
establish that the absence from work is for the reasons referred to above.
2.18 Insurance Company means a legal reserve life insurance company, licensed
- ---- -----------------
to do business in the state of Oregon, with which the Trustees have
entered into a contract to provide benefits under the Plan.
2.19 Limitation Year, for purposes of determining the limitation on certain
- ---- ---------------
additions to the Plan for the benefit of an Employee as described in
Section 5.3, means a twelve-consecutive-month period beginning on an
Anniversary Date.
All qualified plans of the Employer must use the same Limitation Year. If
the Limitation Year is amended to a different 12-consecutive-month period
the new Limitation Year must begin on a date within the Limitation Year in
which the amendment is made.
2.20 Normal Retirement Age, Normal Retirement Benefit, and Normal
- ---- ------------------------------------------------ ------
Retirement Date are defined in Article VII under "Retirement Benefits".
---------------
2.21 Participant means an Employee or former Employee who has become a
- ---- -----------
Participant or resumed participation pursuant to Section 3.1 or 3.5 and
who has not subsequently ceased to participate as provided in Section 3.4.
A Participant may be Active or Inactive as provided in Section 3.3.
2.22 Plan means this Standard Retirement Plan for Home Office Personnel.
- ---- ----
2.23 Plan Administrator means one or more persons appointed by the Trustees to
- ---- ------------------
control and manage the operation and administration of the Plan. The
person or persons so appointed shall constitute a named fiduciary or
fiduciaries for purposes of the Employee Retirement Income Security Act of
1974. If no Plan Administrator is appointed, then the Employer (or the
Trustee(s) if the Plan is trusteed) shall be the Plan Administrator.
2.24 Plan Year means a period of time commencing on an Anniversary Date and
- ---- ---------
ending with the day immediately preceding the next Anniversary Date.
2.25 Reguired Beginning Date
- ---- -----------------------
(a) General Rule. Required Beginning Date means, for any Participant,
------------
April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2.
FIRST AMENDMENT
Art. 11 Section 2.19
Effective 1/1/93 10
<PAGE>
(b) Transition Rules: The Required Beginning Date of any Participant who
attained age 70 1/2 before January 1, 1988, shall be determined
according to (1) or (2) below:
(1) The Required Beginning Date of a Participant who is a 5% owner
is April 1 of the calendar year following the later of:
(A) the calendar year in which the Participant attained age
70 1/2, or
(B) the calendar year in which the Participant retires.
(2) The Required Beginning Date of any Participant who is a 5%
owner during any year beginning after December 31, 1979, is
April 1 of the calendar year following the later of:
(A) the calendar year in which the Participant attained age
70 1/2, or
(B) the earlier of
(i) the calendar year with or within which ends the Plan
Year in which the Participant becomes a 5% owner, or
(ii) the calendar year in which the Participant retires.
(c) The Required Beginning Date of any Participant who is not a 5% owner,
who attained age 70 1/2 during 1988, and who did not retire as of
January 1, 1989, is April 1, 1990.
(d) 5% owner, for purposes of this Section, means a Participant who is a
5% owner within the meaning of Code sec. 416(i) (except without
regard to whether the Plan is actually top-heavy) at any time during
the Plan Year ending with or within the calendar year in which the
Participant attains age 66 1/2, or any subsequent Plan Year.
2.26 Retirement and Retirement Date are defined in Article VI under
- ---- ---------- ---------------
"Retirement".
2.27 Service means employment of the Employee or engagement of the Agent by the
- ---- -------
Employer for the performance of labor or duties by the Employee or Agent
on behalf of the Employer and for which the Employee or Agent is to be
compensated by the Employer.
2.28 Social Security Retirement Age means:
- ---- ------------------------------
(A) age 65, for Participants born before January 1, 1938
(B) age 66, for Participants born after December 3, 1937, but before
January 1, 1955; and
(C) age 67 for Participants born after December 31, 1954.
FIRST AMENDMENT
Art. II Section 2.26
Effective 1/1/93 11
<PAGE>
2.29 Total and Permanent Disability means a physical or mental condition which
- ---- ------------------------------
results in a Participant being eligible to receive disability benefits
under the federal Social Security program, or under any formal program of
long term disability insurance provided by the Employer.
Total and Permanent Disability of the Participant must be certified to the
Plan Administrator by the Company. The Participant must furnish written
proof of Total and Permanent Disability satisfactory to the Company within
90 days after commencement of Total and Permanent Disability, and
thereafter as often as the Company may reasonably require. The Company
shall have the right and opportunity to examine the person of any
Participant as often as it may be reasonably required during any period
for which Total and Permanent Disability status is claimed.
For purposes of this Section, a Participant's Total and Permanent
Disability shall cease on the earliest of the following dates:
(1) the date on which the Participant is no longer Totally and
Permanently Disabled under the terms of this Section;
(2) the date on which the Participant fails to furnish written proof of
disability or fails to be examined as required by the Company.
(3) the date of the Participant's death; or
(4) the date which the Participant has designated as his Early Retirement
Date, Normal Retirement Date or Deferred Retirement Date.
2.30 Trustees means those persons or the organization with which the Employer
- ---- --------
has entered into a trust agreement to provide benefits under the Plan.
However, at any time that the Plan is not trusteed, "Trustees" shall mean
the Company.
2.31 Years of Service
- ---- ----------------
Each Participant's accrued Pension Credit, and therefore his benefits
under this Plan, and also the extent to which he owns (or is "vested" in)
those benefits, is determined with reference to his period(s) of
employment by the Employer, which shall be described as his Years of
Service.
For the purposes of determining the Participant's accrued Pension Credit,
his periods of employment shall be described as Years of Benefit Service.
For the purposes of determining the Participant's vested interest in his
benefits under the Plan, his periods of employment shall be described as
Years of Vesting Service.
(a) Years of Benefit Service
------------------------
Subject to the exclusions described below, each Participant's Years
of Benefit Service shall be measured as follows.
Art. II 12
<PAGE>
A Participant shall be credited with one Year of Benefit Service for each
Plan Year which commenced on or after the Effective Date and during which
the Participant accrued at least 1,000 Hours of Service as an Eligible
Employee.
In addition, if the Participant was an Employee on the Effective Date he
shall be credited with one Year of Benefit Service for each Plan Year
prior to the Effective Date for which he is credited with at least 1,000
Hours of Service as an Eligible Employee.
Finally, if the Participant is credited with fewer than 1,000 Hours of
Service as an Eligible Employee for the Plan Year in which occurs the
Participant's latest termination of Service, then the Participant shall be
credited with fraction of a Year of Benefit Service, the numerator of
which shall equal the Participant's Hour of Service as an Eligible
Employee that are credited for that Plan Year, and the denominator of
which shall equal 1,000.
(b) Exclusions from Benefit Service
If a Participant or former Participant accrues a Break in Service Year, all
Years of Benefit Service attributable to his employment prior to that Break
in Service Year shall thereafter be disregarded unless either
(1) his Vested Percentage is greater than zero at the time the Break in
Service Year has accrued, or
(2) prior to January 1, 1985, he has a Year of Benefit Service after the
Break in Service Year and the number of his consecutive Break in
Service Years is less than the aggregate number of his Years of
Benefit Service before the Break in Service Year, not taking into
account Years of Benefit Service previously disregarded because of a
prior Break in Service Year; or
(3) after December 31, 1984, the number of his consecutive Break in
Service Years is less than (A) or (B), whichever is greater, where
(A) equals 5, and
(B) equals the aggregate number of his Years of Benefit Service
before the Break in Service Years, not taking into account Years
of Benefit Service previously disregarded because of prior Break
in Service Years.
The following Years of Benefit Service shall also be disregarded for the
purposes of this Plan.
(1) Benefit Service attributable to the Plan Year in which the
Participant's Date of Employment occurred shall be disregarded.
However, if the Participant is hired after 1975, and his Date of
Employment is January 1, Benefit Service attributable to the Plan Year
in which his Date of Employment occurred shall be counted.
(2) All Benefit Service which accrued before January 1, 1976, shall be
disregarded if the Participant was not an Eligible Employee on
January 1, 1976.
SECOND AMENDMENT
Section 2.31
Effective 1/1/93 13
<PAGE>
(3) All Benefit Service which is attributable to Service performed before
the Plan Year in which the Participant attained age 21 shall be
disregarded.
Benefit Service may also be disregarded pursuant to Section 7.1, regarding
distribution due to termination of Service.
(c) Years of Vesting Service
------------------------
Subject to the exclusions described below, each Participant's Years of
Vesting Service shall be measured as follows.
A Participant shall be credited with one Year of Vesting Service for each
twelve-consecutive-month period which commenced on an Anniversary Date on
or after the Effective Date and during which the Participant accrued at
least 1,000 Hours of Service.
In addition, if the Participant was an Employee on the Effective Date, he
shall also be credited with one Year of Vesting Service for each twelve-
consecutive-month period which commenced on an Anniversary Date prior to
the Effective Date and during which the Participant accrued at least 1,000
Hours of Service.
SECOND AMENDMENT
Section 2.31
Effective 1/1/93 13a
<PAGE>
(d) Exclusions from Vesting Service
-------------------------------
If a Participant or former Participant accrues a Break in Service Year, all
Years of Vesting Service attributable to his employment prior to that Break
in Service Year shall thereafter be disregarded unless either
(1) his Vested Percentage is greater than zero at the time the Break in
Service Year has accrued, or
(2) prior to January 1, 1985, he has a Year of Vesting Service after the
Break in Service Year and the number of his consecutive Break in
Service Years is less than the aggregate number of his credited Years
of Vesting Service before the Break in Service Year, not taking into
account Years of Vesting Service previously disregarded because of a
prior Break in Service Year; or
(3) after December 31, 1984, the number of his consecutive Break in
Service Years is less than (A) or (B), whichever is greater, where
(A) equals 5, and
(B) equals the aggregate number of his Years of Vesting Service
before the Break in Service Years, not taking into account Years
of Vesting Service previously disregarded because of prior Break
in Service Years.
Art. II 14
<PAGE>
ARTICLE III
PARTICIPATION
3.1 Commencement of Participation
- --- -----------------------------
The date of commencement of participation of Employees who were
Participants before the date as of which this restatement of the Plan
became effective (i.e. January 1, 1993) shall be determined by the terms of
this Plan as it was in effect before this restatement.
An Employee who did not participate before this restatement became
effective shall commence participation on this restatement's effective date
if he meets the Plan's Minimum Participation Standards. If not, he shall
commence participation on the first Entry Date thereafter on which he meets
the Plan's Minimum Participation Standards.
The Entry Dates shall be each Anniversary Date. However, for any person who
was an Agent immediately prior to becoming an Eligible Employee, and who
also is at least 20 years of age, that person's Entry Date shall be the
date on which he became an Eligible Employee.
3.2 Minimum Participation Standards
- --- -------------------------------
An Employee meets the Plan's Minimum Participation Standards at any time
when he satisfies the following conditions:
(a) He is an Eligible Employee.
(b) He is at least 20 years of age.
3.3 Active Participation; Inactive Participation
- --- --------------------------------------------
Once an Employee has commenced participation (or if he subsequently ceased
to participate, once he has resumed participation), he shall be an Active
Participant with respect to each Hour of Service accrued while he is an
Eligible Employee. At any time thereafter at which he is not an Eligible
Employee, but before his participation has ceased, he shall be an Inactive
Participant.
3.4 Cessation of Participation
- --- --------------------------
A Participant shall cease to participate in this Plan (without regard to
his status as an Employee) as of the first date on which his Service has
most recently terminated and also on which he has no rights (present or
contingent) to any benefit under this Plan.
3.5 Participation on Resumption of Employment
- --- -----------------------------------------
A former Employee who participated during the period of his prior
employment and who is still credited with Vesting Service (pursuant to
Section 2.31) shall resume participation as of his first Hour of Service
upon resumption of Service as an Eligible Employee.
Any other former Employee shall commence participation as of the first
Entry Date which occurs on or after his Date of Re-employment and as of
which he has satisfied the Minimum Participation Standards described in
Section 3.2.
Art. III 15
<PAGE>
ARTICLE IV
CONTRIBUTIONS AND FUNDING
4.1 Employer Contributions
- --- ----------------------
The Employer, in consultation with the Actuary, shall contribute whatever
amounts are required to provide the benefits and pay the expenses of the
Plan.
Upon termination or partial termination of the Plan pursuant to Section
8.1, the Employer's obligation to make further contributions to the Plan on
behalf of affected Employees shall cease, except for any additional
contribution which may be necessary to meet the minimum funding
requirements of the Employee Retirement Income Security Act of 1974. Vested
benefits at termination or partial termination are payable only from the
Plan's assets and only to the extent then funded and the Employer's
liability shall be limited to the assets of the Plan as of the date of such
termination, except as may be required to the contrary by law.
4.2 Non-diversion of Funds
- --- ----------------------
Subject to Sections 8.5 and 8.6, all funds contributed to the Plan shall be
applied for the exclusive benefit of Participants and their Beneficiaries,
except for such reasonable expenses as may be incurred in the operation of
the Plan. Except as provided in Section 8.6, no funds or any income earned
thereon may ever revert to the Employer prior to full satisfaction of all
liabilities under this Plan.
4.3 Application of Funds Released
- --- -----------------------------
Any funds which may be released by an Insurance Company in the form of a
dividend or experience refund, and any funds released by the death or
termination of a Participant, or from any other source, shall not be
applied to increase the benefits any Employee would otherwise receive under
the Plan at any time prior to the termination of the Plan nor revert to the
Employer prior to such time, but shall be applied to reduce the amount of
future Employer contributions to the Plan.
4.4 Funding
- --- -------
The Employer shall enter into such insurance or annuity contracts or trust
agreements as it considers appropriate to provide the benefits called for
under the Plan in accordance with applicable federal law.
Art. IV 16
<PAGE>
ARTICLE V
ACCRUAL AND VESTING
OF BENEFITS
5.1 Accrual of Normal Retirement Benefit
- --- ------------------------------------
(a) The amount of each Participant's accrued Normal Retirement Benefit at
any time shall equal not less than his accrued Pension Credit at that
time, determined from the following formula.
(b) The accrued Pension Credit of each Participant who has accrued no Hour
of Service on or after January 1, 1989, shall be determined according
to the terms of this Plan as such terms existed immediately prior to
this most recent restatement of the Plan.
(c) Subject to subsections (d) and (e) below, for each person who at any
time on or after January 1, 1989, has been a Participant and has
accrued one or more Hours of Service as an Eligible Employee, that
person's accrued Pension Credit shall equal the product of (1) and 2),
where
(1) equals the sum of
(A) 1.15% of the Participant's Basic Monthly Earnings, plus
(B) 0.45% of the amount by which the Participant's Basic Monthly
Earnings exceeds 1/12th of $10,000; and
(2) equals the lesser of
(A) the sum of the Participant's accrued Years of Benefit
Service, or
(B) 35.
The provisions of this subsection (c) shall apply retroactively,
beginning as of January 1, 1989.
(d) Subsection (c) above to the contrary notwithstanding, the
Participant's accrued Pension Credit at any time shall not equal less
than the amount if any) credited on behalf of the Participant as of
December 31, 1985, pursuant to Formula B of Section 5.2 of this Plan
as it existed immediately prior to this restatement of the Plan.
(e) In any event, at any time after the earliest date on which the
Participant could retire, his accrued Pension Credit shall equal not
less than the monthly benefit that would have been payable in the form
of a Straight Life Annuity, after any actuarial adjustment applicable
pursuant to Section 6.3, had he retired on any earlier date on which
he was eligible to retire.
(f) Effective November 30, 1993, the accrual of Pension Credit shall be
frozen of each Participant covered by any retirement plan which is not
established or maintained by the Company but to which the Company made
contributions on behalf of such Participant.
SECOND AMENDMENT
Section 5.1
Effective 11/30/93 17
<PAGE>
5.2 Vesting of Normal Retirement Benefit
- --- ------------------------------------
(a) At any time, a Participant's vested interest in his Normal Retirement
Benefit shall be stated in terms of his Vested Percentage, which shall
be determined from the following schedule according to his Years of
Vesting Service (unless the Plan's Top-Heavy Provisions (Section 5.5)
become effective, in which case the vesting schedule stated therein
shall control):
Years of Service Vested Percentage
---------------- -----------------
Less than 5 0%
5 or more 100%
In addition, a Participant's right to his Normal Retirement Benefit
shall become fully vested and nonforfeitable if he is an Employee on
attainment of Normal Retirement Age (as described in Section 6.1).
(b) The portion of a Participant's Normal Retirement Benefit to which he
has obtained a nonforfeitable right shall be referred to herein as his
"Vested Normal Retirement Benefit", and shall be the product of his
Pension Credit, determined according to Section 5.1, multiplied by his
Vested Percentage.
(c) Under no circumstances shall any amendment of this Plan reduce any
Participant's vested interest regarding any benefits accrued under
this Plan as of the adoption date (or effective date, if later) of
such amendment. With regard to the effect of such an amendment on
subsequently accrued benefits, for each Participant whose vested
interest under the Plan as amended would at any future time be less
than it would be if determined without regard to such amendment, then
provided that the Participant had completed at least three Years of
Vesting Service as of the adoption date (or effective date, if later)
of the amendment, such Participant may irrevocably elect in a writing
delivered to the Plan Administrator during the election period
described below to have his vested interest in his subsequently
accrued benefits under this Plan determined without regard to such
amendment.
For the purpose of this Section, the election period within which such
election may be delivered to the Plan Administrator shall begin as of
the adoption date of the amendment, and shall end on the sixtieth day
after the latest of:
(a) the adoption date of the amendment;
(b) the effective date of the amendment; or
(c) the date on which the Participant received written notice of the
amendment from the Employer or Plan Administrator.
5.3 General Limitation on Accrual of Benefits
- --- -----------------------------------------
(a) General Rule:
(1) At any time, the annual benefit payable on behalf of a
Participant pursuant to this Plan shall not exceed the maximum
permissible amount determined according to this Section.
Art. V 18
<PAGE>
(2) For any Limitation Year, if the Participant would otherwise accrue a
benefit which would result in an annual benefit in excess of the
maximum permissible amount, then such accrual shall be reduced, but
only to the extent necessary for the annual benefit to equal the
maximum permissible amount.
(3) If the Participant is or ever has been covered under more than one
defined benefit plan maintained by the Employer, the sum of the
Participant's annual benefits from all such plans may not exceed the
maximum permissible amount. Accruals under this Plan for any
Limitation Year shall be reduced to the extent necessary to prevent
any such excess from occurring.
(4) If the Employer maintains, or at any time maintained, one or more
qualified defined contribution plans, welfare benefit funds (defined
in Code sec. 419(e)), and/or individual medical accounts (defined in
Code sec. 415(l)(2)) which covered any Participant, then for any
Limitation Year the sum of the Participant's defined contribution
fraction and defined benefit fraction shall not exceed 1.0. Accruals
under this Plan shall be reduced to prevent such excess before any
reduction in annual additions under the affected defined contribution
plans, if possible, and any such accruals shall be reduced only to the
extent necessary to prevent such excess from occurring.
For the purposes of this subsection, nondeductible employee
contributions to any defined benefit plan maintained by the Employer
shall be treated as constituting a separate defined contribution plan
maintained by the Employer.
(5) The limitations in the General Rules stated in this Section shall not
apply to the annual benefit (without regard to the age at which
benefits commence) payable to a Participant under this Plan
(A) if the retirement benefits derived from employer contributions
payable with respect to the Participant under this Plan and all
other defined benefit plans of the Employer do not in the
aggregate exceed $10,000 for the Limitation Year, or for any
prior Limitation Year, and
(B) the Employer has not at any time maintained a defined
contribution plan, any welfare benefit fund (as defined in Code
sec. 419(e)), or any individual medical account (as defined in
Code sec. 415(l)(2)) in which the Participant has participated.
For this purpose the value of the retirement benefit payable under the
Plan will not be adjusted upward for Early Retirement or for benefits
which are not in the form of a Straight Life Annuity.
(6) Where a Participant has less than 10 years of Vesting Service at
the time he begins to receive retirement benefits under this
Plan, the benefit limitations expressed in the general rule, and
the $10,000 amount referred to in the special rule, shall be
reduced by
SIXTH AMENDMENT
Section 5.3
Effective 1/1/96 19
<PAGE>
multiplication by a fraction, the numerator of which is the number of
Years of Vesting Service as of, and including, the current Limitation
Year, but not less than 1, and the denominator of which is 10.
(7) In the case of an individual who was a Participant in one or more
defined benefit plans of the Employer as of the first day of the first
Limitation Year beginning after December 31, 1986, the application of
the limitations of this Section shall not cause the maximum
permissible amount for such individual under all such defined benefit
plans to be less than the individual's current accrued benefit. The
preceding sentence applies only if such defined benefit plans met the
requirement of Code sec. 415, for all Limitation Years beginning
before May 6, 1986.
(b) Definitions:
-----------
Where used in this Section, the following definitions shall apply
exclusively.
(1) "Annual benefit" means a benefit which is payable annually in the form
of a Straight Life Annuity under this Plan, not including any benefits
attributable to Rollover Contributions or to a transfer of assets to
this Plan from a qualified plan not maintained by the Employer. For
purposes of applying the limitations of this Section, a benefit which
is not payable in the form of a Straight Life Annuity shall be
adjusted to a Straight Life Annuity beginning at the same age which is
the actuarial equivalent of such benefit in accordance with rules
determined by the Commissioner of Internal Revenue. However, for
purposes of this adjustment the following values are not taken into
account:
(A) The value of a Qualified Joint and Survivor Annuity or a Joint
and Contingent Survivor Annuity (as each are described elsewhere
within Article VI) to the extent that such value exceeds the sum
of (A) the value of a Straight Life Annuity beginning on the same
date and (B) the value of any post-retirement death benefits
which would be payable even if the annuity was not in the form of
a joint and survivor annuity;
(B) The value of benefits that are not directly related to retirement
benefits (such as pre-retirement disability and death benefits);
(C) The value of benefits provided by this Plan which reflect
postretirement cost of living increases to the extent such
increases are in accordance with Code sec. 415(d) and section
1.415-3(c)(2)(iii) of the Federal Income Tax Regulations.
(2) "Compensation" means a Participant's wages, salaries, fees for
professional service and other amounts received for personal services
actually rendered in the course of employment with the Employer
(without regard to whether received in cash or otherwise), and also
means a person's Earned Income, if any, attributable to Service
performed during the Limitation Year, but does not include:
FIRST AMENDMENT
Art. V Section 5.3
Effective 1/1/93 20
<PAGE>
(A) Contributions made by the Employer to a plan of deferred compensation
to the extent that, before the application of sec. 415 of the Code to
that plan, the contributions are not includible in the gross income of
the Participant for the taxable year in which contributed; employer
contributions on behalf of the Participant to a simplified employee
pension described in sec. 408(k) of the Code to the extent such
contributions are deductible by the Participant under sec. 219(b)(7)
of the Code; or any distributions from a plan of deferred compensation
except amounts received by the Participant pursuant to an unfunded
non-qualified plan in the year such amounts are includible in the
Participant's gross income;
(B) Amounts realized from the exercise of a non-qualified stock option, or
when restricted stock (or property) held by the Participant either
becomes freely transferable or is no longer subject to a substantial
risk of forfeiture for purposes of sec. 83 of the Code and regulations
thereunder;
(C) Amounts realized from the sale, exchange or other disposition of stock
acquired under a qualified stock option; or
(D) Other amounts which receive special tax benefits, such as premiums for
group term life insurance (but only to the extent that the premiums
are not includible in the gross income of the Participant), or
contributions made by an employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract
described in sec. 403(b) of the Code (whether or not the contributions
are excludable from the gross income of the Participant).
(3) "Current accrued benefit" means a Participant's accrued benefit under this
Plan expressed as an annual benefit, and determined as if the Participant
had ceased to be an Employee as of the close of the last Limitation Year
that began before January 1, 1987. For the purposes of determining a
Participant's current accrued benefit, the following shall be disregarded:
(A) any change in the terms and conditions of the Plan after May 5, 1986;
and
(B) any cost of living adjustments occurring after May 5, 1986.
(4) "Defined benefit dollar limitation" means $90,000, with such $90,000 limit
being periodically adjusted according to cost of living adjustment factors
prescribed by the Secretary of the Treasury pursuant to Code sec. 415(d)
and regulations thereunder. The new Limitation resulting from cost of
living adjustments will apply to Limitation Years ending within the
calendar year of the date of the adjustment and shall apply to the annual
benefit payable to a Participant, which is otherwise limited by the dollar
limitation.
(5) "Defined benefit fraction" means a fraction, determined with reference to
any Participant for any Limitation Year, according to the following
provisions:
FIRST AMENDMENT
Art. V Section 5.3
Effective 1/1/93 21
<PAGE>
(A) the numerator of which is the sum of all of the Participant's
projected annual benefits under all of the defined benefit plans
(whether or not terminated) maintained by the Employer, determined as
of the close of the Limitation Year and according to Code sec. 415(e)
and regulations thereunder; and
(B) the denominator of which is the lesser of:
(i) the product of 1.25 (or, if the Plan is top-heavy, 1.0)
multiplied by the dollar limitation determined for that
Limitation Year pursuant to Code sec. 415(b)(1)(A) and Code sec.
415(d) and in accordance with paragraph (8) below; or
(ii) the product of 1.4 multiplied by the amount which may be taken
into account under Code sec. 415(b)(1)(B) for that Participant
and that Limitation Year,
except that if the Participant participated as of the first day of the
first Limitation Year that began after December 31, 1986, in one or
more defined benefit plans which were maintained by the Employer and
which were in existence on May 6, 1986, then the denominator of the
fraction will not equal less than 125% of the sum of the annual
benefits which the Participant had accrued under those plans as of the
close of the last Limitation Year that began before January 1, 1987,
disregarding any changes in the terms and conditions of those plans
after May 5, 1986, but provided that this exception shall apply only
if those defined benefit plans individually and in the aggregate
satisfied the requirements of Code sec. 415 for all Limitation Years
that began before January 1, 1987.
For the purposes of this subsection (5), "projected annual benefits" means
the annual benefit (as defined in subsection (1) above) to which the
Participant would be entitled under the terms of this Plan assuming that
the Participant remains an Employee until his attainment of Normal
Retirement Age (or his current age, if later), and also assuming that the
Participant's compensation (as defined in subsection (2) above) for the
current Limitation Year and all other relevant factors used to determine
benefits under the Plan will remain constant for all future Limitation
Years.
(6) "Defined contribution fraction" means a fraction, determined with
reference to any Participant for any Limitation Year, according to the
following provisions:
(A) the numerator of which is the sum of the "annual additions" on
behalf of the Participant under all defined contribution plans,
defined benefit plans, welfare benefit funds (defined in Code
sec. 419(e)), or individual medical accounts (defined in Code
sec. 415(l)(2)) maintained by the Employer as of the close of the
then-current Limitation Year and/or in any and all prior
Limitation Years; and
Art. V 22
<PAGE>
(B) the denominator of which is the sum of the lesser of the
following amounts for the then-current Limitation Year and for
each prior Limitation Year in which the Participant was an
Employee:
(i) the product of 1.25 (or, if the Plan is top-heavy according
to Section 5.5, 1.0) multiplied by the dollar limitation in
effect under Code sec. 415(c)(1)(A) or for such Limitation
Year (but without regard to Code sec. 415(c)(6); or
(ii) the product of 1.4 multiplied by the amount which may be
taken into account under Code sec. 415(c)(1)(B) (or
subsection (c)(7) or (c)(8), if applicable) regarding the
Participant for such Limitation Year.
Solely for the purposes of subsection (6)(A) above, "annual additions"
has the meaning provided by Code sec. 415(c)(2) and regulations
promulgated thereunder, so as to include the sum of the following
amounts credited to the Participant's account for the Limitation Year:
Employer contributions, Employee contributions, forfeitures, and any
amounts attributable to any nondeductible Employee contributions
received by this Plan or any other defined benefit plan (whether or
not terminated) maintained by the Employer, except that for Limitation
Years that began before January 1, 1987, annual additions shall not be
recomputed to include any Mandatory or Voluntary Participant
Contributions.
Provided that the Plan satisfied the applicable requirements of Code
sec. 415 as then in effect for the Limitation Year (if any) which
began in 1986, an amount shall be subtracted from the numerator of the
defined contribution fraction (not exceeding such numerator) so that
the sum of the defined benefit fraction and the defined contribution
fraction for such Limitation Year, determined according to Code sec.
415 as amended effective in 1987, does not exceed 1.0, disregarding
any changes in the terms and conditions of the affected plans made
after May 6, 1986, but using the Code sec. 415 limitation applicable
to the first Limitation Year that began on or after January 1, 1987.
(7) "Highest average compensation" means, for any Participant, the
Participant's average compensation for the three (or fewer if the
Participant has been an Employee for less than three as of the date of
determination) consecutive twelve-month periods during which the
Participant performed Service which resulted in the greatest aggregate
compensation from the Employer.
(8) "Maximum permissible amount" means for any Participant the lesser of
the defined benefit dollar limitation or 100% of the Participant's
highest average compensation, except to the extent provided to the
contrary by the following.
Art. V 23
<PAGE>
(A) If the Participant has less than ten years of participation with the
Employer, the defined benefit dollar limitation is reduced by one-
tenth for each year of participation (or part thereof) less than ten.
To the extent provided in regulations or in other guidance issued by
the Internal Revenue Service, the preceding sentence shall be applied
separately with respect to each change in the benefit structure of the
Plan. If the Participant has less than ten Years of Service with the
Employer, the compensation limitation is reduced by one-tenth for each
Year of Service (or part thereof) less than ten. The adjustments of
this section (A) shall be applied in the denominator of the defined
benefit fraction based upon Years of Service. Years of Service shall
include future years occurring before the Participant's Normal
Retirement Age. Such future years shall include the year which
contains the date the Participant reaches Normal Retirement Age, but
only if it can be reasonably anticipated that the Participant will
receive a Year of Service for such year.
(B) If the annual benefit of the Participant commences before the
Participant's Social Security Retirement Age, but on or after age 62,
the defined benefit dollar limitation as reduced above, if necessary,
shall be determined as follows:
(i) If a Participant's Social Security Retirement Age is 65, the
dollar limitation for benefits commencing on or after age 62 is
determined by reducing the defined benefit dollar limitations by
5/9 of one percent for each month by which benefits commence
before the month in which the Participant attains age 65.
(ii) If a Participant's Social Security Retirement Age is greater than
65, the dollar limitation for benefits commencing on or after age
62 is determined by reducing the defined benefit dollar
limitations by 5/9 of one percent for each of the first 36 months
and 5/12 of one percent for each of the additional months (up to
24 months) by which benefits commence before the month of the
Participant's Social Security Retirement Age.
(C) If the annual benefit of the Participant commences prior to age 62,
the defined benefit dollar limitation shall be the actuarial
equivalent of an annual benefit beginning at age 62, as determined
above, reduced for each month by which benefits commence before the
month in which the participant attains age 62. To determine actuarial
equivalence, the interest rate assumption is the greater of the rate
specified in Section 2.1 of the Plan or 5 percent. Any decrease in the
defined benefit dollar limitation determined in accordance with this
provision shall not reflect the mortality decrement to the extent that
benefits will not be forfeited upon the death of the Participant.
FIRST AMENDMENT
Art. V Section 5.3
Effective 1/1/93 24
<PAGE>
(D) If the annual benefit of the Participant commences after the
Participant's Social Security Retirement Age, the defined benefit
dollar limitation as reduced in (A) above, if necessary, shall be
reduced so that it is the actuarial equivalent of an annual
benefit of such dollar limitation beginning at the Participant's
Social Security Retirement Age. To determine actuarial
equivalence, the interest rate assumption used is the lesser of
the rate specified in Section 2.1 of the Plan or 5 percent.
(9) "Year of Participation": Each Participant shall be credited with a
year of participation (computed to fractional parts of a year) for
each accrual computation period under the Plan for which both of
the following conditions are met:
(A) The Participant is credited with at least the number of Hours
of Service required under the Plan in order to accrue a
benefit for the accrual computation period; and
(B) The Participant is an Active Participant for at least one day
during the benefit accrual period.
If these two conditions are met, the portion of a year of
participation credited to the Participant shall equal the amount
of benefit accrual service credited to the Participant for such
accrual computation period. A Participant who is permanently and
totally disabled within the meaning of section 415(c)(3)(C)(i) of
the Code for an accrual computation period shall receive a year of
participation with respect to that period. In addition, for a
Participant to receive a year of participation (or part thereof)
for an accrual computation period, the Plan must be established no
later than the last day of such accrual computation period. In no
event will more than one year of participation be credited for any
12-month period.
5.4 Special Limitation on Accrued Benefits
- --- --------------------------------------
1. Rule for Plan Years beginning after December 31, 1991:
- -----------------------------------------------------
(a) For each Plan Year, the Plan's ability to distribute benefits to
certain affected Participants is restricted.
(b) The Participants to whom this restriction applies are those 25
Highly Compensated Employees who receive the most Compensation for
that Plan Year or any prior Plan Year.
(c) For each Plan Year, no affected Participant (described in
subsection (b) above) may be paid benefits from the Plan during
that Plan Year which would exceed the sum of the payments that
would be made on behalf of the Participant under a Straight Life
Annuity having the same Actuarial Value as the sum of the
Participant's accrued Normal Retirement Benefit plus all other
benefits (if any) accrued by the Participant under the Plan.
FIRST AMENDMENT
Art. V Section 5.3
Effective 1/1/93 25
<PAGE>
(d) There is an exception to the restriction described above. That
restriction shall not apply to an otherwise affected Participant
if either:
(1) after payment of all of the Participant's benefits under the
Plan, the value of the Plan's assets equals at least 110% of
the value of the Plan's then-current liabilities (as defined
in Code sec. 412(l)(7)); or
(2) the total value of the Participant's benefits under the Plan
equals less than 1% of the value of the Plan's then-current
liabilities.
(e) For the purposes of this Section, the meaning of "benefit(s)"
includes any loans set forth in Code section 72(p)(2)(A), any
periodic income, any withdrawal values payable to a living
Employee, and any death benefits not provided for by insurance on
the Participant's life.
2. Rule for Plan Years beginning before January 1, 1992:
- - ----------------------------------------------------
(a) The provisions of this section shall operate upon the occurrence of the
following conditions:
(1) the Plan is terminated within ten years after its establishment;
(2) the benefit of a Participant to whom this Section applies becomes
payable within ten years after the establishment of the Plan.
(b) In the event that the limitations of this Section apply because of the
occurrence of condition (a)(1), the duration of the limitations
imposed by this Section shall be permanent.
In the event that they apply because of the occurrence of condition
(a)(2), the duration of the limitations imposed shall be from the date
of occurrence of the condition until the later of the date upon which
this Plan has been in effect for ten years or the date upon which the
full current costs of the Plan are funded for the first time.
(c) In the event of the occurrence of any of the conditions of this
Section, the Employer contributions which are used for the benefit of
a Participant who is among the 25 highest paid employees of the
Employer on the date this Plan was established, and whose anticipated
annual benefit under this Plan exceeds $1,500, shall not exceed the
greater of (1) and (2), as described below:
(1) equals the greater of
(A) $20,000; or
(B) 20% of the first $50,000 of the Participant's annual
Compensation, multiplied by the number of years between the
date of the establishment of the Plan and the earliest of
dates (i) or (ii):
Art. V 26
<PAGE>
(i) The date upon which this Plan is terminated.
(ii) The date upon which the Participant's benefit becomes
payable.
For the purposes of this subsection (B), the term "annual
Compensation" means either 1) a Participant's average
regular annual Compensation, or 2) a Participant's average
Compensation over the last five years, or 3) a Participant's
last annual Compensation if such Compensation is reasonably
similar to his average regular annual Compensation for the
five preceding years.
(2) equals subsection (B) below for an employee who is a substantial
owner, or subsection (C) below for an employee who is not a
substantial owner.
(A) For purposes of this Section the term "substantial owner"
means an individual who:
(i) owns the entire interest in an unincorporated trade or
business,
(ii) in the case of a partnership, is a partner who owns,
directly or indirectly, more than 10 percent of either
the capital interest or the profits interest in such
partnership, or
(iii) in the case of a corporation, owns, directly or
indirectly, more than 10 percent in value of either the
voting stock of that corporation or all the stock of
that corporation.
For purposes of clause (iii) the constructive ownership rules of
section 1563(e) of the Internal Revenue Code of 1954 shall apply
(determined without regard to section 1563(e)(3)(C)). For purposes
of this Section an individual is also treated as a substantial
owner with respect to a plan if, at any time within the 60 months
preceding the date on which the determination is made, he was a
substantial owner under the plan.
(B) shall equal, subject to the limits of subsections (iv)(aa) and
(iv)(bb)) below, the "present Actuarial value" (as defined in (D)
below) of a Straight Life Annuity purchased for the Participant
and commencing at the Participant's age 65, where the monthly
benefit payable under such annuity equals the lesser of (i) or
(ii), multiplied by (iii):
Art. V 27
<PAGE>
(i) The substantial owner's average monthly gross income
from his employer during the 5 consecutive calendar
year period (or, if less, during the number of
calendar years in such period in which he actively
participates in the Plan) during which his gross
income from that employer was greater than during any
other such period with that employer, or
(ii) $750 multiplied by a fraction, the numerator of which
is the contribution and benefit base (determined under
section 230 of the Social Security Act) in effect at
the time the plan terminates and the denominator of
which is such contribution and benefit base in effect
in calendar year 1974.
(iii) a fraction (not to exceed 1), the numerator of which
is the number of years the substantial owner was an
Active Participant in the Plan, and the denominator of
which is 30.
(iv) This subsection (2)(B) shall be limited as follows:
(aa) At the time one of the conditions of this Section
occurs, if the Plan has been in effect for less
than 60 months, this subsection (2)(B) shall equal
no more than the greater of (I) and (II):
(I) 20 percent of the amount which would be due
had the Plan been in effect for at least 60
months, or
(II) $20 per month,
multiplied by the number of years (but not more
than five (5) the Plan has been in effect.
(bb) Any Plan Amendment effective within 60 months prior
to the occurrence of one of the conditions of this
Section which operates to increase Actuarial Value
of the monthly benefit available as a Straight Life
Annuity at age 65 shall be disregarded for purposes
of this subsection (2)(B).
(C) shall equal the "present Actuarial Value" (as defined in (D)
below) of a Straight Life Annuity purchased for the Participant
and commencing at the Participant's age 65, where the amount of
the monthly benefit payable
Art. V 28
<PAGE>
under such annuity shall equal $750 multiplied by a fraction, the
numerator of which is the contribution and benefit base
(determined under section 230 of the Social Security Act) in
effect at the time the plan terminates and the denominator of
which is such contribution and benefit base in effect in calendar
year 1974.
(D) For the purposes of subsections (B) and (C) above, "present
Actuarial Value" shall mean an Actuarial Value computed using the
mortality rates set forth in the 1984 Unisex Pension mortality
table and interest rates which would be used (as of the date of
distribution or such other date which is in accordance with
regulations prescribed by the Secretary of the Treasury) by the
PBGC for purposes of determining the present value of a lump sum
distribution upon plan termination.
(d) The limitations imposed by this Section shall in no event apply if (1)
the Participant's benefit is payable in the form of the Normal
Retirement Benefit or an annuity providing monthly benefits not
greater in amount than those which would be payable in the form of the
Normal Retirement Benefit and (2) either the current costs of the Plan
have been funded or, if not, then the Employer has already contributed
at least as much to the Plan in the year then current as the amount by
which the benefit payable without regard to the limitations imposed by
this Section exceeds the amount of benefit which would be payable were
the benefit otherwise subject to the limitations imposed by this
Section.
(e) For purposes of this Section, the term "benefit" means any periodic
income or any withdrawal value payable to a Participant, and the cost
of any death benefit which may be payable after Retirement on behalf
of a Participant, but does not include the cost of any death benefit
with respect to a Participant before his retirement nor the amount of
any death benefit actually payable after the death of a Participant
whether such death occurs before or after retirement.
For purposes of this Section, the term "Employer contributions which
may be used for the benefit of a Participant" refers to both
contributions of the Employer allocated exclusively for the benefit of
the Participant at a particular time, if any, and any unallocated
funds which would be used for his benefit if either the Plan were
terminated or the Participant were to withdraw from the Plan at that
time.
(f) In the event that this Plan is amended so as to increase substantially
the benefits payable to, or the Employer contributions made for the
benefit of, the Participants described in the first paragraph of this
Section, this Section shall apply as if the date of such amendment
were the date of establishment of this Plan, except that the $20,000
minimum amount of unrestricted Employer contribution for the benefit
of a Participant as well as whether the Participant's anticipated
annual benefit exceeds $1,500 shall be determined with reference to
the original date of establishment of the Plan.
Art. V 29
<PAGE>
(g) This Section is part of this Plan solely to comply with Internal
Revenue Service regulations in effect at the time of its
adoption. It shall become inoperative and of no effect upon a
ruling by the Internal Revenue Service that the limitations it
imposes are not required of a qualified retirement plan.
5.5 Top-Heavy Provisions
- --- --------------------
(a) Top-Heavy Provisions: Application
---------------------------------
Any provisions of this Plan to the contrary notwithstanding, this
Section shall become effective only if, as of the first day of the
applicable Plan Year, the Plan is top-heavy pursuant to the Test
described in Section 5.5(b)(2).
(b) Top-Heavy Determination
-----------------------
(1) Definitions
(A) Aggregation Group.
-----------------
(i) Required Aggregation Group means
--------------------------
(aa) each and every plan of the Employer in which a Key
Employee is a Participant during the Plan Year
containing the Determination Date or any of the
four preceding Plan Years, including any plan that
has subsequently terminated, and
(bb) each other plan of the Employer which enables any
plan described in subsection (i) above to meet the
participation and nondiscrimination requirements
of the Code, including (but not limited to) the
requirements of Code sections 401(a)(4) and 410.
(ii) Permissive Aggregation Group means a Required
----------------------------
Aggregation Group or a plan described in subsection
(A)(i) above together with any other plan of the
Employer which is not required to be included in an
Aggregation Group under subsection (i)(b) above but
which may be so included if such group would continue
to meet the participation and nondiscrimination
requirements of the Internal Revenue Code.
(iii) Top-Heavy Group means any Required Aggregation
---------------
Group found to be top-heavy pursuant to subsection (2)
of this Section 5.5(b).
(B) Determination Date means the last day of the preceding Plan
------------------
Year.
Art. V 30
<PAGE>
(C) Key Employee and non-Key Employee are defined in Section
---------------------------------
416(i) of the Code. For the purposes of determining who is a
Key Employee, "Compensation" shall be determined according
to Code sec. 415(c)(3), but including amounts contributed by
the Employer pursuant to a salary reduction agreement and
which are excludable from the Employee's gross income under
Code sec. 125, 402(a)(8), 402(h), or 403(b). Key Employee is
also described in Article 11, under the definition of
"Employee".
(D) Present Value of Accrued Benefits means the value of an
---------------------------------
accrued benefit determined as of the most recent Valuation
Date which is within a twelve-month period ending on the
Determination Date. For purposes of this section, Accrued
Benefit means the entire benefit based on Service to date
payable at the later of the Valuation Date (as referenced in
subsection (E) below) or Normal Retirement Age in the event
of retirement on that date. Accrued benefit shall also
include the amount of any nonproportional subsidy. A
nonproportional subsidy means a subsidized Early Retirement
benefit or any subsidized benefit option payable at any time
other than retirement on or after Normal Retirement Age if
the group of Employees who may conceivably qualify for such
subsidy does not, as a group, satisfy sec. 410(b) of the
Internal Revenue Code.
The Accrued Benefit shall be determined as follows:
(i) in the first Plan Year of the Plan, either
(aa) as if the Participant terminated Service as of the
Determination Date or
(bb) as if he terminated Service as of the Valuation
Date, taking into account the estimated accrued
benefit as of the Determination Date.
(ii) For any other Plan Year, as if the Participant
terminated Service as of the Valuation Date.
In any event, the accrued benefit of any Participant who is
a non-Key Employee shall be determined under the method
that uniformly applies for accrual purposes under all
defined benefit plans sponsored by the Employer, or if
there is no such method, as if such benefit accrued not
more rapidly than the slowest accrual rate permitted under
the fractional rule of code sec. 411(b)(1)(C).
(E) Valuation Date means the first day of each Plan Year, as
--------------
of which valuations are performed for purposes of sec. 412
of the Code.
Art. V 31
<PAGE>
(2) Top-Heavy Test
(A) The Plan (or Aggregation Group) shall be top-heavy for each Plan
Year if, as of the Determination Date, the Plan's (or Aggregation
Group's) top-heavy ratio for the Plan Year exceeds sixty percent
(60%). The top-heavy ratio is the Present Value of Accrued
Benefits of all Key Employees over the Present Value of Accrued
Benefits of all Employees, excluding former Key Employees.
Calculation of the top heavy ratio shall be made in accordance
with sec. 416 of the Code and the regulations promulgated
thereunder and shall take into account the following amounts:
(i) Present Value of Accrued Benefits as described in subsection
(1)(D) above; and
(ii) The amount of all distributions to Participants or their
Beneficiaries during the Plan Year that includes the
Determination Date and also during the four preceding Plan
Years except
(A) any rollover to this Plan initiated by the Employee;
and
(B) any transfer to this Plan from a qualified plan
maintained by an unrelated employer; and
(C) any distribution which occurred after the Valuation
Date but prior to the Determination Date to the extent
that such a distribution has been included in the
calculation of the Present Value of Accrued Benefits.
However, calculation of the top-heavy ratio for any Plan
Year shall not take into account the Present Value of
Accrued Benefits or the amount of all distributions made to
any individual who has not performed services for the
Employer at any time during the 5-year period ending on such
Plan Year's Determination Date.
For an Aggregation Group, each plan shall initially be
tested separately, and then the plans shall be aggregated by
adding together the results for each plan as of the
Determination Dates that fall within the same calendar year.
If the Aggregation Group includes two or more defined
benefit plans, the same actuarial assumptions will be
specified within and used by such plans for the purposes of
this Section. Also, in such defined benefit plans
proportional subsidies shall be ignored and non-proportional
subsidies considered for the purposes of this Section.
For a Required Aggregation Group, each Plan shall be tested
by determining the Present Value of Accrued Benefits
for non-Key Employees (1) pursuant to the method, if any,
that
Art. V 32
<PAGE>
uniformly applies for accrual purposes under all plans
maintained by the affiliated Employers; or (2) if there is
no such method, as if such Accrued Benefits accrued not more
rapidly than the slowest accrual rate permitted under the
fractional accrual rates of Section 411(b)(1)(C) of the
Code.
(B) Assumptions
The following assumptions will be used in determining the
Present Value of Accrued Benefits:
(i) Interest: 5 percent
(ii) Post Retirement 1971 Male Group Annuity Mortality
Mortality: projected to the year 2000 assuming
a constant annual mortality decrease
of one and one-half percent with a
six-year set-back for females
(iii) Pre-Retirement
Mortality: None
(iv) Pre-Retirement
Turnover: None
(v) Salary and Cost of
Living Increases: None
(3) Vesting Schedule
(A) A Participant's Vested Percentage at any time shall be not less than
the percentage determined from the following schedule, according to
his Years of Vesting Service:
Years of Vesting Service Vested Percentage
------------------------ -----------------
Less than 3 0%
3 or more 100%
However, this Vesting Schedule shall not apply to the accrued benefit
of any Participant who does not have an Hour of Service after the Plan
became top-heavy.
(B) If this Vesting Schedule becomes applicable, then it shall apply to
each Participant's entire accrued benefit under this Plan. In
addition, such Vesting Schedule shall remain in effect in all future
Plan Years, even those in which the Plan is not top-heavy.
(4) Minimum Benefit
(A) At any time, the accrued Normal Retirement Benefit of each non-Key
Employee who is a Participant shall be the greater of his accrued
Normal Retirement Benefit as determined pursuant to subsection (B)
below and that determined pursuant to Section 5.1.
Art. V 33
<PAGE>
(B) The minimum accrued benefit is equal to the product of (i) and (ii):
(i) an Employee's average Compensation for the consecutive Plan Years
(but not more than five (5)) when the Employee had the highest
aggregate Compensation from the Employer
(ii) the lesser of:
(a) 2% per Year of Benefit Service and
(b) 20%.
In calculating a Participant's accrued benefit pursuant to this
subsection (B), a Year of Benefit Service must be counted only when
the Plan was top-heavy for a Plan Year ending within the Year of
Benefit Service. Each non-Key Employee who is a Participant shall be
entitled to not less than a minimum benefit pursuant to this
subsection.
The minimum benefit provided by this subsection shall be expressed as
a Straight Life Annuity (with no ancillary benefits) commencing at
Normal Retirement Age or in another benefit form having equal
Actuarial Value.
Art. V 34
<PAGE>
ARTICLE VI
RETIREMENT BENEFITS
6.1 Retirement
- --- ----------
(a) A Participant who has attained Retirement Age (as defined below) may
choose to retire by terminating his Service and designating in writing
to the Plan Administrator a Retirement Date, which may be the first
day of any month after he terminates employment but not later than the
latest date that is permitted by Section 6.6(e) regarding Commencement
of Payments, which is his "Required Beginning Date". This latter date
shall be the Retirement Date of any Participant who has not, prior
thereto, designated a Retirement Date, regardless of whether the
Participant's Service has terminated.
(b) If the date on which the Participant attains Normal Retirement Age is
the first day of a month, that date shall be his Normal Retirement
Date. Otherwise, the Participant's Normal Retirement Date shall be the
first day of the first month following his attainment of Normal
Retirement Age.
(c) A Participant's attainment of Retirement Age is determined according
to the following provisions.
(1) Normal Retirement Age: A Participant attains Normal Retirement
---------------------
Age when he attains age 65.
(2) Deferred Retirement Age: A Participant attains Deferred
-----------------------
Retirement Age if he remains an Employee after having attained
Normal Retirement Age.
(3) Subsidized Early Retirement Age: A Participant attains Subsidized
-------------------------------
Early Retirement Age on his first birthdate coincident with or
following the first day of which:
(A) he has attained at least age 60, and
(B) the sum of his attained age (expressed in whole years) plus
the sum of his accrued Years of Benefit Service under this
Plan and his accrued Years of Benefit Service under the
Standard Retirement Plan for Field Personnel equals 90,
PROVIDED that his retirement benefit is not determined pursuant
to Section 5.1(d) (i.e. according to Formula B of Section 5.2 of
this Plan as it existed prior to this restatement); otherwise,
the Participant shall not be eligible to receive the Subsidized
Early Retirement Benefit, pursuant to Section 6.3.
(4) Early Retirement Age
--------------------
(A) Subject to subsection (B) below, a Participant attains Early
Retirement Age as of the first date on which he has attained
the earlier of (i) and (ii), where
Art. VI 35
<PAGE>
(i) equals the first date on which:
(I) he is credited with at least 10 Years of Benefit
Service, and
(II) he has attained at least age 55, and
(III) not more than five years remain until the earlier
of his attainment of Subsidized Early Retirement
Age or his attainment of Normal Retirement Age,
assuming that the Participant was to be
continuously employed as an Eligible Employee on
and after the date of determination; and
(ii) equals the first date on which:
(I) he is credited with at least 10 Years of Benefit
Service, and
(II) he has attained at least age 60.
(B) Subsection (A) above to the contrary notwithstanding, if the
Participant's retirement benefit is determined pursuant to
Section 5.1 (d), then the Participant shall attain Early
Retirement Age only as of the first day on which:
(i) he is credited with at least 10 Years of Vesting Service,
and
(ii) he has attained at least age 60.
6.2 Retirement Benefit in the Case of Normal Retirement
- --- ---------------------------------------------------
The Normal Retirement Benefit under this Plan shall be a monthly benefit
payable to a Participant beginning on the last day of the month in which
occurs his Normal Retirement Date, that last day of the month then becoming
the Participant's Annuity Starting Date, in the form of a Straight Life
Annuity providing a monthly benefit equal to not less than the
Participant's accrued Pension Credit. However, a Participant's accrued
Normal Retirement Benefit at any time shall not be less than his accrued
Normal Retirement Benefit as determined pursuant to Section 5.5 (the "Top-
Heavy Provisions").
A Participant's right to a Normal Retirement Benefit shall become vested
and nonforfeitable in accordance with Section 5.2.
Benefits shall be payable from the Plan only as provided in Articles VI and
V11. If a Participant retires upon attaining Normal Retirement Age he shall
commence to receive a retirement benefit according to Section 6.6. The form
in which a Participant's retirement benefit will be distributed shall be
determined according to Section 6.5.
<PAGE>
6.3 Retirement Benefit in the Case of Early or Deferred Retirement
--------------------------------------------------------------
(a) If a Participant retires when he has attained Early Retirement Age,
but before he has attained Subsidized Early Retirement Age, Normal
Retirement Age or Deferred Retirement Age, the Participant shall be
entitled to receive a reduced monthly benefit. This reduced monthly
benefit shall equal his Normal Retirement Benefit reduced by an Early
Retirement factor for each complete calendar month by which his
Retirement Date precedes the date he would attain the earlier of his
Normal Retirement Date or his Subsidized Early Retirement Date
(assuming that, instead of terminating his Service on or before his
Retirement Date, he continued from his Retirement Date to perform
Hours of Service as an Eligible Employee at the same annual rate that
existed as of his most recent termination of Service).
The exact amount by which the Participant's Normal Retirement Benefit
shall be reduced due to his Early Retirement and pursuant to this
subsection (a) shall be determined as follows.
(1) One Early Retirement factor shall be applied with regard to
benefits accrued prior to the date as of which this restatement
of the Plan became effective. For persons who were Highly
Compensated Employees for the Plan Year that began January 1,
1988, this means their accrued benefits determined as of December
31, 1988, under the terms of this Plan as it existed immediately
prior to this restatement's adoption. For persons who were Non-
Highly Compensated Employees for the Plan Year that began January
1, 1988, this means their accrued benefits determined as of
December 31, 1992, under the terms of this Plan as it existed
immediately prior to this restatement's adoption. The amount of
this factor shall equal 5/12ths of 1% per month.
(2) Another Early Retirement factor shall be applied with regard to
benefits accrued on or after the date as of which this
restatement of the Plan became effective. The amount of this
factor equals 1/2 of 1% per month.
(b) If the Participant retires when he has attained Subsidized Early
Retirement Age, the Participant shall be entitled to receive a monthly
benefit that is equal to his Normal Retirement Benefit.
(c) If the Participant retires when he has attained Deferred Retirement
Age, the Participant shall be entitled to receive a monthly benefit
that is equal to his accrued Pension Credit determined as of that
date.
(d) Benefits payable pursuant to this Section shall be distributed
beginning as of the last day of the month in which occurs the
Participant's Retirement Date, that last day of the month then
becoming the Participant's Annuity Starting Date, and in a form
determined pursuant to Section 6.5.
6.4 Retirement Benefit in the Case of Re-employment of Formerly Retired
- --- -------------------------------------------------------------------
Participant
- -----------
If a Participant who has retired and commenced receiving benefit payments
under the terms of this Plan is re-employed by the Employer, he shall
continue during such re-employment to receive benefit payments in the same
amount and form and on the same schedule as those he received during the
period of his Retirement.
Art. VI 37
<PAGE>
Upon re-employment he shall re-enter the Plan and accrue an additional
benefit pursuant to Section 5.1. Upon his subsequent Retirement Date, he
shall be entitled to a benefit based on his accrued Pension Credit payable
at such subsequent Retirement Date (as determined pursuant to Section 5.1)
and based on all Years of Benefit Service (as defined in Section 2.33) and
all Basic Monthly Earnings (as defined in Section 2.5) during all his
employment with the Employer less the total amount of his benefit based on
all such Benefit Service and earnings prior to his first Retirement Date
and payable at his subsequent Retirement Date if he had not been re-
employed by the Employer. The additional benefit shall be paid in any form
which the Participant is eligible to elect at the time of his subsequent
retirement.
6.5 Form of Retirement Benefit
- --- --------------------------
(a) Regardless of form, the amount distributed as a retirement benefit to a
Participant shall be equivalent in Actuarial Value to the amount of his
retirement benefit payable in the Normal Form according to Section 6.2,
Section 6.3, or Section 6.4, whichever applies.
(b) The Normal Form of retirement benefit under this Plan is a Straight
Life Annuity.
(c) Except as provided in subsection (d) below, a retiring Participant
shall receive his retirement benefit in the form of a Qualified Joint
and Survivor Annuity.
(1) For a Participant who has no surviving spouse (as defined in
Section 7.2) as of his Retirement, his Qualified Joint and
Survivor Annuity is an annuity providing monthly income payable
for his life only, with no payments after his death.
(2) For a Participant who has a spouse as of his Retirement, his
Qualified Joint and Survivor Annuity is an annuity which:
(A) provides monthly income payable for his life, and thereafter
for the life of his surviving spouse, with payments to the
spouse equal to two-thirds of the payments to the
Participant, and
(B) has the same Actuarial Value as a Straight Life Annuity for
the life of the Participant.
(d) Subject to the provisions of Section 6.6 below, a Participant may
elect and may revoke any such election and make another election to
waive receipt of his retirement benefit in the form of a Qualified
Joint and Survivor Annuity, and to receive his retirement benefit
instead in one of the forms described below:
(1) Joint and Contingent Survivor Annuity - monthly income payable
for the life of the Participant, and thereafter for the life of
his spouse (or designated nonspouse Beneficiary, if any).
Payments to the spouse or Beneficiary may be the same amount as,
one-half of or two-thirds of the payment paid to the Participant,
as specified in the election. If this form is payable pursuant to
Section 7.2, it shall be monthly income payable for the life of
the Participant's Beneficiary and his designated Beneficiary.
THIRD AMENDMENT
Section 6.5
Effective 1/1/95 38
<PAGE>
(2) Straight Life Annuity - monthly income payable for the life of the
Participant only, with no payments after his death.
(3) Certain and Life Annuity - monthly income payable for the life of the
Participant (or Beneficiary), with the provision that if the
Participant (or Beneficiary) should die after commencement of
payments, but before the end of a certain period of 60, 120 or 180
months, as elected, payments will be continued for the remainder of
the certain period to the Participant's Beneficiary (or, if the
annuity is distributed pursuant to Section 7.2, to a Beneficiary
designated by the Participant's Beneficiary) PROVIDED, however, that
the certain period elected shall not extend beyond (1) the life
expectancy of the Participant, (2) the life expectancies of the
Participant and his designated Beneficiary, (3) if payable pursuant
to Section 7.2, the life expectancy of the designated Beneficiary or
(4) 60 months, if by operation of Section 8.7 the Participant's
Beneficiary is his estate.
(4) Only for benefits accrued prior to January 1, 1995, an Annuity for a
Certain Period-monthly income for a fixed period of five, ten or
fifteen years only, as elected, with the provision that if the
Participant should die after commencement of payments, but before the
end of a certain period of 60, 120 or 180 months, as elected,
payments will be continued for the remainder of the certain period to
the Participant's Beneficiary (or, if the annuity is distributed
pursuant to Section 7.2, to a Beneficiary designated by the
Participant's Beneficiary) PROVIDED, however, that the certain period
elected shall not extend beyond (1) the life expectancy of the
Participant, (2) the life expectancies of the Participant and his
designated Beneficiary, (3) if payable pursuant to Section 7.2, the
life expectancy of the designated Beneficiary or (4) 60 months, if by
operation of Section 8.7 the Participant's Beneficiary is his estate.
However, no optional form may be elected under which the amount of monthly
benefit payable to the Participant would not exceed 50% of the amount he
would receive in the form of a Straight Life Annuity unless such optional
form is a Joint and Contingent Survivor Annuity with the Participant's
spouse designated as contingent annuitant.
6.6 Election of Forms and Commencement of Payments
- --- ----------------------------------------------
(a) Employment After Attainment of Normal Retirement Age
(1) Noncommencement of Benefits.
(A) Employment. Benefit payments will not be commenced for the
----------
duration of employment (as defined in this Section) for any
Participant who continues employment with the Employer after
he has attained Normal Retirement Age. No benefit payment will
be withheld pursuant to 29 CFR 2530.203-3 unless the
Participant is notified of the benefit suspension as required
in that regulation. For purposes of noncommencement of benefit
payments, "Employer" is limited to the Employer which
maintained the Plan as of the date a Participant's retirement
benefit payments previously commenced or would have commenced.
"Employment" means 40 or more Hours of
THIRD AMENDMENT
Section 6.5
Effective 1/1/95 39
<PAGE>
40 or more Hours of Service as defined in 29 CFR 2530.200b-2(a)(1)
and (2) in a calendar month or in a four-or-five week payroll
period ending in a calendar month (if used by the Employer) after
the Participant has attained Normal Retirement Age.
(B) Notification of Employment. The Employer may require that a
--------------------------
retired Participant notify the Plan Administrator in writing when
he is employed in any employment subsequent to attaining Normal
Retirement Age and that, as a condition of continuing to receive
Retirement benefit payments, a retired Participant certify in
writing that he is not employed after he has attained Normal
Retirement Age.
(C) Preliminary Determination. Any Participant, including a retired
-------------------------
Participant, may request that the Plan Administrator determine
whether contemplated employment will be of the type described in
subsection (a) above. Such determination shall be made within a
reasonable period of time pursuant to Section 8.4.
(2) Commencement of Benefit Payments
--------------------------------
(A) Amount of Monthly Benefit on Retirement. The amount of a
---------------------------------------
Participant's benefit upon Retirement is the amount of the
noncommenced benefit payment plus the benefit, if any, earned
during continued post Normal Retirement Age employment. A delayed
suspended benefit, including any additional benefit, shall be paid
in the automatic benefit form or in an optional benefit form as
elected by the Participant, pursuant to Section 6.5.
(B) Payment of Benefits. The initial payment on commencement
-------------------
of benefits shall include:
(I) The payment for that calendar month,
(II) The payments due since the cessation of employment
described in subsection (1)(A) above, and
(III) A lump sum amount equal to the total amount of all payments
not made because of each calendar month or four-or-five
week payroll period ending in a calendar month (if used by
the Employer) after Normal Retirement Age in which the
Participant had fewer than 40 hours of service, as defined
in 29 CFR 2530.200b-2(a)(1) and (2), excluding months
covered by payments in (11) above, plus interest thereon
from the date each payment was missed equal to the Plan's
Actuarial Equivalent rate of interest. If the missed
payments plus interest have not been commenced prior to the
death of the Participant, they shall be paid to his
beneficiary or, if none, to his estate. Notwithstanding any
provision of this Plan to the contrary,
Art. VI 40
<PAGE>
employment during any month with respect to which a
retirement benefit is payable and Compensation for that
employment shall in no way affect the amount of such
Participant's accrued benefits under this Plan.
Noncommenced post-Normal Retirement Age benefit payments shall
commence by the earlier of the date provided in subsection (e) of
this Section and the first day of the third calendar month after the
calendar month or payroll period in which the Participant ceases
employment as defined in subsection (a)(1)(A) above, subject to 30
days' prior written notification of the Plan Administrator by the
Participant of cessation of such employment.
If it should subsequently be determined by the Plan Administrator
that, pursuant to statute, court decision, ruling by the
Commissioner of Internal Revenue or the Secretary of Labor or
otherwise, the provisions regarding the payment of benefits to a
post-Normal Retirement Age Employee for less than 40-hour employment
are no longer necessary to qualify the Plan under the Code, or to
comply with the Employee Retirement Income Security Act of 1974, as
amended, subsection (B)(III) shall be void and of no effect, and no
such payments or interest shall be due and owing to such extent, and
the Plan need not be amended to so provide.
(C) Offset for Payment of Suspended Benefits. Any payments made during
----------------------------------------
calendar months or payroll periods (as applicable) in which the
Participant had 40 or more Hours of Service shall be offset against
benefit payments to be made. Except for the initial payment on
commencement of benefit payments under this Section, the offset in
any one month shall not exceed 25 percent of that month's total
benefit payment.
(b) Election
--------
Subject to the spousal consent requirements described below, a Participant
may elect to waive his right to receive his retirement benefit in the form of a
Qualified Joint and Survivor Annuity. He may instead elect to receive his
retirement benefit in one of the forms described in Section 6.5. He may also
elect to replace the person currently designated by him or this Plan to be his
contingent annuitant. Any such an election may be revoked and replaced with
another election. However, to be effective for the purposes of this Plan, any
such election or revocation must meet all of the following conditions:
(1) it must be written, and the writing must be received by the Plan
Administrator within 90 days before the Participant's Annuity
Starting Date;
(2) it must specifically designate the form in which benefits are to be
paid;
Art. VI 41
<PAGE>
(3) if there is to be a change regarding the contingent annuitant, then it
must specifically identify the person (if any) who is to become the
contingent annuitant;
(4) the Participant must have previously received the explanation
described below;
(5) unless the Participant is revoking all other elections prior to his
Annuity Starting Date, so that his benefit will again be payable as a
Qualified Joint and Survivor Annuity, the spousal consent requirements
described below must have been met.
(c) Spousal Consent
---------------
An election by a Participant to receive his retirement benefit in one of the
alternative benefit forms, except in the form of a joint and contingent
----------------------------------------------
survivor annuity (with the spouse as contingent annuitant) that is
-------------------------------------------------------------------
actuarially equivalent to the Qualified Joint and Survivor Annuity, or to
-------------------------------------------------------------------
change his contingent annuitant shall not take effect unless:
(1) the Participant's spouse, in a writing received by the Plan
Administrator, acknowledges the effect of and consents to the
Participant's election, and the writing is witnessed by the Plan
Administrator or a notary public; or
(2) it can be established to the Plan Administrator's satisfaction that
spousal consent cannot be obtained because there is no spouse, or
because the spouse cannot be located, or because of other circumstances
which render obtaining such spousal consent impossible.
Any consent by a spouse (or establishment that the consent of the spouse cannot
be obtained) pursuant to this subsection shall be effective only with respect to
such spouse.
(d) Explanation
-----------
No less than 30 days and no more than 90 days before a Participant's Annuity
Starting Date, the Plan Administrator shall provide the Participant with a
written explanation of (i) the terms and conditions of the Qualified Joint
and Survivor Annuity; (ii) the Participant's right to make and the effect of
an election to waive the Qualified Joint and Survivor Annuity; (iii) the
rights of the Participant's spouse (if any) regarding the Qualified Joint
and Survivor Annuity; and (iv) the right to make, and the effect of, a
revocation of a previous election to waive the Qualified Joint and Survivor
Annuity.
(e) Commencement of Payments
------------------------
(1) Unless a Participant otherwise elects in a writing received by the
Plan Administrator prior to the Participant's Annuity Starting Date,
payment of the Participant's retirement benefits shall begin not later
than the 60th day after the latest of the close of the Plan Year in
which occurs:
Third Amendment
Art. VI, Section 6.6
Effective 1 1/95
42
<PAGE>
(A) the Participant's attainment of Normal Retirement Age;
(B) the 10th anniversary of the date on which the Participant commenced
participation in this Plan; or
(C) the Participant's termination of employment as an Employee,
provided that if the Participant has failed to provide the Plan
Administrator with sufficient information as to age and marital status or
any other relevant information, so that the amounts of payment may not be
determined, or if the Participant cannot be located, then the Plan
Administrator may delay commencement of payments for not more than 60 days
after the earliest date on which the amount and form of payment may be
determined under the terms of this Plan, or the Participant is located.
The amount of payment in the event of such a delay shall be retroactive to
the Participant's Retirement Date.
(2) Any provisions of this Plan to the contrary notwithstanding, the entire
vested interest of the Participant in benefits under this Plan:
(A) will be distributed to the Participant not later than the
Participant's Required Beginning Date, or
(B) will be distributed, beginning not later than the Participant's
Required Beginning Date, over the life of the Participant or over
the lives of the Participant and a designated Beneficiary (or over a
period not extending beyond the life expectancy of the Participant
or the life expectancy of the Participant and a designated
Beneficiary).
For the purpose of determining the amount to be distributed as of the
Participant's Required Beginning Date, his Vested Benefit shall be valued
as of December 31 of the calendar year immediately preceding his Required
Beginning Date.
(3) If a Participant's interest is to be distributed in a form other than a
Lump Sum, the following minimum distribution rules shall apply on or after
the Participant's Required Beginning Date.
(A) If the Participant's benefit is to be distributed over (1) a period
not extending beyond the life expectancy of the Participant or the
joint life and last survivor expectancy of the Participant and the
Participant's Beneficiary, or (2) a period not extending beyond the
life expectancy of the Beneficiary, then the amount required to be
distributed for each calendar year, beginning with distributions for
the first distribution calendar year, must at least equal the
quotient obtained by dividing the Participant's benefit by the
applicable life expectancy.
Art. VI 43
<PAGE>
(B) If the Participant's spouse (if any) is not the Beneficiary, the
method of distribution selected must assure that at least 50% of the
present value of the amount available for distribution is paid within
the life expectancy of the Participant.
(C) The amount to be distributed each year, beginning with distributions
for the first distribution calendar year, shall not be less than the
quotient obtained by dividing the Participant's benefit by the lesser
of (1) the applicable life expectancy, or (2) if the Participant's
spouse (if any) is not the Beneficiary, the applicable divisor
determined from the table set forth in Q&A-6 of section 1.401(a)(9)-2
of the Income Tax Regulations. Distributions after the death of the
Participant shall be distributed using the applicable life
expectancy referenced in subsection (3)(A) above as the relevant
divisor without regard to Regulations sec. 1.401(a)(9)-2.
If the Participant's benefit is being distributed as a period certain
annuity without a life contingency, or a life annuity with a period
certain exceeding 20 years, the periodic payments shall be combined
and treated as an annual amount for purposes of determining the
amount which must be distributed by the Participant's Required
Beginning Date. That required amount shall be the annual amount for
the first distribution calendar year. The annual amount for other
distribution calendar years, including the annual amount for the
calendar year in which the Participant's Required Beginning Date
occurs, must be distributed on or before December 31 of the calendar
year for which the distribution is required.
(D) The minimum distribution required for the Participant's first
distribution calendar year must be made on or before the
Participant's Required Beginning Date. The minimum distribution for
other calendar years, including the minimum distribution for the
distribution calendar year in which the Participant's Required
Beginning Date occurs, must be made on or before December 31 of that
distribution calendar year.
If the Participant's benefit is distributed in the form of an annuity
purchased from an Insurance Company, any such distribution shall be made
in accordance with the requirements of Code sec. 401(a)(9) and the
regulations promulgated thereunder.
(4) Any additional amounts of Pension Credit accrued by the Participant after
his Required Beginning Date shall be distributed annually in the form of a
lump sum consistent with the requirements of Code sec. 401(a)(9) and
applicable regulations.
(5) Once distributions have begun to a 5% owner under this subsection, they
must continue to be distributed even if the Participant ceases to be a 5%
owner in a subsequent year.
Art. VI 44
<PAGE>
(6) For the purposes of this subsection, "applicable life expectancy" means the
life expectancy (or joint and last survivor expectancy) calculated using
the attained age of the Participant (or designated beneficiary) as of the
Participant's (or designated beneficiary's) birthday in the applicable
calendar year reduced by one for each calendar year which has elapsed since
the date the life expectancy was first calculated.
If the life expectancy is being recalculated, the applicable life
expectancy shall be the life expectancy as so recalculated.
The applicable calendar year shall be the first distribution calendar year,
and if the life expectancy is being recalculated, each such succeeding
calendar year.
If annuity payments commence before the Required Beginning Date, the
applicable calendar year is the year such payments commence. If the
distribution is in the form of an immediate annuity purchased after the
Participant's death with the Participant's remaining Vested Benefit, the
applicable calendar year is the year of purchase.
(7) Unless otherwise elected by the Participant (or spouse, as applicable) by
the time distributions are required to begin, life expectancies shall be
recalculated annually. If such an election has been made by the Participant
(or spouse, as applicable), it shall be irrevocable as to the Participant
(or spouse) and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may not be recalculated.
6.7 Post-Retirement Cost-of-Living Adjustment
- --- -----------------------------------------
(a) A post-retirement cost-of-living adjustment ("COLA") shall be applied to
the amount of any monthly benefits payable on behalf of each retired
Participant.
(b) The COLA shall be applied separately to the Grandfathered Benefit and the
Additional Benefit as set forth below in subsection (c):
The Grandfathered Benefit is:
(1) For each Participant who was a Highly Compensated Employee ("HCE") for
the Plan Year that began January 1, 1988; the accrued benefit on
December 31, 1988.
(2) For all other Participants, the benefit accrued as of the earlier of
separation, retirement or December 31, 1992, calculated in accordance
with the terms of the Plan prior to adoption of this restatement.
The Additional Benefit is the positive difference, if any, between the
accrued benefit as of the date of termination, death or retirement calculated in
accordance with the terms of Section 5.1(c) of this Plan and the Grandfathered
Benefit.
For each other Participant, the COLA shall be applied as of January 1 of
the calendar year following the calendar year in which he retires, but only
regarding benefits that had accrued as of December 31, 1992, under the terms of
the Plan as it existed immediately prior to the adoption of this restatement.
For benefits accrued by each such Participant on or after January 1, 1993, the
COLA shall be applied as of January 1 of the calendar year following the later
of the calendar year in which he retires or the calendar year in which he
attains age 62.
FIRST AMENDMENT
Art. VI Section 6.7(b)
Effective. 1/1/93 45
<PAGE>
(c) The amount of the COLA shall be redetermined annually, as of each
January 1.
Subject to subsection (d) below, the amount of the COLA shall equal the
amount of the monthly benefit that is payable upon commencement of benefits
multiplied by a "COLA Factor."
For each year, the COLA Factor shall be applied as follows:
Grandfathered Benefit multiplied by:
- -----------------------------------
__ --
|_ _ _ _ _ |
|(|CPI | |# mos. from |) (Total Elapsed)|
--- --------- -------------
|(| Ret _______-1| | DOR to next | ) CPI ( Time from)|
------------- --- ---------
Min |(|CPI |*| January 1___________ | +1)* Curr Yr-1____________,1+.03*(
- --- --- -----
Retirement)|
- ----------
|(| Ret-1 _| |_ 12 _| ) CPI ( not earlier)|
----- -- --- -----------
|( ) Ret ( than 1968))|
--- ---------
|_ _|
Additional Benefit multiplied by:
__ __
|_ _ _ _ |
|(|CPI | | # mos. from | ( Total)|
--- ----------- -----
|(| Max(62,DOR)___________________-1| | Max(62,DOR) to |) CPI (
-------------- ---
Elapsed)|
- -------
Min |(|CPI |*| next Jan 1______________ |+1) * Curr Yr-1_____________,
- --- --- --
1+.03*( Time from)|
- ------ ---------
|(|_ Max(62,DOR)-1 _| |_ 12 _| ) CPI (Max(62,DOR))|
---------- -- --- ----------
|( ) Max (62,DOR) |
|_ ----------- _|
The monthly benefit payable will be based on the sum of the results of the two
calculations.
CPI refers to the Consumer Price Index for all U.S. Urban Consumers compiled by
the Bureau of Labor Statistics, U.S. Department of Labor for the month of June
of the calendar year identified in the subscript. The subscripts have the
following meanings:
RET: Calendar year in which benefit commence.
RET-1: Calendar year immediately preceding RET.
Curr Yr - 1: Calendar year immediately preceding year in which
the adjusted benefit is paid.
Max (62, DOR): Later of the calendar year in which benefits
commence or calendar year in which the
Participant attains his 62nd birthday.
Max (62, DOR) - 1: Calendar year immediately preceding MAX (62,
DOR).
FIRST AMENDMENT
Art. VI Section 6.7(c)
Effective, 1/1/93 46
<PAGE>
Abbreviations used other than in subscripts have the following meanings:
DOR: First day of month in which first benefit is made.
MAX (62, DOR): First day of month of the later of first benefit payment or
coincident with or following his 62nd birthday.
(d) Any of the provisions of this Section to the contrary notwithstanding,
in no event will the portion of any COLA, attributable to years
commencing on or after January 1, 1989, exceed the adjustment
for that year to social security benefits that are made pursuant to
section 215(i)(2)(A) of the Social Security Act.
FIRST AMENDMENT
Art. VI Section 6.7(c)
Effective 1/1/93 46a
<PAGE>
(e) If a Participant's benefit is payable in the form of a Certain and Life
Annuity, or a Joint and Contingent Survivor Annuity, the amount of any
monthly benefits which may become payable to a Beneficiary or contingent
annuitant at any time will be determined with reference to the amount of
monthly benefit which would have been payable to the Participant at that
time had he not predeceased the Beneficiary or contingent annuitant.
(f) If any time the Employer is of the opinion that the Consumer Price Index
for all U.S. Urban Consumers compiled by the Bureau of Labor Statistics,
United States Department of Labor, is no longer suitable for the purpose
assigned to it in this Plan, the Employer shall amend the Plan to provide a
more suitable method of recognizing changes in the cost of living for
purposes of determining Plan benefits for any person then receiving benefit
payments, provided that no monthly benefit shall be less than it was during
the first year after benefits commenced.
Art. VI 47
<PAGE>
ARTICLE VII
INCIDENTAL BENEFITS
7.1 Termination of Employment Before Attainment of Retirement Age
- --- -------------------------------------------------------------
(a) If a Participant terminates employment as an Employee before he attains
Retirement Age, but after he has acquired any nonforfeitable right to a
Normal Retirement Benefit (pursuant to Section 5.2), he shall be entitled
to a deferred benefit payable when he has attained Retirement Age, under
the same conditions as in the case of any other Participant described in
Article VI.
(b) Any provisions of this Section 7.1 to the contrary notwithstanding, if the
lump sum present value determined according to subsection (c) below) of a
terminating Participant's vested interest in his deferred retirement
benefit has not ever exceeded $3,500 as of the date of any prior
distribution from the Plan to the Participant, then the Plan Administrator
shall automatically distribute that lump sum to the Participant at the time
of the Participant's termination of Service. The present value of the
Participant's vested deferred benefit must be determined as of the date of
distribution.
For purposes of this Plan, if the lump sum present value of a terminating
Participant's vested accrued benefit is zero, then the Participant shall be
deemed to have received a distribution of his vested accrued benefit as of
the date of termination.
(c) For the purpose of this Section, in order to determine the lump sum present
value of the Participant's nonforfeitable accrued benefit, the present
value shall be calculated (1) by using an interest rate no greater than the
applicable interest rate if the vested accrued benefit (using such rate) is
not in excess of $25,000, and (2) by using an interest rate no greater than
120 percent of the applicable rate if the vested accrued benefit exceeds
$25,000 (as determined under subclause (1)). The term "applicable interest
rate" means the interest rate which would be used (as of the date of
distribution) by the Pension Benefit Guaranty Corporation for purposes of
determining the present value of a lump sum distribution on plan
termination.
(d) Any distribution that is made to a Participant pursuant to this Section
shall be in lieu of any and all other benefits, present or contingent, to
which the Participant may be entitled under the terms of this Plan.
However, if a Participant receives a distribution pursuant to this Section,
and then subsequently resumes participation under this Plan, he shall have
the right to restore his Employer-derived accrued benefit (including all
optional forms of benefits and subsidies relating to such benefits) to the
extent forfeited upon his repayment to the Plan of the full amount of the
distribution plus interest, compounded annually from the date of
distribution at the rate determined for purposes of Code sec. 411(c)(2)(C).
Such repayment must be made (if at all) before the earlier of (1) five
years after the Participant's Date of Re-employment, or (2) the date the
Participant incurs the fifth of 5 consecutive Break in Service Years.
Art. VII 48
<PAGE>
7.2 Surviving Spouse Benefit
- --- ------------------------
If a Participant dies prior to his Annuity Starting Date, the Participant's
"surviving spouse" or "dependent domestic partner" (if any) shall be
entitled to receive the "Surviving Spouse Benefit", provided that if the
Participant as of his date of death was an Employee (or treated as an
Employee pursuant to Section 7.3) or an Agent (or treated as an Agent
pursuant to the Standard Retirement Plan for Field Personnel), the
Participant must also have been credited with at least five Years of
Vesting Service as of his date of death.
(For purposes of this Section, "surviving spouse" means the spouse of a
Participant to whom the Participant had been married for at least 12
complete, consecutive months as of the Participant's date of death.)
"Dependent domestic partner" means a Participant's domestic partner who
qualifies for coverage under the Employer's Medical Expense Coverage Plan.
The Surviving Spouse Benefit shall be a monthly benefit paid in the form of
a Straight Life Annuity for the life of the surviving spouse or dependent
domestic partner only. Payment of the Surviving Spouse Benefit shall
commence on the last day of the month following the date which would have
been the deceased Participant's Normal Retirement Date (had he survived),
or on the last day of the month in which he died in the event that he had
deferred retirement beyond his Normal Retirement Date, or on the last day
of the month following the earliest date which the Participant could have
designated as his Early Retirement Date (or, if earlier, his Subsidized
Early Retirement Date) had he survived.
The amount of the monthly benefit under the Surviving Spouse Benefit during
the calendar year in which benefit payments commence shall be one-half of
the Participant's Pension Credit (determined according to Section 5.2)
accrued to the date of his death, reduced by the Early Retirement factors
described in Section 6.3(a)(1) and (2) if the date of commencement of the
benefit precedes the earlier of what would have been the Participant's
Subsidized Early Retirement Date or his Normal Retirement Date.
The amount of the monthly benefit in subsequent calendar years shall be the
product of (1) the amount of the monthly benefit during the first calendar
year, and (2) the Participant's Cost of Living Factor described in Section
6.7, with the Participant's Retirement Date (as used in that Section)
understood to mean the Retirement Date with reference to which the
Surviving Spouse Benefit commenced.
In the event of the Participant's death after his Annuity Starting Date,
there will be no death benefit payable other than that which is payable
under the form of annuity in which he had elected to receive his benefit,
or the automatic form in which the benefit is payable under Article VI, if
he had exercised no election.
7.3 Disability of a Participant
- --- ---------------------------
If a Participant becomes Totally and Permanently Disabled while an Employee
and while he is credited with at least 5 Years of Vesting Service, he shall
be treated under the Plan during the continuance of the disability as
though he were still employed at the same regular rate of Compensation he
was earning, and with the same regular number of Hours of Service as an
Eligible Employee per Plan Year, as at the time of the occurrence of his
disability. Upon subsequent attainment of Retirement Age he shall be
entitled to a retirement benefit under the same conditions as in the case
of any other Participant. Should he cease to be Totally
SIXTH AMENDMENT
Section 7.2
Effective 8/1/96 49
<PAGE>
and Permanently Disabled before attaining Retirement Age (and not subsequently
resume employment as an Employee) he shall be treated under Section 7.1 as if he
had terminated employment as an Employee on the date he ceased to be Totally and
Permanently Disabled.
Art. VII 50
<PAGE>
ARTICLE VIII
GENERAL PROVISIONS
8.1.1 Plan Modification: Authority
- ----- ----------------------------
The Trustees reserve the right to amend, modify, or terminate the Plan at
any time, provided that no amendment or modification shall act to reduce
the balances of the Individual Accounts of any Participant accrued to the
time of such amendment or modification.
8.1.2 Plan Modification: Merger
- ----- -------------------------
No merger, consolidation, or transfer of the assets or liabilities of
this Plan with or to any other qualified plan shall be undertaken unless,
after such merger, consolidation, or transfer, each Participant would, if
the Plan then terminated, receive a benefit not less than the benefit he
would have received had the Plan terminated immediately prior to such
merger, consolidation, or transfer.
8.1.3 Plan Modification: Termination
- ----- ------------------------------
Upon termination or partial termination of this Plan, the rights of each
affected Participant to benefits accrued to the date of termination or
partial termination shall be fully vested to the extent funded.
If, after the allocation of the Plan's assets pursuant to the Plan's
termination, all liabilities of the Plan have been satisfied in full and
there remain surplus Plan assets not necessary to satisfy the liabilities
of the Plan, such surplus shall revert to the Employer, consistent with
the provisions of the termination amendment of this Plan.
8.2.1 Duties: Plan Administrator
- ----- --------------------------
The Plan Administrator, as a named fiduciary, has the discretionary
authority to control and manage the operation and administration of the
Plan. The Plan Administrator in his sole discretion shall make such
rules, regulations, interpretations, and computations and shall take such
other actions to administer the Plan as he may deem appropriate. Such
rules, regulations, computations, and other actions shall be conclusive
and binding upon all persons.
Duties of the Plan Administrator include, but are not limited to,
determination of benefits and eligibility to participate, payment of
funds to the Insurance Company or Trustee, authorization of benefit
payments and payment of any expenses incurred in the administration of
the Plan. The Plan Administrator may employ such consultants and advisors
as he deems necessary or desirable for carrying out his duties under the
Plan.
8.2.2 Duties: Employer
- ----- ----------------
Duties of the Employer include, but are not limited to, payment of funds
to the Insurance Company or Trustee, in addition to payment of any
expenses incurred in the administration of the Plan. The Employer shall
indemnify and hold harmless any fiduciary who is an employee of the
Employer from any and all claims, loss, damages, expense (including
counsel fees), and liability (including amounts paid in
Art. VIII 51
<PAGE>
settlement with the Employer's written consent) arising from any act or
omission of the fiduciary, except when the same is judicially determined to
be done due to the gross negligence or willful misconduct of the fiduciary.
8.3 Claims Procedure
- --- ----------------
Any Participant in this Plan, or his Beneficiary, may make a claim for
benefits due to him under this Plan by making application to the Plan
Administrator. If a claim is wholly or partially denied, notice of the
decision shall be furnished to the claimant by the Plan Administrator
within 90 days after receipt of the claim by the Plan Administrator unless
special circumstances require an extension of time for processing the
claim. If an extension of time is required the Plan Administrator shall
furnish the claimant with written notice of that fact, including the reason
why an extension is required and an estimated date upon which a final
decision is expected, which shall be not later than 180 days after the
claim was made. In that event, if the claim is denied in whole or part,
written notice of denial shall be given as soon as practicable, but not
later than 180 days after the claim was made.
A notice of denial of a claim shall state:
(1) The specific reason or reasons for the denial;
(2) Reference to the specific Plan provisions upon which the denial was
based;
(3) A description of any additional material or information necessary for
the claimant to perfect the claim and an explanation of why such
additional material or information is required.
If this notice is not furnished within the time provided in this Section,
the claim shall be deemed wholly denied.
8.4 Review Procedure
- --- ----------------
In the event that a claim is denied under this Plan, the claimant or his
authorized representative may apply in writing to the Plan Administrator
within 60 days of receiving notice of the denial or, if no written notice
of denial is received within the 180-day period prescribed in Section 8.3,
within 60 days after the expiration of the said 180-day period, asking that
the denial be reviewed. This time limit may be extended by the Plan
Administrator if an extension appears to be reasonable in view of the
nature of the claim and the pertinent circumstances. Upon receipt of such
application, the Plan Administrator shall afford the claimant an
opportunity to review pertinent documents and to submit issues and comments
in writing. A decision on review shall be rendered by the Plan
Administrator not later than 60 days after the claimant's application for
review unless an extension of time for processing is required, in which
case a decision will be made as soon as possible, but not later than 120
days after the request for review was made. If an extension of time is
required the Plan Administrator shall give the claimant written notice of
that fact before the extension period begins. A decision on review shall be
in writing and shall include specific reasons for the decision and specific
references to the Plan provisions on which the decision is based.
If the claimant has not received written decision on review within 60 days
after the request for review was received, or within 120 days if an
extension of time was required, the claim will be considered wholly denied
on review.
Art. VIII 52
<PAGE>
8.5 Termination of the Plan
- --- -----------------------
Upon termination or partial termination of this Plan the Employer shall
amend the Plan so as to provide for the allocation of Plan assets as
required by law. In such event the rights of each affected Participant to
benefits accrued to the date of termination or partial termination shall be
fully vested and nonforfeitable to the extent funded. If, after allocation
of the Plan assets pursuant to the amendment required by this Section, all
liabilities of the Plan have been satisfied in full and there remain
surplus Plan assets not necessary to satisfy the liabilities of the Plan,
such surplus shall revert to the Employer.
8.6 Qualification of the Plan and Conditions of Contributions
- --- ---------------------------------------------------------
This Plan, together with any annuity contracts or trust agreement used in
conjunction with it, is intended to meet the requirements of the Internal
Revenue Service for approval as a tax-exempt plan or trust under Section
401 of the Code. Any amendments which may be necessary to meet these
requirements shall be made retroactive to the date upon which the Plan
failed to meet these requirements.
Contributions to this Plan are made with the intent and subject to the
condition that such contributions are deductible under Section 404 of the
Code. If any contribution by the Employer is disallowed as a deduction by
the Internal Revenue Service then, to the extent the deduction is
disallowed, the contribution shall be refunded to the Employer within one
year after the disallowance of the deduction. If any contribution by the
Employer is made by a mistake of fact, such contribution shall be refunded
to the Employer within one year after the payment of the contribution.
If a refund occurs pursuant to the preceding paragraph, the amount which
shall be returned to the Employer shall be the excess of the amount which
was contributed over the amount (1) which was deductible, or (2) which
would have been contributed absent the mistake of fact (as the case may
be), without any earnings but net of any losses attributable to such
excess.
8.7 Beneficiaries
- --- -------------
Any payments due under the Plan to a Participant's Beneficiary shall be
paid according to the Beneficiary designation last filed in writing with
the Plan Administrator by the Participant. If no such designation is made,
payments shall be made in the following order of priority:
(a) To the surviving spouse of the Participant,
(b) If no spouse survives the Participant, then to the children of the
Participant in equal shares, with a share by right of representation
to the then surviving children of any deceased child,
(c) If neither a spouse, children nor grandchildren survive the
Participant, then to the Participant's estate.
Art. VIII 53
<PAGE>
8.8 Spendthrift Clause
- --- ------------------
(a) General Rule
------------
Subject to the exception specified in subsection (b) below, benefits
payable under this Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution, or levy of any kind,
either voluntary or involuntary, including any such liability which is
for alimony or other payments for the support of a spouse or former
spouse, or for any other relative of the Employee, prior to actually
being received by the person entitled to the benefit under the terms
of the Plan except as provided below, and any attempt to anticipate,
alienate, sell, transfer, assign, pledge, encumber, charge or
otherwise dispose of any right to benefits payable hereunder shall be
void; also, the Plan shall not in any manner be liable for, nor
subject to, the debts, contracts, liabilities, engagements or torts of
any person entitled to benefits hereunder.
(b) Exception
---------
The provisions of subsection (a) above to the contrary shall not
withstand a right to a benefit payable under this Plan that has been
created, assigned or recognized pursuant to a "qualified domestic
relations order", as defined in Code sec. 414(p). Administration of
the Plan with respect to qualified domestic relations orders shall at
all times be consistent with Code sec. 414, regulations promulgated
thereunder, and any other provisions of state and federal law that may
be applicable. Payment of a benefit to an alternate payee pursuant to
a qualified domestic relations order may be made prior to the time
such payment could be made to the Participant, provided that such
payment is consistent with the provisions of this Plan in all respects
except for the time of payment.
8.9 Annuities
- --- ---------
Any provisions of this Plan to the contrary notwithstanding:
(a) any annuity contract distributed from this Plan shall contain express
provisions sufficient to make such contract nontransferable; and
(b) the terms of any annuity contract purchased and distributed by the
Plan to a Participant or Participant's spouse shall comply and be
consistent with the requirements of this Plan.
8.10 Limitations of the Employer's Liability
- ---- ---------------------------------------
To the extent permitted by law, the liability of the Employer with respect
to any and all obligations arising from or in any way connected with this
Plan shall be limited to amounts already contributed.
Art. VIII 54
<PAGE>
8.11 Non-Guarantee of Employment
- ---- ---------------------------
This Plan shall not be considered to constitute a contract of employment
and nothing contained in the Plan shall give any Employee the right to be
retained in employment, nor shall anything contained in the Plan interfere
with the Employer's right to discharge or retire any Employee at any time.
Participation in the Plan shall not give any Employee any right or claim
in any benefits except as specifically provided in this Plan.
8.12 Applicable Law
--------------
The provisions of this Plan shall be governed, construed, and administered
in accordance with federal law, and to the extent that state law is not
preempted by federal law, the law of the state of Oregon.
8.12 USERRA Requirements
-------------------
Notwithstanding any provision of this Plan to the contrary, contributions
and Service credit with respect to qualified military service will be
provided in accordance with Code sec. 414(u).
SIXTH AMENDMENT
Section 8.13
Effective 10/13/96 55
<PAGE>
ARTICLE IX
DIRECT ROLLOVERS
9.1 This Article applies to distributions made on or after January 1, 1993.
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a distributee's election under this Article, a distributee
may elect, at the time and in the manner prescribed by the Plan
Administrator, to have any portion of an eligible rollover distribution
paid directly to an eligible retirement plan specified by the distributee
in a direct rollover.
9.2 Definitions
(a) Eligible rollover distribution: An eligible rollover distribution is
any distribution of all or any portion of the balance to the credit of
the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distributee or the joint lives
(or joint life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or
more; any distribution to the extent such distribution is required
under Code sec. 401(a)(9); the portion of any distribution that is not
includible in gross income (determined without regard to the exclusion
for net unrealized appreciation with respect to employer securities);
and distributions reasonably expected to total less than $200 in a
single year.
(b) Eligible retirement plan: An eligible retirement plan is an individual
retirement account described in Code sec. 408(a), an individual
retirement annuity described in Code sec. 408(b), an annuity plan
described in Code sec. 403(a), or a qualified trust described in Code
sec. 401(a), that accepts the distributee's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan is
an individual retirement account or individual retirement annuity.
(c) Distributee: A distributee includes an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse and the
Employee's or former Employee's spouse or former spouse who is the
alternate payee under a qualified domestic relations order, as defined
in Code sec. 414(p), are distributees with regard to the interest of
the spouse or former spouse.
(d) Direct rollover: A direct rollover is a payment by the Plan to the
eligible retirement plan specified by the distributee.
THIRD AMENDMENT
Art. IX
Effective 1/1/93 56
<PAGE>
EXHIBIT 10.7
STANDARD INSURANCE COMPANY
AMENDED AND RESTATED SUPPLEMENTAL
DEFERRED COMPENSATION PLAN
FOR SENIOR OFFICER MANAGEMENT GROUP
It has been the preexisting policy and practice of Standard Insurance
Company to adopt deferred compensation plans for selected key employees. The
Supplemental Deferred Compensation Plan stated herein is adopted in order to
augment the deferred compensation plans currently in effect for selected key
employees and to extend to these employees additional benefits.
ARTICLE I. Definitions
----------------------
1.1 "Board" shall mean the Board of Directors of Standard.
1.2 "Supplemental Deferred Compensation Agreements" shall mean those
individual agreements to defer compensation entered into between the
Participants and Standard, substantially in the form attached hereto as Exhibit
A.
1.3 "Minimal Annual Salary" shall mean all amounts which (a) will be
earned in calendar years next succeeding the calendar year during which the
Supplemental Deferred Compensation Agreement is executed, and (b) would
constitute "Compensation" under the Standard Insurance Company Employees and
Agents Deferred Compensation Plan Restatement Plan (1992) ("the 401(k)
Plan")without giving effect to any limitation imposed by Internal Revenue Code
Section 401(a)(17) computed as if any amounts which would be currently paid but
for elective deferrals pursuant to this
Page 1 - Amended and Restated Supplemental Deferred Compensation
Plan
<PAGE>
Plan or the Deferred Compensation Plan for Senior Office Management Group were
currently paid and not deferred.
1.4 "Participant" shall mean a member of the Senior Officer Management
Group who has entered into a Supplemental Deferred Compensation Agreement with
Standard and who therefore is entitled to benefits under the Plan in accordance
with its terms.
1.5 "Plan" means this Supplemental Deferred Compensation Plan for the
Senior Officer Management Group as it may be from time to time amended.
1.6 "Normal Retirement Date" shall mean the earlier of the last day of the
month in which the Participant becomes age 65, or the last day of the month in
which Participant has reached Early Retirement Date.
1.7 "Early Retirement Date" is the date as of which Participant is not
less than fifty-five (55) years of age and the total of Participant's age plus
his years of service with Standard equal at least eighty (80). For purposes of
this provision, a year of service shall mean a calendar year in which
Participant was employed by Standard for not less than six (6) months. The
period of time a Participant is employed by Standard shall include the time that
a Participant is on total and permanent disability status.
1.8 "Senior Officer Management Group" shall mean the President and Chief
Executive Officer; Senior Vice President-Individual Insurance; Senior Vice
President - Group Insurance;
Page 2 - Amended and Restated Supplemental Deferred Compensation
Plan
<PAGE>
Senior Vice President - Investments; Vice President - Information Systems; Vice
President and Controller; Corporate Secretary; Vice President - Group Insurance
Sales; and Vice President - Individual Insurance Sales. These officers
constitute a select group of highly compensated individuals.
1.9 "Standard" shall mean Standard Insurance Company, a life insurance
company organized and existing under the laws of the state of Oregon.
1.10 "Supplemental Deferred Compensation" shall mean the amounts
deferred pursuant to Paragraph 2.2 and the matching amounts credited pursuant
to Paragraph 2.3, plus interest accrued prior to January 1, 1995, plus amounts
credited and less amounts debited by reason of Net Adjustments pursuant to
Paragraph 3.4 determined as of the end of the calendar quarter immediately
preceding the time of payment of the first installment or lump sum as specified
herein.
ARTICLE II. Eligibility and Amounts Deferred
--------------------------------------------
2.1 Eligibility. Each member of the Senior Officer Management Group shall
-----------
be eligible to become a Participant in this Plan. An eligible member may become
a Participant in this Plan by entering into a Supplemental Deferred Compensation
Agreement with Standard. Such Supplemental Deferred Compensation Agreements are
by this reference incorporated herein and together with this document constitute
the written Plan.
Page 3 - Amended and Restated Supplemental Deferred Compensation
Plan
<PAGE>
2.2 Deferred Compensation. Each Participant shall be entitled to elect an
---------------------
annual deferral of an amount equal to not more than Participant's Supplemental
Deferral Amount. Participant's Supplemental Deferral Amount is 3 percent of
Participant's Minimal Annual Salary after reduction by the Elective Amount, if
any, deferred pursuant to the Deferred Compensation Plan for Senior Officer
Management Group; provided that the amount deferred in any calendar year may not
exceed the limitation on exclusion for elective deferrals under (S)(S)402 (g)
of the Internal Revenue Code of 1986 ("Code"), which is $7,000 subject to cost
of living adjustments pursuant to (S)(S)402 (g) (5) of the Code. The amount
deferred is hereafter referred to as "Deferred Compensation."
The Participant shall agree to defer only compensation which will be earned
commencing in the calendar year next succeeding the year during which the
Deferred Compensation Agreement is executed. Deferral shall be on an annual
basis. For deferrals after December 31, 1994, the Participant shall give written
notice to Standard each year of such election to defer and the amount to be
deferred. Such notice must be given not later than December 31 of the year
preceding the year in which any of the compensation to be deferred is earned.
Failure to give such notice shall constitute forfeiture of the right to defer
amounts pursuant to this paragraph until January 1 of the succeeding year. For
deferrals before January 1, 1995, an election to defer
Page 4 - Amended and Restated Supplemental Deferred Compensation
Plan
<PAGE>
hereunder shall continue on an annual basis until a timely written notice is
given to Standard at which time the election shall expire as to amounts earned
after the expiration of the calendar year in which such notice is received by
Standard.
2.3 Matching Amounts. Standard shall credit to each Participant an amount
----------------
equal to 1.5 times the amounts deferred by Participant pursuant to Paragraph 2.2
at such times as such amounts are credited to the Participant's account pursuant
to Paragraph 3.1. The amounts credited by Standard pursuant to this Paragraph
2.3 are hereafter referred to as "Matching Amounts."
ARTICLE III. Memorandum Accounts and Net Adjustments
----------------------------------------------------
3.1 Separate Memorandum Accounts. Standard shall maintain in its records a
----------------------------
separate Memorandum Account of the Deferred Compensation and the Matching
Amounts credited under this Plan for each Participant. A credit to this
Memorandum Account shall be made each month in an amount equal to the
compensation subject to the election to defer pursuant to Paragraph 2.2 which
would have been paid to Participant in such month but for such election to
defer. In addition, Standard shall credit the Memorandum Account with the
Matching Amount pursuant to Paragraph 2.3. Standard may at its option for the
purpose of convenience maintain separate Memorandum Accounts for the Deferred
Compensation and the Matching Amounts.
Page 5 - Amended and Restated Supplemental Deferred Compensation
Plan
<PAGE>
3.2 Creation of Subaccounts Within Separate Memorandum Account. The
----------------------------------------------------------
separate Memorandum Account shall consist of two subaccounts, a self-directed
subaccount and a nonself-directed subaccount. Amounts in the separate
Memorandum Account shall be allocated to the nonself-directed subaccount unless
Participant affirmatively designates amounts to be allocated to Participant's
self-directed subaccount. The amounts allocated to Participant's self-directed
subaccount shall be subject to a Net Adjustment determined as set forth in
Paragraph 3.4(b), as if the amounts credited were invested in investments
selected by Participant from the investment options available to Participants in
the 401(k) Plan ("Participant Directed Investments"). The amounts allocated to
Participant's nonself-directed subaccount shall be subject to a Net Adjustment
determined as set forth in Paragraph 3.4(a).
3.3 Self-Directed Subaccounts.
-------------------------
(a) Designation of Amount to Be Allocated to Subaccount. Participant
---------------------------------------------------
may designate on his annual deferral election whether all or any portion of the
amounts deferred under such election are to be credited to his self-directed
subaccount.
(b) Limitations on Amount Allocated to Self-Directed Subaccount.
-----------------------------------------------------------
Prior to April 1, 1995, Participant may direct in writing that up to the greater
of $5,000 or fifty percent (50%) of the total amounts credited in his separate
Memorandum Account be credited to Participant's self-directed subaccount. Not
more
Page 6 - Amended and Restated Supplemental Deferred Compensation
Plan
<PAGE>
frequently than once in each calendar year quarter commencing after April 1,
1995, a Participant may direct in writing that not more than the greater of
$5,000 or five percent (5%) of the amounts allocated to his nonself-directed
subaccount are to be credited to his self-directed subaccount.
(c) Exception to the Limitation on Amount Allocated to Self-Directed
----------------------------------------------------------------
Subaccount. In the case of a Participant who designates in writing prior to
- ----------
April 1, 1995 to have the entire amount in his nonself-directed subaccount be
credited to his self-directed subaccount, the amount in the nonself-directed
subaccount shall be transferred to Participant's self-directed subaccount over a
five-year period in quarterly increments. The amount of each quarterly increment
shall be determined by multiplying the amounts credited to the nonself-directed
subaccount by a fraction, the numerator of which is one and the denominator of
which is the number of quarterly incremental payments remaining to be made
within the five-year period.
3.4 Determination of Net Adjustments. The amount in the Memorandum Account
--------------------------------
of each Participant shall be subject to a Net Adjustment determined as follows:
(a) As to amounts allocated to Participant's nonself-directed
subaccount, commencing January 1, 1995, Standard shall apply a Net Adjustment
equal to the Net Adjustment which would be applied under the 401(k) Plan, if
such amounts were held under the 401(k) Plan and not in participant directed
account under
Page 7 - Amended and Restated Supplemental Deferred Compensation
Plan
<PAGE>
such Plan, at such times and in such manner as such Net Adjustment is determined
pursuant to the 401(k) Plan.
(b) As to amounts allocated to Participant's self-directed
subaccount, Standard shall apply a Net Adjustment equivalent to the Net
Adjustment which would be applied to participant directed accounts under the
401(k) Plan, determined as if the amount in the self-directed subaccount were
invested in the Participant Directed Investments, at such times and in such
manner as such Net Adjustment is determined pursuant to the 401(k) Plan.
Unless otherwise designated, Net Adjustment in this Agreement shall refer
to the aggregate Net Adjustment to both the Participant's self-directed
subaccount and Participant's nonself-directed subaccount.
(c) Effective Date of Allocations and Investments Selection. For
-------------------------------------------------------
purposes of determining the Net Adjustment, any designation made by Participant
to allocate or re-allocate amounts between the subaccounts or any selection of
Participant Directed Investments in the self-directed subaccount shall be
effective for purposes of this Plan only prospectively as of the first day of
the calendar quarter beginning not sooner than fifteen (15) days following
receipt by Standard of a written directive from Participant.
3.5 Application of Net Adjustments. Net Adjustments shall continue to be
------------------------------
applied to the separate Memorandum Accounts
Page 8 - Amended and Restated Supplemental Deferred Compensation
Plan
<PAGE>
between the time a Participant ceases for any reason to be employed by Standard
and the time of payment of the first installment (or the lump sum) as specified
herein. From the time of payment of the first installment until payment of the
final installment or lump sum, the remaining balance of the Supplemental
Deferred Compensation, or the portion thereof payable to Participant, if less,
shall continue to be subject to Net Adjustments determined as set forth in
Paragraph 3.4.
3.6 No Special Fund. The aggregate of the Deferred Compensation and
---------------
Matching Amounts together with Net Adjustments shall not be set aside in a
special fund for the Participants but rather a bookkeeping account called a
Memorandum Account shall be used by Standard for this purpose.
ARTICLE IV. Future Payments
---------------------------
4.1 Amounts Payable. Subject to Paragraph 4.5, the aforesaid deferred
---------------
compensation shall be payable to Participant only as follows:
(a) Normal Retirement. When Participant has retired from Standard's
-----------------
full-time employ on or after Participant's Normal Retirement Date, the
Participant shall be paid the Supplemental Deferred Compensation, adjusted for
Net Adjustments, in the manner provided under Paragraph 4.2.
(b) Total and Permanent Disability. In the event that a Participant
------------------------------
shall become totally and permanently disabled so
Page 9 - Amended and Restated Supplemental Deferred Compensation
Plan
<PAGE>
that the Participant cannot perform the functions of the Participant's
employment with Standard, then upon such Participant's Normal Retirement Date,
the Participant shall be paid the Supplemental Deferred Compensation, adjusted
for Net Adjustments, in the manner provided under Paragraph 4.2.
(c) Death.
-----
(i) In the event of Participant's death before the Supplemental
Deferred Compensation, adjusted for Net Adjustments, shall have been paid to the
Participant in full, payment of the amounts to which Participant is entitled
under this Plan shall be made to the Participant's spouse in the manner in which
such amounts would have been paid to Participant pursuant to Paragraph 4.2,
except that the lump sum payment shall be made or the installment payments shall
commence, as the case may be, in the month following the date of death of
Participant.
(ii) If Participant's spouse should predecease Participant or die
after the Participant's death but before the amount specified in (i) above has
been paid in full, or if the Participant has no spouse, the unpaid amount shall
be paid in a lump sum to such person who has been previously designated by
Participant in a writing accepted and approved in writing by Standard, or, if
none, to the estate of Participant's spouse or the estate of Participant if
Participant had no spouse. Such payment shall be made within sixty (60) days of
the date of death
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<PAGE>
of the last to die of the Participant or the Participant's spouse.
(d) Termination. In the event Participant voluntarily terminates
-----------
employment with Standard or Standard terminates Participant's employment with
Standard prior to the Normal Retirement Date, the Supplemental Deferred
Compensation, adjusted for Net Adjustments shall be payable in the manner
provided under Paragraph 4.2.
4.2 Payments. The manner of payment of the Supplemental Deferred
--------
Compensation (as defined in Paragraph 1.10) payable to Participant pursuant to
the applicable provisions of Paragraph 4.1 shall be as specified in the annual
election made by the Participant pursuant to Paragraph 2.2 or, if no manner of
payment has been specified, in installments as provided in Paragraph 4.3(a).
4.3 Election. Participant may elect either a lump sum payment or
--------
installment payments as the manner in which the amount of Supplemental Deferred
Compensation payable to Participant pursuant to the applicable provisions of
Paragraph 4.1 shall be paid to Participant. Such election shall be specified in
writing on the notice of election to make a voluntary deferral submitted
pursuant to Paragraph 2.2 and shall apply to the amounts deferred pursuant to
the election and the matching credits thereon, as well as the Net Adjustments.
Such election shall be irrevocable.
(a) In the event Participant makes no election of a manner of payment
pursuant to Paragraph 4.3, with respect to any
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<PAGE>
amounts deferred, payment of such amounts, together with matching credits
applicable thereto, adjusted for Net Adjustments shall be made pursuant to the
installment method. Under the installment method, the Supplemental Deferred
Compensation payable to Participant shall be paid in level monthly installments
equal to 1 percent of such amount. These payments shall commence in the first
month after the Participant shall have reached Normal Retirement Date and is no
longer in Standard's full time employ and shall continue until the amount of
Supplemental Deferred Compensation payable to Participant, adjusted for Net
Adjustments shall have been paid out.
Within thirty (30) days after the end of each calendar year ending after
the payment of the first installment, the amounts credited less amounts debited
to the Participant's Memorandum Account by reason of Net Adjustments for such
calendar year or, for the first year in which installment payments commence, the
portion thereof after the first installment, shall be determined. In the event
that the amount so calculated exceeds the amount which would have been realized
from the application of a 10% simple interest rate (a) on Participant's unpaid
balance in his separate Memorandum Account as of the first day of such calendar
year (excluding from such balance any Excess Return credited in the preceding
year), or (b) for the first year in which installment payments commence, on the
Supplemental Deferred Compensation, the amount of such excess shall be Excess
Return.
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<PAGE>
The Excess Return shall be paid within the first thirty (30) days of the
calendar year following the calendar year in which the Excess Return was
credited. Payment of the Excess Return shall be in addition to the level monthly
payments described above.
(b) In the event Participant has elected a lump sum distribution, the
Supplemental Deferred Compensation shall be paid no sooner than thirty (30) nor
later than sixty (60) days following the first date that Participant has reached
Normal Retirement Date and is no longer in Standard's full time employ.
(c) In the event the Participant has elected a lump sum payment for
some, but not all, of the amounts deferred, then a partial lump sum payment
shall be paid no sooner than thirty (30) nor later than sixty (60) days
following the first date that Participant has reached Normal Retirement Date and
is no longer in Standard's full time employ. The partial lump sum payment shall
consist of the amounts deferred, and matching credits applicable thereto, as to
which a lump sum payment was elected pursuant to Paragraph 4.3 adjusted for Net
Adjustments. The balance of the Supplemental Deferred Compensation shall be paid
as provided in Paragraph 4.3(a), with such balance being treated as the
Supplemental Deferred Compensation for purposes of Paragraph 4.3(a).
(d) In the event Participant has not made an election designating a
complete or partial lump sum payment pursuant to
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<PAGE>
this paragraph 4.3, payment shall be made under the deferred installment method
as set forth in Paragraph 4.3(a).
4.4 Withholding. Payments hereunder are subject to any requirement of
-----------
withholding imposed by federal, state or local law. The decision of the Board
shall be final with respect to a determination of the application of any
withholding requirements and computation of amounts withheld.
4.5 De Minimus Distribution. In the event that payments are to be made
-----------------------
under the installment method, and at the time the installment payments payable
to a Participant commence, or at any time thereafter, the amount of such payment
is less than $100, the unpaid balance of the Supplemental Deferred Compensation,
adjusted for Net Adjustments, payable to such Participant shall be paid in a
single lump sum payment even though the Participant has not elected a lump sum
payment.
ARTICLE V. Miscellaneous
------------------------
5.1 Questions Determined by Board. In the event of any questions or
-----------------------------
dispute as to retirement from full-time employment, the date of commencement of
such retirement, what constitutes total and permanent disability, the date of
commencement of such disability, the date of death of a Participant or of a
Participant's spouse, the identity or interests of various persons in the
residual portion of a Participant's estate, or any
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Plan
<PAGE>
other provisions herein, the decision of a majority of the Board shall be
binding on all interested parties.
5.2 Non-Alienation of Payments. No Participant, spouse, legatee, or
--------------------------
residuary legatee, as the case may be, or heir or any other person, shall have
the right to commute, encumber, assign, transfer, pledge or otherwise anticipate
or dispose of the right to receive payments hereunder.
5.3 No Trust Created; Unsecured Creditors. Notwithstanding anything herein
-------------------------------------
contained to the contrary, no action taken pursuant to the provisions of this
Plan shall create or be construed to create a trust of any kind or fiduciary
relationship between Standard and the Participants, their designated
beneficiaries or any other persons. Any deferred funds shall continue for all
purposes to be part of the general assets of Standard, subject to the claims of
Standard's creditors, and Standard shall in no way be restricted with regard to
the controls, investment and use of such funds. To the extent that any person
acquires the right to receive payment from Standard under this Plan, such right
shall be no greater than the right of any unsecured general creditor of
Standard.
5.4 Plan Interpretation. All of the terms and provisions of this Plan
-------------------
shall be interpreted and applied so as to qualify the amounts deferred hereunder
as deferred compensation, not taxable to Participants until paid to them
pursuant to the Plan. In the event that any of the terms and provisions cannot
be so
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interpreted and applied, such terms and provisions shall be null and void; all
other provisions shall be given effect separately therefrom and continue in full
force and effect.
5.5 Non-Guarantee of Employment. Nothing contained herein shall be
---------------------------
construed as conferring upon a Participant the right to continue in the employ
of Standard as an executive or in any other capacity. Standard may terminate the
employment of any Participant at any time the Board determines such termination
to be for the benefit of the company.
5.6 Effect on Other Benefits. Any Deferred Compensation or other amounts
------------------------
payable under this Plan shall not be deemed salary or other compensation
to the Participant for the purpose of computing benefits to which the
Participant may be entitled under the Standard Retirement Trust - Home Office
Personnel or any other qualified benefit plan of Standard.
5.7 Governing Law. This Plan shall be construed in accordance with and
-------------
governed by the laws of the state of Oregon.
5.8 Section Headings. The headings of this Plan have been inserted for
----------------
convenience of reference only and are to be ignored in any construction of the
provisions hereof.
ARTICLE VI. Amendment of Plan
-----------------------------
6.1 Amendment. The Plan may be amended in whole or in part from time to
---------
time by the Board.
6.2 Notice of Amendment. Notice of every such amendment shall be given in
-------------------
writing to each Participant and, with respect
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<PAGE>
to a deceased Participant, to the person or persons entitled to payment under
Paragraph 4.1(c), provided that notice shall not be required to be given if all
of the Supplemental Deferred Compensation adjusted for Net Adjustments of such
Participant and interest thereon has been paid.
6.3 Effective Date. This Amended and Restated Supplemental Deferred
--------------
Compensation Plan for Senior Officer Management Group shall be effective as of
December 31, 1994.
Date: December 22, 1994
-----------------
STANDARD INSURANCE COMPANY
By: /s/ Ronald E. Timpe
-----------------------------------
Ronald E. Timpe, President
Page 17 - Amended and Restated Supplemental Deferred Compensation
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<PAGE>
AGREEMENT TO PARTICIPATE IN THE
SUPPLEMENTAL DEFERRED COMPENSATION PLAN FOR
SENIOR OFFICER MANAGEMENT GROUP
This Agreement is part of and governed by that Supplemental Deferred
Compensation Plan for Senior Officer Management Group (hereinafter referred to
as "the Supplemental Plan") effective January 1, 1987 and amended and restated
as of December 31, 1994.
This Agreement is made by and between STANDARD INSURANCE COMPANY, a life
insurance company organized and existing under the laws of the State of Oregon
(hereinafter referred to as "Standard"), and ____________________(hereinafter
referred to as "Employee"), as follows:
1. Standard currently employs Employee as its _________________with duties
as provided by the Bylaws and the Board of Directors.
2. Employee is entitled to compensation including a fixed annual salary of
$ __________ which is paid in equal semi-monthly installments and an amount
equal to ____ percent (__%) of his fixed annual salary ("Mandatory Deferral")
payment of which is deferred pursuant to the Amended and Restated Deferred
Compensation Plan for Senior Officer Management Group effective December 10,
1985 and amended and restated effective December 31, 1994 ("Officers Plan"). In
addition, Employee has elected to defer payment of ___________ of his fixed
annual salary, __________ of bonuses and ________ of other compensation under
the Officers Plan ("Elective Deferrals").
3. Pursuant to the Supplemental Plan, Employee hereby elects to defer
the receipt of the following portions of his compensation, provided that no more
than the maximum amount which may be deferred pursuant to the Supplemental Plan,
shall be deferred in any calendar year
(a) ___ percent (__%) of the portion of his fixed annual salary which
is not deferred under the Officers Plan.
(b) ___ percent (__%) of the portion of his bonuses which is not
deferred under the Officers Plan
(c) _____ of the portion of his other compensation which is not
deferred under the Officers Plan
The amount so deferred shall be called the "Deferred Compensation." The deferral
shall be effective and shall apply
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<PAGE>
to compensation earned after December 31, 1994 and prior to January 1, 1996.
4. The Deferred Compensation shall be credited to a separate memorandum
account for the Participant, and Standard shall credit to such account amounts
equal to 1.5 times the Deferred Compensation credited pursuant to the Plan. Such
credits shall be called the "Matching Amount."
5. The amounts deferred pursuant to this Agreement, together with the
Matching Amount, and Net Adjustments accrued thereon, shall be paid:
(a) Amounts deferred from fixed annual salary shall be paid:
[ ] in a lump sum
[ ] in installments as set forth in the Supplemental Plan
(b) Amounts deferred from bonuses shall be paid:
[ ] in a lump sum
[ ] in installments as set forth in the Supplemental Plan
(c) Amounts deferred from other compensation shall be paid:
[ ] in a lump sum
[ ] in installments as set forth in the Supplemental Plan
6. All of the terms and conditions of the Supplemental Plan are hereby
incorporated by reference.
7. This Agreement is irrevocable.
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Plan
<PAGE>
8. This Agreement shall be binding upon the heirs, executors,
administrators or other successors in interest of the parties.
EXECUTED this ____ day of ___________________ , 1994.
STANDARD INSURANCE COMPANY
By: _____________________________
Ronald E. Timpe, President
By: _____________________________
Ivy E. Lenz, Secretary
_________________________________
Employee
Page 20 - Amended and Restated Supplemental Deferred Compensation
Plan
<PAGE>
EXHIBIT 10.8
STANDARD INSURANCE COMPANY
AMENDED AND RESTATED DEFERRED COMPENSATION PLAN
FOR SENIOR OFFICER MANAGEMENT GROUP
It has been the preexisting policy and practice of Standard Insurance
Company to adopt deferred compensation plans for selected key employees. The
Deferred Compensation Plan stated herein is intended to continue such practice
for the class herein defined.
ARTICLE 1. Definitions
----------------------
1.1 "Board" shall mean the Board of Directors of Standard.
1.2 "Deferred Compensation Agreements" shall mean those individual
agreements to defer compensation entered into between members of the Senior
officer Management Group and Standard.
1.3 "Minimal Annual Salary" shall mean all amounts which (a) will be
earned in calendar years next succeeding the calendar year during which the
Deferred Compensation Agreement is executed, and (b) would constitute
"Compensation" under the Standard Insurance Company Employees and Agents
Deferred Compensation Plan Restatement Plan (1994) ("the 401(k) Plan") without
giving effect to any limitation imposed by Internal Revenue Code Section
401(a)(17) computed as if any amounts which would be currently paid but for
elective deferrals pursuant to this Plan or the Supplemental Deferred
Compensation Plan for Senior Office Management Group ("the Supplemental Plan")
were currently paid and not deferred.
Page 1 - Amended and Restated Deferred Compensation Plan
<PAGE>
1.4 "Participant" shall mean a member of the Senior Officer Management
Group who has entered into a Deferred Compensation Agreement with Standard and
who therefore is entitled to benefits under the Plan in accordance with its
terms.
1.5 "Plan" means this Deferred Compensation Plan for the Senior Officer
Management Group as it may be from time to time amended.
1.6 "Normal Retirement Date" shall mean the earlier of the last day of the
month in which the Participant becomes age 65, or the last day of the month in
which Participant has reached Early Retirement Date.
1.7 "Early Retirement Date" is the date as of which Participant is not
less than fifty-five (55) years of age and the total of Participant's age plus
his years of service with Standard equal at least eighty (80). For purposes of
this provision, a year of service shall mean a calendar year in which
Participant was employed by Standard for not less than six (6) months. The
period of time a Participant is employed by Standard shall include the time that
a Participant is on total and permanent disability status.
1.8 "Senior Officer Management Group" shall mean the President and Chief
Executive Officer; Senior Vice President - Individual Insurance; Senior Vice
President - Group Insurance; Senior Vice President Investments; Vice President -
Information Systems; Vice President and Controller; Corporate Secretary; Vice
President - Group Insurance Sales; and Vice President -
Page 2 - Amended and Restated Deferred Compensation Plan
<PAGE>
Individual Insurance Sales. These officers constitute a select group of highly
compensated individuals.
1.9 "Standard" shall mean Standard Insurance Company, a life insurance
company organized and existing under the laws of the state of Oregon.
1.10 "Total Deferred Compensation" shall mean the amounts deferred pursuant
to Paragraphs 2.2 and 2.3, plus matching credits pursuant to Paragraph 2.4, plus
interest accrued thereon prior to January 1, 1995, plus amounts credited and
less amounts debited by reason of Net Adjustments pursuant to Paragraph 3.4
determined as of the end of the calendar quarter immediately preceding the time
of payment of the first installment or lump sum as specified herein.
ARTICLE II. Eligibility and Amounts Deferred
--------------------------------------------
2.1 Eligibility. Each member of the Senior Officer Management Group may
-----------
become a Participant in this Plan by entering into a Deferred Compensation
Agreement with Standard. Such individual Deferred Compensation Agreements are by
this reference incorporated herein and together with this document constitute
the written Plan.
2.2 Mandatory Amount Deferred. Each Participant shall be entitled to a
-------------------------
Minimal Annual Salary as set forth in Paragraph 2 of the Participant's Deferred
Compensation Agreement. In addition to the Minimal Annual Salary, each
Participant may be entitled to an annual deferral of compensation in an amount
as
Page 3 - Amended and Restated Deferred Compensation Plan
<PAGE>
set forth in Paragraph 3 of the Participant's Deferred Compensation Agreement.
This deferral is hereinafter referred to as the Mandatory Amount.
2.3 Elective Amounts Deferred. Each Participant shall be entitled to defer
-------------------------
from Minimal Annual Salary amounts in addition to the Mandatory Amount provided
for in Paragraph 2.2 of this Plan. This deferral is hereinafter referred to as
the Elective Amount. The Participant shall agree to defer only compensation
which will be earned in calendar years next succeeding the year during which the
Deferred Compensation Agreement is executed. In no case shall the deferral of
such Elective Amounts commence before January 1, 1977. Deferral shall be on an
annual basis. For deferrals after December 31, 1994, the Participant shall give
written notice to Standard each year of his election to defer and the percentage
of (a) fixed annual salary, (b) bonuses, and (c) other compensation to be
deferred. Such notice must be given not later than December 31 of the year
preceding the year in which any of the compensation to be deferred is earned. A
different percentage, or no deferral, may be elected with respect to each type
of compensation. Failure to give such notice shall constitute forfeiture of the
right to defer amounts pursuant to this paragraph until January 1 of the
succeeding year. For deferrals before January 1, 1995, any election to defer
hereunder shall continue on an annual basis until a timely written notice is
given to Standard, at which time the election shall expire as
Page 4 - Amended and Restated Deferred Compensation Plan
<PAGE>
to amounts earned after the expiration of the calendar year in which such notice
is received by Standard.
2.4 Matching Credit. Standard shall credit to the Memorandum Account of
---------------
each Participant an amount equal to four and one-half percent (4.5%) of the
elective amounts deferred as provided in Paragraph 3.1. The matching credit
shall be deemed to be part of the Elective Amount.
ARTICLE III. Memorandum Accounts and Net Adjustments
-----------------------------------------------------
3.1 Separate Memorandum Accounts. Standard shall maintain in its records a
----------------------------
separate Memorandum Account of the compensation deferred for each Participant. A
credit to this Memorandum Account shall be made each month in an amount not less
than (a) the percentage provided in Paragraph 3 of the Participant's Deferred
Compensation Agreement (Mandatory Amounts Deferred) times the amount of the
Participant's fixed annual salary which would be paid to Participant in such
month but for elective deferrals under this Plan and the Supplemental Plan, plus
(b) the percentages provided pursuant to Paragraph 2.3 (Elective Amounts
Deferred) of this Plan times the amount of the respective type of Compensation
subject to the deferral election under Paragraph 2.3 which would be paid to
Participant in such month but for elective deferrals under this Plan and the
Supplemental Plan, plus (c) an amount equal to 4.5% the amount described in (b)
(Matching Credit). Standard may at its option for the purpose of
Page 5 - Amended and Restated Deferred Compensation Plan
<PAGE>
convenience maintain separate Memorandum Accounts for the mandatory and elective
amounts deferred hereunder.
3.2 Creation of Subaccounts Within Separate Memorandum Account. The
----------------------------------------------------------
separate Memorandum Account shall consist of two subaccounts, a self-directed
subaccount and a nonself-directed subaccount. The Mandatory Amount shall be
allocated only to the nonself-directed subaccount. Any other amounts in the
separate Memorandum Account shall be allocated to the nonself-directed
subaccount unless Participant affirmatively designates amounts to be allocated
to Participant's self-directed subaccount. The amounts allocated to
Participant's self-directed subaccount shall be subject to a Net Adjustment
determined as set forth in Paragraph 3.4(b), as if the amounts credited were
invested in investments selected by Participant from the investment options
available to participants in the 401(k) Plan ("Participant Directed
Investments"). The amounts allocated to Participant's nonself-directed
subaccount shall be subject to a Net Adjustment determined as set forth in
Paragraph 3.4(a)
3.3 Self-Directed Subaccounts.
-------------------------
(a) Designation of Amount to Be Allocated to Subaccount. Participant
---------------------------------------------------
may designate on his annual deferral election whether all or any portion of the
amounts deferred under such election are to be credited to his self-directed
subaccount.
(b) Limitations on Amount Allocated to Self-Directed Subaccount.
-----------------------------------------------------------
Prior to April 1, 1995, Participant may direct in writing that up to the greater
of $5,000 or fifty percent (50%)
Page 6 - Amended and Restated Deferred Compensation Plan
<PAGE>
of the Elective Amounts and the interest accrued thereon credited in his
separate Memorandum Account be allocated to Participant's self-directed
subaccount. Not more frequently than once in each calendar year quarter
commencing after April 1, 1995, a Participant may direct in writing that not
more than the greater of $5,000 or five percent (5%) of the amounts allocated to
his nonself-directed subaccount from the portion of the Memorandum Account
consisting of the Elective Amounts adjusted for interest accrued and Net
Adjustments ("the Adjusted Elective Amount of the Memorandum Account") are to be
allocated to his self-directed subaccount.
(c) Exception to the Limitation on Amount Allocated to Self-Directed
----------------------------------------------------------------
Subaccount. In the case of a Participant who designates in writing prior to
- ----------
April 1, 1995 to have the entire Adjusted Elective Amount of the Memorandum
Account be allocated to his self-directed subaccount, such amount shall be
transferred to Participant's self-directed subaccount over a five-year period in
quarterly increments. The amount of each quarterly increment shall be determined
by multiplying the Adjusted Elective Amount of the Memorandum Account by a
fraction, the numerator of which is one and the denominator of which is the
number of quarterly incremental payments remaining to be made within the five-
year period.
3.4 Determination of Net Adjustments. The amount in the Memorandum Account
--------------------------------
of each Participant shall be subject to a Net Adjustment determined as follows:
Page 7 - Amended and Restated Deferred Compensation Plan
<PAGE>
(a) As to amounts allocated to Participant's nonself-directed
subaccount, commencing January 1, 1995, Standard shall apply a Net Adjustment
equal to the Net Adjustment which would be applied under the 401(k) Plan, if
such amounts were held under the 401(k) Plan and not in a participant directed
account under such Plan, at such times and in such manner as such Net Adjustment
is determined pursuant to the 401(k) Plan.
(b) As to amounts allocated to Participant's self-directed subaccount,
Standard shall apply a Net Adjustment equivalent to the Net Adjustment which
would be applied to participant directed accounts under the 401(k) Plan,
determined as if the amount in the self-directed subaccount were invested in the
Participant Directed Investments, at such times and in such manner as such Net
Adjustment is determined pursuant to the 401(k) Plan.
Unless otherwise designated, Net Adjustment in this Agreement shall refer
to the aggregate Net Adjustment to both the Participant's self-directed
subaccount and Participant's nonself-directed subaccount.
(c) Effective Date of Allocations and Investments Selection. For
-------------------------------------------------------
purposes of determining the Net Adjustment, any designation made by Participant
to allocate or re-allocate amounts between the subaccounts or any selection of
Participant Directed Investments in the self-directed subaccount shall be
effective for purposes of this Plan only prospectively as of the first day of
the calendar quarter beginning not sooner than
Page 8 - Amended and Restated Deferred Compensation Plan
<PAGE>
fifteen (15) days following receipt by Standard of a written directive from
Participant.
3.5 Allocation of Net Adjustments. Net Adjustments shall continue to be
-----------------------------
applied to the separate Memorandum Account between the time a Participant ceases
for any reason to be employed by Standard and the time of payment of the first
installment (or the lump sum) as specified herein, provided that in the event of
termination by Standard or voluntary departure, Net Adjustments shall be
computed and applied only upon the portion of the Total Deferred Compensation
payable to Participant pursuant to applicable provisions of Paragraph 4.1. From
the time of payment of the first installment until payment of the final
installment or lump sum, the remaining balance of the Total Deferred
Compensation, or the portion thereof payable to Participant, if less, shall
continue to be subject to Net Adjustments determined as set forth in Paragraph
3.4.
3.6 No Special Fund. The aggregate of the amounts deferred together with
---------------
Net Adjustments shall not be set aside in a special fund for the Participants
but rather, a bookkeeping account called a Memorandum Account shall be used by
Standard for this purpose.
ARTICLE IV. Future Payments and Forfeitures
-------------------------------------------
4.1 Amounts Payable. Subject to Paragraph 4.5, the aforesaid deferred
---------------
compensation shall be payable to Participant only as follows:
Page 9 - Amended and Restated Deferred Compensation Plan
<PAGE>
(a) Normal Retirement. When Participant has retired from Standard's
-----------------
full-time employ on or after Participant's Normal Retirement Date, the
Participant shall be paid his Total Deferred Compensation, adjusted for Net
Adjustments in the manner provided under Paragraph 4.2.
(b) Total and Permanent Disability. In the event that a Participant
------------------------------
shall become totally and permanently disabled so that the Participant cannot
perform the functions of the Participant's employment with Standard, then upon
such Participant's Normal Retirement Date the Participant shall be paid the
Total Deferred Compensation, adjusted for Net Adjustments in the manner provided
under Paragraph 4.2.
(c) Termination by Standard. In the event that Standard terminates a
-----------------------
Participant before the Normal Retirement Date, the portion of the Total Deferred
Compensation accrued to the date of termination to be paid to the Participant
shall be:
(i) If the termination occurs in the first four years from the
date of the Deferred Compensation Agreement, 50 percent of the amounts deferred
pursuant to Paragraph 2.2 (Mandatory Amounts Deferred) plus 100 percent of the
amounts deferred pursuant to Paragraph 2.3 (Elective Amounts Deferred) and 100
percent of the amounts credited pursuant to Paragraph 2.4 (Matching Amounts),
adjusted for Net Adjustments, or
(ii) If the termination occurs in the fifth through eighth year
of the Deferred Compensation Agreement, 75 percent of the amounts deferred
pursuant to Paragraph 2.2
Page 10 - Amended and Restated Deferred Compensation Plan
<PAGE>
(Mandatory Amounts Deferred) plus 100 percent of the amounts deferred pursuant
to Paragraph 2.3 (Elective Amounts Deferred) and 100 percent of amounts credited
pursuant to Paragraph 2.4 (Matching Amounts), adjusted for Net Adjustments, or
(iii) 100 percent of the Total Deferred Compensation, adjusted
for Net Adjustments, if the termination occurs after the eighth year of the
Deferred Compensation Agreement.
All payments made in the event of Participant's termination by Standard
shall be payable in the manner provided under Paragraph 4.2.
(d) Death.
-----
(i) In the event of Participant's death before the Total Deferred
Compensation, or the portion thereof, payable to Participant pursuant to the
applicable provisions of Paragraph 4.1, adjusted for Net Adjustments, shall have
been paid to the Participant in full, payment of amounts remaining unpaid shall
be made to the Participant's spouse in the manner in which such amounts would
have been paid to Participant pursuant to Paragraph 4.2, except that the
complete or partial lump sum payment shall be made or the installment payments
shall commence, as the case may be, in the month following the date of death of
Participant.
(ii) If Participant's spouse should predecease Participant or die
after the Participant's death but before the amounts payable to Participant have
been paid in full, or if the
Page 11 - Amended and Restated Deferred Compensation Plan
<PAGE>
Participant has no spouse, the unpaid amount shall be paid in a lump sum to such
person who has been previously designated by Participant in a writing accepted
and approved in writing by Standard, or, if none, to the estate of Participant's
spouse or, if Participant had no spouse, to the estate of Participant. Such
payment shall be made within sixty (60) days of the date of death of the last to
die of the Participant or the Participant's spouse.
(e) Participant's Voluntary Departure. Any Participant who
---------------------------------
voluntarily leaves Standard prior to the Normal Retirement Date, except as a
result of total and permanent disability, forfeits all rights to any
compensation deferred pursuant to Paragraph 2.2 (Mandatory Amounts Deferred).
After voluntary departure, amounts of compensation deferred pursuant to
Paragraph 2.3 (Elective Amounts Deferred) and amounts credited pursuant to
Paragraph 2.4 (Matching Amounts), adjusted for Net Adjustments, shall be payable
in the manner provided under Paragraph 4.2.
4.2 Payments. The manner of payment of the amount of Total Deferred
--------
Compensation (as defined in Paragraph 1.9) payable to Participant pursuant to
the applicable provisions of Paragraph 4.1 shall be as specified in the election
made by the Participant pursuant to Paragraph 4.3 or, if no manner of payment
has been specified, as provided in 4.3(a).
4.3 Election. Participant may elect a lump sum payment or installment
--------
payments as the manner in which the amount of
Page 12 - Amended and Restated Deferred Compensation Plan
<PAGE>
compensation deferred pursuant to the applicable provisions of Paragraph 2.2 and
Paragraph 2.3, together with the matching credits and adjusted for Net
Adjustments, shall be paid to Participant. Such election shall be specified in
writing on the annual notice of election to make a voluntary deferral submitted
pursuant to Paragraph 2.3 and shall apply to the amounts deferred and matching
credits for the year to which the election applies as well as the Net
Adjustments. Such election shall be irrevocable.
(a) In the event Participant makes no election of manner of payment
pursuant to Paragraph 4.3 with respect to any amounts deferred, payment of such
amounts, together with matching credits applicable thereto, adjusted for Net
Adjustments, shall be made pursuant to the installment method. Under the
installment method, the amount of the Total Deferred Compensation Participant
shall be paid in level monthly installments equal to 1 percent of such amount.
These payments shall commence in the first month after the Participant shall
have reached Normal Retirement Date and is no longer in Standard's full time
employ and shall continue until the amount of Total Deferred Compensation
adjusted for Net Adjustments shall have been paid out.
Within thirty (30) days after the end of each calendar year ending after
the payment of the first installment, the amounts credited less amounts debited
to the Participant's Memorandum Account by reason of Net Adjustments for such
calendar year or,
Page 13 - Amended and Restated Deferred Compensation Plan
<PAGE>
for the first year in which installment payments commence, the portion thereof
after the first installment, shall be determined. In the event that the amount
so calculated exceeds the amount which would have been realized from the
application of a 10% simple interest rate (a) on Participant's unpaid balance in
his separate Memorandum Account as of the first day of such calendar year
(excluding from such balance any Excess Return credited in the preceding year),
or (b) for the first year in which installment payments commence, on the Total
Deferred Compensation, the amount of such excess shall be Excess Return. The
Excess Return shall be paid within the first thirty (30) days of the calendar
year following the calendar year in which the Excess Return was credited.
Payment of the Excess Return shall be in addition to the level monthly payments
described above.
(b) In the event Participant has elected a lump sum distribution with
respect to all of the amounts deferred, the Total Deferred Compensation shall be
paid no sooner than thirty (30) nor later than sixty (60) days following the
first date that Participant has reached Normal Retirement Date and is no longer
in Standard's full time employ.
(c) In the event the Participant has elected a lump sum payment for
some, but not all, of the amounts deferred, then a partial lump sum payment
shall be paid no sooner than thirty (30) nor later than sixty (60) days
following the first date that Participant has reached Normal Retirement Date and
is no longer in Standard's full time employ. The partial lump sum payment
Page 14 - Amended and Restated Deferred Compensation Plan
<PAGE>
shall consist of the amounts deferred, and matching credits applicable thereto,
as to which a lump sum payment was elected pursuant to Paragraph 4.3, adjusted
for Net Adjustments. The balance of the Total Deferred Compensation shall be
paid as provided in Paragraph 4.3(a), with such balance being treated as the
Total Deferred Compensation for purposes of Paragraph 4.3(a).
(d) In the event Participant has not made an election designating
either a lump sum payment or installment payment pursuant to this Paragraph 4.3,
payment shall be made under the installment method as set forth in Paragraph
4.3(a).
4.4 Withholding. Payments hereunder are subject to any requirement of
-----------
withholding imposed by federal, state or local law. The decision of the Board
shall be final with respect to a determination of the application of any
withholding requirements and computation of amounts withheld.
4.5 De Minimus Distribution. In the event that payments are to be made
-----------------------
under the installment method, and at the time the installment payments payable
to a Participant commence, or at any time thereafter, the amount of each such
payment is less than $100, the unpaid balance of the Total Deferred
Compensation, adjusted for Net Adjustments, payable to such Participant shall be
paid in a single lump sum payment even though the Participant has not elected a
lump sum payment.
Page 15 - Amended and Restated Deferred Compensation Plan
<PAGE>
ARTICLE V. Miscellaneous
------------------------
5.1 Questions Determined by Board. In the event of any questions or
-----------------------------
dispute as to retirement from full-time employment, the date of commencement of
such retirement, what constitutes total and permanent disability, the date of
commencement of such disability, the date of death of a Participant or of a
Participant's spouse, the identity or interests of various persons in the
residual portion of a Participant's estate, or any other provisions herein, the
decision of a majority of the Board shall be binding on all interested parties.
5.2 Non-Alienation of Payments. No Participant, spouse, legatee, or
--------------------------
residuary legatee, as the case may be, or heir or any other person, shall have
the right to commute, encumber, assign, transfer, pledge or otherwise anticipate
or dispose of the right to receive payments hereunder.
5.3 No Trust Created; Unsecured Creditors. Notwithstanding anything herein
-------------------------------------
contained to the contrary, no action taken pursuant to the provisions of this
Plan shall create or be construed to create a trust of any kind or fiduciary
relationship between Standard and the Participants, their designated
beneficiaries or any other persons. Any deferred funds shall continue for all
purposes to be part of the general assets of Standard, subject to the claims of
Standard's creditors, and Standard shall in no way be restricted with regard to
the controls, investment and use of such funds. To the extent that any person
acquires the right to receive payment from Standard
Page 16 - Amended and Restated Deferred Compensation Plan
<PAGE>
under this Plan, such right shall be no greater than the right of any unsecured
general creditor of Standard.
5.4 Plan Interpretation. All of the terms and provisions of this Plan
-------------------
shall be interpreted and applied so as to qualify the amounts deferred hereunder
as deferred compensation, not taxable to Participants until paid to them
pursuant to the Plan. In the event that any of the terms and provisions cannot
be so interpreted and applied, such terms and provisions shall be null and void;
all other provisions shall be given effect separately therefrom and continue in
full force and effect.
5.5 Non-Guarantee of Employment. Nothing contained herein shall be
---------------------------
construed as conferring upon a Participant the right to continue in the employ
of Standard as an executive or in any other capacity. Standard may terminate the
employment of any Participant at any time the Board determines such termination
to be for the benefit of the company.
5.6 Effect on Other Benefits. Any deferred compensation or other amounts
------------------------
payable provided for under this Plan shall not be deemed salary or other
compensation to the Participant for the purpose of computing benefits to which
the Participant may be entitled under the Standard Retirement Trust Home Office
Personnel or any other qualified benefit Plan of Standard.
5.7 Governing Law. This Plan shall be construed in accordance with and
-------------
governed by the laws of the state of Oregon.
Page 17 - Amended and Restated Deferred Compensation Plan
<PAGE>
5.8 Section Headings. The headings of this Plan have been inserted for
----------------
convenience of reference only and are to be ignored in any construction of the
provisions hereof.
ARTICLE VI. Amendment of Plan
-----------------------------
6.1 Amendment. The Plan may be amended in whole or in part from time to
---------
time by the Board.
6.2 Notice of Amendment. Notice of every such amendment shall be given in
-------------------
writing to each Participant and, with respect to a deceased Participant, to the
person or persons entitled to payment under Paragraph 4.1(d), provided that
notice shall not be required to be given if the Total Deferred Compensation,
adjusted for Net Adjustments, of such Participant has been paid.
6.3 Effective Date. This Amended and Restated Deferred Compensation Plan
--------------
for Senior Office Management Group shall be effective as of December 31, 1994.
Dated: December 28, 1994
STANDARD INSURANCE COMPANY
By: /s/ Ronald E. Timpe
---------------------------------
Ronald E. Timpe, President
Page 18 - Amended and Restated Deferred Compensation Plan
<PAGE>
AGREEMENT TO PARTICIPATE IN
DEFERRED COMPENSATION PLAN FOR
SENIOR OFFICER MANAGEMENT GROUP
THIS AGREEMENT is part of and governed by that Deferred Compensation Plan
for Senior Officer Management Group adopted by the Board of Directors of
STANDARD INSURANCE COMPANY on September 27, 1976 and amended and restated as of
December 31, 1994 ("the Deferred Compensation Plan").
THIS AGREEMENT is made by and between STANDARD INSURANCE COMPANY, a life
insurance company organized and existing under the laws of the State of Oregon
(hereinafter referred to as "Standard"), and _________________________________
(hereinafter referred to as "Employee"), as follows:
1. Standard hereby employs Employee with duties as provided by the Bylaws
and Board of Directors.
2. Employee shall be entitled to Minimal Annual Salary as compensation for
services.
3. In addition to the Minimal Annual Salary as aforesaid, Employee shall
be entitled to a deferral of compensation in an amount of _ percent
(_%) of his fixed annual salary. For purposes of this Agreement, "fixed
annual salary" refers to that portion of the Minimal Annual Salary
which is payable in equal semi-monthly installments for the period
commencing January 1, 1995 and ending December 31, 1995. This deferral
shall be called the mandatory amount. The percentage figure used to
determine the mandatory amount may be changed from time to time by
action of the Board of Directors. For purposes of this paragraph, fixed
annual salary shall not include payroll taxes and fringe benefits, but
shall include any payments made on account of disability in lieu of
salary in whole or in part.
In the event of a change in Employee's fixed annual salary, the
mandatory amount becoming due thereafter shall be adjusted upwards or
downwards so that the mandatory amount shall bear the same ratio (%) to
the mandatory amount prior to the adjustment as the amount of salary
after the change bears to the amount of salary prior to the change.
4. Employee shall also be entitled to defer amounts from his Minimal
Annual Salary pursuant to the Deferred Compensation Plan. A deferral
under this paragraph shall be called the elective amount.
Page 19 - Amended and Restated Deferred Compensation Plan
<PAGE>
5. Pursuant to the Deferred Compensation Plan, Standard shall maintain in
its records a separate memorandum account of the compensation herein
deferred for Employee.
6. Pursuant to the Deferred Compensation Plan, as to each elective
deferral Standard shall credit to the separate Memorandum Account
maintained for Employee an amount equal to 4 1/2,% of the elective
amount deferred.
7. All of the terms and conditions of the Deferred Compensation Plan are
hereby incorporated by reference.
8. This Agreement is irrevocable.
9. This Agreement shall bind the heirs, executors, administrators or other
successors in interest of the parties.
EXECUTED this ____ day of December, 1994.
STANDARD INSURANCE COMPANY
By: ______________________________
Ronald E. Timpe, President
By: ______________________________
Ivy E. Lenz, Secretary
By: ______________________________
Employee
Page 20 - Amended and Restated Deferred Compensation Plan
<PAGE>
EXHIBIT 10.9
STANCORP FINANCIAL GROUP, INC.
and
[CHASE MELLON SHAREHOLDER SERVICES]
Rights Agreement
Dated as of __________, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<C> <S> <C>
1. Certain Definitions................................................... 1
2. Appointment of Rights Agreement....................................... 5
3. Issue of Rights Certificates.......................................... 5
4. Form of Rights Certificates........................................... 7
5. Countersignature and Resignation...................................... 8
6. Transfer, Split-Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Certificates....... 8
7. Exercise of Rights; Purchase Price; Expiration Date of Rights......... 9
8. Cancellation and Destruction of Rights Certificates................... 11
9. Reservation and Availability of Capital Stock......................... 11
10. Preferred Stock Record Date........................................... 13
11. Adjustment of Purchase Price, Number of Shares or Number of Rights.... 13
12. Certificate of Adjusted Purchase Price or Number of Shares............ 22
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.. 22
14. Fractional rights and Fractional shares............................... 25
15. Rights of Action...................................................... 26
16. Agreement of Rights Holders........................................... 26
17. Rights Certificate Holder Not Deemed a Shareholder.................... 27
18. Concerning the Rights Agent........................................... 28
</TABLE>
i
<PAGE>
<TABLE>
<C> <S> <C>
19. Merger or Consolidation or Change of Name of Rights Agent............. 28
20. Duties of Rights Agent................................................ 29
21. Change of Rights Agent................................................ 31
22. Issuance of New Rights Certificates................................... 32
23. Redemption............................................................ 32
24. Exchange.............................................................. 34
25. Notices............................................................... 35
26. Supplements and Amendments............................................ 36
27. Successors............................................................ 36
28. Benefits of this Agreement............................................ 36
29. Severability.......................................................... 36
30. Determinations and Actions by the Board of Directors, Etc............. 37
31. Governing Law......................................................... 37
32. Counterparts.......................................................... 37
33. Description Headings.................................................. 37
</TABLE>
ii
<PAGE>
RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of ____________, 1999 (the "Agreement"),
between StanCorp Financial Group, Inc., an Oregon corporation (the "Company"),
and [Chase Mellon Shareholder Services] (the "Rights Agent").
WITNESSETH
----------
WHEREAS, effective as of ____________, 1999, the Board of Directors of the
Company authorized and declared a dividend of one Right for each share of Common
Stock (as such terms are hereinafter defined) of the Company outstanding on
__________, 1999 (the "Record Date"), and has authorized the issuance of one
Right with respect to each share of Common Stock issued by the Company between
the Record Date and the earliest of the Distribution Date, the Redemption Date
or the Final Expiration Date (as such terms are hereinafter defined), with each
Right initially representing the right to purchase one one-hundredth of a share
of Preferred Stock (as hereinafter defined) having the rights, powers and
preferences set forth in the form of Amendment to the Company's Articles of
Incorporation attached hereto as Exhibit A, upon the terms and subject to the
conditions herein set forth (the "Rights");
NOW THEREFORE, in consideration of the mutual agreements set forth herein,
the parties hereby agree as follows:
1. Certain Definitions. For purposes of this Agreement, the following
-------------------
terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter, defined) of such Person, shall become the Beneficial
Owner (as such term is hereinafter defined) of 15% or more of the shares of
Common Stock then outstanding; provided, however, that an Acquiring Person shall
-------- -------
not include the Company, any Subsidiary (as such term is hereinafter defined) of
the Company or any employee benefit plan of the Company or of any Subsidiary of
the Company, or any entity holding shares of Common Stock for or pursuant to the
terms of any such plan. Notwithstanding the foregoing, no Person shall be
deemed to be an "Acquiring Person" either (i) as the result of an acquisition of
Common Stock by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares Beneficially Owned by such Person
to 15% or more of the Common Stock of the Company then outstanding; provided,
--------
however, that if a Person shall become the Beneficial Owner of 15% or more of
- -------
the Common Stock then outstanding by reason of share purchases by the Company
and shall, after such share purchases by the Company, become the Beneficial
Owner of any additional shares of Common Stock, then such Person shall be deemed
to be an "Acquiring Person," or (ii) if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an
<PAGE>
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), has become such inadvertently, and such Person divests as
promptly as practicable a sufficient number of shares of Common Stock so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph (a).
(b) "Act" shall mean the Securities Act of 1933, as amended.
(c) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act (as such term is hereinafter defined), as in effect on the date of
this Agreement.
(d) "Agreement" shall mean this Rights Agreement.
(e) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to beneficially own any, securities:
(i) which such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the power to vote or dispose of, including
pursuant to any agreement, arrangement or understanding, whether or not in
writing;
(ii) which such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the right to acquire voting or dispositive
power over (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding
(whether or not in writing), or upon the exercise of conversion rights,
exchange rights, rights, warrants or options, or otherwise; or
(iii) which are beneficially owned, directly or indirectly, by any other
Person (or any Affiliate or Associate thereof) with which such Person (or
any of such Person's Affiliates or Associates) has any agreement
arrangement or understanding, whether or not in writing, for the purpose of
acquiring, holding, voting or disposing of any securities of the Company;
provided, however, that nothing in this paragraph (e) shall cause a person to be
- -------- -------
the "Beneficial Owner" of, or to "beneficially own," (A) any securities that may
be issued on the exercise of Rights, (B) any security if the agreement,
arrangement or understanding to vote such security arises solely from a
revocable proxy or consent given to such Person in response to a public proxy or
consent solicitation made pursuant to, and in accordance with, the applicable
rules and regulations of the Exchange Act, (C) securities tendered pursuant to a
tender or exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, or (D) any securities
2
<PAGE>
acquired by a Person engaged in business as an underwriter of securities through
such Person's participation in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such acquisition. For all
purposes of this Agreement, any calculation of the number of shares of Common
Stock outstanding at any particular time for purposes of determining the
particular percentage of such outstanding shares of Common Stock of which any
Person is the Beneficial Owner shall be made in accordance with the last
sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the
Exchange Act.
(f) "Business Day" shall mean any day other than a Saturday, a Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(g) "Close of business" on any given date shall mean 5:00 p.m., New York
time, on such date; provided, however, that if such date is not a Business Day,
-------- -------
it shall mean 5:00 p.m., New York time, on the next succeeding Business Day.
(h) "Common Stock" shall mean the Common Stock of the Company. The term
"common stock" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting power
of such other Person together with all rights and benefits (however denominated
or constituted) relating to such common stock (including, without limitation any
rights or warrants to acquire additional shares of such common stock or other
securities or assets, or to participate in any trust for the benefit of holders
of such shares, or to share in the benefits of any agreements or other
arrangements for the benefit of such holders), whether or not such rights are
yet exercisable, and together with any other securities which are represented by
the certificates for such common stock or are transferred in connection with
transfers of such common stock.
(i) "Common Stock Equivalents" shall have the meaning set forth in Section
11(a)(iii).
(j) "Current Per Share Market Price" shall have the meaning set forth in
Section 11(d).
(k) "Current Value" shall have the meaning set forth in Section 11(a)(iii).
(l) "Distribution Date" shall have the meaning set forth in Section 3(a).
(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
3
<PAGE>
(n) "Final Expiration Date" shall have the meaning set forth in Section
7(a).
(o) "Person" shall mean any individual, firm, corporation, partnership or
other entity and shall include any successor (by merger or otherwise) of such
entity.
(p) "Preferred Stock" means Series A Preferred Shares of the Company and,
to the extent that there is not a sufficient number of Series A Preferred Shares
authorized to permit the full exercise of the Rights, any other series of
Preferred Shares of the Company designated for such purpose containing terms
substantially similar to the terms of the Series A Preferred Shares.
(q) "Preferred Stock Equivalents" shall have the meaning set forth in
Section 11(b).
(r) "Principal Party" shall have the meaning set forth in Section 13(b).
(s) "Proposed Acquiror" shall mean any Person who has proposed or publicly
announced an intention to propose a transaction that, if consummated, would
cause a Stock Acquisition Date or any Section 13 Event to occur.
(t) "Purchase Price" shall mean the dollar amount payable upon exercise of
one Right to acquire the number of one one-hundredths of a share of Preferred
Stock or other securities or assets for which the Right is then exercisable and
shall initially be the price set forth in Section 7(b).
(u) "Record Date" shall have the meaning set forth in the WHEREAS clause at
the beginning of this Agreement.
(v) "Redemption Date" shall have the meaning set forth in Section 7(a).
(w) "Redemption Price" shall have the meaning set forth in Section 23(a).
(x) "Rights" shall have the meaning set forth in the WHEREAS clause at the
beginning of this Agreement.
(y) "Rights Certificate" shall have the meaning set forth in Section 3(a).
(z) "Section 13 Event" shall mean any event described in Section 13(a).
4
<PAGE>
(aa) "Spread" shall have the meaning set forth in Section 11(a)(iii).
(ab) "Stock Acquisition Date" shall mean the first date of public
announcement (including, without limitation, the date a report is filed pursuant
to Section 13(d) of the Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become an Acquiring Person.
(ac) "Subsidiary" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
(ad) "Substitution Period" shall have the meaning set forth in Section
11(a)(iii).
(ae) "Trading Day" shall have the meaning set forth in Section 11(d).
2. Appointment of Rights Agent. The Company hereby appoints the Rights
---------------------------
Agent for the Company in accordance with the terms and conditions hereof, and
the Rights Agent hereby accepts such appointment. The Company may from time to
time appoint such co-Rights Agents as it may deem necessary or desirable.
3. Issue of Rights Certificates.
----------------------------
(a) Until the earlier of (i) the close of business on the tenth day after
the Stock Acquisition Date (or, if the tenth day after the Stock Acquisition
Date is prior to the Record Date, the Record Date) or (ii) the close of business
on the tenth day after the date that a tender or exchange offer by any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or of any Subsidiary of the Company, or any Person or entity
organized, appointed or established by the Company for or pursuant to the terms
of any such plan) is first published or sent or given within the meaning of Rule
14d-2(a) of the General Rules and Regulations under the Exchange Act, if upon
consummation thereof, such Person would be the Beneficial Owner of 15 percent or
more of the shares of Common Stock then outstanding (the earliest of (i) and
(ii) being herein referred to as the "Distribution Date"), (w) the Rights will
be evidenced by the certificates for the Common Stock registered in the names of
the holders of the Common Stock (which certificates shall also be deemed to be
certificates for Rights) and not by separate Rights Certificates, (x) the Rights
and the right to receive Rights Certificates will be transferable only in
connection with the transfer of the underlying Common Stock and any transfer of
Common Stock shall also constitute the transfer of the associated Rights
represented by the same certificate, (y) in the event the Company purchases or
acquires any Common Stock after the Record Date but prior to the Distribution
Date, any Rights associated with such acquired Common Stock shall be deemed
canceled and retired so that the Company shall not be entitled to exercise any
Rights associated with shares of Common Stock that are no longer outstanding,
and (z) in the event the Company issues any Common Stock after the Record Date
but prior to the earliest of the Distribution Date,
5
<PAGE>
the Redemption Date or the Final Expiration Date, the Company shall issue one
Right for each such newly issued share of Common Stock (subject to adjustment as
provided in Section 11(h)) which Right shall be evidenced by the certificate for
the associated share of Common Stock. As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights Agent
will, if requested, send) by first-class, postage-prepaid mail, to each record
holder of shares of Common Stock as of the close of business on the Distribution
Date, at the address of such holder shown on the records of the Company, a
Rights Certificate, in substantially the form of Exhibit B hereto (a "Rights
Certificate"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section
11(h), at the time the Rights Certificates are distributed the Company shall
make the necessary and appropriate rounding adjustments pursuant to Section
14(a) so that Rights Certificates are distributed representing only whole
numbers of Rights and cash is paid in lieu of fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) As soon as practicable following the Record Date, the Company will send
a copy of a Summary of Rights to Purchase Preferred Stock, [in substantially the
form of Exhibit C] (the "Summary of Rights"), by first-class, postage-prepaid
mail, to each record holder of shares of Common Stock as of the close of
business on the Record Date, at the address of such holder shown on the records
of the Company.
(c) All Common Stock certificates which are issued, either upon an original
issuance by the Company or upon a transfer by a holder, after the Record Date
but prior to the earliest of the Distribution Date, the Redemption Date or the
Final Expiration Date, shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights set forth in a Rights Agreement between StanCorp
Financial Group, Inc. (the "Company") and [Chase Mellon Shareholder
Services] dated as of __________, 1999 (the "Rights Agreement"), the
terms of which are incorporated herein by reference and a copy of
which is on file at the principal executive offices of the Company.
Under certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. The Company will mail to the
holder of this certificate a copy of the Rights Agreement without
charge after receipt of a written request therefor. Under certain
circumstances, Rights beneficially owned by Acquiring Persons or their
Affiliates or Associates (as
6
<PAGE>
such terms are defined in the Rights Agreement), and Rights previously
owned by such Persons, may become null and void.
4. Form of Rights Certificates.
---------------------------
(a) The Rights Certificates (and the form of election to purchase and form
of assignment to be printed on the reverse thereof) shall be substantially the
same as Exhibit B hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or with
any rule or regulation made pursuant thereto or with any rule or regulation of
any stock exchange on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 11 and Section 22, the
Rights Certificates, whenever distributed, shall entitle the holders thereof to
purchase for the Purchase Price such number of one one-hundredths of a share of
Preferred Stock as shall be set forth therein, but the amount and type of
securities purchasable upon exercise and the Purchase Price shall be subject to
adjustment as provided herein.
(b) Any Rights Certificate issued pursuant to Section 3 hereof that
represents Rights beneficially owned by (i) an Acquiring Person or any Associate
or Affiliate of an Acquiring Person, (ii) any other Person if such Rights
formerly were beneficially owned by an Acquiring Person (or by an Associate or
Affiliate of such Acquiring Person) at a time after the Acquiring Person became
an Acquiring Person, or (iii) a transferee of Rights from an Acquiring Person
(or from any Associate or Affiliate thereof) who became a transferee prior to or
concurrently with the Acquiring Person becoming an Acquiring Person and receives
such Rights pursuant to either (A) a transfer (whether or not for consideration)
from the Acquiring Person (or its Affiliate or Associate) to holders of equity
interests in such Acquiring Person (or its Affiliate or Associate) or to any
Person with whom such Acquiring Person (or its Affiliate or Associate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, or (B) a transfer which the Board of Directors has determined is part of
a plan, arrangement or understanding that has as a primary purpose or effect the
avoidance of Section 7(e), and any Rights Certificate issued pursuant to Section
6, 7(d) or 22 upon transfer, exchange, replacement or adjustment of any other
Rights Certificate referred to in this sentence, shall contain the following
legend:
The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights
Certificate and the Rights represented hereby may become null and void
in
7
<PAGE>
the circumstances specified in Section 7(e) of the Rights Agreement;
provided, however, that the Rights Agent shall not have any responsibility to
- -------- -------
ascertain the existence of facts that would require the imposition of such
legend but shall be required to impose such legend only if instructed to do so
by the Company or if a holder fails to certify upon transfer or exchange in the
space provided on the Rights Certificate that such holder is not an Acquiring
Person or an Affiliate or Associate of an Acquiring Person.
5. Countersignature and Registration. The Rights Certificates shall be
---------------------------------
executed on behalf of the Company by its Chairman of the Board, Chief Executive
Officer, President or any Vice President, either manually or by facsimile
signature, and shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Rights Certificates
shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless countersigned. In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Rights Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the person who signed such Rights Certificates had not ceased
to be such officer of the Company; and any Rights Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its principal offices, books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates and the date of
each of the Rights Certificates.
6. Transfer, Split-Up, Combination and Exchange of Rights Certificates;
-------------
Mutilated, Destroyed, Lost or Stolen Certificates.
--------------------------------------------------
(a) Subject to the provisions of Sections 4(b), 7(e) and 14, at any time
after the close of business on the Distribution Date, and at or prior to the
close of business on the earlier of the Redemption Date or the Final Expiration
Date, any Rights Certificate or Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Certificates, entitling
the registered holder to purchase a like number of shares of Preferred Stock or
other securities or property as the Rights Certificate or Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights
8
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Agent and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Sections 4(b), 7(e) and 14,
countersign and deliver to the person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split-up, combination or
exchange of Rights Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Rights Certificate so lost, stolen, destroyed
or mutilated.
7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
-------------------------------------------------------------
(a) At any time after the Distribution Date and at or prior to the earlier
of (i) the close of business on __________, 2009 (the "Final Expiration Date")
or (ii) the time at which the Rights are redeemed as provided in Section 23 (the
"Redemption Date"), subject to Section 7(e), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions on
exercisability set forth in Sections 9(c), 11(a)(iii)) and 23(a) in whole or in
part upon surrender of the Rights Certificate, with the form of election to
purchase and certificate on the reverse side thereof duly executed, to the
Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each Right that is exercised.
(b) The Purchase Price to be paid on exercise of each Right shall initially
be $______ and shall be payable in lawful money of the United States of America
in accordance with paragraph (c) below. Each Right shall initially entitle the
holder to acquire one one-hundredth of a share of Preferred Stock upon exercise
of the Right. The Purchase Price and the number of shares of Preferred Stock or
other
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<PAGE>
securities or assets for which a Right is exercisable shall be subject to
adjustment as provided in Sections 11 and 13.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by payment of
the Purchase Price for the shares to be purchased and an amount equal to any
applicable transfer tax in cash, or by certified check or cashier's check
payable to the order of the Company, the Rights Agent shall, subject to Section
20(k), thereupon promptly (i) requisition from any transfer agent of the
Preferred Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the number of shares of Preferred Stock to be purchased and the
Company hereby authorizes its transfer agent to comply with all such requests,
(ii) when appropriate, requisition from the Company the amount of cash to be
paid in lieu of issuance of fractional shares in accordance with Section 14,
(iii) after receipt of the certificates for Preferred Stock cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, deliver such cash to or upon
the order of the registered holder of such Rights Certificate. In the event
that the Company is obligated to issue other securities (including, but not
limited to, debt securities) of the Company, and/or distribute other property
pursuant to Section 11, the Company covenants that it will make all arrangements
necessary so that such other securities and/or property are available for
distribution by the Rights Agent, if and when appropriate.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
Rights equivalent to the Rights remaining unexercised shall be issued by the
Rights Agent to the registered holder of such Rights Certificate or to his duly
authorized assigns, subject to the provisions of Section 14.
(e) Notwithstanding any other provision of this Agreement, from and after
the occurrence of a Stock Acquisition Date, any Rights beneficially owned by (i)
an Acquiring Person, or any Associate or Affiliate of an Acquiring Person, (ii)
any other Person if such Rights formerly were beneficially owned by an Acquiring
Person (or by an Associate or Affiliate of such Acquiring Person) at a time
after such Acquiring Person became an Acquiring Person, or (iii) a transferee of
Rights from an Acquiring Person (or from any Associate or Affiliate thereof) who
became a transferee prior to or concurrently with the Acquiring Person becoming
an Acquiring Person and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person (or its Affiliate
or Associate) to holders of equity interests in such Acquiring Person (or its
Affiliate or Associate) or to any Person with whom the Acquiring Person (or its
Affiliate or Associate) has any continuing agreement, arrangement or
understanding regarding the transferred Rights, or (B) a transfer which the
Board of Directors has determined is part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of this
Section 7(e), shall become
10
<PAGE>
null and void and any holder of such Rights shall thereafter have no right to
exercise such Rights under any provision of this Agreement. The Company shall
use all reasonable efforts to ensure that the provisions of this Section 7(e)
and of Section 4(b) are complied with, but shall have no liability to any holder
of Rights Certificates or any other Person as a result of its failure to make
any determinations with respect to an Acquiring Person, or any of its
Affiliates, Associates or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the surrendered Right Certificate and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
8. Cancellation and Destruction of Rights Certificates. All Rights
---------------------------------------------------
Certificates surrendered for the purpose of exercise, transfer, split-up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
9. Reservation and Availability of Capital Stock.
---------------------------------------------
(a) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Preferred Stock (and,
following the occurrence of a Stock Acquisition Date or a Section 13 Event, out
of its authorized and unissued shares of Common Stock and/or other securities),
the number of shares of Preferred Stock (and, following the occurrence of a
Stock Acquisition Date or a Section 13 Event, Common Stock and/or other
securities) that, as provided in this Agreement, will be sufficient to permit
the exercise in full of all outstanding Rights; provided, however, that shares
issuable pursuant to Section 11(a)(ii) shall be reserved only following the
occurrence of an event described in that section.
(b) If any shares of Preferred Stock are listed on a national securities
exchange, and so long as the shares of Preferred Stock (and, following the
occurrence of a Stock Acquisition Date or a Section 13 Event, Common Stock
and/or other securities) issuable and deliverable upon the exercise of the
Rights may be listed on that
11
<PAGE>
exchange, the Company shall use its best efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such issuance to
be listed on the exchange upon official notice of issuance upon exercise.
(c) The Company shall use its best efforts (i) to file, as soon as
practicable following a Stock Acquisition Date and the determination by the
Company in accordance with Section 11(a)(iii) of the consideration to be
delivered by the Company upon exercise of the Rights, or as soon as is required
by law following the Distribution Date, as the case may be, a registration
statement under the Act with respect to the securities purchasable upon exercise
of the Rights on an appropriate form, (ii) to cause such registration statement
to become effective as soon as practicable after such filing, and (iii) to cause
such registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act) until the earlier of (A) the date as of
which the Rights are no longer exercisable for such securities, and (B) the date
of the expiration of the Rights. The Company will also take such action as may
be appropriate under or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend the exercisability of the Rights, for a
period of time not to exceed 90 days after the date the Company first becomes
obligated to use its best efforts to file a registration statement as set forth
in clause (i) of the first sentence of this Section 9(c), in order to prepare
and file such registration statement and permit it to become effective. Upon
any such suspension, the Company shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction, unless the requisite qualification
in such jurisdiction shall have been obtained and until a registration statement
has been declared effective.
(d) The Company covenants and agrees that it will take all such action as
may be necessary to ensure that all shares of Preferred Stock (and, following
the occurrence of a Stock Acquisition Date or Section 13 Event, Common Stock
and/or other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates for such shares of such shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable shares.
(e) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any shares of Preferred Stock or other securities upon the exercise of Rights.
The Company shall not, however, be required to pay any transfer tax which may be
payable in respect of any transfer, split-up, combination or exchange of Rights
Certificates, or any issuance or delivery of certificates for shares in a name
other than that of the registered holder of the Rights Certificate evidencing
Rights surrendered for exercise, and shall not be required to issue or deliver
any certificates for shares upon the exercise of any Rights until any such tax
shall have been paid (any such tax being payable by the holder of
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<PAGE>
such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
10. Preferred Stock Record Date. Each person in whose name any
---------------------------
certificate for a number of one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
-------- -------
date of such surrender and payment is a date upon which the Preferred Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are closed, such person shall be deemed to have become the record holder
of such shares (fractional or otherwise) on, and such certificate shall be
dated, the next succeeding Business Day on which the Preferred. Stock (or
Common Stock and/or other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a
shareholder of the Company with respect to shares for which the Rights shall be
exercisable, including, without limitation, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.
11. Adjustment of Purchase Price, Number of Shares or Number of Rights.
------------------------------------------------------------------
The Purchase Price, the number and kind of securities covered by each Right and
the number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Stock payable in
Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into a smaller number of shares of
Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the number and kind of shares of capital
stock issuable at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, shall
be proportionately adjusted so that the holder of any Right exercised after
such time shall be entitled to receive the aggregate number and kind of
shares of capital stock which, if such Right had been exercised immediately
prior to such date and at a time when the Preferred Stock transfer books of
the Company were open, he or she would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. The adjustments provided for in this
Section 11(a)(i) shall be made successively
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<PAGE>
whenever such a dividend is declared or paid or such a subdivision,
combination or reclassification is effected. If an event occurs which would
require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii).
(ii) In the event that a Stock Acquisition Date occurs, proper provision
shall be made so that each holder of a Right, except as provided below and
in Section 7(e), shall thereafter have a right to receive, upon exercise
thereof and payment of the Purchase Price in accordance with the terms of
this Agreement, in lieu of a number of one one-hundredths of a share of
Preferred Stock, such number of shares of Common Stock as shall equal the
result obtained by dividing the then current Purchase Price by 50 percent
of the Current Per Share Market Price of the Common Stock (determined
pursuant to Section 11(d)) on the Stock Acquisition Date (such number of
shares being the "Adjustment Shares").
(iii) In the event the number of shares of Common Stock which are
authorized by the Company's articles of incorporation but not outstanding
or reserved for issuance for purposes other than upon exercise of the
Rights are not sufficient to permit the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company shall (A) determine the excess of (1) the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value") over (2)
the then current Purchase Price (such excess, the "Spread"), and (B) with
respect to each Right, make adequate provision to substitute for the
Adjustment Shares, upon payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the applicable Purchase Price, (3) shares of Common
Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock that the Board
of Directors of the Company has deemed to have the same value as shares of
Common Stock ("Common Stock Equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate value
has been determined by the Board of Directors of the Company based upon the
advice of a nationally recognized investment banking firm selected by the
Board of Directors of the Company; provided, however, if the Company shall
-------- -------
not have made adequate provision to deliver value pursuant to clause (B)
above within 30 days following the Stock Acquisition Date, then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right
and without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available) and then, if necessary, cash, which shares and/or
cash have an aggregate value equal to the Spread. If the Board of
Directors of the Company shall determine in good faith that it is likely
that sufficient additional shares of Common Stock could be authorized for
issuance upon exercise in full of the Rights, the 30-day period set forth
above
14
<PAGE>
may be extended to the extent necessary, but not more than 90 days after
the Stock Acquisition Date, in order that the Company may seek shareholders
approval for the authorization of such additional shares (such period, as
it may be extended as so permitted, the "Substitution Period"). To the
extent the Company determines that some action must be taken pursuant to
the first or second sentences of this Section 11(a)(iii), the Company (x)
shall provide that such action shall apply uniformly to all outstanding
Rights other than those that are void as provided in Section 7(e), and (y)
may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant
to such first sentence and to determine the value thereof. In the event of
any such suspension, the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as
well as a public announcement at such time as the suspension is no longer
in effect. For purposes of this Section 11(a)(iii), the value of the Common
Stock shall be the Current Per Share Market Price (as determined pursuant
to Section 11(d) hereof) of the Common Stock on the date of the Stock
Acquisition Date and the value of any Common Stock Equivalent shall be
deemed to have the same value as the Common Stock on such date.
(b) In case the Company shall at any time after the date of this Agreement
fix a record date for the issuance of rights, options or warrants to all holders
of Preferred Stock entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Stock (or shares
having the same rights, privileges and preferences as the Preferred Stock
("Preferred Stock Equivalents")) or securities convertible into Preferred Stock
or Preferred Stock Equivalents at a price per share of Preferred Stock or
Preferred Stock Equivalent (or having a conversion price per share, if a
security convertible into Preferred Stock or Preferred Stock Equivalents) less
than the then Current Per Share Market Price of the Preferred Stock (as defined
in Section 11(d)) on such record date, the number of shares of Preferred Stock
for which each Right shall be exercisable after such record date shall
determined by multiplying the number of shares of Preferred Stock for which each
Right was exercisable immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date plus the number of additional shares of Preferred Stock
and/or Preferred Stock Equivalents to be offered for subscription or purchase
(or into which the convertible securities so to be offered are initially
convertible) and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of shares of
Preferred Stock which the aggregate offering price of the total number of shares
of Preferred Stock and/or Preferred Stock Equivalents so to be offered (and/or
the aggregate initial conversion price of convertible securities so to be
offered) would purchase at such Current Per Share Market Price. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board of Directors, whose determination shall be
described in a statement filed with
15
<PAGE>
the Rights Agent. Preferred Stock owned by or held for the account of the
Company shall not be deemed outstanding for the purpose of any such computation.
Such adjustment shall be made successively whenever such a record date is fixed;
and in the event that such rights, options or warrants are not so issued, the
number of shares of Preferred Stock for which each Right shall be exercisable
shall be readjusted to be the number of shares of Preferred Stock for which each
Right would then be exercisable if such record date had not been fixed; and to
the extent such rights, options or warrants are issued but not exercised prior
to their expiration, the number of shares for which each Right shall be
exercisable shall be readjusted to be the number which would have resulted from
the adjustment provided for in this Section 11(b) if only the rights or warrants
that were exercised had been issued.
(c) (i) In case the Company shall at any time after the date of this
Agreement fix a record date for the making of a distribution to all holders
of Preferred Stock (including any such distribution made in connection with
a consolidation or merger in which the Company is the continuing or
surviving corporation) of evidences of indebtedness or assets (other than a
regular quarterly cash dividend or a dividend payable in shares of
Preferred Stock but including any dividend payable in stock other than
Preferred Stock) or subscription rights or warrants (excluding those
referred to in Section 11(b)), the number of shares of Preferred Stock for
which each Right shall be exercisable after such record date shall be
determined by multiplying the number of shares of Preferred Stock for which
each Right was exercisable immediately prior to such record date by a
fraction, the numerator of which shall be the then Current Per Share Market
Price of the Preferred Stock (as defined in Section 11(d)) on such record
date, and the denominator of which shall be such Current Per Share Market
Price of the Preferred Stock, less the fair market value (as determined in
good faith by the Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent) of the portion of the
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to one share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the number
of shares of Preferred Stock for which each Right shall be exercisable
shall be readjusted to be the number of shares of Preferred Stock for which
each Right would then be exercisable if such record date had not been
fixed.
(ii) In case the Company shall at any time after the date of this Agreement
fix a record date for the making of a distribution to all holders of Common
Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a regular
quarterly cash dividend or a dividend payable in shares of Common Stock) or
subscription rights or warrants (excluding those referred to in Section
11(h)(ii)), the number of shares of Preferred Stock for which each Right
shall be
16
<PAGE>
exercisable after such record date shall be determined by multiplying the
number of shares of Preferred Stock for which each Right was exercisable
immediately prior to such record date by a fraction, the numerator of which
shall be the then Current Per Share Market Price of the Common Stock (as
defined in Section 11(d)) on such record date, and the denominator of which
shall be such Current Per Share Market Price of the Common Stock, less the
fair market value (as determined in good faith by the Board of Directors,
whose determination shall be described in a statement filed with the Rights
Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
share of Common Stock. Such adjustments shall be made successively whenever
such a record date is fixed; and in the event that such distribution is not
so made, the number of shares of Preferred Stock for which each Right shall
be exercisable shall be readjusted to be the number of shares of Preferred
Stock for which each Right would then be exercisable if such record date
had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "Current Per
Share Market Price" of common stock (including Common Stock) on any date
shall be deemed to be the average of the daily closing prices per share of
the common stock for the 30 consecutive Trading Days (as such term is
hereinafter defined) immediately prior to such date; provided, however,
-------- -------
that in the event the Current Per Share Market Price of common stock is
determined during a period following the announcement by the issuer of such
common stock of (A) a dividend or distribution on such common stock payable
in such common stock or securities convertible into such common stock, or
(B) any subdivision, combination or reclassification of such common stock,
and prior to the expiration of 30 Trading Days after the ex-dividend date
for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the Current
Per Share Market Price shall be appropriately adjusted to take into account
such event. The closing price for each day shall be the last sale price as
reported by the New York Stock Exchange (the "NYSE") or such other system
then in use, or, if on any such date the common stock is not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the common
stock selected by a majority of the Board of Directors. The term "Trading
Day" shall mean a day on which the principal national securities exchange
on which the common stock is listed or admitted to trading is open for the
transaction of business or, if the common stock is not listed or admitted
to trading on any national securities exchange, a Business Day. If the
common stock is not publicly held or so listed or traded for the 30-day
period, "Current Per Share Market Price" shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent.
17
<PAGE>
(ii) For the purpose of any computation hereunder, the "Current Per Share
Market Price" of Preferred Stock shall be determined in the same manner as
set forth above for the Common Stock in clause (i) of this Section 11(d)
(other than the last sentence thereof). If the Current Per Share Market
Price of Preferred Stock cannot be determined in the manner provided above
or if the Preferred Stock is not publicly held or listed or traded in a
manner described in clause (i) of this Section 11(d), the "Current Per
Share Market Price" of Preferred Stock shall be conclusively deemed to be
an amount equal to the Current Per Share Market Price of the Common Stock
multiplied by the Adjustment Number as that term is defined in Section 2 of
the Amendment to the Company's Articles of Incorporation, as amended,
designating the Preferred Stock (initially 100). If neither the Common
Stock nor the Preferred Stock is publicly held or so listed or traded,
"Current Per Share Market Price" of Preferred Stock shall mean the fair
value per share as determined in good faith by the Board of Directors of
the Company, whose determination shall be described in a statement filed
with the Rights Agent and shall be conclusive for all purposes. For all
purposes of this Agreement, the current market price of one one-hundredth
of a share of Preferred Stock shall be equal to the Current Per Share
Market Price of one share of Preferred Stock divided by 100.
(e) No adjustment in the Purchase Price or the number of shares for which a
Right is exercisable shall be required unless such adjustment would require an
increase or decrease of at least one percent in the Purchase Price or the number
of shares for which a Right is exercisable; provided, however, that any
-------- -------
adjustments which by reason of this Section 11(e) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent or to
the nearest ten-thousandth of a share of Common Stock or one-millionth of a
share of Preferred Stock, as the case may be. Notwithstanding the first
sentence of this Section 11(e), any adjustment required by this Section 11 shall
be made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the date of the expiration of
the right to exercise any Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a), the
holder of any Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than Preferred Stock, thereafter
the number of such other shares so receivable upon exercise of any Right shall
be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred Stock
contained in Section 11 and the provisions of Sections 7, 9, 10, 13 and 14 with
respect to the Preferred Stock shall apply on like terms to any such other
shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price or the number of shares of Preferred Stock
for which a Right is exercisable hereunder shall evidence the right to purchase,
at the
18
<PAGE>
adjusted Purchase Price, the number of one one-hundredths of a share of
Preferred Stock purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(h) (i) In the event the Company shall, after the date of this Agreement
and prior to the Distribution Date, (A) declare a dividend on the Common
Stock payable in Common Stock, (B) subdivide the outstanding Common Stock,
(C) combine the outstanding Common Stock into a smaller number of shares of
Common Stock, or (D) issue any shares of Common Stock in a reclassification
of the Common Stock (including any such reclassification in connection with
a consolidation or merger in which the Company is the continuing or
surviving corporation), the number of Rights associated with each share of
Common Stock then outstanding, and the number of Rights to be associated
with each share of Common Stock which may thereafter become outstanding
prior to the Distribution Date, shall be proportionately adjusted so that
the number of Rights associated with each share of Common Stock following
any such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Common Stock immediately prior to such
event by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event.
(ii) In the event the Company shall, after the date of this Agreement and
prior to the Distribution Date, fix a record date for the issuance of
rights, options or warrants to all holders of Common Stock entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Common Stock or securities convertible into
Common Stock at a price per share of Common Stock (or having a conversion
price per share, if a security convertible into Common Stock) less than the
then Current Per Share Market Price of the Common Stock (as defined in
Section 11(d)) on such record date, the number of Rights associated with
each share of Common Stock then outstanding, and the number of Rights to be
associated with each share of Common Stock which may thereafter become
outstanding prior to the Distribution Date, shall be proportionately
adjusted so that the number of Rights associated with each share of Common
Stock after such record date shall be determined by multiplying the number
of Rights associated with each share of Common Stock immediately prior to
such record date by a fraction, the numerator of which shall be the number
of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate offering price of the total
number of shares of Common Stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered)
would purchase at such Current Per Share Market Price and the denominator
of which shall be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of
19
<PAGE>
Common Stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible). In case
such subscription price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights
Agent. Common Stock owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed.
In the event that such rights, options or warrants are not so issued, the
number of Rights associated with each share of Common Stock shall be
readjusted to be the number of Rights that would have been associated with
each share of Common Stock if such record date had not been fixed; and to
the extent such rights, options or warrants are issued but not exercised
prior to their expiration, the number of Rights associated with each share
shall be readjusted to be the number which would have resulted from the
adjustment provided for in this Section 11(h)(ii) if only the rights,
options or warrants that were exercised had been issued.
(iii) Notwithstanding the foregoing, the adjustments provided for in this
Section 11(h) shall not be made if the Company exercises its election
provided for in Section 11(i).
(i) The Company may elect on or after the date of any event described in
clauses (A) through (D) of Section 11(h)(i) or described in Section 11(h)(ii),
if such event occurs before the Distribution Date (a "Section 11(h) Event"), to
adjust the Purchase Price and the number of shares of Preferred Stock
purchasable upon the exercise of a Right in substitution for any adjustment
under Section 11(h) in the number of Rights associated with each share of Common
Stock. If such election is made, (i) the number of Rights associated with each
share of Common Stock prior to the Section 11(h) Event shall be maintained after
the Section 11(h) Event, (ii) any new shares of Common Stock issued in the
Section 11(h) Event shall, as provided in Section 3(a), have issued with it the
number of Rights associated with each share of Common Stock outstanding, and
(iii) any combination of shares of Common Stock into a smaller number of shares
in the Section 11(h) Event shall result in a similar combination of the
associated Rights. The Purchase Price and the number of Shares of Preferred
Stock purchasable upon exercise of a Right after such adjustment shall be
determined by multiplying the Purchase Price and the number of Shares of
Preferred Stock purchasable upon exercise of a Right, respectively, in effect
immediately prior to such adjustment by a fraction, the numerator of which shall
be the number of Rights that would have been associated with each share of
Common Stock after the Section 11(h) Event if the Company had not exercised its
election provided for in this Section 11(i) and the denominator of which shall
be the number of Rights associated with each share of Common Stock immediately
prior to the Section 11(h) Event. To the extent the number of Rights that would
have been associated with each share of Common Stock if the Company had not
exercised its election provided for in this
20
<PAGE>
Section 11(i) may be readjusted as provided in the last sentence of Section
11(h)(ii), the Purchase Price and number of shares of Preferred Stock
purchasable upon exercise of a Right shall be similarly readjusted.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-hundredths of a share of Preferred Stock issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-hundredth of a
share and the number of one one-hundredths of a share of Preferred Stock which
were expressed in the initial Rights Certificates issued hereunder.
(k) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price or the number of one one-hundredths of a share of
Preferred Stock for which a Right is exercisable be made effective as of a
record date for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right exercised after
such record date the number of one one-hundredths of a share of Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of one one-hundredths of a share of Preferred
Stock and other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Purchase Price and the number of one one-
hundredths of a share of Preferred Stock for which a Right is exercisable in
effect prior to such adjustment; provided, however, that the Company shall
-------- -------
deliver to such holder a due bill or other appropriate instrument evidencing
such holder's right to receive such additional shares upon the occurrence of the
event requiring such adjustment.
(l) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board of Directors shall
determine to be advisable in order that any consolidation or subdivision of the
Preferred Stock, issuance wholly for cash of any Preferred Stock at less than
the current market price, issuance wholly for cash of Preferred Stock or
securities which by their terms are convertible into or exchangeable for shares
of Preferred Stock, dividends on Preferred Stock payable in Preferred Stock or
issuance of rights, options or warrants referred to in Section 11(b), hereafter
made by the Company to holders of its Preferred Stock shall not be taxable to
such shareholders or shall reduce the taxes payable by such shareholders.
(m) The Company covenants and agrees that, after the Distribution Date, it
will not, except as permitted by Section 23 or Section 26, take (or permit any
Subsidiary to take) any action, including any merger, consolidation or sale of
assets if at the time such action is taken or immediately thereafter it is
reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.
21
<PAGE>
12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever
----------------------------------------------------------
an adjustment is made as provided in Sections 11 and 13, the Company shall
promptly (a) prepare a certificate setting forth such adjustment and a brief
statement of the facts accounting for such adjustment, (b) file with the Rights
Agent and with each transfer agent for the Preferred Stock and the Common Stock
a copy of such certificate and (c) mail a brief summary thereof to each holder
of Rights in accordance with Section 25.
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
--------------------------------------------------------------------
(a) In the event that, following the Distribution Date, directly or
indirectly,
(i) the Company shall consolidate with, or merge with and into, any other
Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(m)) and the Company shall not be the continuing or
surviving corporation of such consolidation or merger,
(ii) any Person shall acquire shares of Common Stock of the Company in a
share exchange,
(iii) any Person (other than a Subsidiary of the Company in a transaction
that complies with Section 11(m)) shall consolidate with the Company, or
merge with and into the Company and the Company shall be the continuing or
surviving corporation of such consolidation or merger and, in connection
with such consolidation or merger, all or part of the outstanding Common
Stock shall be changed into or exchanged for stock or other securities of
any other Person or cash or any other property, or
(iv) the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50 percent or more of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any Person other than the Company or one or more of its wholly
owned Subsidiaries in a transaction that complies with Section 11(m),
then, and in each such case, proper provision shall be made so that (A) each
- ----
holder of a Right (except as otherwise provided in Section 7(e)) shall
thereafter have the right to receive, upon the exercise thereof and payment of
the Purchase Price in accordance with the terms of this Agreement, such number
of validly authorized and issued, fully paid, nonassessable and freely tradeable
shares of common stock of the Principal Party (as hereinafter defined) not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by dividing the then current
Purchase Price by 50 percent of the Current Per Share Market Price of the common
stock of the Principal Party (determined pursuant to Section 11(d)) on the date
22
<PAGE>
of consummation of the Section 13 Event, (B) the Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement, (C)
the term "Company" shall thereafter be deemed to refer to the Principal Party,
it being specifically intended that the provisions of Section 11 shall apply to
the Principal Party only following the first occurrence of a Section 13 Event,
and (D) the Principal Party shall take such steps (including, but not limited
to, the reservation of a sufficient number of shares of its common stock in
accordance with Section 9) in connection with such consummation as may be
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable, as nearly as reasonably may be, in relation to the common stock
thereafter deliverable upon the exercise of the Rights. The provisions of
Section 11(a)(ii) shall be of no effect following the first occurrence of an
event described in Section 13.
(b) The term "Principal Party" shall mean
(i) in the case of any transaction described in clause (i), (ii) or (iii)
of Section 13(a), the Person that is the issuer of any securities into
which shares of Common Stock of the Company are converted in such merger or
consolidation, or for which shares of Common Stock are exchanged in such
share exchange, and if no securities are so issued, the Person that is the
other party to such merger, consolidation or share exchange or, if there is
more than one such Person, the Person the common stock of which has the
highest aggregate current market price (determined pursuant to Section
11(d)); and
(ii) in the case of any transaction described in clause (iv) of Section
13(a), the Person that is the party receiving the greatest portion of the
assets or earning power transferred pursuant to such transaction or
transactions; or, if each Person that is a party to such transaction or
transactions receives the same portion of the assets or earning power
transferred pursuant to such transaction or transactions or if the Person
receiving the largest portion of the assets or earning power cannot be
determined, whichever Person the common stock of which has the highest
aggregate current market price (determined pursuant to Section 11(d));
provided, however, that, if the common stock of such Person is not at such time
- -------- -------
and has not been continuously over the preceding 12-month period registered
under Section 12 of the Exchange Act or such Person is not a corporation, then
(A) if such Person is a direct or indirect Subsidiary of one other Person which
has common stock so registered, "Principal Party" shall refer to such other
Person, (B) if such Person is a direct or indirect Subsidiary of another Person
but is not a direct or indirect Subsidiary of another Person which has common
stock so registered, "Principal Party" shall refer to the ultimate parent entity
of such first-mentioned Person, (C) if such Person is directly or indirectly
controlled by more than one Person, and one or more of such other persons has
common stock so registered, "Principal Party" shall refer to whichever of such
Persons that is the issuer of common stock so registered having the
23
<PAGE>
highest aggregate current market price (determined pursuant to Section 11(d)),
and (D) if such Person is directly or indirectly controlled by more than one
Person, and none of such other Persons have common stock so registered,
"Principal Party" shall refer to whichever ultimate parent entity is the
corporation having the greatest shareholders' equity or, if no such ultimate
parent entity is a corporation, shall refer to whichever ultimate parent entity
is the entity having the greatest net assets.
(c) The Company shall not enter into any transaction described in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. In
addition, the Company shall not consummate any such transaction unless the
Principal Party shall have a sufficient number of authorized shares of common
stock which have not been issued or reserved for issuance to permit the exercise
in full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and such Principal Party shall have executed and delivered
to the Rights Agent a supplemental agreement providing for the terms set forth
in this Section 13 and further providing that, as soon as practicable after
execution of such agreement, the Principal Party will
(i) prepare and file a registration statement under the Act with respect to
the securities purchasable upon exercise of the Rights on an appropriate
form, and will use its best efforts to cause such registration statement to
(A) become effective as soon as practicable after such filing, (B) remain
effective (with a prospectus at all times meeting the requirements of the
Act) until the Final Expiration Date and, as soon as practicable following
the execution of such agreement, take such action as may be required to
ensure that any acquisition of such shares of common stock upon the
exercise of the Rights complies with any applicable state security or "blue
sky" laws; and
(ii) will deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
(d) In case the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its Articles or Certificate of Incorporation or Bylaws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the consummation of a transaction referred to in this Section
13, shares of common stock of such Principal Party at less than the then Current
Per Share Market Price (determined pursuant to Section 11(d)) or securities
exercisable for, or convertible into, shares of common stock of such Principal
Party at less than the then Current Per Share Market Price (other than to
holders of Rights pursuant to this Section 13) or (ii) providing for any special
24
<PAGE>
payment, tax or similar provisions in connection with the issuance of the shares
of common stock of such Principal Party pursuant to the provisions of Section
13; then, in such event, the Company shall not consummate any such transaction
unless prior thereto the Company and such Principal Party shall have executed
and delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
applicable provision will have no effect in connection with, or as a consequence
of, the consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the Stock Acquisition Date, the
Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13. The provisions of Section
11(a)(ii) shall be of no effect following the first occurrence of a Section 13
Event.
14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights. In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Right would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For the purposes of this Section 14(a), the current
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price for any day shall be the last
sale price, or, in case no such sale takes place on such day, the average of the
high bid and low asked prices in the over-the-counter market, as reported by the
NYSE or such other system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one one-
hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredths of a share of Preferred Stock
the Company shall pay to the registered holders of Rights Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one one-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current
25
<PAGE>
market value of one one-hundredth of a share of Preferred Stock shall be one
one-hundredth of the closing price of a share of Preferred Stock (as determined
pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to
the date of such exercise.
(c) Following the occurrence of a Stock Acquisition Date or Section 13
Event, the Company shall not be required to issue fractions of shares of Common
Stock upon exercise of the Rights or to distribute certificates which evidence
fractional shares of Common Stock. In lieu of fractional shares of Common
Stock, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of current market value of one share of Common Stock. For
purposes of this Section 14(c), the current market value of one share of Common
Stock shall be the closing price of one share of Common Stock (as determined
pursuant to Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.
(d) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
15. Rights of Action. All rights of action in respect of this Agreement,
----------------
excepting the rights of action given to the Rights Agent under Section 18, are
vested in the respective registered holders of the Rights Certificates (and,
prior to the Distribution Date, the registered holders of the Common Stock); and
any registered holder of any Right Certificate (or, prior to the Distribution
Date, of Common Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Rights Certificate in the manner provided in such Rights
Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations of any Person subject to this Agreement.
16. Agreement of Rights Holders. Every holder of a Right, by accepting
---------------------------
the same, consents and agrees with the Company and the Rights Agent and with
every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Stock;
26
<PAGE>
(b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office of
the Rights Agent designated for such purpose, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and certificates
fully executed;
(c) subject to Sections 6 and 7(f), the Company and the Rights Agent may
deem and treat the Person in whose name the Rights Certificate (or, prior to the
Distribution Date, the associated Common Stock certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Right Certificates or the associated
Common Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e), shall be affected by any
notice to the contrary; and
(d) Notwithstanding anything in this Agreement to the contrary, neither the
Company nor the Rights Agent shall have any liability to any holder of a Right
or other Person as a result of its inability to perform any of its obligations
under this Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission, or any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, the Company must use its best efforts to have any
-------- -------
such order, decree or ruling lifted or otherwise overturned as soon as possible.
17. Rights Certificate Holder Not Deemed a Shareholder. No holder, as
--------------------------------------------------
such, of any Rights Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the number of one one-hundredths of a
share of Preferred Stock or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders (except as provided in Section 23(c)), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.
27
<PAGE>
18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration and execution of this Agreement and
the exercise and performance of its duties hereunder. The Company also agrees
to indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense incurred without negligence, bad faith or willful
misconduct on the part of the Rights Agent, for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability.
(b) The Rights Agent shall be protected and shall incur no liability for,
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for shares of Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of counsel as set forth in Section 20.
19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust business or stock transfer business of the Rights Agent or any
successor rights agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21. In case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Rights Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
28
<PAGE>
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
20. Duties of Rights Agent. The Rights Agent undertakes the duties and
----------------------
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively provided and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any other
Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the
29
<PAGE>
exercisability of the Rights (including the Rights becoming void pursuant to
Section 7(e) hereof) or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in this Agreement or the
ascertaining of the existence of facts that would require any such change or
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice that such change or adjustment is required);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Preferred Stock
or Common Stock to be issued pursuant to this Agreement or any Right Certificate
or as to whether any shares of Preferred Stock or Common Stock will, when
issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
any Vice President, the Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered by it in good faith in
accordance with instructions of any such officer or for any delay in acting
while waiting for those instructions. Any application by the Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken or omitted by the Rights Agent under
this Agreement and the date on or after which such action shall be taken or such
omission shall be effective. The Rights Agent shall not be liable for any
action taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five Business Days after the date
any such officer of the Company actually receives such application, unless any
such officer shall have consented in writing to an earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Rights Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer, or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not Rights Agent under this
Agreement. Nothing herein shall preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
30
<PAGE>
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.
21. Change of Rights Agent. The Rights Agent or any successor Rights
----------------------
Agent may resign and be discharged from its duties under this Agreement upon 30
days notice in writing mailed to the Company and to each transfer agent of the
Common Stock and Preferred Stock by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and to
each transfer agent of the Common Stock and Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then the registered holder of
any Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or of any State
of the United States, in good standing, which is authorized under such laws to
exercise corporate trust powers or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50 million or (b) an affiliate or subsidiary of a corporation described
in clause (a) of this sentence. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any
31
<PAGE>
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Not later than the
effective date of any such appointment the Company shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common
Stock and Preferred Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
22. Issuance of New Rights Certificates. Notwithstanding any of the
-----------------------------------
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance
or sale of Common Stock of the Company following the Distribution Date and prior
to the Final Expiration Date, the Company (a) shall, with respect to Common
Stock of the Company so issued or sold pursuant to the exercise of stock options
or under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities issued by the Company prior to the Distribution Date, and
(b) may, in any other case, if deemed necessary or appropriate by the Board of
Directors, issue Rights Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) no
-------- -------
such Rights Certificate shall be issued if, and to the extent that, the Company
shall be advised by counsel that such issuance would create a significant risk
of material adverse tax consequences to the Company or the person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.
23. Redemption.
----------
(a) The Board of Directors of the Company may at its option, at any time
prior to the earliest of (i) the close of business on the tenth day following a
Stock Acquisition Date (or, if the Stock Acquisition Date shall have occurred
prior to the Record Date, the close of business on the tenth day following the
Record Date) or (ii) the Final Expiration Date, redeem all but not less than all
the then outstanding Rights at a redemption price of $.001 per Right,
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"). Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable
as provided in Section 11(a)(ii) until such time as the Company's right of
redemption hereunder has expired.
32
<PAGE>
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights (or at such later time as shall be
specified in the resolution taking such action), and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Promptly after the action of the Board of Directors ordering
the redemption of the Rights, the Company shall give notice of such redemption
to the holders of the then outstanding Rights and the Rights Agent by mailing
such notice to all such holders at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the shares of Common Stock. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made. The
Company may, at its option, pay the Redemption Price in cash, shares of Common
Stock (based on the Current Per Share Market Price, as defined in Section 11(d),
of the Common Stock at the time of redemption) or any other form of
consideration deemed appropriate by the Board of Directors.
(c) In case the Company shall propose (a) to pay any dividend payable in
stock of any class to the holders of its Preferred Stock or Common Stock or to
make any other distribution to the holders of its Preferred Stock or Common
Stock (other than a regular quarterly cash dividend), (b) to offer to the
holders of its Preferred Stock or Common Stock rights or warrants to subscribe
for or to purchase any additional shares of Preferred Stock or Common Stock or
shares of stock of any class or any other securities, (c) to effect any
reclassification of its Preferred Stock or Common Stock (other than a
reclassification involving only the subdivision of outstanding shares of
Preferred Stock or Common Stock), (d) to effect any consolidation, merger or
share exchange into or with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(m)), (e) to effect any
sale or other transfer or to permit one or more of its Subsidiaries to effect
any sale or other transfer, in one or more related transactions, of 50 percent
or more of the assets or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(m)), or (f) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to each holder of a
Rights Certificate, to the extent feasible and in accordance with Section 25, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, exchange, sale,
transfer, liquidation, dissolution, or winding up is to take place and the date
of participation therein by the holders of the Preferred Stock or Common Stock
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (a) or (b) above at least 20 days prior to the
record date for determining holders of the Preferred Stock or Common Stock for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed
33
<PAGE>
action or the date of participation therein by the holders of the Preferred
Stock or Common Stock whichever shall be the earlier.
In case a Stock Acquisition Date shall occur, the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, in
accordance with Section 25, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders of Rights
under Section 11(a)(ii).
24. Exchange.
--------
(a) The Board of Directors of the Company may, at its option, at any time
and from time to time after a Stock Acquisition Date, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 7(e)) for shares of
Common Stock or Common Stock Equivalents, or any combination thereof, at an
exchange ratio of one share of Common Stock, or such number of Common Stock
Equivalents or units representing fractions thereof as would be deemed to have
the same value as one share of Common Stock, per Right, appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio").
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of Common Stock and/or Common
Stock Equivalents equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange; provided, however, that the failure to give, or any defect
-------- -------
in, such notice shall not affect the validity of such exchange. The Company
promptly shall mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of exchange will state the method by which the exchange of the shares of Common
Stock and/or Common Stock Equivalents for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section
7(e)) held by each holder of Rights.
(c) In the event that the number of shares of Common Stock which are
authorized by the Company's Articles of Incorporation as amended but not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights are not sufficient to permit an exchange of Rights as contemplated in
accordance with this Section 24, the Company may, at its option, take all such
action as may be
34
<PAGE>
necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the company
shall pay to the registered holders of Rights with regard to which such
fractional shares of Common Stock would otherwise be issuable an amount in cash
equal to the same fraction of the value of a whole share of Common Stock. For
purposes of this Section 24, the value of a whole share of Common Stock shall be
the closing price (as determined pursuant to the second sentence of Section
11(d)(i) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24, and the value of any Common Stock Equivalent shall be deemed
to have the same value as the Common Stock on such date.
25. Notices. Notices or demands authorized by this Agreement to be given
-------
or made by the Rights Agent or by the holder of any Rights Certificate to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:
StanCorp Financial Group, Inc.
1100 SW Sixth Avenue
Portland, Oregon 97204
Attention: Corporate Secretary
Copy to: Ruth A. Beyer
Stoel Rives LLP
900 SW Fifth Ave., Suite 2300
Portland, OR 97204
Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent shall be sufficiently given or made if
sent by first-class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows:
[Chase Mellon Shareholder Services]
------------------------------
------------------------------
------------------------------
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
35
<PAGE>
26. Supplements and Amendments. Prior to the Distribution Date, the
--------------------------
Company and the Rights Agent shall, if the Board of Directors of the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock.
From and after the Distribution Date, the Company and the Rights Agent shall, if
the Board of Directors of the Company so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interest of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of any such Person); provided, however, this Agreement may not be
-------- -------
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) a time period relating to when the Rights may be redeemed at such time as
the Rights are not then redeemable, or (b) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of or the benefits to, the holders of Rights. Upon the delivery of a
certificate from an appropriate officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
26, the Rights Agent shall execute such supplement or amendment. Prior to
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of shares of Common Stock.
27. Successors. All the covenants and provisions of this Agreement by or
----------
for the benefit of the Company or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns.
28. Benefits of this Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any person or corporation other than the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, the Common Stock) any legal or equitable right, remedy
or claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date, the Common Stock).
29. Severability. If any term, provision, covenant or restriction of this
------------
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions covenants
and restrictions of this Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated; provided, however, that
-------- -------
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23(a) shall be reinstated and
36
<PAGE>
shall not expire until the close of business on the tenth day following the date
of such determination by the Board of Directors of the Company.
30. Determinations and Actions by the Board of Directors, Etc. The Board
----------------------------------------------------------
of Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (b) below,
all omissions with respect to the foregoing) which are done or made by the Board
of Directors of the Company in good faith, shall (a) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (b) not subject the Board of Directors of the Company to any
liability to the holders of the Rights.
31. Governing Law. This Agreement and each Rights Certificate issued
-------------
hereunder shall be deemed to be a contract made under the laws of the State of
Oregon and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State.
32. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
33. Descriptive Headings. Descriptive headings of the several Sections of
--------------------
this Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
37
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
STANCORP FINANCIAL GROUP, INC.
By
--------------------------------------------
Its
-----------------------------------------
[CHASE MELLON SHAREHOLDER SERVICES]
By
--------------------------------------------
Its
-----------------------------------------
38
<PAGE>
EXHIBIT A
---------
FORM OF
ARTICLES OF AMENDMENT
OF
STANCORP FINANCIAL GROUP, INC.
ESTABLISHING
SERIES A PREFERRED SHARES
1. The name of the Corporation is StanCorp Financial Group, Inc.
2. Article 2 of the Corporation's Articles of Incorporation is amended to add a
new paragraph D, which shall read in its entirety as follows:
D. Series A Preferred Stock.
------------------------
(1) Designation and Amount. The shares of such series shall be designated
----------------------
as "Series A Preferred Shares" and the number of shares constituting such
series shall be __________.
(2) Dividends and Distributions.
---------------------------
(i) The holders of shares of Series A Preferred Shares shall be entitled
to receive, when and as declared by the Board of Directors, out of
funds legally available for the purpose, dividends in an amount per
share equal to 100 (the "Adjustment Number") multiplied by the
aggregate per share amount of all cash dividends, and the Adjustment
Number multiplied by the aggregate per share amount (payable in kind)
of all non-cash dividends or other distributions other than a dividend
payable in Common Stock or a subdivision of the outstanding Common
Stock (by reclassification or otherwise), declared on the Common Stock
of the Corporation (the "Common Stock") after the first issuance of
any share or fraction of a share of Series A Preferred Shares.
(ii) The Corporation shall declare a dividend or distribution on the Series
A Preferred Shares as provided in subparagraph 2(i) at the same time
that it declares a dividend or distribution on the Common Stock (other
than a dividend payable in Common Stock).
(iii) Dividends shall not be cumulative. Unpaid dividends shall not bear
interest. Dividends paid on the Series A Preferred Shares in an
amount less than the total amount of such dividends at the time
accrued
<PAGE>
and payable on such shares shall be allocated pro rata on a share-by-
share basis among all such shares at the time outstanding.
(3) Voting Rights. The holders of Series A Preferred Shares shall have the
-------------
following voting rights:
(i) Each Series A Preferred Share shall entitle the holder thereof to the
number of votes equal to the Adjustment Number then in effect on all
matters submitted to a vote of the shareholders of the Corporation.
(ii) Except as otherwise provided herein or by law, the holders of Series A
Preferred Shares and the holders of Common Stock shall vote together
as one class on all matters submitted to a vote of shareholders of the
Corporation.
(4) Certain Restrictions.
--------------------
(i) Whenever dividends or distributions payable on the Series A Preferred
Shares as provided in subparagraph 2 have not been declared or paid
for any fiscal year, until all such dividends and distributions for
such fiscal year on Series A Preferred Shares outstanding shall have
been declared and paid in full, the Corporation shall not in such
fiscal year:
(a) declare or pay dividends on or make any other distributions on
any shares of stock ranking junior or on a parity (either as to
dividends or upon liquidation, dissolution or winding up) to the
Series A Preferred Shares except dividends paid ratably on the
Series A Preferred Shares and all such parity stock on which
dividends are payable in proportion to the total amounts to which
the holders of all such shares are then entitled and, dividends
or distributions payable in Common Stock;
(b) purchase or otherwise acquire for consideration any Series A
Preferred Shares or any shares of stock ranking on a parity with
the Series A Preferred Shares, except in accordance with a
purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of such shares upon
such terms as the Board of Directors, after consideration of the
respective dividend rates and other relative rights and
preferences of the respective series and classes, shall determine
in good faith will result in fair and equitable treatment among
the respective series or classes.
(ii) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any
A-2
<PAGE>
shares of stock of the Corporation unless the Corporation could, under
subparagraph 4(i), purchase or otherwise acquire such shares at such
time and in such manner.
(5) Restriction on Issuance of Shares; Reacquired Shares. The Corporation
----------------------------------------------------
shall not issue any Series A Preferred Shares except upon exercise of
rights (the "Rights") issued pursuant to the Rights Agreement dated as of
_____________, 1999, between the Corporation and [Chase Mellon Shareholder
Services], (the "Rights Agreement"), a copy of which is on file with the
secretary of the Corporation at its principal executive office and shall be
made available to shareholders of record without charge upon written
request. Any Series A Preferred Shares purchased or otherwise acquired by
the Corporation in any manner whatsoever may be restored to the status of
authorized but unissued shares after the acquisition thereof. All such
shares shall upon any such restoration become authorized but unissued
shares of Preferred Shares and may be reissued as part of a new series of
Preferred Shares to be created by the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
(6) Liquidation, Dissolution or Winding Up.
--------------------------------------
(i) Upon any liquidation (voluntary or otherwise), dissolution or winding
up of the Corporation, no distribution shall be made to the holders of
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Shares unless, prior thereto, the holders of shares of Series A
Preferred Shares shall have received the Adjustment Number multiplied
by the per share amount to be distributed to holders of Common Stock,
plus an amount equal to declared and unpaid dividends and
distributions thereon to the date of such payment (the "Series A
Liquidation Preference"). Following the payment of the full amount of
the Series A Liquidation Preference, no additional distributions shall
be made to the holders of shares of Series A Preferred Shares.
(ii) In the event that there are not sufficient assets available to permit
payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of Preferred Shares, if
any, which rank senior to or on a parity with the Series A Preferred
Shares, then assets shall be distributed first to holders of any
series of Preferred Shares ranking senior to the Series A Preferred
Shares to the extent of their liquidation preferences and such
remaining assets shall be distributed ratably to the holders of Series
A Preferred Shares and such parity shares in proportion to their
respective liquidation preferences.
A-3
<PAGE>
(7) Consolidation, Merger, etc. In case the Corporation shall enter into
---------------------------
any consolidation, merger, combination or other transaction in which the
Common Stock is exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the Series A
Preferred Shares shall at the same time be similarly exchanged or changed
in an amount per share equal to the Adjustment Number multiplied by the
aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each common
Share is changed or exchanged.
(8) Anti-Dilution Adjustments to Adjustment Number. In the event the
----------------------------------------------
Corporation shall at any time after ____________, 1999 (the "Rights
Declaration Date") (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of shares,
then in each such case the Adjustment Number for all purposes of this
Article 2 shall be adjusted by multiplying the Adjustment Number then in
effect by a fraction, the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator
of which is the number of shares of Common Stock that were outstanding
immediately prior to such event. In the event the Corporation shall at any
time after the Rights Declaration Date, fix a record date for the issuance
of rights, options or warrants to all holders of Common Stock entitling
them (for a period expiring within 45 calendar days after such record date)
to subscribe for or purchase Common Stock or securities convertible into
Common Stock at a price per Common Stock (or having a conversion price per
share, if a security convertible into Common Stock) less than the then
Current Per Share Market Price of the Common Stock (as defined in Section
11(d) of the Rights Agreement) on such record date, then in each such case
the Adjustment Number for all purposes of this Article 2 shall be adjusted
by multiplying the Adjustment Number then in effect by, a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of
Common Stock to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible) and the
denominator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of Common
Stock so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such Current
Per Share Market Price (as defined in Section 11(d) of the Rights
Agreement). In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors. Common Stock owned by or held for the account of the
Corporation shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed. In the event that such rights, options or warrants
are not so issued, the Adjustment Number shall be readjusted as if such
record date had not been fixed; and to the extent such rights,
A-4
<PAGE>
options or warrants are issued but not exercised prior to their expiration,
the Adjustment Number shall be readjusted to be the number which would have
resulted from the adjustment provided for in this paragraph 8 if only the
rights, options or warrants that were exercised had been issued.
(9) No Redemption. The Series A Preferred Shares shall not be redeemable
-------------
at the option of the Corporation or any holder thereof. Notwithstanding
the foregoing sentence, the Corporation may acquire Series A Preferred
Shares in any other manner permitted by law.
(10) Amendment. Subsequent to the Distribution Date (as defined in the
---------
Rights Agreement) these Articles of Incorporation shall not be further
amended in any manner which would materially alter or change the
preferences, limitations and relative rights of the Series A Preferred
Shares so as to affect them adversely without the affirmative vote of the
holders of a majority of the outstanding Series A Preferred shares, voting
separately as a class.
(11) Fractional Shares. Series A Preferred Shares may be issued in
-----------------
fractions of a share in integral multiples of one one-hundredth of a share,
which shall entitle the holder, in proportion to such holders fractional
shares, to exercise voting rights, receive dividends, participate in
distributions and to have the benefit of all other rights of holders of
Series A Preferred Shares.
3. The amendment was adopted on _____________, 1999.
4. Shareholder action was not required to adopt the amendment. The amendment
was adopted by the board of directors without shareholder action.
A-5
<PAGE>
5. Person to contact about this filing:
Ruth A. Beyer
Stoel Rives LLP
900 SW Fifth Ave., Suite 2300
Portland, OR 97204
(503) 294-9332
Dated: __________, 1999
STANCORP FINANCIAL GROUP, INC.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
A-6
<PAGE>
EXHIBIT B
---------
[Form of Rights Certificate]
Certificate No. R- __________ Rights
NOT EXERCISABLE AFTER __________, 2009 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS
OR THEIR RESPECTIVE AFFILIATES OR ASSOCIATES (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND ANY RIGHTS PREVIOUSLY OWNED BY SUCH PERSONS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE
ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]/1/
Rights Certificate
_______________
This certifies that ____________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of ___________, 1999 (the "Rights Agreement") between
StanCorp Financial Group, Inc., an Oregon corporation (the "Company"), and
[Chase Mellon Shareholder Services] (the "Rights Agent"), to purchase from the
Company at any time prior to 5 p.m., New York time, on ___________, 2009 (the
"Final Expiration Date") at the office or offices of the Rights Agent designated
for such purpose, one one-hundredth of a fully paid and nonassessable share of
Series A Preferred Shares (the "Preferred Stock") of the Company, at a purchase
price of $_____ (the "Purchase Price"), upon presentation and surrender of this
Rights Certificate with the Form of Election to
- -------------------------------
/1/ The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
<PAGE>
Purchase and related Certificate duly executed. The Purchase Price may be paid
in cash or by certified check or cashier's check payable to the order of the
Company. The number of Rights evidenced by this Rights Certificate, the number
of one one-hundredths of a share of Preferred Stock which may be purchased upon
exercise hereof, and the Purchase Price per Right set forth above are the number
of Rights, the number of one one-hundredths of a share and the Purchase Price as
of __________, 1999, based on the Preferred Stock and Common Stock as
constituted at such date.
Upon the occurrence of a Stock Acquisition Date (as such term is defined in
the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or any Affiliate or Associate of
such Acquiring Person (as such terms are defined in the Rights Agreement), (ii)
any other person if such Rights formerly were beneficially owned by such
Acquiring Person (or by an Associate or Affiliate thereof) at a time after such
Acquiring Person, became an Acquiring Person, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of Rights from
such Acquiring Person (or from any Associate or Affiliate thereof) who became a
transferee prior to or concurrently with such Acquiring Person becoming an
Acquiring Person, such Rights shall become null and void and no holder hereof
shall have any right with respect to such Rights from and after the occurrence
of such an event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Preferred Stock or other securities or property which may be
obtained upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including a Stock Acquisition Date or a Section 13 Event (as such terms are
defined in the Rights Agreement).
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the Rights
and the limitations on the rights, obligations, duties, and immunities hereunder
of the Rights Agent, the Company, and the holders of the Rights Certificates,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the above-
mentioned office of the Rights Agent and are also available upon written request
to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office or offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights Certificate or Rights Certificates
of like tenor and date evidencing Rights entitling the holder to purchase a like
aggregate number of one one-hundredths of a share of Preferred Stock as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to
B-2
<PAGE>
purchase. If this Rights Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights certificate or
Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate may be redeemed by the Company at its option at a redemption
price of $.001 per Right at any time prior to the earlier of (i) the close of
business on the tenth day following the Stock Acquisition Date (as such period,
may be extended pursuant to the Rights Agreement) and (ii) the Final Expiration
Date.
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredths of a share of Preferred Stock, which may, at the
election of the Company be evidenced by depository receipts), but in lieu
thereof a cash payment will be made as provided in the Rights Agreement.
No holder of this Rights certificate, as such, shall be entitled to vote,
receive dividends, or be deemed for any purpose the holder of shares of
Preferred Stock or of any other securities of the Company which may at any time
be issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company or any right to vote for the
election of directors or upon any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of ____________, 19__.
ATTEST: STANCORP FINANCIAL GROUP, INC.
________________________________ ___________________________________
Secretary Title:
B-3
<PAGE>
Countersigned:
By______________________________
Authorized Signature
B-4
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Rights certificate.)
FOR VALUE RECEIVED _________________________________________ hereby
sells, assigns, and transfers unto ______________________________________
_______________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________
this Rights Certificate, together with all right, title, and interest therein,
and does hereby irrevocably constitute and appoint ____________________,
Attorney, to transfer the within Rights Certificate on the books of the within-
named Company, with full power of substitution.
Dated ____________, 19__.
______________________________
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate ___ is ___ is not being sold, assigned, and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined in the
Rights Agreement);
B-5
<PAGE>
(2) after due inquiry and to the best knowledge of the undersigned, it ___
did ___ did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was, or subsequently became an Acquiring Person or an Affiliate
or Associate of an Acquiring Person.
Dated: ____________, 19__. ____________________________________
Signature
Signature Guaranteed:
B-6
<PAGE>
NOTICE
------
The signatures to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires to exercise
Rights represented by the Rights Certificate.)
TO: ________________
The undersigned hereby irrevocably elects to exercise ____________ Rights
represented by this Rights Certificate to purchase the shares of Preferred Stock
issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person which may be issuable upon the exercise of the
Rights) and requests that certificates for such shares be issued in the name of
and delivered to:
________________________________________________________________________
(Please print name and address)
________________________________________________________________________
Please insert social security
or other identifying number: _______________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
________________________________________________________________________
(Please print name and address)
________________________________________________________________________
B-7
<PAGE>
Please insert social security
or other identifying number: _______________________________________________
Dated ____________, 19__.
____________________________________
Signature
Signature Guaranteed:
B-8
<PAGE>
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate ___ are ___ are not
being exercised by or on behalf of a Person is or was an Acquiring Person or an
Affiliate or Associate of an Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it ___
did ___ did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was, or became Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated: ____________, 19__. ____________________________________
Signature
Signature Guaranteed:
B-9
<PAGE>
EXHIBIT C
---------
SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES
Effective as of ___________, 1999, the Board of Directors of StanCorp
Financial Group, Inc. (the "Company") declared a dividend of one Right for each
outstanding share of Common Stock of the Company to shareholders of record at
the close of business on ____________, 1999. Each Right entitles the registered
holder to purchase from the Company one one-hundredth of a share of Series A
Preferred Shares (the "Preferred Shares") at a Purchase Price of $____, subject
to adjustment. The description and terms of the Rights are set forth in a
Rights Agreement (the "Rights Agreement") between the Company and [Chase Mellon
Shareholder Services], as Rights Agent.
Initially, the Rights will be attached to the certificates representing
outstanding shares of Common Stock, and no separate Rights Certificates will be
distributed. The Rights will separate from the Common Stock and a Distribution
Date will occur upon the earlier of (i) ten days following a public announcement
that a person or group of affiliated or associated persons has acquired, or
obtained the right to acquire from shareholders, beneficial ownership of 15
percent or more of the outstanding Common Stock (an "Acquiring Person") or (ii)
ten business days following the commencement of a tender offer or exchange offer
that would result in a person or group beneficially owning 15 percent or more of
such outstanding Common Stock, as such periods may be extended pursuant to the
Rights Agreement.
Until the Distribution Date, (i) the Rights will be evidenced by and will
be transferred with and only with such Common Stock certificates, (ii) new
Common Stock certificates issued after _________, 1999, will contain a legend
incorporating the Rights Agreement by reference, and (iii) the surrender for
transfer of any certificate for Common Stock will also constitute the transfer
of the Rights associated with the Common Stock represented by such certificate.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on __________, 2009, unless earlier redeemed by the
Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of the Common Stock as of the close of
business on the Distribution Date, and thereafter, the separate Rights
Certificates alone will represent the Rights. Except as otherwise determined by
the Board of Directors, only Common Stock issued prior to the time the Rights
become exercisable or issued upon exercise or
<PAGE>
conversion of rights, warrants, options or convertible securities issued prior
to the time the Rights become exercisable will be issued with Rights.
In the event that any person becomes an Acquiring Person, each holder of a
Right shall thereafter have the right to receive, upon exercise, in lieu of
Preferred Shares, Common Stock of the Company (or, in certain circumstances,
cash, property or other securities of the Company) having a value equal to two
times the exercise price of the Right. However, Rights are not exercisable as
described in this paragraph until such time as the Rights are no longer
redeemable by the Company as set forth below. Notwithstanding any of the
foregoing, if any person becomes an Acquiring Person all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by an Acquiring Person will become null and void.
For example, at an exercise price of $130 per Right, each Right not owned
by the Acquiring Person (or by certain related parties or transferees) following
the event set forth in the preceding paragraph would entitle its holder to
purchase $260 worth of Common Stock (or other consideration, as noted above) for
$130. Assuming that the Common Stock had a per share value of $20 at such time,
the holder of each valid Right would be entitled to purchase thirteen shares of
Common Stock for $130.
In the event that, at any time following the Distribution Date, (i) the
Company is acquired in a merger or other business combination transaction in
which the Company is not the surviving corporation or in which the Common Stock
are exchanged for stock or other securities or property, or (ii) 50 percent or
more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as set forth
above) shall thereafter have the right to receive, upon exercise, common stock
of the acquiring company having a value equal to two times the exercise price of
the Right.
The Purchase Price payable, and the number of one one-hundredths of a share
of Preferred Shares or other securities or property issuable upon exercise of
the Rights are subject to adjustment from time to time to prevent dilution (i)
in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Shares or the Common Stock, (ii) if holders
of the Preferred Shares are granted certain rights or warrants to subscribe for
Preferred Shares or convertible securities at less than the current market price
of the Preferred Shares, (iii) if holders of Common Stock are granted certain
rights or warrants to subscribe for Common Stock or convertible securities at
less than the current market price of the Common Stock, or (iv) upon the
distribution to holders of Preferred Shares or Common Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price or the number
of Preferred Shares issuable upon exercise of a Right will be required until
cumulative adjustments would require an increase or decrease of at least 1
percent. No fractional
C-2
<PAGE>
Preferred Shares will be issued (other than fractions which are integral
multiples of one one-hundredth of a share of Preferred Shares) and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading date prior to the date of exercise.
At any time until ten days (or longer if extended pursuant to the terms of
the Rights Agreement) after a person otherwise becomes an Acquiring Person, the
Company may redeem the Rights in whole, but not in part, at a price of $.001 per
Right (payable in cash, Common Stock or other consideration), appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof. Immediately upon the action of the Board of
Directors ordering redemption of the Rights, the Rights will terminate and the
only right of the holders of Rights will be to receive the $.001 redemption
price.
At any time after a person becomes an Acquiring Person, the Board of
Directors of the Company may exchange the Rights (other than Rights owned by
such person or group which become void), in whole or in part, at an exchange
ratio of one Common Stock, or one one-hundredth of a share of Preferred Shares
(or of a share of a class or series of the Company's preferred stock having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).
Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the right
to vote or to receive dividends. While the distribution of the Rights will not
be taxable to shareholders or to the Company, shareholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.
The Preferred Shares will be non-redeemable. The Preferred Shares may rank
on a lower priority in respect of the preference as to dividends and the
distribution of assets with other classes or series of the Company's preferred
shares. Each Preferred Share will be entitled to an aggregate of 100 times the
cash and non-cash (payable in kind) dividends and distributions (other than
dividends and distributions payable in Common Shares) declared on the Company's
Common Stock. In the event of liquidation, the holders of Preferred Shares will
be entitled to receive a liquidation payment in an amount equal to 100 times the
payment made per Common Share, plus an amount equal to declared and unpaid
dividends and distributions thereon. In the event of any merger, consolidation
or other transaction in which Common Stock is exchanged, each Preferred Share
will be entitled to receive 100 times the amount received per share of Common
Stock. The dividend and liquidation rights of the Preferred Stock are protected
by antidilution provisions. Each Preferred Share will be entitled to 100 votes
(subject to certain adjustments) on all matters submitted to the shareholders.
C-3
<PAGE>
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an exhibit to a Current Report on Form 8-K dated
___________________. A copy of the Rights Agreement is available free of charge
from the Rights Agent. This summary description of the Rights does not purport
to be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by reference.
C-4
<PAGE>
Exhibit 21.1
<TABLE>
<CAPTION>
SUBSIDIARIES OF STANCORP FINANCIAL GROUP, INC.
-------------------------------------------------------------------------------------
Company Name Incorporation
Location
-------------------------------------------------------------------------------------
<S> <C>
1. Standard Insurance Company Oregon
-------------------------------------------------------------------------------------
2. Standard Management, Inc. Oregon
-------------------------------------------------------------------------------------
3. Standard Mortgage Investors, LLC Oregon
-------------------------------------------------------------------------------------
4. Standard Real Estate Investors, LLC Oregon
-------------------------------------------------------------------------------------
5. 400 Health Club, Inc. Oregon
-------------------------------------------------------------------------------------
6. Standard Assigned Benefits, Inc. Oregon
-------------------------------------------------------------------------------------
7. StanWest Equities, Inc. Oregon
-------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 2 to Registration Statement
No. 333-72521 of StanCorp Financial Group, Inc. of our reports related to
StanCorp Financial Group, Inc. and Standard Insurance Company, dated
January 21, 1999 and February 12, 1999, respectively, appearing in the
Prospectus, which is part of this Registration Statement, and to the reference
to us under the heading "Experts" in such Prospectus.
DELOITTE & TOUCHE LLP
Portland, Oregon
March 9, 1999
<PAGE>
EXHIBIT 23.5
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc.
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ Virginia L. Anderson
- ----------------------------
Name: Virginia L. Anderson
September 28, 1998
<PAGE>
EXHIBIT 23.6
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc.
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ Frederick W. Buckman
- ----------------------------
Name: Frederick W. Buckman
September 28, 1998
<PAGE>
EXHIBIT 23.7
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc.
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ John (Buck) E. Chapoton
- ------------------------------
Name: John (Buck) E. Chapoton
September 28, 1998
<PAGE>
EXHIBIT 23.8
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc.
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ Barry J. Galt
- -------------------------
Name: Barry J. Galt
September 28, 1998
<PAGE>
EXHIBIT 23.9
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc.
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ Richard Geary
- -------------------------
Name: Richard Geary
September 28, 1998
<PAGE>
EXHIBIT 23.10
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc.
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ Peter T. Johnson
- -------------------------
Name: Peter T. Johnson
September 28, 1998
<PAGE>
EXHIBIT 23.11
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc.
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ Peter O. Kohler, MD
- ---------------------------
Name: Peter O. Kohler, MD
September 28, 1998
<PAGE>
EXHIBIT 23.12
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ Jerome J. Meyer
- -------------------------
Name: Jerome J. Meyer
October 9, 1998
<PAGE>
EXHIBIT 23.13
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc.
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ Ralph R. Peterson
- -------------------------
Name: Ralph R. Peterson
September 28, 1998
<PAGE>
EXHIBIT 23.14
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc.
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ E. Kay Stepp
- -------------------------
Name: E. Kay Stepp
September 28, 1998
<PAGE>
EXHIBIT 23.15
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc.
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ William Swindells
- -------------------------
Name: William Swindells
September 28, 1998
<PAGE>
EXHIBIT 23.16
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc.
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ Mike Thorne
- -------------------------
Name: Mike Thorne
September 28, 1998
<PAGE>
EXHIBIT 23.17
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc.
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ Franklin E. Ulf
- -------------------------
Name: Franklin E. Ulf
September 28, 1998
<PAGE>
EXHIBIT 23.18
CONSENT
To the Board of Directors
StanCorp Financial Group, Inc.
Portland, Oregon
I hereby consent to act as a Director of StanCorp Financial Group, Inc.
(the "Company") upon being duly elected to that position. I also consent to the
inclusion of my name in the Company's Registration Statement on Form S-1
relating to the initial public offering of shares of its common stock as a
nominee or person chosen to become a Director of the Company.
/s/ Benjamin R. Whiteley
- -------------------------
Name: Benjamin R. Whiteley
September 28, 1998
