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Registration No. 333-
As filed with the Securities and Exchange Commission on May 2, 1997.
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
----------------------
SAFECO CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
WASHINGTON 91-0742146
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
SAFECO PLAZA
SEATTLE, WASHINGTON 98185
(Address of principal executive offices, including zip code)
SAFECO LONG-TERM INCENTIVE PLAN OF 1997
(Full title of the plan)
JAMES W. RUDDY
Senior Vice President and General Counsel
SAFECO Plaza T-22
Seattle, Washington 98185
(206) 545-5667
(Name, address and telephone number, including area code, of agent for service)
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Title of Securities to Amount to Be Proposed Maximum Proposed Maximum Amount of
Be Registered Registered (1) Offering Price Per Share (2) Aggregate Offering Price (2) Registration Fee
Common Stock, 6,000,000 $39.625 $237,750,000 $72,045
no par value
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes an indeterminate number of additional shares that may be issued to
adjust the number of shares issued pursuant to such employee benefit plan
as the result of any future stock split, stock dividend or similar
adjustment of the registrant's outstanding Common Stock.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933, as amended. The
price per share is estimated to be $39.625, based on the average of the
high ($40.25) and low ($39.00) sale prices for the registrant's Common
Stock as reported on the Nasdaq National Market on April 28, 1997.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3 INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference in this
registration statement:
(a) The registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, filed with the Securities and Exchange Commission
(the "Commission") on March 28, 1997, which contains audited
consolidated financial statements for the most recent fiscal year for
which such statements have been filed.
(b) The description of the registrant's Common Stock contained in a
registration statement filed with the Commission under Section 12(g)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), including any amendments or reports filed for the purpose of
updating such description.
All documents filed by the registrant pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the filing of a
post-effective amendment which indicates that the securities offered hereby have
been sold or which deregisters the securities covered hereby then remaining
unsold shall also be deemed to be incorporated by reference into this
registration statement and to be a part hereof commencing on the respective
dates on which such documents are filed.
ITEM 5 INTERESTS OF NAMED EXPERTS AND COUNSEL
The opinion of counsel as to the legality of the securities that may be issued
under the SAFECO Long-Term Incentive Plan of 1997 (the "1997 Plan") is given by
Janice Schafer, Corporate Counsel for the registrant.
ITEM 6 INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 23B.08.510 through 23B.08.600 of the Washington Business Corporation
Act (the "Washington Act") authorize a court to award, or a corporation's board
of directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
claims arising under the Securities Act of 1933, as amended (the "Securities
Act"). Article XII of the registrant's Bylaws provides that the registrant's
directors and officers shall be indemnified against all judgments, penalties,
fines, settlements and reasonable expenses actually incurred by the indemnitee
in connection with any proceeding (whether brought by or in the right of the
registrant or otherwise) by reason of the fact that the indemnitee was a
director or officer of the registrant, with certain specified statutory
exceptions for any action or omission finally adjudged to involve intentional
misconduct, a knowing violation of the law, an unlawful distribution or the
receipt of an improper benefit, or for any act for which indemnification is
otherwise prohibited by law.
II-1
<PAGE>
Section 23B.08.320 of the Washington Act authorizes a corporation to limit a
director's liability to the corporation or its shareholders for monetary damages
for acts or omissions as a director, except for any act or omission finally
adjudged to involve intentional misconduct, a knowing violation of the law, an
unlawful distribution, or the receipt of an improper benefit. Article VIII of
the registrant's Restated Articles of Incorporation contains provisions
implementing, to the fullest extent permitted by Washington law, such
limitations on the liability of directors to the registrant and its
shareholders.
The registrant also maintains an insurance policy insuring its directors and
officers against liability for certain acts or omissions while acting in their
official capacities.
ITEM 8 EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
5.1 Opinion of counsel regarding the legality of the Common Stock
being registered
23.1 Consent of Ernst & Young LLP
23.2 Consent of counsel (included in Exhibit 5.1)
99.1 SAFECO Long-Term Incentive Plan of 1997
ITEM 9 UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(b) To reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in this registration statement;
(c) To include any material information with respect to the plan of
distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
II-2
<PAGE>
provided, however, that paragraphs (1)(a) and (1)(b) above do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by the
registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain
unsold at the termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Exchange Act (and, where applicable, each filing of an employee
benefits plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in this registration
statement 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.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed
in the Securities 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
of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized on this 2nd day of May, 1997.
SAFECO CORPORATION
/S/ ROGER H. EIGSTI
----------------------------------
By: Roger H. Eigsti, Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Name Title Date
/S/ ROGER H. EIGSTI Chairman and May 2, 1997
- ----------------------------- Chief Executive Officer
Roger H. Eigsti
/S/ BOH A. DICKEY President and May 2, 1997
- ----------------------------- Chief Operating Officer
Boh A. Dickey and Director
/S/ ROD A. PIERSON Senior Vice President, May 2, 1997
- ----------------------------- Chief Financial Officer,
Rod A. Pierson Secretary and Controller
/S/ PHYLLIS J. CAMPBELL Director May 2, 1997
- -----------------------------
Phyllis J. Campbell
/S/ ROBERT S. CLINE Director May 2, 1997
- -----------------------------
Robert S. Cline
/S/ JOHN W. ELLIS Director May 2, 1997
- -----------------------------
John W. Ellis
/S/ WILLIAM P. GERBERDING Director May 2, 1997
- -----------------------------
William P. Gerberding
II-4
<PAGE>
Name Title Date
/S/ JOSHUA GREEN III Director May 2, 1997
- -----------------------------
Joshua Green III
/S/ WILLIAM W. KRIPPAEHNE, JR Director May 2, 1997
- -----------------------------
William W. Krippaehne, Jr.
/S/ WILLIAM G. REED, JR. Director May 2, 1997
- -----------------------------
William G. Reed, Jr.
/S/ JUDITH M. RUNSTAD Director May 2, 1997
- -----------------------------
Judith M. Runstad
May 2, 1997
- -----------------------------
Paul W. Skinner
/S/ GEORGE H. WEYERHAEUSER Director May 2, 1997
- -----------------------------
George H. Weyerhaeuser
II-5
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
5.1 Opinion of counsel regarding the legality of the Common Stock
being registered
23.1 Consent of Ernst & Young LLP
23.2 Consent of counsel (included in Exhibit 5.1)
99.1 SAFECO Long-Term Incentive Plan of 1997
<PAGE>
EXHIBIT 5.1
May 2, 1997
SAFECO Corporation
SAFECO Plaza
Seattle, Washington 98185
Ladies and Gentlemen:
As Corporate Counsel of SAFECO Corporation (the "Company"), I have acted as
counsel in connection with the Registration Statement on Form S-8 which is being
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, with respect to 6,000,000 shares of the common stock, no par
value, of the Company (the "Shares"). The Shares may be issued pursuant to the
SAFECO Long-Term Incentive Plan of 1997 (the "Plan").
I have examined the Registration Statement and a copy of the Restated
Articles of Incorporation of the Company and any amendments thereto to date,
a copy of the Bylaws of the Company as amended to date, and such resolutions of
the Board of Directors of the Company and other documentation as I have deemed
necessary for the purpose of this opinion.
Based upon and subject to the foregoing, I am of the opinion that the
Shares that may be issued by the Company pursuant to the Plan, upon the due
execution by the Company and registration by its registrar of the Shares and the
issuance thereof by the Company in accordance with the terms of the Plan, will
be validly issued, fully paid and nonassessable.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to me under the heading "Interests of Named
Experts and Counsel" in the Registration Statement.
Very truly yours,
/s/ Janice Oakes Schafer
Janice Oakes Schafer
Corporate Counsel
<PAGE>
EXHIBIT 15.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 333- ) pertaining to the SAFECO Long-Term Incentive Plan of 1997 of
SAFECO Corporation of our report dated February 14, 1997, with respect to the
consolidated financial statements and schedules of SAFECO Corporation and
subsidiaries included and incorporated by reference in its Annual Report
(Form 10-K) for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
Seattle, Washington
April 30, 1997
<PAGE>
EXHIBIT 99.1
SAFECO LONG-TERM INCENTIVE PLAN OF 1997
1. PURPOSE
The purpose of the SAFECO Long-Term Incentive Plan of 1997 (the "Plan") is to
enhance the long-term profitability and shareholder value of SAFECO Corporation
(the "Company") by offering incentives and rewards to selected eligible
employees of the Company and its Subsidiaries (as defined in Section 2) who are
key to the Company's growth and success as an inducement to them to remain in
the service of the Company and to acquire and maintain stock ownership in the
Company.
2. DEFINITIONS
(a) "AFFILIATE" means a person controlling, controlled by or under common
control with the Company.
(b) "AWARD" shall mean any award or grant made pursuant to the Plan,
including, without limitation, awards or grants of stock options,
stock appreciation rights, restricted stock rights, performance stock
rights or any combination of the foregoing. Awards may be granted
singly, in combination, or in tandem so that the settlement or payment
of one automatically reduces or cancels the other.
(c) "AWARD AGREEMENT" means a written agreement between the Company and a
Plan participant evidencing an Award.
(d) "BENEFICIAL OWNER" has the meaning set forth in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(e) "CHANGE IN CONTROL" shall be deemed to have occurred if the event set
forth in any one of the following paragraphs has occurred:
(i) Any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or its Affiliates)
representing 25% or more of the combined voting power of the
Company's then outstanding securities, excluding any Person who
becomes such a Beneficial Owner in connection with a transaction
described in clause (x) of paragraph (iii) of this Section 2(e);
or
(ii) The following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals
who, on the date the Plan is adopted by the Company's
shareholders, constitute the Board of Directors of the Company
and any new director (other than a director whose initial
assumption of office is in connection with an actual or
threatened election
<PAGE>
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board of Directors or nomination
for election by the Company's shareholders was approved by a vote
of at least two-thirds of the directors then still in office who
either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or
recommended; or
(iii) There is consummated a merger or consolidation of the Company or
any Subsidiary with any other corporation, OTHER THAN (x) a
merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company
or any Subsidiary at least 75% of the combined voting power of
the securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation, or (y) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any
securities acquired directly from the Company or its Affiliates
other than in connection with the acquisition by the Company or
its Affiliates of a business) representing 25% or more of the
combined voting power of the Company's then outstanding
securities; or
(iv) The shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated
an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 75% of the combined
voting power of the voting securities of which are owned by
shareholders of the Company in substantially the same proportions
as their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, a "Change in Control" shall not be
deemed to have occurred by virtue of the consummation of any
transaction or series of integrated transactions immediately following
which the record holders of the Company's common stock immediately
prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which owns
all or substantially all of the Company's assets immediately following
such transaction or series of transactions.
2
<PAGE>
(f) "COMMITTEE" shall mean the committee or sub-committee described in
Section 3 selected by the Company's Board of Directors to administer
the Plan.
(g) "FAIR MARKET VALUE" shall mean, with respect to the Company's common
stock, the price at which the last trade of the Company's common
stock was made prior to 1:00 p.m. West Coast time on the Nasdaq
National Market on the date in question.
(h) "PERSON" for purposes of Section 2(e) means any person (as defined in
Section 2(a)(9) of the Exchange Act, as such term is modified in
Section 13(d) and 14(d) of the Exchange Act) OTHER THAN (i) any
employee plan established by the Company, (ii) the Company or any of
its affiliates (as defined in Rule 12b-2 promulgated under the
Exchange Act), (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a corporation
owned, directly or indirectly, by shareholders of the Company in
substantially the same proportions as their ownership of the Company.
(i) "RETIREMENT" shall mean a termination of employment with the Company
or a Subsidiary occurring on or after an individual attains age 65, or
such other termination of employment as the Committee may approve as a
retirement from time to time for purposes of the Plan.
(j) "SUBSIDIARY" shall mean any corporation of which more than 50% of the
total combined voting power of all classes of stock entitled to vote
is directly or indirectly owned by the Company.
3. ADMINISTRATION
(a) The Plan shall be administered by a Committee to be appointed from
time to time by the Company's Board of Directors and shall consist of
at least two members of the Board, each of whom is an "outside
director" as defined in regulations promulgated under Section 162(m)
of the Internal Revenue Code of 1986, as amended (the "Code"). In
addition, if the Committee does not also consist solely of
"non-employee directors" as defined in Rule 16b-3 under the Exchange
Act, the Plan shall be administered with respect to individuals
subject to Section 16 of the Exchange Act by a sub-committee of the
Committee to be appointed from time to time by the Company's Board of
Directors and consisting of at least two members of the Board, each of
whom is a "non-employee director."
(b) Except for the terms and conditions explicitly set forth in the Plan,
the Committee shall have the exclusive authority to determine, in its
sole discretion, all matters relating to Awards under the Plan,
including the selection of individuals to be granted Awards; the type
of Awards; the number of shares of common stock subject to an Award;
all terms, conditions, restrictions and limitations, if any, of an
Award; and the terms of any instrument that evidences the Award. The
Committee may, in its discretion, accelerate the exercisability of or
waive any or all of the restrictions
3
<PAGE>
and conditions applicable to any Award and may, with the consent of
the holder, modify any agreement governing an Award. The Committee
may permit or require the deferral of any Award payment, subject to
such rules and procedures as it may establish, which may include
provisions for the payment or crediting of interest or dividend
equivalents on the deferred payment. Any deferred payment may require
the payment to be forfeited under certain circumstances in accordance
with Section 15. The Committee shall also have exclusive authority to
interpret the Plan and may adopt, amend and rescind rules and
procedures relating to the Plan. The Committee may delegate
administrative duties to such of the Company's officers as it so
determines; provided, however, that decisions concerning the terms and
conditions of an Award and the selection of recipients of Awards shall
not be delegated.
(c) The Board of Directors shall designate one member of the Committee as
its Chair, and the Committee shall hold its meetings at such times and
places as it shall deem advisable. At least one-half of its members
shall constitute a quorum for the conduct of business, and any
decision or determination approved by a majority of members present at
any meeting in which a quorum exists shall be deemed to have been made
by the Committee. In addition, any decision or determination reduced
to writing and signed by all of the members shall be deemed to have
been made by the Committee. The Committee may appoint a secretary,
shall keep minutes of its meetings, and may make such rules and
regulations for the conduct of its business and for the carrying out
of the Plan as it deems appropriate.
(d) The interpretation and construction by the Committee of any provisions
of the Plan and of Awards thereunder and all actions taken and
determinations made by the Committee pursuant to the Plan shall be
final and conclusive on all persons having any interest therein.
(e) Notwithstanding anything in the Plan to the contrary, the Committee,
in its absolute discretion, may bifurcate the Plan so as to restrict,
limit or condition the use of any provision of the Plan to
participants who are subject to Section 16 of the Exchange Act without
so restricting, limiting or conditioning the Plan with respect to
other participants in the Plan.
4. SHARES SUBJECT TO PLAN
(a) Subject to the provisions of Section 21 (relating to adjustments due
to changes in capital structure), a maximum of 6,000,000 shares of the
Company's common stock shall be available for issuance pursuant to
Awards under the Plan. No more than 3,000,000 shares may be issued in
connection with restricted stock rights and performance stock rights
granted under the provisions of Sections 12 and 13.
(b) Any shares of the Company's common stock that have been made subject
to an Award and that subsequently cease to be subject to the Award
(other than by reason
4
<PAGE>
of exercise or payment of the Award to the extent it is exercised for
or settled in shares of common stock) shall again be available for
issuance in connection with future grants of Awards under the Plan;
provided, however, that for purposes of Section 4(c), any such shares
shall be counted in accordance with the requirements of Section 162(m)
of the Code.
(c) Subject to the provisions of Section 21 (relating to adjustments due
to changes in capital structure), the maximum number of shares with
respect to which options may be granted under the Plan to any
individual during any calendar year is 300,000, and the maximum number
of shares payable under a performance stock right for any Performance
Cycle (as defined in Section 13(a)) is 300,000 shares, or in the event
the performance stock right is paid in cash, the equivalent cash value
on the date the performance stock right would otherwise be settled in
shares, such limitations to be applied in a manner consistent with the
requirements of, and only to the extent required for compliance with,
the exclusion from the limitation on deductibility of compensation
under Section 162(m) of the Code.
5. ELIGIBILITY
Awards may be granted only to salaried key management employees of the Company
or a Subsidiary (including salaried employees who are also directors) who, in
the judgment of the Committee, will perform services of special importance in
the management, operation and development of the business of the Company or the
businesses of one or more of its Subsidiaries, provided the grant date for
options and performance stock rights for an employee shall not occur during or
after the calendar year in which the employee reaches the age of 65.
6. PRICE AND TERM OF OPTIONS
(a) The exercise price for shares purchased under each option will be
determined by the Committee but shall not be less than 100% of the
Fair Market Value of the shares of stock covered by the option on the
date of grant of the option.
(b) The term of each option shall be as determined by the Committee, but
not in excess of ten years from the date it is granted. An option
granted for an initial term of less than ten years may be extended by
amendment for a period of up to ten years from the date of the initial
grant, provided that no such amendment of an incentive stock option
shall be made without the prior consent of the optionee.
7. LIMITATIONS ON EXERCISE OF OPTIONS
(a) Any minimum period during which an optionee must be continuously
employed prior to an option becoming exercisable and the increments in
which an option will become exercisable shall be set forth in the
Award Agreement evidencing the option. Such provisions may be waived
or modified by the Committee at any time. Absence on leave shall not
be deemed an interruption of employment for purposes
5
<PAGE>
of the Plan, except that with respect to incentive stock options a
leave of absence shall be subject to any requirements of Section 422
of the Code.
(b) With respect to incentive stock options granted to an employee under
the Plan, to the extent the aggregate Fair Market Value (determined at
the time the options are granted) of the stock with respect to which
incentive stock options are exercisable for the first time by such
employee during any calendar year (under the Plan and all other stock
option plans of the Company and its Subsidiaries) exceeds $100,000,
such portion in excess of $100,000 shall be treated as a nonqualified
stock option.
8. METHOD OF EXERCISE
Each exercise of an option granted hereunder, whether in whole or in part, shall
be by written notice to the Chief Executive Officer of the Company designating
the number of shares as to which the option is exercised, and shall be
accompanied by payment in full for the number of shares so designated. Stock to
be purchased under an option may be paid for in cash, in shares of the Company's
common stock (either through physical delivery or by attestation) at their Fair
Market Value on the date of exercise, or in a combination thereof, or in such
other consideration as the Committee in its discretion may permit. Fractional
shares may not be purchased under an option, and fractional shares may not be
delivered to the Company for payment of the option price.
9. FORM OF OPTION AGREEMENT
Each Award Agreement evidencing an option shall contain the essential terms of
the option and such other provisions as the Committee shall from time to time
determine, but such Award Agreements need not be identical. If the option is an
incentive stock option, the Award Agreement shall contain such terms and
provisions relating to exercise and otherwise as may be necessary to render it
an incentive stock option under the applicable provisions of the Code (presently
Section 422 thereof), and the regulations thereunder.
10. FINANCING OF OPTIONS
The Company declares its belief that the purposes of the Plan can be fully
achieved only if those employees to whom options are granted hereunder are able
financially to purchase the stock covered by their options should they wish to
do so. Thus, within the limits of and in compliance with applicable statutes and
regulations, the Company and its Subsidiaries may extend credit, arrange credit,
guarantee obligations, and otherwise aid such employees in needed financing of
their purchases of stock pursuant to options.
11. STOCK APPRECIATION RIGHTS
(a) In connection with the grant of any stock option, the Committee may
grant a stock appreciation right ("SAR") pursuant to which the
optionee shall have the right to surrender all or part of such stock
option and to exercise the SAR and thereby obtain payment of an amount
equal to the difference between the aggregate option price of
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<PAGE>
the shares so surrendered and the Fair Market Value of such shares
on the date of surrender. In all other respects, a SAR will have the
same terms and provisions as the related option.
(b) The exercise of a SAR shall be by written notice to the chief
executive officer of the Company designating the number of shares as
to which the SAR is exercised and shall be subject to such limitations
as the Committee may deem appropriate. Payment to the holder upon the
call of a SAR may be made in shares of the Company's common stock (at
their Fair Market Value on the date of exercise), in cash, or partly
in shares and partly in cash, at the discretion of the Committee.
12. RESTRICTED STOCK RIGHTS
(a) The Committee may grant any eligible employee restricted stock rights
("RSRs") which entitle such employee to receive a stated number of
shares of the Company's common stock if the employee for a stated
period remains continuously employed by the Company or a Subsidiary
or, following the employee's Retirement, serves on the Board of
Directors of the Company or in another capacity approved by the
Committee (the "Restricted Period"). At the time an RSR is issued, the
Committee shall designate the length of the Restricted Period and the
service that will qualify under the Restricted Period; provided,
however, in no event may the Restricted Period extend beyond the fifth
anniversary date of the employee's termination of employment. The
Committee shall also have full and final authority to select the
employees who receive RSRs, to specify the number of shares of stock
subject to each RSR, and to establish the other terms, conditions and
definitions that govern RSRs.
(b) The Company shall pay to each holder of an unexpired RSR during the
Restricted Period, as additional compensation, an amount of cash equal
to the dividends that would have been payable to the holder of the RSR
during the Restricted Period if the holder had owned the stock subject
to the RSR. Such amount shall be paid as near in time as reasonably
practical to the applicable dividend payment dates.
(c) At the expiration of each Restricted Period and provided all
conditions relating to an RSR have been met, the Company shall issue
to the holder the shares of stock which relate to such Restricted
Period or, at the request of the holder, make a payment of an amount
equal to the Fair Market Value of such shares (or any portion thereof)
determined as of the settlement date or, alternatively, over such
period as may be established by the Committee at the time of grant.
(d) Upon grant of an RSR, the Company shall deliver to the recipient an
Award Agreement which sets forth the terms and conditions of the RSR.
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13. PERFORMANCE STOCK RIGHTS
(a) The Committee may grant to an eligible employee performance stock
rights ("PSRs") which entitle such employee to receive a stated number
of shares of the Company's common stock if the employee attains
certain specified performance goals ("Performance Goals") within a
stated performance period (a "Performance Cycle"). The Committee shall
have full and final authority to select the employees who receive
PSRs, to specify the number of shares of stock subject to each such
right, to establish the Performance Goals, to establish the
Performance Cycle and to establish the terms, conditions and
definitions that govern such rights.
(b) The Committee shall establish Performance Goals for each Performance
Cycle on the basis of such criteria and to accomplish such objectives
as the Committee may from time to time select. Performance Goals
selected by the Committee may include performance criteria for the
Company, a Subsidiary, or an operating group, division, or unit of the
Company or a Subsidiary. During any Performance Cycle, the Committee
may adjust the Performance Goals for such Performance Cycle as it
deems equitable in recognition of unusual or nonrecurring events
affecting the Company, changes in applicable tax laws or accounting
principles, or such other factors as the Committee may determine;
provided, however, that the Committee may not adjust Performance Goals
for any participant who is a covered employee for purposes of Section
162(m) of the Code for the year in which such Performance Award is
settled in such a manner as would increase the amount of compensation
otherwise payable to such covered employee.
(c) As soon as practical after the end of a Performance Cycle, the
Committee shall determine the extent to which a PSR has been earned on
the basis of performance in relation to the established Performance
Goals. To the extent that the Performance Goals of a PSR are
satisfied, the Company shall settle the earned portion of the PSR by
the issuance and delivery of unrestricted shares equal to the number
of earned shares, by the payment of cash equal to the Fair Market
Value of the earned shares on the date the PSR would otherwise be
settled in shares, or by a combination of cash and shares, as
requested by the holder. If the Performance Goals are not met by the
expiration of the Performance Cycle, the PSR shall expire and the
holder thereof shall have no further rights thereunder.
(d) Upon granting a PSR, the Company shall issue to the recipient an Award
Agreement which sets forth the terms and conditions of the PSR.
(e) The Performance Goals shall be any one or a combination of net income,
earnings per share, return on equity, return on assets, stock price
appreciation, total shareholder return, cash flow, revenues, item
count, market share, assets, assets under management, any
profit-related ratio or calculation, or any growth,
concentration-of-business or market-share ratio or calculation. Such
Performance Goals may be measured on an absolute basis or relative to
a group of peer
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companies selected by the Committee, relative to internal goals, or
relative to levels attained in prior years. The Committee will
establish specific Performance Goals for each PSR not later than 90
days after the beginning of the Performance Cycle for the Award.
(f) The Company shall not make dividend equivalent payments with respect
to shares subject to PSRs.
14. TERMINATION OF EMPLOYMENT, RETIREMENT, DISABILITY AND DEATH
(a) In the event the employment of a Plan participant by the Company or a
Subsidiary terminates, then unless otherwise provided in the Award
Agreement, any unexercised option or SAR granted to such participant
may be exercised, BUT ONLY TO THE EXTENT EXERCISABLE ON THE DATE OF
TERMINATION OF EMPLOYMENT, at any time within three months following
such termination of employment, EXCEPT THAT:
(i) If the participant's termination of employment is on account
of RETIREMENT, then the option or SAR, to the extent
exercisable at the date of termination of employment, may be
exercised at any time prior to the expiration of its stated
term, but in no event later than the fifth anniversary date
of the participant's termination of employment.
(ii) If the participant's termination of employment is on account
of a permanent and total DISABILITY within the meaning of
Section 22(e)(3) of the Code, then the option or SAR, to the
extent exercisable at the date of termination of employment,
may be exercised at any time within one year after the date
of termination.
(iii) If the participant's termination of employment is caused by
the DEATH of the participant, then the option or SAR may be
exercised at any time prior to the expiration of the term
stated in the Award Agreement by the person(s) to whom the
participant's rights pass by will or by operation of law
without regard to any requirements related to continued
employment or installment vesting.
(iv) If the participant DIES FOLLOWING TERMINATION of employment
and during the period in which the option or SAR is
exercisable under paragraph (i) or (ii) of this Section
14(a), then, to the extent the option or SAR was vested at
the date of the participant's termination of employment, the
option or SAR may be exercised at any time prior to the
expiration of the term stated in the Award Agreement by the
person(s) to whom the participant's rights pass by will or
by operation of law.
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(b) Any portion of an option or SAR that is not exercisable on the date of
termination of the participant's employment shall terminate on such
date, unless the Committee determines otherwise.
(c) To the extent that the option or SAR of any deceased or disabled
participant or of any participant whose employment has terminated
shall not have been exercised within the time periods provided above,
all further rights to exercise such option or SAR shall terminate at
the expiration of the applicable period.
(d) In the event a holder of an RSR issued under the provisions of Section
12 fails to satisfy the employment or service requirements of the RSR,
such holder shall lose the right to receive stock or cash under the
provisions of the RSR, EXCEPT THAT in the event a holder of an RSR is
unable to satisfy such requirements because of death or disability
within the meaning of Section 22(e)(3) of the Code, then as soon as
practical following the date of death or the date of determination of
disability (the "Disability Determination Date"), the holder or the
personal representative of the holder's estate, as the case may be,
shall be issued shares of the Company's common stock equal in number
to the total number of unissued shares covered by such RSR or, in lieu
thereof, at the request of such holder or personal representative,
receive a cash payment equal to the Fair Market Value of such shares
(or any portion thereof) at the date of death or the Disability
Determination Date, as the case may be. Such shares shall be issued
or payment made without regard to any employment or other service
requirement stated in the RSR.
(e) Except as provided in Section 22, in the event the employment of an
employee who holds a PSR granted under the provisions of Section 13
terminates for any reason prior to the expiration of the Performance
Cycle specified in the PSR, then, except to the extent the Committee
may decide otherwise in select situations, such employee shall lose
all rights to thereafter receive any stock or payment under such PSR.
(f) If a corporation ceases to be a Subsidiary of the Company, then,
except to the extent the Committee determines otherwise, employees of
such corporation shall be deemed to have terminated their employment
with the Company or a Subsidiary of the Company for purposes of this
Section 14 as of the date such corporation's status as a Subsidiary
terminates.
15. FORFEITURE
Subject to the Committee's discretion, the grant of any Award under the Plan may
be conditioned on the participant's agreement to forfeit unexercised Awards and
pay the value of previously exercised or settled Awards to the Company in the
event that the participant engages in any activity in competition with the
Company or otherwise contrary to the Company's interests while employed by the
Company or a Subsidiary or within a specified period following termination of
employment or exercise or settlement of an Award.
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16. TRANSFERABILITY
Except as otherwise provided in this Section 16, Awards shall not be
transferable other than by will or the laws of descent and distribution and
shall be exercisable during the lifetime of a participant only by the
participant or, in the event the participant becomes legally incompetent, by the
participant's guardian or legal representative. Notwithstanding the foregoing,
and to the extent permitted by Section 422 of the Code, the Committee, in its
discretion, may provide in any Award Agreement or otherwise that the Award is
transferable, without payment of consideration, (i) to immediate family members
(including grandchildren) of the participant or (ii) to a trust or trusts for
the benefit of such family members or (iii) to a partnership or similar
organization composed of such family members ("Permitted Family Transferees").
Any Award assigned or transferred to Permitted Family Transferees shall be
subject to all the same terms and conditions contained in the Award Agreement,
and the events of termination of employment stated in Section 14 shall continue
to be applied with respect to the original Award recipient, following which
termination the Award shall be exercisable by the transferee only to the extent
and for the periods specified in Section 14.
17. WITHHOLDING
The Company may require the holder of an Award to pay to the Company the amount
of any taxes that the Company is required to withhold with respect to the grant,
exercise, payment or settlement of an Award. The Company shall have the right
to withhold from any Award or any shares of stock issuable pursuant to an Award
an amount equal to such taxes.
18. RIGHTS AS SHAREHOLDER
Neither a person to whom an Award is granted, nor such person's legal
representative, heir, legatee, distributee or Permitted Family Transferee shall
be deemed to be the holder of, or to have any rights of a holder with respect
to, any shares subject to such Award until after the shares are issued.
19. AMENDMENTS TO THE PLAN
The Company's Board of Directors may from time to time make such amendments to
the Plan as it may deem proper and in the best interests of the Company or a
Subsidiary, provided that:
(a) No amendment shall be made which would impair, without the consent of
the applicable participant, any Award previously granted under the
Plan or deprive any participant of any shares of stock of the Company
which the participant may have acquired through or as a result of the
Plan.
(b) Any such amendment which would (i) increase the number of securities
which may be issued under the Plan or (ii) materially modify the
requirements as to eligibility for participation in the Plan shall be
submitted to the shareholders of the Company for their approval at the
next annual or special meeting after adoption by the Board of
Directors, and if such shareholder approval is not obtained, the
amendment,
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together with any actions taken under the Plan on the necessary
authority of such amendment, shall be null and void.
20. TERMINATION OF THE PLAN
The Plan shall remain in effect until Awards have been granted covering all the
shares of the Company's common stock authorized under Section 4(a) or until the
Plan is otherwise terminated by the Company's Board of Directors; provided,
however, that no incentive stock option shall be granted more than ten years
after the date on which the Plan is approved by the shareholders of the Company,
I.E., the effective date of the Plan. Termination of the Plan shall not affect
outstanding Awards.
21. CHANGES IN CAPITAL STRUCTURE
Except as otherwise provided in Section 22, in the event the outstanding shares
of common stock of the Company are hereafter increased or decreased or changed
into or exchanged for a different number or kind of shares or other securities
of the Company or of another corporation by reason of any reorganization,
merger, consolidation, recapitalization, reclassification, stock split, spin-
off, combination of shares, dividend payable in shares, rights offering, change
in the corporate structure of the Company, or otherwise, then the Committee
shall make proportional adjustments to the maximum number and class of shares
subject to the Plan and to the maximum number and class of shares with respect
to which Awards may be granted or paid to any individual participant as set
forth in Sections 4(a) and (c). In addition, the Committee shall make an
appropriate adjustment to the number and class of shares as to which outstanding
Awards, or portions thereof then unexercised, shall be exercisable or settled
and the per share price of such shares, to the end that the participant's
proportionate interest shall be maintained as before the occurrence of such
event, without any change in the total price applicable to the unexercised
portion of any Award. Any such adjustment made by the Committee shall be
conclusive.
22. CHANGE IN CONTROL
(a) Notwithstanding any other provision of the Plan to the contrary, if,
while any Awards remain outstanding under the Plan, a Change in
Control of the Company shall occur, then:
(i) All options and SARs granted under the Plan that are outstanding
at the time of such Change in Control shall become exercisable in
full immediately prior to the Change in Control;
(ii) To the extent deemed earned, each outstanding PSR shall become
immediately payable in cash, and the remainder of each
outstanding PSR shall be canceled for no value. All outstanding
PSRs shall be deemed to have been earned to the extent of the
greater of:
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(1) The number of shares of the Company's common stock
determined by the Committee based on the extent to which the
Performance Goals specified in the Award Agreement have been
achieved during the portion of the Performance Cycle ending
on the last day of the last fiscal quarter of the Company
ending on or before the date of the Change in Control; or
(2) The number of shares of the Company's common stock equal to
the product of the target shares identified in the Award
Agreement multiplied by a fraction with a numerator equal to
the whole number of calendar months beginning with the month
in which the Award was granted and ending on the date of the
Change in Control and a denominator equal to the whole
number of calendar months in the entire Performance Cycle
specified in the Award Agreement.
(iii) All restrictions with respect to RSRs shall lapse and all
outstanding RSRs shall be settled by a payment in cash to each
holder of such Award; and
(iv) All other restrictions with respect to outstanding Awards not
described in paragraphs (i) through (iii) of this Section 22(a)
shall lapse, and such Awards shall be fully vested and
nonforfeitable.
(b) For purposes of this Section 22, with respect to determining the cash
equivalent value of an RSR or PSR or the spread payable upon exercise
of a SAR, the Fair Market Value of a share of the Company's stock
shall be deemed to equal the greater of (i) the Fair Market Value of a
share of stock as of the date on which a Change in Control occurs and
(ii) the price of a share of stock which is paid or offered to be
paid, by any Person or entity, in connection with any transaction
which constitutes a Change in Control.
(c) The phrase "immediately prior to the Change in Control" shall be
understood to mean sufficiently in advance of a Change in Control to
permit the holder of an Award to take all steps reasonably necessary
to exercise all options and SARs and take any actions with respect to
the shares of stock underlying Awards of any nature so that such
shares may be treated in the same manner as the shares of stock of
other shareholders in connection with the Change in Control.
23. APPROVALS
The obligations of the Company under the Plan shall be subject to the approval
of such state or federal authorities or agencies, if any, as may have
jurisdiction in the matter. Shares shall not be issued with respect to an Award
unless the exercise and the issuance and delivery of the shares comply with all
relevant provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the Exchange Act, the
Code, the respective rules and regulations promulgated thereunder, and the
requirements of any stock exchange or
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market on which the shares may then be listed or traded, and shall be further
subject to the approval of counsel for the Company with respect to such
compliance. Inability of the Company to obtain from any regulatory body
having jurisdiction the authority deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any shares hereunder shall
relieve the Company of any liability for the nonissuance or sale of such
shares. The Board of Directors may require any action or agreement by a
holder of an Award as may from time to time be necessary to comply with the
federal and state securities laws. The Company shall not be obliged to
register stock issued under the Plan or options or any other rights to
acquire stock granted under the Plan.
24. EMPLOYMENT RIGHTS
Nothing in this Plan or any Award granted pursuant hereto shall confer upon any
employee any right to be continued in the employment of the Company or any
Subsidiary of the Company or to interfere in any way with the right of the
Company, in its sole discretion, to terminate such employee's employment at any
time.
25. EFFECTIVE DATE OF THE PLAN
The effective date of this Plan is May 7, 1997.
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