<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 1998
Commission File Number 1-2964
------------------
TRANSAMERICA CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-0932740
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 Montgomery Street
San Francisco, California 94111
(Address of principal executive offices)
(Zip Code)
(415) 983-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Number of shares of Common Stock, $1 par value, outstanding as of close
of business on April 30, 1998: 62,937,470 shares.
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TRANSAMERICA CORPORATION
FORM 10-Q
Part I. Financial Information
Item 1. Financial Statements.
The following unaudited consolidated financial statements of
Transamerica Corporation and Subsidiaries, for the periods ended March 31, 1998
and 1997, and the balance sheet as of December 31, 1997 do not include complete
financial information and should be read in conjunction with the Consolidated
Financial Statements filed with the Commission in Transamerica's Annual Report
on Form 10-K for the year ended December 31, 1997. The financial information
presented in the financial statements included in this report reflects all
adjustments, consisting only of normal recurring accruals, which are, in the
opinion of management, necessary for a fair statement of results for the interim
periods presented. Results for the interim periods are not necessarily
indicative of the results for the entire year for most of the Corporation's
businesses.
* * * * * * *
Earnings per share is calculated by dividing income available to common
stockholders by the average number of common, and for diluted earnings per share
common stock equivalent, shares outstanding. Basic earnings per share is based
upon the weighted average number of common shares outstanding during the period
of 63,050,000 and 66,170,000 at March 31, 1998 and 1997. Diluted earnings per
share is based upon the weighted average number of common shares outstanding
during the period plus the effect of common stock options outstanding, using the
treasury stock method, of 65,568,000 and 68,063,000 at March 31, 1998 and 1997.
The computations for 1997 are based on income after deduction of preferred
dividends of $2.6 million and the premium on redemption of preferred stock of
$3.8 million.
Effective January 1, 1998, Transamerica adopted the provisions of
American Institute of Certified Public Accountants Statement of Position No.
98-1 which requires, among other things, that payroll costs incurred in the
development of computer software systems be capitalized. The effect of adoption
was to increase first quarter consolidated income by $1.8 million ($0.03 diluted
earnings per share).
The consolidated ratios of earnings to fixed charges were computed by
dividing income from continuing operations before fixed charges and income
taxes by the fixed charges. Fixed charges consist of interest and debt expense
and one-third of rent expense, which approximates the interest factor.
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<TABLE>
TRANSAMERICA CORPORATION AND SUBSIDIARIES
-----------------
CONSOLIDATED BALANCE SHEET
Assets
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Investments, principally of life insurance subsidiaries:
Fixed maturities $ 29,416.8 $ 29,210.8
Equity securities 1,667.0 1,607.5
Mortgage loans and real estate 764.2 750.2
Loans to life insurance policyholders 450.2 451.0
Short-term investments 291.9 336.0
----------- -----------
32,590.1 32,355.5
Finance receivables 5,217.2 4,333.4
Less unearned fees ($378.8 in 1998 and
$340.8 in 1997) and allowance for losses 489.7 430.1
----------- -----------
4,727.5 3,903.3
Cash and cash equivalents 112.6 132.9
Trade and other accounts receivable 2,459.9 2,165.8
Net assets of discontinued operations 50.4 40.1
Property and equipment, less accumulated
depreciation of $1,437.3 in 1998 and
$1,465.9 in 1997:
Land, buildings and equipment 405.3 395.4
Equipment held for lease 2,977.5 2,996.5
Deferred policy acquisition costs 2,152.8 2,102.6
Separate account assets 7,038.8 5,494.7
Goodwill, less accumulated amortization of
$159.6 in 1998 and $156.2 in 1997 386.9 423.0
Assets held for sale 75.5 377.8
Other assets 655.6 785.3
----------- -----------
$ 53,632.9 $ 51,172.9
=========== ===========
(Amounts in millions)
</TABLE>
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<TABLE>
TRANSAMERICA CORPORATION AND SUBSIDIARIES
-----------------
CONSOLIDATED BALANCE SHEET (Continued)
Liabilities and Stockholders' Equity
<CAPTION>
March 31, December 31,
1998 1997
<S> <C> <C>
Life insurance policy liabilities $ 30,511.1 $ 30,141.9
Notes and loans payable, principally of
finance subsidiaries, of which $858.1
in 1998 and $998.6 in 1997 matures
within one year 6,619.7 6,235.3
Accounts payable and other liabilities 1,981.1 2,096.9
Income taxes 1,683.4 1,607.8
Separate account liabilities 7,038.8 5,494.7
Minority interest in preferred securities
of affiliates 715.0 715.0
Stockholders' equity:
Preferred Stock ($100 par value):
Preference Stock (without par value)--
5,000,000 shares authorized; none
outstanding
Common Stock ($1 par value):
Authorized--150,000,000 shares
Outstanding -- 63,165,194 shares in 1998
and 62,904,108 shares in 1997,
after deducting 16,573,268 shares
and 16,834,354 shares in treasury 63.2 62.9
Retained earnings 3,423.2 3,330.8
Components of other cumulative
comprehensive income:
Net unrealized gain from investments
marked to fair value 1,644.3 1,533.6
Foreign currency translation adjustments (46.9) (46.0)
----------- -----------
5,083.8 4,881.3
----------- -----------
$ 53,632.9 $ 51,172.9
=========== ===========
(Amounts in millions except for share data)
</TABLE>
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<TABLE>
TRANSAMERICA CORPORATION AND SUBSIDIARIES
-----------------
CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
Three months ended
March 31,
1998 1997
<S> <C> <C>
REVENUES
Investment income $ 564.5 $ 533.0
Life insurance premiums and related income 456.9 442.1
Finance charges and other fees 167.1 123.3
Leasing revenues 185.7 188.9
Real estate and tax service revenues 74.6 56.2
Gain on investment transactions 84.3 8.2
Other 25.8 20.3
----------- -----------
1,558.9 1,372.0
EXPENSES
Life insurance benefits 724.4 680.3
Life insurance underwriting, acquisition
and other expenses 178.0 199.8
Interest and debt expense 104.9 101.4
Leasing operating and maintenance costs 111.9 114.0
Provision for losses on receivables 13.6 3.6
Other, including administrative and general
expenses 197.2 155.8
----------- -----------
1,330.0 1,254.9
----------- -----------
228.9 117.1
Income taxes 75.2 36.1
----------- -----------
Income from continuing operations
and net income $ 153.7 $ 81.0
=========== ===========
Basic earnings per share of common stock:
Income before gain on investment
transactions $ 1.57 $ 1.05
Gain on investment transactions 0.87 0.08
------------ ------------
Income from continuing operations
and net income $ 2.44 $ 1.13
============ ============
Diluted earnings per share of common stock:
Income before gain on investment
transactions $ 1.51 $ 1.02
Gain on investment transactions 0.83 0.08
------------ ------------
Income from continuing operations
and net income $ 2.34 $ 1.10
============ ============
Dividends per share of common stock $ 0.50 $ 0.50
============ ============
Ratio of earnings to fixed charges 2.79 1.97
============ ============
(Amounts in millions except for share data)
</TABLE>
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<TABLE>
TRANSAMERICA CORPORATION AND SUBSIDIARIES
-----------------
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
Three months ended March 31,
1998 1997
<S> <C> <C>
OPERATING ACTIVITIES
Income from continuing operations $ 153.7 $ 81.0
Adjustments to reconcile income from
continuing operations to net cash
provided by operating activities:
Increase in life insurance policy
liabilities, excluding policyholder
balances on interest-sensitive policies 449.2 126.5
Amortization of policy acquisition costs 75.6 47.4
Policy acquisition costs deferred (133.8) (102.3)
Depreciation and amortization 83.4 84.2
Other (294.3) 108.6
---------- ----------
Net cash provided by operations 333.8 345.4
INVESTING ACTIVITIES
Finance receivables originated (4,791.9) (4,234.4)
Finance receivables collected 4,582.7 3,851.7
Purchase of investments (2,119.8) (2,058.1)
Sales and maturities of investments 2,166.5 1,540.3
Proceeds from the portfolio sales of and cash
transactions with discontinued operations (7.2) 405.3
Purchase of finance receivables from
Whirlpool Financial Corporation (351.9)
Other (76.3) (86.4)
---------- ----------
Net cash used by investing activities (597.9) (581.6)
FINANCING ACTIVITIES
Proceeds from debt financing 957.1 2,415.5
Payment of notes and loans (578.2) (2,453.2)
Receipts from interest-sensitive policies
credited to policyholder account balances 1,705.7 1,505.3
Return of policyholder balances on
interest-sensitive policies (1,779.8) (1,148.0)
Treasury stock purchased (79.4) (13.2)
Redemption of preferred stock (318.9)
Proceeds from issuance of common stock 50.0 38.3
Dividends (31.6) (35.8)
---------- ----------
Net cash provided (used) by financing activities 243.8 (10.0)
---------- ----------
Decrease in cash and cash
equivalents (20.3) (246.2)
Cash and cash equivalents at beginning
of year 132.9 440.9
---------- ----------
Cash and cash equivalents at end of period $ 112.6 $ 194.7
========== ==========
(Amounts in millions)
</TABLE>
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<TABLE>
TRANSAMERICA CORPORATION AND SUBSIDIARIES
-----------------
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
<CAPTION>
Three months ended March 31,
1998 1997
<S> <C> <C>
Balance at beginning of year $ 3,330.8 $ 2,920.2
Net income 153.7 81.0
Dividends on common stock (31.6) (33.2)
Dividends on preferred stock (2.6)
Treasury stock purchased (29.7)
---------- ----------
Balance at end of period $ 3,423.2 $ 2,965.4
========== ==========
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Consolidated Results
Transamerica's net income for the first quarter of 1998 increased $72.7
million (90%), compared to the first quarter of 1997.
Net income for the first quarter of 1998 included net after tax gains
from investment transactions aggregating $54.7 million compared to $5.3 million
in the first quarter of 1997. Income before investment transactions for the
first quarter of 1997 included a $20.1 million after tax provision for a legal
settlement recorded by the life insurance business. Excluding this provision,
income before investment transactions increased $3.1 million (3%) due primarily
to increases in life insurance and real estate operating results and lower
unallocated interest and other expenses. Partially offsetting these favorable
variances were decreased commercial lending and leasing operating results.
Gain on investment transactions, pretax, included in consolidated
revenues, comprised (amounts in millions):
<TABLE>
<CAPTION>
Three months ended March 31,
1998 1997
<S> <C> <C>
Net gain (loss) on sale of investments $ 93.0 $ (2.3)
Adjustment for impairment in value (7.9) (2.0)
Adjustment to amortization of
deferred policy acquisition
costs for realized investment
transactions (0.8) 12.5
---------- ----------
$ 84.3 $ 8.2
========== ==========
</TABLE>
The amortization of deferred policy acquisition costs is adjusted due
to gains or losses realized on the sale of certain investments. The adjustment
to the amortization of deferred policy acquisition costs is included in
investment transactions as an offset to the related gains or losses. Investment
transactions also reflected downward adjustments primarily for impairment in the
value of certain nonperforming fixed maturity investments, mortgage loans, real
estate investments and real estate acquired through foreclosure.
<PAGE>
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<TABLE>
REVENUES AND INCOME BY LINE OF BUSINESS
<CAPTION>
Three months ended March 31
Revenues Income
1998 1997 1998 1997
(Amounts in millions)
<S> <C> <C> <C> <C>
Life insurance revenue and income
before investment transactions $ 1,014.6 $ 971.5 $ 77.9 $ 62.9
Commercial lending 164.6 117.4 18.0 21.2
Leasing 203.2 207.7 15.6 15.8
Amortization of goodwill (3.4) (3.2)
---------- ---------- --------- ---------
Total finance 367.8 325.1 30.2 33.8
Real estate services revenue and income
before investment transactions 98.7 76.7 18.4 8.1
Unallocated interest and
other expenses 18.5 15.6 (27.5) (29.1)
Consolidation eliminations (25.0) (25.1)
---------- ---------- --------- ---------
Revenues and income from continuing
operations before investment
transactions 1,474.6 1,363.8 99.0 75.7
Gains on investment transactions:
Life insurance 26.2 5.8 17.1 3.7
Real estate 58.1 2.4 37.6 1.6
---------- ---------- --------- ---------
Total investment gains 84.3 8.2 54.7 5.3
---------- ---------- --------- ---------
Total revenues and income from
continuing operations $ 1,558.9 $ 1,372.0 $ 153.7 $ 81.0
========== ========== ========= =========
</TABLE>
Life insurance
In the first quarter of 1998 the life insurance operation reported net
income of $95 million compared to $66.6 million in the first quarter of 1997.
Net income included after tax gains from investment transactions of $17.1
million in the first quarter of 1998 compared to $3.7 million in the first
quarter of 1997. First quarter income before investment transactions for the
life insurance operation was $77.9 million, $15 million (24%) higher than the
$62.9 million income before investment transactions earned in the first quarter
of 1997. The 1997 first quarter results were unfavorably affected by a $20.1
million after tax charge for a legal settlement recorded in the life insurance
division.
The life insurance division's 1998 first quarter operating income
before investment transactions was $20.8 million compared to $0.5 million in the
first quarter of 1997. The 1997 period included the $20.1 million after tax
charge discussed above.
Annuities' income before investment transactions of $11.9 million was
$2.4 million (17%) lower than the comparable period in 1997 due to lower
interest margin and lower fee income. In addition, first quarter 1998 operating
expenses were higher than the 1997 period due to increased marketing and
distribution expenses associated with certain new product introductions in 1998.
The asset management group's (including structured settlements) first
quarter results before investment transactions were $16.4 million, $3.1 million
(23%) better than the first quarter of 1997. This was primarily due to favorable
interest spreads and increased fee income resulting from growth in the line's
asset management business.
Within the reinsurance line, higher loss claims on accident and health
business during the first quarter of 1998 resulted in $4.3 million (26%) lower
earnings before investment transactions than the first quarter of last year.
<PAGE>
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The Canadian line's performance for the first quarter was about equal
to the comparable 1997 quarter. Although net investment income in the first
quarter of 1998 was higher than the first quarter of 1997, higher death claims
and increased reserves due to growth in inforce business offset the revenue
increase.
For the corporate line, income before investment transactions in the
first quarter of 1998 of $8.7 million was $1.6 million (15%) lower than the
comparable 1997 period due primarily to lower investment income.
Life insurance operations gains on investment transactions increased
$13.4 million for the first quarter of 1998 compared to first quarter of 1997.
The $17.1 million after tax gain for the first quarter included a $22.8 million
gain on disposition of investments compared to a loss of $3 million in the first
quarter of 1997. In the 1998 and 1997 first quarters, downward adjustments of
$5.2 million and $1.3 million were made for impairment in the value of fixed
maturity investments. An adjustment to the amortization of policy acquisition
costs of $500,000 after tax further reduced the net investment gain for the
first quarter of 1998 compared to a favorable adjustment of $8.1 million in the
same period in 1997.
Total life insurance net investment income of $557.6 million increased
$28.2 million (5%) for the first quarter of 1998 over the first quarter of 1997
primarily due to the increased level of invested assets.
Premiums and related income for the life insurance operation increased
$14.9 million (3%) for the first quarter of 1998 over the first quarter of 1997.
The growth was primarily due to increases in traditional life premiums, fees
from interest-sensitive policies and increased fee income from group pension and
annuities. The life insurance operations benefits paid or provided increased
$27.8 million (4%) primarily due to increased interest credited on
interest-sensitive policies and the larger base of life insurance in force.
Cash provided by life insurance operations for the first quarter of 1998
decreased $53.1 million (20%) compared with the same period of 1997 primarily
due to the timing of the settlement of certain receivables and payables,
including reinsurance receivables and payables. The life insurance operation
continues to maintain a sufficiently liquid portfolio to cover its operational
requirements, with remaining funds being invested in longer term securities.
Commercial Lending
Commercial lending net income for the first quarter of 1998 was $15.1
million compared to $18.5 million for the first quarter of 1997. Income, before
the amortization of goodwill, for the first quarter of 1998 was $18 million, a
decrease of $3.2 million (15%) from the first quarter of 1997. Operating results
for the 1998 period included a $3.2 million operating loss from the retail
businesses (which consist of the credit card portfolio acquired from Whirlpool
Financial Corporation in 1998 and the retained residential mortgage lending
businesses), a $2.1 million after tax charge for losses and the restructuring of
the insurance premium finance business, and a $2.1 million after tax gain on the
sale and securitization of $300 million of floorplan receivables. The first
quarter of 1997 operating results included a $3.2 million tax benefit from the
resolution of prior years' tax matters. A higher net margin due to higher
average receivables owned and serviced in the first quarter of 1998 and a $3
million tax benefit from the resolution of prior year tax matters were offset in
part by higher operating expenses and a higher provision for losses on
receivables.
Revenues in the first quarter of 1998 increased $47.2 million (40%)
over the first quarter of 1997 principally as a result of growth in average net
receivables outstanding owned and serviced.
Interest expense increased $7.5 million (18%) in the first quarter of 1998
due to a higher average interest rate on borrowings and to higher average
outstanding debt as a result of growth in average net receivables. Operating
expenses rose $34.7 million (80%) in the first quarter of 1998 compared to the
first quarter of 1997 mainly as a result of costs related to the integration of
the Whirlpool Financial operations and higher business volume. The provision for
losses on receivables increased $10 million due primarily to higher credit
losses relating to the retail portfolio and additional provisions for the
insurance premium finance portfolio. Credit losses, net of recoveries, on an
annualized basis as a percentage of average net receivables outstanding were
0.57% for the first quarter of 1998 compared to 0.17% for the first quarter of
1997.
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Page 10
Net commercial finance receivables outstanding at March 31, 1998
increased $858.6 million (24%) from December 31, 1997. The increase in
receivables was largely a result of a decision not to sell the insurance premium
finance operation and the reclassification of those receivables from assets held
for sale to finance receivables, and the acquisitions during the first quarter
of 1998 of the retail finance business and most of the remaining international
assets from Whirlpool Financial Corporation which amounted to $352 million in
net receivables. This completed the acquisition of $1.1 billion in net
receivables and other assets representing substantially all of the inventory and
retail finance business from Whirlpool Financial Corporation. The total purchase
price was $1.3 billion in cash subject to post closing adjustments. During the
first quarter of 1998 the distribution finance operation also securitized $300
million of floorplan finance receivables.
Management has established an allowance for losses equal to 2.37% of
net commercial finance receivables outstanding as of March 31, 1998 compared to
2.35% at December 31, 1997.
Delinquent receivables, which are defined as instalments for inventory
finance and asset based lending receivables more than 60 days past due and the
outstanding loan balance for all other receivables more than 60 days past due,
were $39.1 million (0.84% of receivables outstanding) at March 31, 1998 compared
to $18 million (0.48% of receivables outstanding) at December 31, 1997.
Nonearning receivables, which are defined as balances from borrowers
that are over 90 days delinquent or at such earlier time as full collectibility
becomes doubtful, were $41.8 million (0.90% of receivables outstanding) at March
31, 1998 compared to $26.4 million (0.71% of receivables outstanding) at
December 31, 1997.
The increase in both nonearning and delinquent receivables at March 31,
1998 was due to the inclusion of the insurance premium finance receivables which
were reported as assets held for sale at December 31,1997, and the receivables
of the new retail lending operation. Delinquent and nonearning insurance premium
finance receivables at December 31, 1997 were $14.2 million and $7.5 million.
Leasing
In the first quarter of 1998, the leasing operation reported net income
of $15.1 million compared to $15.3 million in the first quarter of 1997. Leasing
income, before the amortization of goodwill, was $15.6 million in the first
quarter of 1998 compared to $15.8 million in the first quarter of 1997. Earnings
for 1998 were lower as a result of a smaller fleet size and fewer units on hire
in the rail trailer business and lower earnings from the structured finance
business due to tightening interest rate spreads. Offsetting some of these
decreases in earnings were favorable results from standard containers due to
lower ownership and operating costs resulting from a smaller fleet.
Revenue for the first quarter of 1998 decreased $4.5 million (2%) as
compared to the first quarter of 1997. Revenue decreased in the standard
container and rail trailer businesses due to lower per diem rates and to fewer
units on hire resulting from smaller fleets. Partially offsetting these
decreases were higher revenues from European trailer due to a larger fleet size.
Expenses for the first quarter of 1998 decreased $4.2 million (2%)
mainly due to lower ownership and operating costs associated with a smaller
fleet of standard containers and rail trailers.
The combined utilization of standard containers, refrigerated
containers, domestic containers, tank containers and chassis averaged 79% for
the first quarter of 1998 compared to 78% in the first quarter of 1997. Rail
trailer utilization was 79% for the first quarter of 1998 compared to 83% in the
first quarter of 1997. European trailer utilization was 90% for the first
quarter of 1998 compared to 91% in the first quarter of 1997.
Real Estate Services
This segment includes Transamerica's real estate information businesses
as well as certain real estate and other investments.
Net income for the first quarter of 1998 increased $46.3 million (477%)
over the first quarter of 1997. Net income included net after tax gains from
investment transactions of $37.6 million and $1.6 million in the first quarters
of 1998 and 1997. Income before investment transactions in the first quarter of
1998 increased $10.3 million (127%) from the first quarter of 1997 primarily due
to higher operating income at the real estate tax service due to increased new
contract volume caused by higher mortgage refinancings in the first quarter of
1998.
Revenues for the first quarter of 1998 increased $77.7 million (98%)
over the first quarter of 1997 as a result of increased gains from investment
transactions and increased volume at the real estate tax service business.
<PAGE>
Page 11
Unallocated Interest and Expenses
Unallocated interest and other expenses, after related income taxes,
for the first three months of 1998 decreased $1.6 million (5%). The decrease was
primarily due to the inclusion in the 1997 period of expenses associated with
the vesting of certain performance stock options issued under the 1995
Performance Stock Option Plan.
Discontinued Operations
In the first quarter of 1998 and 1997 results from discontinued
operations were break even.
Comprehensive Income
In accordance with Financial Accounting Standard No. 130, Reporting
Comprehensive Income, comprehensive income for the three months ended
March 31, 1998 and 1997 comprised:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Net income $ 153.7 $ 81.0
Other comprehensive income, net of tax:
Unrealized gains (losses) from
investments marked to fair value:
Unrealized holding gains (losses)
arising during period:
Equity securities 131.9 2.0
Fixed maturities 33.5 (311.1)
Less: reclassification adjustment
for gains included in net income (54.7) (5.3)
--------- ---------
110.7 (314.4)
Foreign currency
translation adjustments (0.9) (7.2)
--------- ---------
Comprehensive income (loss) $ 263.5 $ (240.6)
========= =========
</TABLE>
Transamerica is required to mark its equity securities and fixed maturities
portfolios to fair value. These investments support liabilities that are not
marked to fair value.
Transamerica manages its exposure to interest rate fluctuations by managing
the characteristics of the assets and liabilities so that changes are offset.
Transamerica's objectives for asset liability management are to provide maximum
levels of finance and investment income and minimize funding costs while
maintaining acceptable levels of interest rate and liquidity risk and
facilitating the funding needs of the company.
Corporate Liquidity and Capital Requirements
Transamerica Corporation receives funds from its subsidiaries in the
form of dividends, income taxes and interest on loans. The Corporation uses
these funds to pay dividends to its stockholders, purchase shares of its common
stock, reinvest in the operations of its subsidiaries and pay corporate
interest, expenses and taxes. Reinvested funds are allocated among subsidiaries
on the basis of expected returns, creation of shareholder value and capital
needs. Reinvestment may be accomplished by allowing a subsidiary to retain all
or a portion of its earnings, or by making capital contributions or loans.
The Corporation also borrows funds to finance acquisitions or to lend
to certain of its subsidiaries to finance their working capital needs.
Subsidiaries are required to maintain prudent financial ratios
consistent with other companies in their respective industries and retain the
capacity through committed credit lines to repay working capital loans from the
Corporation.
<PAGE>
Page 12
In May 1997, Transamerica announced that its board of directors had
authorized additional purchases of up to 6 million shares of the company's
common stock. At March 31, 1998, there were 1,706,500 shares remaining to be
purchased under this authorization. During the first quarter of 1998,
Transamerica purchased 211,000 shares for a total cost of $25.6 million and
recorded a market price adjustment of $29 million in connection with the
accelerated stock purchase program in the second quarter of 1997.
Investment Portfolio
Transamerica, principally through its life insurance subsidiaries,
maintains an investment portfolio aggregating $32.6 billion at March 31, 1998,
of which $29.4 billion was invested in fixed maturities. At March 31, 1998,
94.5% of the fixed maturities was rated as "investment grade" with an additional
3.6% in the BB category or its equivalent. The amortized cost of fixed
maturities was $27.2 billion resulting in a net unrealized gain position, before
the effect of income taxes and adjustments to deferred acquisition costs and
policy liabilities, of $2.2 billion at March 31, 1998. The amortized cost of
delinquent below investment grade securities, before provision for impairment in
value, was $2 million at March 31, 1998 and December 31, 1997. Adjustment for
impairment in value has been made to reduce the amortized cost of certain fixed
maturity investments by $78.7 million at March 31, 1998 and $72.9 million at
December 31, 1997.
In addition to the investments in fixed maturities, $764.2 million (2%
of the investment portfolio), net of allowance for losses of $30.7 million, was
invested in mortgage loans and real estate including $696.3 million in
commercial mortgage loans, $67.4 million in real estate investments, $400,000 in
foreclosed real estate and $30.8 million in residential mortgage loans. Problem
loans, defined as restructured loans yielding less than 8% and delinquent loans,
totaled $3 million at March 31, 1998 and $2.3 million at December 31, 1997.
Allowances for possible losses of $1.4 million at March 31, 1998 and $1.5
million at December 31, 1997 have been established to cover possible losses from
mortgage loans and real estate investments.
Derivatives
The operations of Transamerica are subject to risk of interest rate
fluctuations to the extent that there is a difference between the cash flows
from Transamerica's interest-earning assets and the cash flows related to its
liabilities that mature or are repriced in specified periods. In the normal
course of its operations, Transamerica hedges some of its interest rate risk
with derivative financial instruments. These derivatives comprise primarily
interest rate swap agreements, interest rate floor agreements, and options to
enter into interest rate swap agreements (swaptions).
Derivative financial instruments with a notional amount of $9.9 billion
at March 31, 1998 and $10 billion at December 31, 1997 and designated as hedges
of portions of Transamerica's investment portfolio were outstanding. In
addition, derivative financial instruments with a notional amount of $6.1
billion at March 31, 1998 and $4 billion at December 31, 1997 and designated as
hedges of Transamerica's liabilities were outstanding.
While Transamerica is exposed to credit risk in the event of
nonperformance by the other party, nonperformance is not anticipated due to the
credit rating of the counterparties. At March 31, 1998, the derivative financial
instruments discussed above were issued by financial institutions rated A or
better by one or more of the major credit rating agencies. The fair value of
Transamerica's derivative financial instruments at March 31, 1998 and December
31, 1997 was a net benefit of $199.6 million and $212.7 million comprising
agreements with aggregate gross benefits of $225 million and $238 million and
agreements with aggregate gross obligations of $25.4 million and $25.3 million.
Year 2000 Issue
Transamerica has developed a plan to modify its information systems
technology to recognize the year 2000 and has begun converting its critical data
processing systems. The project is currently on schedule. Most of the systems
are currently being remediated, will be tested during the second half of 1998
and are expected to be year 2000 ready by the end of 1998. The remainder of the
systems are expected to be year 2000 ready by mid-1999.
The Corporation currently expects the project to cost between $25
million and $35 million, which is being expensed as incurred. This estimate
includes internal costs, but excludes the costs to upgrade and replace systems
in the normal course of business. It is currently expected that the project will
not have a significant effect on Transamerica's results of operations.
<PAGE>
Page 13
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.1 Form of $125 Nonqualified Stock Option Agreement under
the Registrant's 1995 Performance Stock Option Plan
10.2 Form of $150 Nonqualified Stock Option Agreement granted
with Tandem Limited Stock Appreciation Right under the
Registrant's 1995 Performance Stock Option Plan
10.3 Form of Tandem Limited Stock Appreciation Right (Tandem
to $150 Options) under the Registrant's 1995 Performance
Stock Option Plan
10.4 Form of $125 Nonqualified Stock Option Agreement under
the Registrant's 1996 Stock Option and Award Plan
10.5 Form of $150 Nonqualified Stock Option Agreement granted
with Tandem Limited Stock Appreciation Right under the
Registrant's 1996 Stock Option and Award Plan
10.6 Form of Tandem Limited Stock Appreciation Right (tandem
to $150 Options) under the Registrant's 1996 Stock
Option and Award Plan.
12 Computation of Ratio of Earnings from continuing
operations to Fixed Charges.
27 Financial Data Schedule.
(b) Reports on Form 8K - None.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANSAMERICA CORPORATION
(Registrant)
Burton E. Broome
Vice President and Controller
(Chief Accounting Officer)
Date: May 12, 1998
<PAGE>
EXHIBIT 10.1
FORM OF $125 NONQUALIFIED STOCK OPTION AGREEMENT UNDER THE
REGISTRANT'S 1995 PERFORMANCE STOCK OPTION PLAN
TRANSAMERICA CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
Transamerica Corporation (the "Company") hereby grants you,
[NAME OF EMPLOYEE] (the "Employee"), a nonqualified stock option under the
Company's 1995 Performance Stock Option Plan (the "Plan"), to purchase shares of
common stock of the Company ("Shares"). The date of this Agreement is [DATE]
(the "Grant Date"). In general, the latest date this option will expire is [DATE
10 YEARS FROM GRANT DATE] (the "Expiration Date"). However, as provided in
Appendix A (attached hereto), this option may expire earlier than the Expiration
Date. Subject to the provisions of Appendix A (attached hereto) and of the Plan,
the principal features of this option are as follows:
Maximum Number of Shares
Purchasable with this Option: [NUMBER] Purchase Price per Share: $125.00
- ---------------------------- ------------------------
Scheduled Vesting Dates Number of Shares
[DATE 3 YEARS FROM GRANT DATE] [# of Shares]
[DATE 4 YEARS FROM GRANT DATE] [# of Shares]
[DATE 5 YEARS FROM GRANT DATE] [# of Shares]
Event Triggering Termination of Option Maximum Time to Exercise After
Triggering Event*
Termination of Employment due to Disability 3 years
Termination of Employment due to Early or
Normal Retirement 5 years
Termination of Employment due to death 3 years
Termination of Employment within 1 year after
a Change of Control for a reason other
than Disability, Early or Normal 1 year
Retirement or death
All other Terminations of Employment 3 months
* However, in no event may this option be exercised after the Expiration Date
(except in certain cases of the death of the Employee).
Your signature below indicates your agreement and
understanding that this option is subject to all of the terms and conditions
contained in Appendix A and the Plan. For example, important additional
information on vesting and termination of this option is contained in Paragraphs
4 through 7 of Appendix A. ACCORDINGLY, PLEASE BE SURE TO READ ALL OF APPENDIX
A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS OPTION.
TRANSAMERICA CORPORATION EMPLOYEE
By_______________________ _______________________
Title: [NAME]
<PAGE>
APPENDIX A
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
1. Grant of Option. The Company hereby grants to the Employee
under the Plan, as a separate incentive in connection with his or her employment
and not in lieu of any salary or other compensation for his or her services, a
nonqualified stock option to purchase, on the terms and conditions set forth in
this Agreement and the Plan, all or any part of an aggregate of [NUMBER] Shares.
The option granted hereby is not intended to be an Incentive Stock Option within
the meaning of Section 422 of the Code.
2. Exercise Price.The purchase price per Share for this option
(the "Exercise Price")shall be $125.00.
3. Number of Shares. The number and class of Shares specified
in Paragraph 1 above, and/or the Exercise Price, are subject to adjustment by
the Committee in the event of any merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend, split-up, Share
combination, distribution or other change in the corporate structure of the
Company affecting the Shares (an "Event"). Any such adjustment shall be made by
the Committee as constituted immediately prior to the applicable Event (the
"Applicable Committee") and shall be designed so that if the Employee (or any
beneficiary) exercises this option after an Event, he or she shall receive (upon
payment of the Exercise Price for each Share exercised) the securities and any
other property (other than regular cash dividends) which the Employee (or
beneficiary) would have been entitled to had he or she instead acquired the
Shares on the Grant Date and held them through the date of exercise.
Notwithstanding the preceding, (a) the number of Shares subject to this option
always shall be a whole number, and (b) if the Applicable Committee determines
that the delivery of securities or other property (other than Shares) from any
such adjustment would create an undue burden or expense, the Employee (or
beneficiary) instead shall receive a lump sum cash payment equal to the fair
market value (as determined by the Applicable Committee) of such securities or
other property.
4. Vesting Schedule. This option is scheduled to become exercisable as to
33 1/3% of the shares subject to such option on the third anniversary date of
the Grant Date, and as to an additional 33 1/3% on each succeeding anniversary
date, until the right to exercise this option shall have accrued with respect to
100% of the Shares subject to this option. However, on any scheduled vesting
date, vesting actually will occur only if the Employee is an Executive on such
date. Notwithstanding the foregoing, in the event of the Employee's Termination
of Employment due to Early Retirement, Normal Retirement, Disability or death,
the right to exercise a portion of such Shares will vest on the date that such
right otherwise would have vested, as determined in the discretion of the
Committee based on the time elapsed from the Grant Date to the Termination of
Employment and the vesting date.
5. Change of Control. In the event a Change of Control occurs
prior to the Employee's Termination of Employment, the right to exercise one
hundred percent (100%) of the Shares subject to this option will vest on the
date on which the Change of Control occurs.
6. Termination of Option. Except as provided in the last
sentence of this Paragraph 6, in the event of the Employee's Termination of
Employment for any reason other than Early or Normal Retirement, Disability or
death, the Employee may, within three (3) months after the date of such
Termination, or prior to the Expiration Date, whichever shall first occur,
exercise any vested but unexercised portion of this option. In the event of the
Employee's Termination of Employment due to Disability, the Employee may, within
three (3) years after the date of such Termination, or prior to the Expiration
Date, whichever shall first occur, exercise any vested but unexercised portion
of this option. In the event of the Employee's Termination of Employment due to
Early or Normal Retirement, the Employee may, within five (5) years from the
date of such Termination, or prior to the Expiration Date, whichever shall first
occur, exercise any vested but unexercised portion of this option. In the event
of the Employee's Termination of Employment within one year after a Change of
Control for any reason other than Early or Normal Retirement, Disability or
death, the Employee may, within one (1) year after the date of such Termination,
or prior to the Expiration Date, whichever shall first occur, exercise any
vested but unexercised portion of this option.
7. Death of Employee. In the event that the Employee dies
prior to the expiration of this option in accordance with the provisions of
Paragraph 6 above, the Employee's designated beneficiary or beneficiaries, or if
no beneficiary survives the Employee, the administrator or executor of the
Employee's estate, may, within three (3) years after the date of death, exercise
any vested but unexercised portion of this option. Any such transferee must
furnish the Company (a) written notice of his or her status as a transferee, (b)
evidence satisfactory to the Company to establish the validity of the transfer
of this option and compliance with any laws or regulations pertaining to such
transfer, and (c) written acceptance of the terms and conditions of this option
as set forth in this Agreement.
8. Persons Eligible to Exercise Option. This option shall be
exercisable during the Employee's lifetime only by the Employee. The option is
not transferable except that the Employee may transfer this option (a) by a
valid beneficiary designation made in a form and manner acceptable to the
Committee, or (b) by will or the applicable laws of descent and distribution.
9. Exercise of Option. This option may be exercised by the
person then entitled to do so as to any Shares which may then be purchased (a)
by giving written notice of exercise to the Secretary of the Company (or his or
her designee), specifying the number of full Shares to be purchased and
accompanied by full payment of the Exercise Price (and the amount of any income
tax the Company is required by law to withhold by reason of such exercise), and
(b) by giving satisfactory assurances in writing if requested by the Company,
signed by the person exercising the option, that the Shares to be purchased upon
such exercise are being purchased for investment and not with a view to the
distribution thereof.
10. Suspension of Exercisability. If at any time the Company
shall determine, in its discretion, that the listing, registration or
qualification of the Shares upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory
authority, is necessary or desirable as a condition of the purchase of Shares
hereunder, this option may not be exercised, in whole or in part, unless and
until such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company.
The Company shall make reasonable efforts to meet the requirements of any such
state or federal law or securities exchange and to obtain any such consent or
approval of any such governmental authority.
11. No Rights of Stockholder. Neither the Employee (nor any
beneficiary) shall be or have any of the rights or privileges of a stockholder
of the Company in respect of any of the Shares issuable pursuant to the exercise
of this option, unless and until certificates representing such Shares shall
have been issued, recorded on the records of the Company or its transfer agents
or registrars, and delivered to the Employee (or beneficiary).
12. No Effect on Employment. The Employee's employment with
the Company and its Affiliates is on an at-will basis only. Accordingly, the
terms of the Employee's employment with the Company and its Affiliates shall be
determined from time to time by the Company or the Affiliate employing the
Employee (as the case may be), and the Company or the Affiliate shall have the
right, which is hereby expressly reserved, to terminate or change the terms of
the employment of the Employee at any time for any reason whatsoever, with or
without good cause. For purposes of this Agreement, the transfer of employment
of the Employee between the Company and any one of its Affiliates (or between
Affiliates) shall not be deemed a Termination of Employment.
13. Address for Notices. Any notice to be given to the Company
under the terms of this Agreement shall be addressed to the Company, in care of
its Secretary, at 600 Montgomery Street, San Francisco, California 94111, or at
such other address as the Company may hereafter designate in writing.
14. Option is Not Transferable. Except as otherwise provided
in Paragraphs 7 and 8 above, this option and the rights and privileges conferred
hereby may not be transferred, pledged, assigned or otherwise hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
sale under execution, attachment or similar process. Upon any attempt to
transfer, pledge, assign, hypothecate or otherwise dispose of this option, or of
any right or privilege conferred hereby, or upon any attempted sale under any
execution, attachment or similar process, this option and the rights and
privileges conferred hereby immediately shall become null and void.
15. Maximum Term of Option. Notwithstanding any other
provision of this Agreement except Paragraph 7 above relating to the death of
the Employee (in which case this option is exercisable to the extent set forth
therein), this option is not exercisable after the Expiration Date.
16. Binding Agreement. Subject to the limitation on the
transferability of this option contained herein, this Agreement shall be binding
upon and inure to the benefit of the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.
17. Conditions to Exercise. The Exercise Price for this option
must be paid in the legal tender of the United States or, in the Committee's
sole discretion, in Shares. Exercise of this option will not be permitted until
satisfactory arrangements have been made for the payment of the appropriate
amount of withholding taxes (as determined by the Company).
18. Plan Governs. This Agreement is subject to all of the
terms and provisions of the Plan. In the event of a conflict between one or more
provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan shall govern. Capitalized terms and phrases used and not
defined in this Agreement shall have the meaning set forth in the Plan.
19. Committee Authority. The Committee shall have all
discretion, power, and authority to interpret the Plan and this Agreement and to
adopt such rules for the administration, interpretation and application of the
Plan as are consistent therewith. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Employee, the Company and all other interested persons, and shall be
given the maximum deference permitted by law. No member of the Committee shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or this Agreement.
20. Captions. The captions provided herein are for convenience
only and are not to serve as a basis for the interpretation or construction of
this Agreement.
21. Agreement Severable. In the event that any provision in
this Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
22. Modifications to this Agreement. This Agreement
constitutes the entire understanding of the parties on the subjects covered. The
Employee expressly warrants that he or she is not executing this Agreement in
reliance on any promises, representations, or inducements other than those
contained herein. Modifications to this Agreement or the Plan can be made only
in an express written contract executed by a duly authorized officer of the
Company.
<PAGE>
EXHIBIT 10.2
FORM OF $150 NONQUALIFIED STOCK OPTION AGREEMENT GRANTED WITH TANDEM
LIMITED STOCK APPRECIATION RIGHT UNDER THE REGISTRANT'S 1995
PERFORMANCE STOCK OPTION PLAN
TRANSAMERICA CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
Transamerica Corporation (the "Company") hereby grants you,
[NAME OF EMPLOYEE] (the "Employee"), a nonqualified stock option under the
Company's 1995 Performance Stock Option Plan (the "Plan"), to purchase shares of
common stock of the Company ("Shares"). The date of this Agreement is [DATE]
(the "Grant Date"). In general, the latest date this option will expire is [DATE
10 YEARS FROM GRANT DATE] (the "Expiration Date"). However, as provided in
Appendix A (attached hereto), this option may expire earlier than the Expiration
Date. Subject to the provisions of Appendix A and of the Plan, the principal
features of this option are as follows:
Maximum Number of Shares
Purchasable with this Option: [NUMBER] Purchase Price per Share: $150.00
- ---------------------------- ------------------------
Scheduled Vesting Date: The first date on which both o the following
- ---------------------- have occurred: (a) the tenth trading day
(occurring within a period of 30 consecutive
trading days before [DATE 5 YEARS AND ONE DAY
FROM GRANT DATE]) on which the Fair Market
Value of a Share is at least $150, and (b) as
determined in the discretion of the Committee,
the Company's total shareholder return equals
or exceeds the median level of shareholder
return for a subset of the S&P 500 Financial
Index during the period from [GRANT DATE] to
the tenth trading day in (a) plus any days
thereafter until such median level is met or,
if such period is less than one year, during
the one-year period that begins prior to [GRANT
DATE] and ends on the tenth trading day in (a)
or any day thereafter until such median level
is met (if it is met during such one-year
period).
Event Triggering Termination of Option Maximum Time to Exercise After
Triggering Event*
Termination of Employment (except as shown below) 3 months
Termination of Employment due to Disability 3 years
Termination of Employment due to Early or Normal
Retirement 5 years
Termination of Employment due to death 3 years
Termination of Employment within 1 year after a Change
of Control for 1 year a reason other than Disability,
Early or Normal Retirement or death
Failure of Option to Vest None
* However, in no event may this option be exercised after the Expiration Date
(except in certain cases of the death of the Employee).
Your signature below indicates your agreement and
understanding that this option is subject to all of the terms and conditions
contained in Appendix A and the Plan. For example, important additional
information on vesting and termination of this option is contained in Paragraphs
4 through 6 of Appendix A. ACCORDINGLY, PLEASE BE SURE TO READ ALL OF APPENDIX
A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS OPTION.
TRANSAMERICA CORPORATION EMPLOYEE
By______________________ ________________________
Title: [NAME]
<PAGE>
APPENDIX A
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
1. Grant of Option. The Company hereby grants to the Employee
under the Plan, as a separate incentive in connection with his or her employment
and not in lieu of any salary or other compensation for his or her services, a
nonqualified stock option to purchase, on the terms and conditions set forth in
this Agreement and the Plan, all or any part of an aggregate of [NUMBER] Shares.
The option granted hereby is not intended to be an Incentive Stock Option within
the meaning of Section 422 of the Code.
2. Exercise Price. The purchase price per Share for this
option (the "Exercise Price") shall be $150.00.
3. Number of Shares. The number and class of Shares specified
in Paragraph 1 above, the Exercise Price and/or the Fair Market Value specified
in Paragraph 4 below, are subject to adjustment by the Committee in the event of
any merger, reorganization, consolidation, recapitalization, separation,
liquidation, stock dividend, split-up, Share combination, distribution or other
change in the corporate structure of the Company affecting the Shares (an
"Event"). Any such adjustment shall be made by the Committee as constituted
immediately prior to the applicable Event (the "Applicable Committee") and shall
be designed so that if the Employee (or any beneficiary) exercises this option
after an Event, he or she shall receive (upon payment of the Exercise Price for
each Share exercised) the securities and any other property (other than regular
cash dividends) which the Employee (or beneficiary) would have been entitled to
had he or she instead acquired the Shares on the Grant Date and held them
through the date of exercise. Notwithstanding the preceding, (a) the number of
Shares subject to this option always shall be a whole number, and (b) if the
Applicable Committee determines that the delivery of securities or other
property (other than Shares) from any such adjustment would create an undue
burden or expense, the Employee (or beneficiary) instead shall receive a lump
sum cash payment equal to the fair market value (as determined by the Applicable
Committee) of such securities or other property.
4. Vesting Schedule. The right to exercise this option will
vest as to 100% of the Shares specified in Paragraph 1 above on the first date
on which both of the following conditions shall have been satisfied: (a) the
tenth trading day (occurring within a period of 30 consecutive trading days) on
which the Fair Market Value of a Share is at least $150.00, provided that
vesting will occur only if such tenth trading day occurs on or before [DATE FIVE
YEARS FROM GRANT DATE], and (b) the Company's total shareholder return (change
in share price plus reinvestment of any dividends, as determined in the
discretion of the Committee) equals or exceeds the median level of shareholder
return for a subset of the Standard & Poor's ("S&P") 500 Financial Index (as
determined in the discretion of the Committee) during the period from [GRANT
DATE] to the tenth trading day in (a) plus any days thereafter until such median
level is met or, if such period is less than one year, during the one-year
period that begins prior to [GRANT DATE] and ends on the tenth trading day in
(a) or any day thereafter until such median level is met (if it is met during
such one-year period). However, on any scheduled vesting date, vesting actually
will occur only if the Employee is an Executive on such date. Notwithstanding
the foregoing, in the event of the Employee's Termination of Employment due to
Early Retirement, Normal Retirement, Disability or death, (i) if the right to
exercise any particular Shares would have vested within six (6) months after
such Termination of Employment (had the Employee not incurred a Termination of
Employment), then the right to exercise such Shares will vest on the date that
such right otherwise would have vested, and (ii) if the right to exercise any
particular Shares would have vested more than six (6) months after such
Termination of Employment (had the Employee not incurred a Termination of
Employment), then the right to exercise a portion of such Shares will vest on
the date that such right otherwise would have vested, as determined in the
discretion of the Committee based on the time elapsed from the Grant Date to the
Termination of Employment and the vesting date.
5. Termination of Option. Except as provided in the fourth
sentence of this Paragraph 5, in the event of the Employee's Termination of
Employment for any reason other than Early or Normal Retirement, Disability or
death, the Employee may, within three (3) months after the date of such
Termination, or prior to the Expiration Date, whichever shall first occur,
exercise any vested but unexercised portion of this option. In the event of the
Employee's Termination of Employment due to Disability, the Employee may, within
three (3) years after the date of such Termination, or prior to the Expiration
Date, whichever shall first occur, exercise any vested but unexercised portion
of this option. In the event of the Employee's Termination of Employment due to
Early or Normal Retirement, the Employee may, within five (5) years from the
date of such Termination, or prior to the Expiration Date, whichever shall first
occur, exercise any vested but unexercised portion of this option. In the event
of the Employee's Termination of Employment within one year after a Change of
Control for any reason other than Early or Normal Retirement, Disability or
death, the Employee may, within one (1) year after the date of such Termination,
or prior to the Expiration Date, whichever shall first occur, exercise any
vested but unexercised portion of this option. In addition, this option shall
terminate (a) on the first date on which the option no longer may become
exercisable pursuant to Paragraph 4 above, or (b) upon exercise of the tandem
limited stock appreciation right (the "TLSAR") granted with this option (but
only to the extent provided in the following sentence). For each Share with
respect to which the TLSAR is exercised, the right to exercise [NUMBER] of the
Shares subject to this option shall immediately terminate, provided that the
number of Shares which so terminate shall be rounded to the nearest whole number
(or to such number as is appropriate to ensure that the total number of shares
covered by this option does not exceed the number specified in Paragraph 1
above).
6. Death of Employee. In the event that the Employee dies
prior to the expiration of this option in accordance with the provisions of
Paragraph 5 above, the Employee's designated beneficiary, or if no beneficiary
survives the Employee, the administrator or executor of the Employee's estate,
may, within three (3) years after the date of death, exercise any vested but
unexercised portion of the option. Any such transferee must furnish the Company
(a) written notice of his or her status as a transferee, (b) evidence
satisfactory to the Company to establish the validity of the transfer of this
option and compliance with any laws or regulations pertaining to such transfer,
and (c) written acceptance of the terms and conditions of this option as set
forth in this Agreement.
7. Persons Eligible to Exercise Option. This option shall be
exercisable during the Employee's lifetime only by the Employee. This option is
not transferable, except that the Employee may transfer this option (a) by a
valid beneficiary designation made in a form and manner acceptable to the
Committee, or (b) by will or the applicable laws of descent and distribution.
8. Exercise of Option. This option may be exercised by the
person then entitled to do so as to any Shares which may then be purchased (a)
by giving written notice of exercise to the Secretary of the Company (or his or
her designee), specifying the number of full Shares to be purchased and
accompanied by full payment of the Exercise Price (and the amount of any income
tax the Company is required by law to withhold by reason of such exercise), and
(b) by giving satisfactory assurances in writing if requested by the Company,
signed by the person exercising the option, that the Shares to be purchased upon
such exercise are being purchased for investment and not with a view to the
distribution thereof.
9. Suspension of Exercisability. If at any time the Company
shall determine, in its discretion, that the listing, registration or
qualification of the Shares upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory
authority, is necessary or desirable as a condition of the purchase of Shares
hereunder, this option may not be exercised, in whole or in part, unless and
until such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company.
The Company shall make reasonable efforts to meet the requirements of any such
state or federal law or securities exchange and to obtain any such consent or
approval of any such governmental authority.
10. No Rights of Stockholder. Neither the Employee (nor any
beneficiary) shall be or have any of the rights or privileges of a stockholder
of the Company in respect of any of the Shares issuable pursuant to the exercise
of this option, unless and until certificates representing such Shares shall
have been issued, recorded on the records of the Company or its transfer agents
or registrars, and delivered to the Employee (or beneficiary).
11. No Effect on Employment. The Employee's employment with
the Company and its Affiliates is on an at-will basis only. Accordingly, the
terms of the Employee's employment with the Company and its Affiliates shall be
determined from time to time by the Company or the Affiliate employing the
Employee (as the case may be), and the Company or the Affiliate shall have the
right, which is hereby expressly reserved, to terminate or change the terms of
the employment of the Employee at any time for any reason whatsoever, with or
without good cause. For purposes of this Agreement, the transfer of employment
of the Employee between the Company and any one of its Affiliates (or between
Affiliates) shall not be deemed a Termination of Employment.
12. Address for Notices. Any notice to be given to the Company
under the terms of this Agreement shall be addressed to the Company, in care of
its Secretary, at 600 Montgomery Street, San Francisco, California 94111, or at
such other address as the Company may hereafter designate in writing.
13. Option is Not Transferable. Except as otherwise provided
in Paragraphs 6 and 7 above, this option and the rights and privileges conferred
hereby may not be transferred, pledged, assigned or otherwise hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
sale under execution, attachment or similar process. Upon any attempt to
transfer, pledge, assign, hypothecate or otherwise dispose of this option, or of
any right or privilege conferred hereby, or upon any attempted sale under any
execution, attachment or similar process, this option and the rights and
privileges conferred hereby immediately shall become null and void.
14. Maximum Term of Option. Notwithstanding any other
provision of this Agreement except Paragraph 6 above relating to the death of
the Employee (in which case this option is exercisable to the extent set forth
therein), this option is not exercisable after the Expiration Date.
15. Binding Agreement. Subject to the limitation on the
transferability of this option contained herein, this Agreement shall be binding
upon and inure to the benefit of the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.
16. Conditions to Exercise. The Exercise Price for this option
must be paid in the legal tender of the United States or, in the Committee's
sole discretion, in Shares. Exercise of this option will not be permitted until
satisfactory arrangements have been made for the payment of the appropriate
amount of withholding taxes (as determined by the Company).
17. Plan Governs. This Agreement is subject to all of the
terms and provisions of the Plan. In the event of a conflict between one or more
provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan shall govern. Capitalized terms and phrases used and not
defined in this Agreement shall have the meaning set forth in the Plan.
18. Committee Authority. The Committee shall have all
discretion, power, and authority to interpret the Plan and this Agreement and to
adopt such rules for the administration, interpretation and application of the
Plan as are consistent therewith. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Employee, the Company and all other interested persons, and shall be
given the maximum deference permitted by law. No member of the Committee shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or this Agreement.
19. Captions. The captions provided herein are for convenience
only and are not to serve as a basis for the interpretation or construction of
this Agreement.
20. Agreement Severable. In the event that any provision in
this Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
21. Modifications to the Agreement. This Agreement constitutes
the entire understanding of the parties on the subjects covered. The Employee
expressly warrants that he or she is not executing this Agreement in reliance on
any promises, representations, or inducements other than those contained herein.
Modifications to this Agreement or the Plan can be made only in an express
written contract executed by a duly authorized officer of the Company.
<PAGE>
EXHIBIT 10.3
FORM OF TANDEM LIMITED STOCK APPRECIATION RIGHT(TANDEM TO $150 OPTIONS)
UNDER THE REGISTRANT'S 1995 PERFORMANCE STOCK OPTION PLAN
TRANSAMERICA CORPORATION
TANDEM LIMITED STOCK APPRECIATION RIGHT AGREEMENT
In connection with the grant under the Transamerica
Corporation 1995 Performance Stock Option Plan (the "Plan") of a nonqualified
stock option to purchase shares of common stock of Transamerica Corporation
("Shares") at a purchase price per Share of $150.00 (the "Related Option"),
Transamerica Corporation (the "Company") hereby grants you, [NAME OF EMPLOYEE]
(the "Employee"), a tandem limited stock appreciation right (a "TLSAR") under
the Plan, to surrender all or part of the unexercised portion of the Related
Option in exchange for a payment from the Company pursuant to this TLSAR. The
date of this Agreement is [DATE] (the "Grant Date"). In general, the latest date
this TLSAR will expire is [DATE 10 YEARS FROM GRANT DATE] (the "Expiration
Date"). However, as provided in Appendix A (attached hereto), this TLSAR may
expire earlier than the Expiration Date. Subject to the provisions of Appendix A
and of the Plan, the principal features of this TLSAR are as follows:
Number of Shares to
Which this TLSAR Pertains: [NUMBER] Exercise Price per Share:
$_____
Scheduled Vesting Date: The date on which a Change of
Control occurs.
Event Triggering Termination of TLSAR Maximum Time to Exercise After
Triggering Event*
Termination of Employment (except as shown below) 3 months
Termination of Employment due to Disability 3 years
Termination of Employment due to Early or Normal
Retirement 5 years
Termination of Employment due to death 3 years
Change of Control 60 days
Failure of the Related Option to Vest None
Exercise of the Related Option None
* However, in no event may this TLSAR be exercised after the Expiration Date
(except in certain cases of the death of the Employee).
Your signature below indicates your agreement and
understanding that this TLSAR is subject to all of the terms and conditions
contained in Appendix A and the Plan. For example, important additional
information on vesting and termination of this TLSAR is contained in Paragraphs
4 through 6 of Appendix A. ACCORDINGLY, PLEASE BE SURE TO READ ALL OF APPENDIX
A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS TLSAR.
TRANSAMERICA CORPORATION EMPLOYEE
By_______________________ ______________________
Title: [NAME]
<PAGE>
APPENDIX A
TERMS AND CONDITIONS OF TANDEM LIMITED STOCK APPRECIATION RIGHTS
1. Grant of TLSAR. The Company hereby grants to the Employee
under the Plan, in connection with the grant of the Related Option, and as a
separate incentive in connection with his or her employment and not in lieu of
any salary or other compensation for his or her services, a TLSAR pertaining to
all or any part of an aggregate of [NUMBER] Shares, which TLSAR entitles the
Employee to surrender, on the terms and conditions set forth in this Agreement
and the Plan, all or part of the Related Option in exchange for a payment from
the Company in the amount determined under Paragraph 9 below.
2. Exercise Price. The exercise price per Share for this TLSAR
(the "Exercise Price") shall be $[NUMBER], which is equal to the Fair Market
Value per Share on the Grant Date.
3. Number of Shares. The number and class of Shares specified
in Paragraph 1 above, and/or the Exercise Price, are subject to adjustment by
the Committee in the event of any merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend, split-up, Share
combination, distribution or other change in the corporate structure of the
Company affecting the Shares (an "Event"). Any such adjustment shall be made by
the Committee as constituted immediately prior to the applicable Event;
provided, however, that the number of Shares subject to this TLSAR always shall
be a whole number.
4. Vesting Schedule. The right to exercise this TLSAR will
vest as to 100% of the Shares subject to the TLSAR upon the occurrence of a
Change of Control, provided that vesting will occur only if the Employee is an
Executive on the date of the Change of Control. In the event of the Employee's
Termination of Employment due to Early Retirement, Normal Retirement, Disability
or death, the right to exercise a portion of the Shares to which this TLSAR
pertains will vest on the date that such right otherwise would have vested, as
determined in the discretion of the Committee based on the time elapsed from the
Grant Date to the Termination of Employment and the vesting date.
5. Termination of TLSAR. In the event of the Employee's
Termination of Employment for any reason other than Early or Normal Retirement,
Disability or death, this TLSAR shall immediately terminate, provided that if
this TLSAR became vested prior to such Termination of Employment, the Employee
may, prior to the Expiration Date and subject to the last two sentences of this
Paragraph 5, exercise the TLSAR. In the event of the Employee's Termination of
Employment due to Disability, the Employee may, within three (3) years after the
date of such Termination, or prior to the Expiration Date, whichever shall first
occur, exercise this TLSAR (if then vested). In the event of the Employee's
Termination of Employment due to Early or Normal Retirement, the Employee may,
within five (5) years from the date of such Termination, or prior to the
Expiration Date, whichever shall first occur, exercise this TLSAR (if then
vested). In addition, this TLSAR shall terminate on the first to occur of the
following: (a) the first date on which the Related Option no longer may become
exercisable, (b) the last day of the period of sixty (60) consecutive days which
begins on the date of a Change of Control, or (c) upon exercise of the Related
Option (but only to the extent provided in the following sentence). For each
Share with respect to which the Related Option is exercised, the right to
exercise [NUMBER] of the Shares subject to this TLSAR shall immediately
terminate, provided that the number of Shares which so terminate shall be
rounded to the nearest whole number (or to such number as is appropriate to
ensure that the total number of Shares covered by this TLSAR does not exceed the
number specified in Paragraph 1 above).
6. Death of Employee. In the event that the Employee dies
prior to the expiration of this TLSAR in accordance with the provisions of
Paragraph 5 above, the Employee's designated beneficiary or beneficiaries, or if
no beneficiary survives the Employee, the administrator or executor of the
Employee's estate, nevertheless may, within three (3) years after the date of
death, exercise any vested but unexercised portion of the TLSAR, but only to the
extent that such right was transferred with respect to the Related Option. Any
such transferee must furnish the Company (a) written notice of his or her status
as a transferee of this TLSAR, (b) evidence satisfactory to the Company to
establish the validity of the transfer of this TLSAR and compliance with any
laws or regulations pertaining to such transfer, and (c) written acceptance of
the terms and conditions of this TLSAR as set forth in this Agreement.
7. Persons Eligible to Exercise TLSAR. This TLSAR shall be
exercisable during the Employee's lifetime only by the Employee. This TLSAR is
not transferable, except that the Employee may transfer this TLSAR (a) by a
valid beneficiary designation made in a form and manner acceptable to the
Committee, or (b) by will or the applicable laws of descent and distribution, in
which case this TLSAR shall be transferred to the same extent. Any such transfer
shall be effective only if the Related Option also is transferred to the same
transferee.
8. Notice of Exercise of TLSAR. This TLSAR may be exercised by
the person then entitled to do so as to any portion of the TLSAR which may then
be exercised by giving written notice of exercise to the Secretary of the
Company (or his or her designee) specifying the number of full Shares with
respect to which the TLSAR is to be exercised.
9. Payment of TLSAR Amount. Upon exercise of this TLSAR, the
Employee shall be entitled to receive payment from the Company in an amount (the
"TLSAR Amount") determined by multiplying:
(a) The amount by which the Change of Control
Value (as defined below) of a Share on the date of exercise exceeds the Exercise
Price, times
(b) The number of Shares with respect to which the
TLSAR is exercised.
For this purpose, the "Change of Control Value" of a Share shall mean the
greater of (i) the highest Fair Market Value of a Share during the period of 60
consecutive days which ends on the date of a Change of Control, or (ii) the
highest price per Share paid in the transaction which gives rise to the Change
of Control.
10. Form of Payment of TLSAR Amount. The TLSAR Amount shall be
paid in cash, unless the Committee determines that such payment (or portion
thereof) would cause a transaction which gives rise to the Change of Control to
be ineligible for pooling of interests accounting under APB No. 16, which
transaction (but for such payment) otherwise would have been eligible for such
accounting treatment, in which case the Committee may determine that the TLSAR
Amount shall be paid in Shares of equivalent value. Prior to any payment of the
TLSAR Amount, the Company shall deduct or withhold, or require the Employee to
remit to the Company, an amount sufficient to satisfy any withholding taxes
required to be withheld with respect to the payment.
11. No Rights of Stockholder. Neither the Employee (nor any
beneficiary) shall be or have any of the rights or privileges of a stockholder
of the Company in respect of any of the Shares issuable pursuant to the exercise
of this TLSAR, unless and until certificates representing such Shares shall have
been issued, recorded on the records of the Company or its transfer agents or
registrars, and delivered to the Employee (or beneficiary).
12. No Effect on Employment. The Employee's employment with
the Company and its Affiliates is on an at-will basis only. Accordingly, the
terms of the Employee's employment with the Company and its Affiliates shall be
determined from time to time by the Company or the Affiliate employing the
Employee (as the case may be), and the Company or the Affiliate shall have the
right, which is hereby expressly reserved, to terminate or change the terms of
the employment of the Employee at any time for any reason whatsoever, with or
without good cause. For purposes of this Agreement, the transfer of employment
of the Employee between the Company and any one of its Affiliates (or between
Affiliates) shall not be deemed a Termination of Employment.
13. Address for Notices. Any notice to be given to the Company
under the terms of this Agreement shall be addressed to the Company, in care of
its Secretary, at 600 Montgomery Street, San Francisco, California 94111, or at
such other address as the Company may hereafter designate in writing.
14. TLSAR is Not Transferable. Except as otherwise provided in
Paragraphs 6 and 7 above, this TLSAR and the rights and privileges conferred
hereby may not be transferred, pledged, assigned or otherwise hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
sale under execution, attachment or similar process. Upon any attempt to
transfer, pledge, assign, hypothecate or otherwise dispose of this TLSAR, or of
any right or privilege conferred hereby, or upon any attempted sale under any
execution, attachment or similar process, this TLSAR and the rights and
privileges conferred hereby immediately shall become null and void.
15. Maximum Term of TLSAR. Notwithstanding any other provision
of this Agreement except Paragraph 6 above relating to the death of the Employee
(in which case the TLSAR is exercisable to the extent set forth therein), this
TLSAR is not exercisable after the Expiration Date.
16. Binding Agreement. This Agreement shall be binding upon
and inure to the benefit of the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.
17. Conditions to Exercise. Exercise of this TLSAR will not be
permitted until arrangements (satisfactory to the Company) have been made by the
Employee for the payment of the amount of taxes required (as determined by the
Company) to be withheld by reason of such exercise.
18. Plan Governs. This Agreement is subject to all of the
terms and provisions of the Plan. In the event of a conflict between one or more
provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan shall govern. Capitalized terms and phrases used and not
defined in this Agreement shall have the meaning set forth in the Plan.
19. Committee Authority. The Committee shall have all
discretion, power, and authority to interpret the Plan and this Agreement and to
adopt such rules for the administration, interpretation and application of the
Plan as are consistent therewith. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Employee, the Company and all other interested persons, and shall be
given the maximum deference permitted by law. No member of the Committee shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or this Agreement.
20. Captions. The captions provided herein are for convenience
only and are not to serve as a basis for the interpretation or construction of
this Agreement.
21. Agreement Severable. In the event that any provision in
this Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
22. Modifications to the Agreement. This Agreement constitutes
the entire understanding of the parties on the subjects covered. The Employee
expressly warrants that he or she is not executing this Agreement in reliance on
any promises, representations, or inducements other than those contained herein.
Modifications to this Agreement or the Plan can be made only in an express
written contract executed by a duly authorized officer of the Company.
<PAGE>
EXHIBIT 10.4
FORM OF $125 NONQUALIFIED STOCK OPTION AGREEMENT UNDER THE REGISTRANT'S 1996
STOCK OPTION AND AWARD PLAN
TRANSAMERICA CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
Transamerica Corporation (the "Company") hereby grants you,
[NAME OF EMPLOYEE] (the "Employee"), a nonqualified stock option under the
Company's 1996 Stock Option and Award Plan (the "Plan"), to purchase shares of
common stock of the Company ("Shares"). The date of this Agreement is [DATE]
(the "Grant Date"). In general, the latest date this option will expire is [DATE
10 YEARS FROM GRANT DATE] (the "Expiration Date"). However, as provided in
Appendix A (attached hereto), this option may expire earlier than the Expiration
Date. Subject to the provisions of Appendix A (attached hereto) and of the Plan,
the principal features of this option are as follows:
Maximum Number of Shares
Purchasable with this Option: [NUMBER] Purchase Price per Share: $125.00
- ---------------------------- ------------------------
Scheduled Vesting Dates Number of Shares
[DATE 3 YEARS FROM GRANT DATE] [# of Shares]
[DATE 4 YEARS FROM GRANT DATE] [# of Shares]
[DATE 5 YEARS FROM GRANT DATE] [# of Shares]
Event Triggering Termination of Option Maximum Time to Exercise After
Triggering Event*
Termination of Employment due to Disability 3 years
Termination of Employment due to Early or
Normal Retirement 5 years
Termination of Employment due to death 3 years
Termination of Employment within 1 year after
a Change of Control for a reason other than
Disability, Early or Normal 1 year
Retirement or death
All other Terminations of Employment 3 months
* However, in no event may this option be exercised after the Expiration Date
(except in certain cases of the death of the Employee).
Your signature below indicates your agreement and
understanding that this option is subject to all of the terms and conditions
contained in Appendix A and the Plan. For example, important additional
information on vesting and termination of this option is contained in Paragraphs
4 through 7 of Appendix A. ACCORDINGLY, PLEASE BE SURE TO READ ALL OF APPENDIX
A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS OPTION.
TRANSAMERICA CORPORATION EMPLOYEE
By_______________________ _______________________
Title: [NAME]
<PAGE>
APPENDIX A
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
1. Grant of Option. The Company hereby grants to the Employee
under the Plan, as a separate incentive in connection with his or her employment
and not in lieu of any salary or other compensation for his or her services, a
nonqualified stock option to purchase, on the terms and conditions set forth in
this Agreement and the Plan, all or any part of an aggregate of [NUMBER] Shares.
The option granted hereby is not intended to be an Incentive Stock Option within
the meaning of Section 422 of the Code.
2. Exercise Price. The purchase price per Share for this
option (the "Exercise Price") shall be $125.00.
3. Number of Shares. The number and class of Shares specified
in Paragraph 1 above, and/or the Exercise Price, are subject to adjustment by
the Committee in the event of any merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend, split-up, Share
combination, distribution or other change in the corporate structure of the
Company affecting the Shares (an "Event"). Any such adjustment shall be made by
the Committee as constituted immediately prior to the applicable Event (the
"Applicable Committee") and shall be designed so that if the Employee (or any
beneficiary) exercises this option after an Event, he or she shall receive (upon
payment of the Exercise Price for each Share exercised) the securities and any
other property (other than regular cash dividends) which the Employee (or
beneficiary) would have been entitled to had he or she instead acquired the
Shares on the Grant Date and held them through the date of exercise.
Notwithstanding the preceding, (a) the number of Shares subject to this option
always shall be a whole number, and (b) if the Applicable Committee determines
that the delivery of securities or other property (other than Shares) from any
such adjustment would create an undue burden or expense, the Employee (or
beneficiary) instead shall receive a lump sum cash payment equal to the fair
market value (as determined by the Applicable Committee) of such securities or
other property.
4. Vesting Schedule. This option is scheduled to become exercisable as to
33 1/3% of the shares subject to such option on the third anniversary date of
the Grant Date, and as to an additional 33 1/3% on each succeeding anniversary
date, until the right to exercise this option shall have accrued with respect to
100% of the Shares subject to this option. However, on any scheduled vesting
date, vesting actually will occur only if the Employee remains an Employee on
such date. Notwithstanding the foregoing, in the event of the Employee's
Termination of Employment due to Early Retirement, Normal Retirement, Disability
or death, the right to exercise a portion of such Shares will vest on the date
that such right otherwise would have vested, as determined in the discretion of
the Committee based on the time elapsed from the Grant Date to the Termination
of Employment and the vesting date.
5. Change of Control. In the event a Change of Control occurs
prior to the Employee's Termination of Employment, the right to exercise one
hundred percent (100%) of the Shares subject to this option will vest on the
date on which the Change of Control occurs.
6. Termination of Option. Except as provided in the last
sentence of this Paragraph 6, in the event of the Employee's Termination of
Employment for any reason other than Early or Normal Retirement, Disability or
death, the Employee may, within three (3) months after the date of such
Termination, or prior to the Expiration Date, whichever shall first occur,
exercise any vested but unexercised portion of this option. In the event of the
Employee's Termination of Employment due to Disability, the Employee may, within
three (3) years after the date of such Termination, or prior to the Expiration
Date, whichever shall first occur, exercise any vested but unexercised portion
of this option. In the event of the Employee's Termination of Employment due to
Early or Normal Retirement, the Employee may, within five (5) years from the
date of such Termination, or prior to the Expiration Date, whichever shall first
occur, exercise any vested but unexercised portion of this option. In the event
of the Employee's Termination of Employment within one year after a Change of
Control for any reason other than Early or Normal Retirement, Disability or
death, the Employee may, within one (1) year after the date of such Termination,
or prior to the Expiration Date, whichever shall first occur, exercise any
vested but unexercised portion of this option.
7. Death of Employee. In the event that the Employee dies
prior to the expiration of this option in accordance with the provisions of
Paragraph 6 above, the Employee's designated beneficiary or beneficiaries, or if
no beneficiary survives the Employee, the administrator or executor of the
Employee's estate, may, within three (3) years after the date of death, exercise
any vested but unexercised portion of this option. Any such transferee must
furnish the Company (a) written notice of his or her status as a transferee, (b)
evidence satisfactory to the Company to establish the validity of the transfer
of this option and compliance with any laws or regulations pertaining to such
transfer, and (c) written acceptance of the terms and conditions of this option
as set forth in this Agreement.
8. Persons Eligible to Exercise Option. This option shall be
exercisable during the Employee's lifetime only by the Employee. The option is
not transferable except that the Employee may transfer this option (a) by a
valid beneficiary designation made in a form and manner acceptable to the
Committee, or (b) by will or the applicable laws of descent and distribution.
9. Exercise of Option. This option may be exercised by the
person then entitled to do so as to any Shares which may then be purchased (a)
by giving written notice of exercise to the Secretary of the Company (or his or
her designee), specifying the number of full Shares to be purchased and
accompanied by full payment of the Exercise Price (and the amount of any income
tax the Company is required by law to withhold by reason of such exercise), and
(b) by giving satisfactory assurances in writing if requested by the Company,
signed by the person exercising the option, that the Shares to be purchased upon
such exercise are being purchased for investment and not with a view to the
distribution thereof.
10. Suspension of Exercisability. If at any time the Company
shall determine, in its discretion, that the listing, registration or
qualification of the Shares upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory
authority, is necessary or desirable as a condition of the purchase of Shares
hereunder, this option may not be exercised, in whole or in part, unless and
until such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company.
The Company shall make reasonable efforts to meet the requirements of any such
state or federal law or securities exchange and to obtain any such consent or
approval of any such governmental authority.
11. No Rights of Stockholder. Neither the Employee (nor any
beneficiary) shall be or have any of the rights or privileges of a stockholder
of the Company in respect of any of the Shares issuable pursuant to the exercise
of this option, unless and until certificates representing such Shares shall
have been issued, recorded on the records of the Company or its transfer agents
or registrars, and delivered to the Employee (or beneficiary).
12. No Effect on Employment. The Employee's employment with
the Company and its Affiliates is on an at-will basis only. Accordingly, the
terms of the Employee's employment with the Company and its Affiliates shall be
determined from time to time by the Company or the Affiliate employing the
Employee (as the case may be), and the Company or the Affiliate shall have the
right, which is hereby expressly reserved, to terminate or change the terms of
the employment of the Employee at any time for any reason whatsoever, with or
without good cause. For purposes of this Agreement, the transfer of employment
of the Employee between the Company and any one of its Affiliates (or between
Affiliates) shall not be deemed a Termination of Employment.
13. Address for Notices. Any notice to be given to the Company
under the terms of this Agreement shall be addressed to the Company, in care of
its Secretary, at 600 Montgomery Street, San Francisco, California 94111, or at
such other address as the Company may hereafter designate in writing.
14. Option is Not Transferable. Except as otherwise provided
in Paragraphs 7 and 8 above, this option and the rights and privileges conferred
hereby may not be transferred, pledged, assigned or otherwise hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
sale under execution, attachment or similar process. Upon any attempt to
transfer, pledge, assign, hypothecate or otherwise dispose of this option, or of
any right or privilege conferred hereby, or upon any attempted sale under any
execution, attachment or similar process, this option and the rights and
privileges conferred hereby immediately shall become null and void.
15. Maximum Term of Option. Notwithstanding any other
provision of this Agreement except Paragraph 7 above relating to the death of
the Employee (in which case this option is exercisable to the extent set forth
therein), this option is not exercisable after the Expiration Date.
16. Binding Agreement. Subject to the limitation on the
transferability of this option contained herein, this Agreement shall be binding
upon and inure to the benefit of the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.
17. Conditions to Exercise. The Exercise Price for this option
must be paid in the legal tender of the United States or, in the Committee's
sole discretion, in Shares. Exercise of this option will not be permitted until
satisfactory arrangements have been made for the payment of the appropriate
amount of withholding taxes (as determined by the Company).
18. Plan Governs. This Agreement is subject to all of the
terms and provisions of the Plan. In the event of a conflict between one or more
provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan shall govern. Capitalized terms and phrases used and not
defined in this Agreement shall have the meaning set forth in the Plan.
19. Committee Authority. The Committee shall have all
discretion, power, and authority to interpret the Plan and this Agreement and to
adopt such rules for the administration, interpretation and application of the
Plan as are consistent therewith. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Employee, the Company and all other interested persons, and shall be
given the maximum deference permitted by law. No member of the Committee shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or this Agreement.
20. Captions. The captions provided herein are for convenience
only and are not to serve as a basis for the interpretation or construction of
this Agreement.
21. Agreement Severable. In the event that any provision in
this Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
22. Modifications to this Agreement. This Agreement
constitutes the entire understanding of the parties on the subjects covered. The
Employee expressly warrants that he or she is not executing this Agreement in
reliance on any promises, representations, or inducements other than those
contained herein. Modifications to this Agreement or the Plan can be made only
in an express written contract executed by a duly authorized officer of the
Company.
<PAGE>
EXHIBIT 10.5
FORM OF $150 NONQUALIFIED STOCK OPTION AGREEMENT GRANTED WITH TANDEM
LIMITED STOCK APPRECIATION RIGHT UNDER THE REGISTRANT'S
1996 STOCK OPTION AND AWARD PLAN
TRANSAMERICA CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
Transamerica Corporation (the "Company") hereby grants you,
[NAME OF EMPLOYEE] (the "Employee"), a nonqualified stock option under the
Company's 1996 Stock Option and Award Plan (the "Plan"), to purchase shares of
common stock of the Company ("Shares"). The date of this Agreement is [DATE]
(the "Grant Date"). In general, the latest date this option will expire is [DATE
10 YEARS FROM GRANT DATE] (the "Expiration Date"). However, as provided in
Appendix A (attached hereto), this option may expire earlier than the Expiration
Date. Subject to the provisions of Appendix A and of the Plan, the principal
features of this option are as follows:
Maximum Number of Shares
Purchasable with this Option: [NUMBER] Purchase Price per Share: $150.00
- ---------------------------- ------------------------
Scheduled Vesting Date: The first date on which both of the following
have occurred:(a) the tenth trading day (occurring
within a period of 30 consecutive trading days
before [DATE 5 YEARS AND ONE DAY FROM GRANT DATE])
on which the Fair Market Value of a Share is at
least $150, and (b) as determined in the
discretion of the Committee, the Company's total
shareholder return equals or exceeds the median
level of shareholder return for a subset of the
S&P 500 Financial Index during the period from
[GRANT DATE] to the tenth trading day in (a) plus
any days thereafter until such median level is met
or, if such period is less than one year, during
the one-year period that begins prior to [GRANT
DATE] and ends on the tenth trading day in (a) or
any day thereafter until such median level is met
(if it is met during such one-year period).
Event Triggering Termination of Option Maximum Time to Exercise After
Triggering Event*
Termination of Employment (except as shown below) 3 months
Termination of Employment due to Disability 3 years
Termination of Employment due to Early or Normal
Retirement 5 years
Termination of Employment due to death 3 years
Termination of Employment within 1 year after a Change
of Control for 1 year a reason other than Disability,
Early or Normal Retirement or death
Failure of Option to Vest None
* However, in no event may this option be exercised after the Expiration Date
(except in certain cases of the death of the Employee).
Your signature below indicates your agreement and
understanding that this option is subject to all of the terms and conditions
contained in Appendix A and the Plan. For example, important additional
information on vesting and termination of this option is contained in Paragraphs
4 through 6 of Appendix A. ACCORDINGLY, PLEASE BE SURE TO READ ALL OF APPENDIX
A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS OPTION.
TRANSAMERICA CORPORATION EMPLOYEE
By____________________________ __________________________
Title: [NAME]
<PAGE>
APPENDIX A
TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS
1. Grant of Option. The Company hereby grants to the Employee
under the Plan, as a separate incentive in connection with his or her employment
and not in lieu of any salary or other compensation for his or her services, a
nonqualified stock option to purchase, on the terms and conditions set forth in
this Agreement and the Plan, all or any part of an aggregate of [NUMBER] Shares.
The option granted hereby is not intended to be an Incentive Stock Option within
the meaning of Section 422 of the Code.
2. Exercise Price. The purchase price per Share for this
option (the "Exercise Price") shall be $150.00.
3. Number of Shares. The number and class of Shares specified
in Paragraph 1 above, the Exercise Price and/or the Fair Market Value specified
in Paragraph 4 below, are subject to adjustment by the Committee in the event of
any merger, reorganization, consolidation, recapitalization, separation,
liquidation, stock dividend, split-up, Share combination, distribution or other
change in the corporate structure of the Company affecting the Shares (an
"Event"). Any such adjustment shall be made by the Committee as constituted
immediately prior to the applicable Event (the "Applicable Committee") and shall
be designed so that if the Employee (or any beneficiary) exercises this option
after an Event, he or she shall receive (upon payment of the Exercise Price for
each Share exercised) the securities and any other property (other than regular
cash dividends) which the Employee (or beneficiary) would have been entitled to
had he or she instead acquired the Shares on the Grant Date and held them
through the date of exercise. Notwithstanding the preceding, (a) the number of
Shares subject to this option always shall be a whole number, and (b) if the
Applicable Committee determines that the delivery of securities or other
property (other than Shares) from any such adjustment would create an undue
burden or expense, the Employee (or beneficiary) instead shall receive a lump
sum cash payment equal to the fair market value (as determined by the Applicable
Committee) of such securities or other property.
4. Vesting Schedule. The right to exercise this option will
vest as to 100% of the Shares specified in Paragraph 1 above on the first date
on which both of the following conditions shall have been satisfied: (a) the
tenth trading day (occurring within a period of 30 consecutive trading days) on
which the Fair Market Value of a Share is at least $150.00, provided that
vesting will occur only if such tenth trading day occurs on or before [DATE FIVE
YEARS FROM GRANT DATE], and (b) the Company's total shareholder return (change
in share price plus reinvestment of any dividends, as determined in the
discretion of the Committee) equals or exceeds the median level of shareholder
return for a subset of the Standard & Poor's ("S&P") 500 Financial Index (as
determined in the discretion of the Committee) during the period from [GRANT
DATE] to the tenth trading day in (a) plus any days thereafter until such median
level is met or, if such period is less than one year, during the one-year
period that begins prior to [GRANT DATE] and ends on the tenth trading day in
(a) or any day thereafter until such median level is met (if it is met during
such one-year period). However, on any scheduled vesting date, vesting actually
will occur only if the Employee remains an Employee on such date.
Notwithstanding the foregoing, in the event of the Employee's Termination of
Employment due to Early Retirement, Normal Retirement, Disability or death, (i)
if the right to exercise any particular Shares would have vested within six (6)
months after such Termination of Employment (had the Employee not incurred a
Termination of Employment), then the right to exercise such Shares will vest on
the date that such right otherwise would have vested, and (ii) if the right to
exercise any particular Shares would have vested more than six (6) months after
such Termination of Employment (had the Employee not incurred a Termination of
Employment), then the right to exercise a portion of such Shares will vest on
the date that such right otherwise would have vested, as determined in the
discretion of the Committee based on the time elapsed from the Grant Date to the
Termination of Employment and the vesting date.
5. Termination of Option. Except as provided in the fourth
sentence of this Paragraph 5, in the event of the Employee's Termination of
Employment for any reason other than Early or Normal Retirement, Disability or
death, the Employee may, within three (3) months after the date of such
Termination, or prior to the Expiration Date, whichever shall first occur,
exercise any vested but unexercised portion of this option. In the event of the
Employee's Termination of Employment due to Disability, the Employee may, within
three (3) years after the date of such Termination, or prior to the Expiration
Date, whichever shall first occur, exercise any vested but unexercised portion
of this option. In the event of the Employee's Termination of Employment due to
Early or Normal Retirement, the Employee may, within five (5) years from the
date of such Termination, or prior to the Expiration Date, whichever shall first
occur, exercise any vested but unexercised portion of this option. In the event
of the Employee's Termination of Employment within one year after a Change of
Control for any reason other than Early or Normal Retirement, Disability or
death, the Employee may, within one (1) year after the date of such Termination,
or prior to the Expiration Date, whichever shall first occur, exercise any
vested but unexercised portion of this option. In addition, this option shall
terminate (a) on the first date on which the option no longer may become
exercisable pursuant to Paragraph 4 above, or (b) upon exercise of the tandem
limited stock appreciation right (the "TLSAR") granted with this option (but
only to the extent provided in the following sentence). For each Share with
respect to which the TLSAR is exercised, the right to exercise [NUMBER] of the
Shares subject to this option shall immediately terminate, provided that the
number of Shares which so terminate shall be rounded to the nearest whole number
(or to such number as is appropriate to ensure that the total number of shares
covered by this option does not exceed the number specified in Paragraph 1
above).
6. Death of Employee. In the event that the Employee dies
prior to the expiration of this option in accordance with the provisions of
Paragraph 5 above, the Employee's designated beneficiary, or if no beneficiary
survives the Employee, the administrator or executor of the Employee's estate,
may, within three (3) years after the date of death, exercise any vested but
unexercised portion of the option. Any such transferee must furnish the Company
(a) written notice of his or her status as a transferee, (b) evidence
satisfactory to the Company to establish the validity of the transfer of this
option and compliance with any laws or regulations pertaining to such transfer,
and (c) written acceptance of the terms and conditions of this option as set
forth in this Agreement.
7. Persons Eligible to Exercise Option. This option shall be
exercisable during the Employee's lifetime only by the Employee. This option is
not transferable, except that the Employee may transfer this option (a) by a
valid beneficiary designation made in a form and manner acceptable to the
Committee, or (b) by will or the applicable laws of descent and distribution.
8. Exercise of Option. This option may be exercised by the
person then entitled to do so as to any Shares which may then be purchased (a)
by giving written notice of exercise to the Secretary of the Company (or his or
her designee), specifying the number of full Shares to be purchased and
accompanied by full payment of the Exercise Price (and the amount of any income
tax the Company is required by law to withhold by reason of such exercise), and
(b) by giving satisfactory assurances in writing if requested by the Company,
signed by the person exercising the option, that the Shares to be purchased upon
such exercise are being purchased for investment and not with a view to the
distribution thereof.
9. Suspension of Exercisability. If at any time the Company
shall determine, in its discretion, that the listing, registration or
qualification of the Shares upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory
authority, is necessary or desirable as a condition of the purchase of Shares
hereunder, this option may not be exercised, in whole or in part, unless and
until such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Company.
The Company shall make reasonable efforts to meet the requirements of any such
state or federal law or securities exchange and to obtain any such consent or
approval of any such governmental authority.
10. No Rights of Stockholder. Neither the Employee (nor any
beneficiary) shall be or have any of the rights or privileges of a stockholder
of the Company in respect of any of the Shares issuable pursuant to the exercise
of this option, unless and until certificates representing such Shares shall
have been issued, recorded on the records of the Company or its transfer agents
or registrars, and delivered to the Employee (or beneficiary).
11. No Effect on Employment. The Employee's employment with
the Company and its Affiliates is on an at-will basis only. Accordingly, the
terms of the Employee's employment with the Company and its Affiliates shall be
determined from time to time by the Company or the Affiliate employing the
Employee (as the case may be), and the Company or the Affiliate shall have the
right, which is hereby expressly reserved, to terminate or change the terms of
the employment of the Employee at any time for any reason whatsoever, with or
without good cause. For purposes of this Agreement, the transfer of employment
of the Employee between the Company and any one of its Affiliates (or between
Affiliates) shall not be deemed a Termination of Employment.
12. Address for Notices. Any notice to be given to the Company
under the terms of this Agreement shall be addressed to the Company, in care of
its Secretary, at 600 Montgomery Street, San Francisco, California 94111, or at
such other address as the Company may hereafter designate in writing.
13. Option is Not Transferable. Except as otherwise provided
in Paragraphs 6 and 7 above, this option and the rights and privileges conferred
hereby may not be transferred, pledged, assigned or otherwise hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
sale under execution, attachment or similar process. Upon any attempt to
transfer, pledge, assign, hypothecate or otherwise dispose of this option, or of
any right or privilege conferred hereby, or upon any attempted sale under any
execution, attachment or similar process, this option and the rights and
privileges conferred hereby immediately shall become null and void.
14. Maximum Term of Option. Notwithstanding any other
provision of this Agreement except Paragraph 6 above relating to the death of
the Employee (in which case this option is exercisable to the extent set forth
therein), this option is not exercisable after the Expiration Date.
15. Binding Agreement. Subject to the limitation on the
transferability of this option contained herein, this Agreement shall be binding
upon and inure to the benefit of the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.
16. Conditions to Exercise. The Exercise Price for this option
must be paid in the legal tender of the United States or, in the Committee's
sole discretion, in Shares. Exercise of this option will not be permitted until
satisfactory arrangements have been made for the payment of the appropriate
amount of withholding taxes (as determined by the Company).
17. Plan Governs. This Agreement is subject to all of the
terms and provisions of the Plan. In the event of a conflict between one or more
provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan shall govern. Capitalized terms and phrases used and not
defined in this Agreement shall have the meaning set forth in the Plan.
18. Committee Authority. The Committee shall have all
discretion, power, and authority to interpret the Plan and this Agreement and to
adopt such rules for the administration, interpretation and application of the
Plan as are consistent therewith. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Employee, the Company and all other interested persons, and shall be
given the maximum deference permitted by law. No member of the Committee shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or this Agreement.
19. Captions. The captions provided herein are for convenience
only and are not to serve as a basis for the interpretation or construction of
this Agreement.
20. Agreement Severable. In the event that any provision in
this Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
21. Modifications to the Agreement. This Agreement constitutes
the entire understanding of the parties on the subjects covered. The Employee
expressly warrants that he or she is not executing this Agreement in reliance on
any promises, representations, or inducements other than those contained herein.
Modifications to this Agreement or the Plan can be made only in an express
written contract executed by a duly authorized officer of the Company.
<PAGE>
EXHIBIT 10.6
FORM OF TANDEM LIMITED STOCK APPRECIATION RIGHT (TANDEM TO $150 OPTIONS)
UNDER THE REGISTRANT'S 1996 STOCK OPTION AND AWARD PLAN
TRANSAMERICA CORPORATION
TANDEM LIMITED STOCK APPRECIATION RIGHT AGREEMENT
In connection with the grant under the Transamerica
Corporation 1996 Stock Option and Award Plan (the "Plan") of a nonqualified
stock option to purchase shares of common stock of Transamerica Corporation
("Shares") at a purchase price per Share of $150.00 (the "Related Option"),
Transamerica Corporation (the "Company") hereby grants you, [NAME OF EMPLOYEE]
(the "Employee"), a tandem limited stock appreciation right (a "TLSAR") under
the Plan, to surrender all or part of the unexercised portion of the Related
Option in exchange for a payment from the Company pursuant to this TLSAR. The
date of this Agreement is [DATE] (the "Grant Date"). In general, the latest date
this TLSAR will expire is [DATE 10 YEARS FROM GRANT DATE] (the "Expiration
Date"). However, as provided in Appendix A (attached hereto), this TLSAR may
expire earlier than the Expiration Date. Subject to the provisions of Appendix A
and of the Plan, the principal features of this TLSAR are as follows:
Number of Shares to
Which this TLSAR Pertains: [NUMBER] Exercise Price per Share:
$_____
Scheduled Vesting Date: The date on which a Change of
Control occurs.
Event Triggering Termination of TLSAR Maximum Time to Exercise After
Triggering Event*
Termination of Employment (except as shown below) 3 months
Termination of Employment due to Disability 3 years
Termination of Employment due to Early or Normal
Retirement 5 years
Termination of Employment due to death 3 years
Change of Control 60 days
Failure of the Related Option to Vest None
Exercise of the Related Option None
* However, in no event may this TLSAR be exercised after the Expiration Date
(except in certain cases of the death of the Employee).
Your signature below indicates your agreement and
understanding that this TLSAR is subject to all of the terms and conditions
contained in Appendix A and the Plan. For example, important additional
information on vesting and termination of this TLSAR is contained in Paragraphs
4 through 6 of Appendix A. ACCORDINGLY, PLEASE BE SURE TO READ ALL OF APPENDIX
A, WHICH CONTAINS THE SPECIFIC TERMS AND CONDITIONS OF THIS TLSAR.
TRANSAMERICA CORPORATION EMPLOYEE
By______________________ ________________________
Title: [NAME]
<PAGE>
APPENDIX A
TERMS AND CONDITIONS OF TANDEM LIMITED STOCK APPRECIATION RIGHTS
1. Grant of TLSAR. The Company hereby grants to the Employee
under the Plan, in connection with the grant of the Related Option, and as a
separate incentive in connection with his or her employment and not in lieu of
any salary or other compensation for his or her services, a TLSAR pertaining to
all or any part of an aggregate of [NUMBER] Shares, which TLSAR entitles the
Employee to surrender, on the terms and conditions set forth in this Agreement
and the Plan, all or part of the Related Option in exchange for a payment from
the Company in the amount determined under Paragraph 9 below.
2. Exercise Price. The exercise price per Share for this TLSAR
(the "Exercise Price") shall be $[NUMBER], which is equal to the Fair Market
Value per Share on the Grant Date.
3. Number of Shares. The number and class of Shares specified
in Paragraph 1 above, and/or the Exercise Price, are subject to adjustment by
the Committee in the event of any merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend, split-up, Share
combination, distribution or other change in the corporate structure of the
Company affecting the Shares (an "Event"). Any such adjustment shall be made by
the Committee as constituted immediately prior to the applicable Event;
provided, however, that the number of Shares subject to this TLSAR always shall
be a whole number.
4. Vesting Schedule. The right to exercise this TLSAR will
vest as to 100% of the Shares subject to the TLSAR upon the occurrence of a
Change of Control, provided that vesting will occur only if the Employee remains
an Employee on the date of the Change of Control. In the event of the Employee's
Termination of Employment due to Early Retirement, Normal Retirement, Disability
or death, the right to exercise a portion of the Shares to which this TLSAR
pertains will vest on the date that such right otherwise would have vested, as
determined in the discretion of the Committee based on the time elapsed from the
Grant Date to the Termination of Employment and the vesting date.
5. Termination of TLSAR. In the event of the Employee's
Termination of Employment for any reason other than Early or Normal Retirement,
Disability or death, this TLSAR shall immediately terminate, provided that if
this TLSAR became vested prior to such Termination of Employment, the Employee
may, prior to the Expiration Date and subject to the last two sentences of this
Paragraph 5, exercise the TLSAR. In the event of the Employee's Termination of
Employment due to Disability, the Employee may, within three (3) years after the
date of such Termination, or prior to the Expiration Date, whichever shall first
occur, exercise this TLSAR (if then vested). In the event of the Employee's
Termination of Employment due to Early or Normal Retirement, the Employee may,
within five (5) years from the date of such Termination, or prior to the
Expiration Date, whichever shall first occur, exercise this TLSAR (if then
vested). In addition, this TLSAR shall terminate on the first to occur of the
following: (a) the first date on which the Related Option no longer may become
exercisable, (b) the last day of the period of sixty (60) consecutive days which
begins on the date of a Change of Control, or (c) upon exercise of the Related
Option (but only to the extent provided in the following sentence). For each
Share with respect to which the Related Option is exercised, the right to
exercise [NUMBER] of the Shares subject to this TLSAR shall immediately
terminate, provided that the number of Shares which so terminate shall be
rounded to the nearest whole number (or to such number as is appropriate to
ensure that the total number of Shares covered by this TLSAR does not exceed the
number specified in Paragraph 1 above).
6. Death of Employee. In the event that the Employee dies
prior to the expiration of this TLSAR in accordance with the provisions of
Paragraph 5 above, the Employee's designated beneficiary or beneficiaries, or if
no beneficiary survives the Employee, the administrator or executor of the
Employee's estate, nevertheless may, within three (3) years after the date of
death, exercise any vested but unexercised portion of the TLSAR, but only to the
extent that such right was transferred with respect to the Related Option. Any
such transferee must furnish the Company (a) written notice of his or her status
as a transferee of this TLSAR, (b) evidence satisfactory to the Company to
establish the validity of the transfer of this TLSAR and compliance with any
laws or regulations pertaining to such transfer, and (c) written acceptance of
the terms and conditions of this TLSAR as set forth in this Agreement.
7. Persons Eligible to Exercise TLSAR. This TLSAR shall be
exercisable during the Employee's lifetime only by the Employee. This TLSAR is
not transferable, except that the Employee may transfer this TLSAR (a) by a
valid beneficiary designation made in a form and manner acceptable to the
Committee, or (b) by will or the applicable laws of descent and distribution, in
which case this TLSAR shall be transferred to the same extent. Any such transfer
shall be effective only if the Related Option also is transferred to the same
transferee.
8. Notice of Exercise of TLSAR. This TLSAR may be exercised by
the person then entitled to do so as to any portion of the TLSAR which may then
be exercised by giving written notice of exercise to the Secretary of the
Company (or his or her designee) specifying the number of full Shares with
respect to which the TLSAR is to be exercised.
9. Payment of TLSAR Amount. Upon exercise of this TLSAR, the
Employee shall be entitled to receive payment from the Company in an amount (the
"TLSAR Amount") determined by multiplying:
(a) The amount by which the Change of Control Value
(as defined below) of a Share on the date of exercise exceeds the Exercise
Price, times
(b) The number of Shares with respect to which the
TLSAR is exercised.
For this purpose, the "Change of Control Value" of a Share shall mean the
greater of (i) the highest Fair Market Value of a Share during the period of 60
consecutive days which ends on the date of a Change of Control, or (ii) the
highest price per Share paid in the transaction which gives rise to the Change
of Control.
10. Form of Payment of TLSAR Amount. The TLSAR Amount shall be
paid in cash, unless the Committee determines that such payment (or portion
thereof) would cause a transaction which gives rise to the Change of Control to
be ineligible for pooling of interests accounting under APB No. 16, which
transaction (but for such payment) otherwise would have been eligible for such
accounting treatment, in which case the Committee may determine that the TLSAR
Amount shall be paid in Shares of equivalent value. Prior to any payment of the
TLSAR Amount, the Company shall deduct or withhold, or require the Employee to
remit to the Company, an amount sufficient to satisfy any withholding taxes
required to be withheld with respect to the payment.
11. No Rights of Stockholder. Neither the Employee (nor any
beneficiary) shall be or have any of the rights or privileges of a stockholder
of the Company in respect of any of the Shares issuable pursuant to the exercise
of this TLSAR, unless and until certificates representing such Shares shall have
been issued, recorded on the records of the Company or its transfer agents or
registrars, and delivered to the Employee (or beneficiary).
12. No Effect on Employment. The Employee's employment with
the Company and its Affiliates is on an at-will basis only. Accordingly, the
terms of the Employee's employment with the Company and its Affiliates shall be
determined from time to time by the Company or the Affiliate employing the
Employee (as the case may be), and the Company or the Affiliate shall have the
right, which is hereby expressly reserved, to terminate or change the terms of
the employment of the Employee at any time for any reason whatsoever, with or
without good cause. For purposes of this Agreement, the transfer of employment
of the Employee between the Company and any one of its Affiliates (or between
Affiliates) shall not be deemed a Termination of Employment.
13. Address for Notices. Any notice to be given to the Company
under the terms of this Agreement shall be addressed to the Company, in care of
its Secretary, at 600 Montgomery Street, San Francisco, California 94111, or at
such other address as the Company may hereafter designate in writing.
14. TLSAR is Not Transferable. Except as otherwise provided in
Paragraphs 6 and 7 above, this TLSAR and the rights and privileges conferred
hereby may not be transferred, pledged, assigned or otherwise hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
sale under execution, attachment or similar process. Upon any attempt to
transfer, pledge, assign, hypothecate or otherwise dispose of this TLSAR, or of
any right or privilege conferred hereby, or upon any attempted sale under any
execution, attachment or similar process, this TLSAR and the rights and
privileges conferred hereby immediately shall become null and void.
15. Maximum Term of TLSAR. Notwithstanding any other provision
of this Agreement except Paragraph 6 above relating to the death of the Employee
(in which case the TLSAR is exercisable to the extent set forth therein), this
TLSAR is not exercisable after the Expiration Date.
16. Binding Agreement. This Agreement shall be binding upon
and inure to the benefit of the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.
17. Conditions to Exercise. Exercise of this TLSAR will not be
permitted until arrangements (satisfactory to the Company) have been made by the
Employee for the payment of the amount of taxes required (as determined by the
Company) to be withheld by reason of such exercise.
18. Plan Governs. This Agreement is subject to all of the
terms and provisions of the Plan. In the event of a conflict between one or more
provisions of this Agreement and one or more provisions of the Plan, the
provisions of the Plan shall govern. Capitalized terms and phrases used and not
defined in this Agreement shall have the meaning set forth in the Plan.
19. Committee Authority. The Committee shall have all
discretion, power, and authority to interpret the Plan and this Agreement and to
adopt such rules for the administration, interpretation and application of the
Plan as are consistent therewith. All actions taken and all interpretations and
determinations made by the Committee in good faith shall be final and binding
upon the Employee, the Company and all other interested persons, and shall be
given the maximum deference permitted by law. No member of the Committee shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or this Agreement.
20. Captions. The captions provided herein are for convenience
only and are not to serve as a basis for the interpretation or construction of
this Agreement.
21. Agreement Severable. In the event that any provision in
this Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
22. Modifications to the Agreement. This Agreement constitutes
the entire understanding of the parties on the subjects covered. The Employee
expressly warrants that he or she is not executing this Agreement in reliance on
any promises, representations, or inducements other than those contained herein.
Modifications to this Agreement or the Plan can be made only in an express
written contract executed by a duly authorized officer of the Company.
<PAGE>
EXHIBIT 12
TRANSAMERICA CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS FROM CONTINUING
OPERATIONS TO FIXED CHARGES
Three months ended
March 31,
1998 1997
(Dollar amounts in millions)
Fixed charges:
Interest and debt expense $ 104.9 $ 101.4
One-third of rental expense 9.0 9.3
Dividends declared on preferred
securities issued by affiliates 14.1 9.9
---------- ----------
Total $ 128.0 $ 120.6
========== ==========
Earnings:
Net income $ 153.7 $ 81.0
Provision for income taxes 75.2 36.1
Fixed charges 128.0 120.6
---------- ----------
Total $ 356.9 $ 237.7
========== ==========
Ratio of earnings to fixed charges 2.79 1.97
==== ====
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 113
<SECURITIES> 1,667
<RECEIVABLES> 2,460
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 3,383
<DEPRECIATION> 1,437
<TOTAL-ASSETS> 53,633
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 63
<OTHER-SE> 5,021
<TOTAL-LIABILITY-AND-EQUITY> 53,633
<SALES> 0
<TOTAL-REVENUES> 1,559
<CGS> 0
<TOTAL-COSTS> 1,014
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 14
<INTEREST-EXPENSE> 105
<INCOME-PRETAX> 229
<INCOME-TAX> 75
<INCOME-CONTINUING> 154
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 154
<EPS-PRIMARY> 2.44
<EPS-DILUTED> 2.34
</TABLE>
