EXHIBIT 10.4
UNUM CORPORATION
1990 LONG-TERM STOCK INCENTIVE PLAN
SECTION 1. Purpose.
The purpose of the UNUM Corporation 1990 Long-Term Stock Incentive Plan (the
"Plan") is to promote the interests of UNUM Corporation and its stockholders by
(i) attracting and retaining executive officers, other key employees and
corporation directors of outstanding ability; (ii) motivating such individuals,
by means of performance-related incentives, to achieve longer-range performance
goals; and (iii) enabling such individuals to participate in the long-term
growth and financial success of UNUM Corporation.
SECTION 2. Definitions.
"Affiliate" shall mean any corporation or other entity which is not a Subsidiary
but as to which the Corporation possesses a direct or indirect ownership
interest and has representation on the board of directors or any similar
governing body.
"Award" shall mean a grant or award under Sections 6 through 10, inclusive, of
the Plan, as evidenced in a written document delivered to a Participant.
"Board" shall mean the Board of Directors of the Corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" shall mean the Compensation Committee of the Board.
"Common Stock" or "Stock" shall mean the common stock, $.10 par value, of the
Corporation.
"Corporation" shall mean UNUM Corporation.
"Employee" shall mean any employee of the Employer.
"Employer" shall mean the Corporation and any Subsidiary or Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from
time to time.
"Fair Market Value" shall mean the average of the highest and lowest sales
prices reported for consolidated trading of the Stock on the New York Stock
Exchange on the date in question, or, if the Stock shall not have been traded on
such date, the average of such highest and lowest sales prices on the first day
prior thereto on which the Stock was so traded.
"Fiscal Year" shall mean the fiscal year of the Corporation.
"Incentive Stock Option" shall mean a stock option granted under Section 6 which
is intended to meet the requirements of Section 422A of the Code.
"Limited Right" shall mean a limited stock appreciation right granted under
Section 8.
"Non-Qualified Stock Option" shall mean a stock option granted under Section 6
which is not intended to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock Option.
"Participant" shall mean an Employee who is selected by the Committee to receive
an Award under the Plan.
"Restricted Period" shall mean the period of years selected by the Committee
during which a grant of Restricted Stock or Restricted Stock Unit Award may be
forfeited to the Corporation.
"Restricted Stock" shall mean shares of Common Stock contingently granted to a
Participant under Section 9 of the Plan.
"Restricted Stock Unit" shall have the meaning provided in 10(a).
"Subsidiary" shall mean any business entity in which the Corporation possesses
directly or indirectly fifty percent (50%) or more of the total combined voting
power.
SECTION 3. Administration.
Except as provided in Section 10, the Committee shall have full power to
interpret and administer the Plan and full authority to select the individuals
to whom Awards will be granted and to determine the type and amount of Award(s)
to be granted to each Participant, the terms and conditions of Awards granted
under the Plan and the terms and conditions of the agreements which will be
entered into with Participants. As to the selection and grant of Awards to
Participants who are not subject to Sections 16(a) and 16(b) of the Exchange
Act, or any successor sections, the Committee may delegate its responsibilities
to members of the Company's management consistent with applicable law.
The Committee shall have the authority to adopt, alter and repeal such rules,
guidelines and practices governing the Plan as it shall, from time to time, deem
advisable; to interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any agreements relating thereto); to direct employees
of the Corporation and its subsidiaries or other advisors to prepare such
materials or perform such analysis as the Committee deems necessary or
appropriate; and otherwise to supervise the administration of the Plan.
Any interpretation and administration of the Plan by the Committee, and all
actions of the Committee, shall be final, binding and conclusive on the
Corporation, its stockholders, Subsidiaries, Affiliates, all Participants, their
respective legal representatives, successors and assigns and upon all persons
claiming under or through any of them. No member of the Board or of the
Committee shall incur any liability for any action taken or omitted, or any
determination made, in good faith in connection with the Plan.
SECTION 4. Eligibility.
Participation in the Plan shall be limited to those key employees of the
Corporation and any Subsidiary and Affiliate selected at the sole discretion of
the Committee.
SECTION 5. Maximum Amount Available for Awards.
Subject to adjustment as provided in Section 12(j), the maximum number of shares
of Stock in respect of which Awards may be made under the Plan shall be a total
of 13,600,000 shares of Common Stock. Shares of Common Stock may be made
available from the authorized but unissued shares of the Corporation or from
shares reacquired by the Corporation, including shares purchased in the open
market. In the event that (i) an Option, or Stock Appreciation Right, or Limited
Right expires or is cancelled unexercised as to any shares of Common Stock
covered thereby, or (ii) any Award in respect of shares is forfeited for any
reason under the Plan, such shares shall thereafter be again available for award
pursuant to the Plan.
SECTION 6. Stock Options.
(a) Grant. Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Employees to whom
Options shall be granted, the number of shares to be covered by each
Option, the Option Price, as defined below, therefor and the conditions
and limitations applicable to the exercise of the Option. The Committee
shall have the authority to grant Incentive Stock Options, or to grant
Non-Qualified Stock Options, or to grant both types of Options. In the
case of Incentive Stock Options, the terms and conditions of such grants
shall be subject to and comply with such rules as may be prescribed by
Section 422A of the Code and any regulations implementing Section 422A.
(b) Option Price. The Committee shall establish the exercise price of the
Option (the "Option Price") at the time each Option is granted, which
Option Price shall not be less than 100% of the Fair Market Value of the
Common Stock on the date of grant.
(c) Exercise.
(1) Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may, in its sole discretion,
specify in the applicable Award or thereafter; provided, however,
that in no event may any Option granted hereunder be exercisable
after the expiration of ten years from the date of grant. The
Committee may impose such conditions with respect to the exercise
of Options, including without limitation, any relating to the
application of federal or state securities laws, as it may deem
necessary or advisable.
(2) No shares shall be delivered pursuant to any exercise of an Option
until payment in full of the Option Price therefor is received by
the Corporation. Such payment may be made in cash, or its
equivalent, or, subject to such rules and guidelines as the
Committee may establish, by exchanging shares of Common Stock owned
by the optionee (which are not the subject of any pledge or other
security interest), or by a combination of the foregoing, provided
that the combined value of all cash and cash equivalents and the
Fair Market Value of any such Common Stock so tendered to the
Corporation, valued as of the date of such tender, is at least
equal to such Option Price.
(d) Termination of Employment.
(1) Except as provided below, if a Participant ceases to be an Employee
other than by reason of death, retirement or disability, any then
outstanding Options may be exercised any time before their
expiration date or within three months after the date of
termination, whichever is earlier, but only to the extent that such
Options were exercisable when employment ceased, absent a
determination by the Committee to the contrary; provided, however,
that a Participant is terminated for cause the Committee may
determine that no Option may be exercised at any time after the
termination date.
(2) If a Participant's employment terminates because of death or
disability, all then outstanding Options previously granted to the
Participant will become exercisable. In the case of death of the
Participant, such Options may be exercised at any time before their
expiration date or within three years after the date of
termination, whichever is earlier. In the case of permanent
disability, such Options may be exercised at any time before their
expiration date.
(3) If a Participant's employment terminates because of retirement
prior to January 1, 1995, any then outstanding Options may be
exercised any time before their expiration date or within three
years after the date of termination, whichever is earlier, but only
to the extent that such Options were exercisable when employment
ceased absent a determination by the Committee to the contrary. If
a Participant's employment terminates because of retirement on or
after January 1, 1995, any then outstanding Options may be
exercised any time before their expiration date or within five
years after the date of termination, whichever is earlier, but only
to the extent that such Options were exercisable when employment
ceased absent a determination by the Committee to the contrary.
SECTION 7. Stock Appreciation Rights.
(a) The Committee shall have the authority to grant Stock Appreciation Rights
in tandem with the grant of an Option or freestanding and unrelated to an
Option. Stock Appreciation Rights granted in tandem with an Option may be
granted either at or after the time of the grant of such Option.
Stock Appreciation Rights or any applicable portion thereof granted in
tandem with a given Option shall only be exercisable to the extent that
the related Option is exercisable and shall terminate and no longer be
exercisable upon the expiration or cancellation of the related Option.
The exercise of an Option shall result in an immediate forfeiture of any
Stock Appreciation Right granted in tandem with that Option, and the
exercise of such Stock Appreciation Right shall cause an immediate
forfeiture of its related Option. Stock Appreciation Rights shall not be
exercisable after the expiration of ten years from date of grant. A Stock
Appreciation Right granted in tandem with an Option may be exercised by
an optionee, in accordance with this Section 7, by surrendering the
applicable portion of the related Option. Upon such exercise and
surrender, the optionee shall be entitled to receive an amount determined
in the manner prescribed in this Section 7.
(b) A Stock Appreciation Right shall entitle the Participant to receive
from the Corporation an amount equal to the excess of the Fair Market
Value of a share of Common Stock on the date of the exercise of the Stock
Appreciation Right over the grant price thereof, provided that the
Committee may for administrative convenience determine that, for any
Stock Appreciation Right which is not related to an Incentive Stock
Option and can only be exercised during limited periods of time in order
to satisfy the conditions of certain rules of the Securities and Exchange
Commission, the exercise of any such Stock Appreciation Right for cash
during such limited period shall be deemed to occur for all purposes
hereunder on the day during such limited period on which the Fair Market
Value of the Stock is the highest. Any such determination by the
Committee may be changed by the Committee from time to time and may
govern the exercise of Stock Appreciation Rights granted prior to such
determination as well as Stock Appreciation Rights thereafter granted.
The Committee shall determine whether Stock Appreciation Rights shall be
settled in cash, shares of Common Stock or a combination of cash and
shares of Common Stock.
SECTION 8. Limited Rights.
(a) The Committee shall have the authority to grant Limited Rights in tandem
with the grant of an Option or freestanding and unrelated to an Option.
Limited Rights granted in tandem with an Option may be granted either at
or after the time of the grant of such Option.
Limited Rights or any applicable portion thereof granted in tandem with a
given Option shall terminate and no longer be exercisable upon the
expiration or cancellation of the related Option. The exercise of an
Option shall result in an immediate forfeiture of any Limited Right
granted in tandem with that Option, and the exercise of such Limited
Right shall cause an immediate forfeiture of its related Option.
A Limited Right granted in tandem with an Option may be exercised by an
optionee, in accordance with this Section 8, by surrendering the
applicable portion of the related Option. Upon such exercise and
surrender, the optionee shall be entitled to receive an amount determined
in the manner prescribed in this Section 8.
(b) Limited Rights shall only be exercisable during the 30 day period
following a Change in Control as defined in Section 11 and shall not be
exercisable after the expiration of ten years from the date of grant.
(c) Upon the exercise of a Limited Right, an optionee shall be entitled
to receive from the Corporation an amount in cash equal in value to the
excess of (i) the higher of (A) the highest price per share paid in
connection with the Change in Control or (B) the highest Fair Market
Value per share as reported in the Wall Street Journal at any time during
the 60 day period preceding the Change in Control over (ii) in the case
of a Limited Right granted in tandem with an Option, the Option Price per
share specified in the related Option and in the case of all other
Limited Rights, the price per share established in the grant of the
Limited Right, such excess to be multiplied by the number of shares in
respect of which the Limited Right shall have been exercised; provided,
however, that upon the exercise of a Limited Right granted in tandem with
an Incentive Stock Option, the amount set forth in clause (i) shall not
exceed the Fair Market Value of a share on the date of exercise of the
Limited Right.
(d) Limited Rights shall be subject to such other terms and conditions, not
inconsistent with the provisions of the Plan, as shall be determined from
time to time by the Committee. This Section 8 shall be interpreted in
accordance and consistent with the principles set forth in Rule 16b-3 of
the Exchange Act.
SECTION 9. Restricted Stock.
(a) Subject to the provisions of the Plan, the Committee shall have sole
and complete authority to determine the Employees to whom shares of
Restricted Stock shall be granted, the number of shares of Restricted
Stock to be granted to each Participant, the duration of the Restricted
Period during which, and the conditions under which, the Restricted Stock
may be forfeited to the Corporation, and the other terms and conditions
of such Awards. The Committee may determine that the Restricted Period
applicable to a particular grant may vary depending upon the attainment
of particular conditions, such as corporate earnings, share price or
other targets set by the Committee.
(b) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged or otherwise encumbered, except as herein provided, during the
Restricted Period. Certificates issued in respect of shares of Restricted
Stock shall be registered in the name of the Participant and deposited by
such Participant, together with a stock power endorsed in blank, with the
Corporation. At the expiration of the Restricted Period, the Corporation
shall deliver such certificates to the Participant or the Participant's
legal representative.
(c) If a Participant's employment terminates by reasons of disability or
death, any Restricted Stock held by such Participant shall thereafter
vest and any restriction lapse, to the extent such Restricted Stock would
have become vested and no longer subject to such restrictions within one
year from the time of termination had the Participant continued to
fulfill all of the conditions of the Restricted Stock during such period
(or on such accelerated basis as the Committee may determine at or after
grant). Unless otherwise determined by the Committee, if a Participant's
employment terminates for any reasons other than permanent disability or
death, any Restricted Stock which is unvested or subject to restriction
shall thereupon be forfeited.
SECTION 10. Restricted Stock Units.
(a) The Committee may, in its discretion, grant Restricted Stock Units to
such eligible Participants as it may select. Restricted Stock Units shall
entitle the Participant to receive one share of Common Stock per Unit at
the times and subject to the conditions determined by the Committee. The
Committee shall determine the number of Units to be granted to each
Participant, whether or not the Restricted Stock Units are designed to
satisfy the requirements of Section 162(m) of the Code and the
regulations thereunder, the duration of the Restricted Period (if any)
during which, and the conditions under which, the Restricted Stock Units
may be forfeited to the Corporation, the schedule for settlement, and any
other terms and conditions relating to each grant, not inconsistent with
the terms of this Plan, as the Committee shall deem advisable. The
Committee may provide that the holder of a Restricted Stock Unit Award
shall receive cash or Common Stock equal in value to the dividends paid
with respect to a specified number of shares of the Common Stock, as such
dividends accrue or upon settlement of the Restricted Stock Unit Award,
in which case dividends may be deemed to have been reinvested in
additional Common Stock or such other investment vehicles as the
Committee may specify.
(b) Restricted Stock Units may not be sold, assigned, transferred, pledged or
otherwise encumbered.
(c) Subject to the renumbered Section 12 of this Plan, all of the provisions
governing the satisfaction of Performance Measures and the termination of
the Restriction Period relating to a Restricted Stock Unit Award, or any
cancellation or forfeiture of shares of Restricted Stock Units upon
termination of employment of the Participant, whether by reason of death,
permanent disability, retirement, or otherwise, shall be set forth in the
Agreement relating to such Restricted Stock Unit Award, or in guidelines
established by the Committee and made applicable to such Restricted Stock
Unit Award.
SECTION 11. Non-Employee Director Options.
Notwithstanding any of the other provisions of the Plan to the contrary, the
provisions of this Section 10 shall only apply to a non-employee member of the
Board. The other provisions of the Plan shall apply to grants of Options under
this Section 10 to the extent not inconsistent with the provisions of this
Section.
(a) This Section 11 shall be administered by the Board.
(b) Each non-employee member of the Board shall receive Non-Qualified Stock
Options in accordance with the provisions of this Section 11.
(c) (i) Recipients of Options under this Section 11 shall enter into a
stock option agreement with the Corporation, which agreement shall
set forth, among other things, the exercise price of the Option,
the term of the Option and provisions regarding exercisability of
the Option granted thereunder.
(ii) On the Effective Date (as defined below) each non-employee member
of the Board of the Corporation shall receive Options to purchase
2,000 shares of Common Stock. Beginning in 1997, on the date after
each annual stockholders meeting of the Corporation each continuing
non-employee member of the Board shall be granted an Option to
purchase 4,000 shares of Common Stock and, beginning in 1990, each
newly elected non-employee director shall be granted an Option to
purchase 6,000 shares of Common Stock. The Option Price per share
of Common Stock purchasable under such Options shall be equal to
the Fair Market Value of the Common Stock on the date of grant.
Such Option shall remain exercisable until the earlier of ten years
from the date of grant or the termination of any post-directorship
consultancy agreement with the Corporation; provided, however, that
if such consultancy agreement terminates by reason of death or
disability any then outstanding Options may be exercised (x) at any
time before their expiration date or (y), if such termination is by
reason of death, within three years of the date of death, whichever
is earlier. Such Options shall be exercisable one year from the
date of grant by payment in full in cash or in shares of Common
Stock having a Fair Market Value equal to the Option Price or in a
combination of cash and such shares.
(d) The Board may not amend, alter, or discontinue this Section 11 without
the approval of the stockholders of the Corporation.
SECTION 12. Change of Control.
Notwithstanding anything to the contrary contained herein, unless otherwise set
forth in any agreement relating to an Award, each outstanding Option, Stock
Appreciation Right and Limited Right granted under the Plan shall become
exercisable in full for the aggregate number of shares covered thereby, and any
restriction or deferral limitation applicable to any Restricted Stock or
Restricted Stock Units shall lapse and such shares and Awards shall be deemed
fully vested, in the event of a Change in Control (as hereinafter defined).
For purposes of this Plan, a Change in Control shall be deemed to have occurred
upon the first to occur of the following events:
(i) any "person," as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Corporation or any corporation
owned, directly or indirectly, by the stockholders of the
Corporation in substantially the same proportions as their
ownership of stock of the Corporation), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation
representing more than 40% of the number of the Corporation's then
outstanding securities;
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board, and any new director
(other than a director designated by a person who has entered into
an agreement with the Corporation to effect a transaction described
in Subsection 12(i), (iii) or (iv) of this Section 12) whose
election by the Board or nomination for election by the
Corporation's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(iii) the stockholders of the Corporation approve a merger or
consolidation of the Corporation with any other corporation, other
than a merger or consolidation which would result in the voting
securities of the Corporation outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or being
converted into voting securities of the surviving entity) more than
60% of the number of outstanding securities of the Corporation or
such surviving entity outstanding immediately after such merger or
consolidation; or
(iv) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation or an agreement for the sale or
disposition by the Corporation of all or substantially all of the
Corporation's assets.
SECTION 13. General Provisions.
(a) Withholding. The Employer shall have the right to deduct from all amounts
paid to a Participant in cash (whether under this Plan or otherwise) any
taxes required by law to be withheld in respect of Awards under this
Plan. In the case of payments of Awards in the form of Common Stock, at
the Committee's discretion the Participant may be required to pay to the
Employer the amount of any taxes required to be withheld with respect to
such Common Stock, or, in lieu thereof, to the extent permitted by
applicable federal and state securities laws, the Employer shall have the
right to retain (or the Participant may be offered the opportunity to
elect to tender) the number of shares of Common Stock whose Fair Market
Value equals the amount required to be withheld. The Optionee shall be
entitled to elect to pay all or a portion of the exercise price for
options granted under this Plan and any withholding taxes in connection
with such exercise by having the shares of Common Stock to be issued by
UNUM Corporation pursuant to such exercise sold by a broker-dealer under
circumstances meeting the requirements of 12 C.F.R. Section 220.
(b) Nontransferability. No Award shall be assignable or transferable, and no
right or interest of any Participant shall be subject to any lien,
obligation or liability of the Participant, except by will or the laws of
descent and distribution.
(c) No Right to Employment. No person shall have any claim or right to be
granted an Award, and the grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the
Employer. Further, the Employer expressly reserves the right at any time
to dismiss a Participant free from any liability, or any claim under the
Plan, except as provided herein or in any agreement entered into with
respect to an Award.
(d) No Rights as Stockholder. Subject to the provisions of the applicable
Award, no Participant or transferee of an Option or Restricted Stock
Units shall have any rights as a stockholder with respect to any shares
of Common Stock to be distributed under the Plan until he or she has
become the holder thereof. Notwithstanding the foregoing, in connection
with each grant of Restricted Stock hereunder, the applicable Award shall
specify if and to what extent the Participant shall not be entitled to
the rights of a stockholder in respect of such Restricted Stock.
(e) Construction of the Plan. The validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations,
and rights relating to the Plan, shall be determined solely in accordance
with the laws of the State of Delaware.
(f) Effective Date. Subject to the approval of the stockholders of the
Corporation, the Plan shall be effective on February 9, 1990 (the
"Effective Date"). No Options or Awards may be granted under the Plan
after February 9, 2000.
(g) Amendment of Plan. The Board may amend, suspend or terminate the Plan or
any portion thereof at any time, provided that no amendment shall be made
without stockholder approval if such approval is necessary to comply with
any tax or regulatory requirement, including for these purposes any
approval requirement which is a prerequisite for exemptive relief under
Section 16(b) of the Exchange Act. Notwithstanding anything to the
contrary contained herein, the Committee may amend the Plan in such
manner as may be necessary so as to have the Plan conform with local
rules and regulations. The Chief Executive Officer shall be authorized to
make minor or administrative modifications to the Plan as well as
modification to the Plan which may be dictated by requirements of federal
or state statutes applicable to the Corporation or authorized or made
desirable by such statutes. No modification or termination of the Plan
shall, without the optionee's consent, alter or impair any of his or her
rights or obligations under any Option, Stock Appreciation Right or
Limited Right theretofore granted to him or her under the Plan.
(h) Amendment of Award. The Committee may amend, modify or terminate any
outstanding Award with the Participant's consent at any time prior to
payment or exercise in any manner not inconsistent with the terms of the
Plan, including without limitation, (i) to change the date or dates as of
which (A) an Option, Stock Appreciation Right or Limited Right becomes
exercisable; (B) Restricted Stock or Restricted Stock Units becomes
nonforfeitable; or (ii) to cancel and reissue an Award under such
different terms and conditions as it determines appropriate.
(i) Hardship Distributions. In no event shall any Option granted under this
Plan be exercisable through payment of the Option Price in cash during
the period of one year following a hardship distribution under the UNUM
Employees Retirement Savings Plan and Trust, as defined therein.
(j) Adjustments and Assumption. In the event of a reorganization,
recapitalization, stock split, stock dividend, combination of shares,
merger, consolidation, distribution of assets, or any other change in the
corporate structure or shares of the Corporation, the Committee shall
make such adjustments as it deems appropriate in the number and kind of
shares authorized by the Plan, in the number and kind of shares covered
by the Awards granted, and in the purchase price of outstanding Options.
In the event of any merger, consolidation or other reorganization in
which the Corporation is not the surviving or continuing corporation, all
Awards granted hereunder and outstanding on the date of such event shall
be assumed by the surviving or continuing corporation with appropriate
adjustment as to the number and kind of shares and purchase price of the
shares.
(k) In addition to the purposes set forth in Section 1, the Committee may
grant Awards to eligible Participants in order to compensate such
Participants to surrender existing rights to receive benefits from the
Employer under this or any other benefit plan or arrangement.