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Exhibit
10.1
ALFA
CORPORATION
2005 AMENDED AND RESTATED
STOCK INCENTIVE PLAN
1. Purpose of Plan.
The purpose of this Amended and Restated Stock Incentive Plan is to
promote the interests of Alfa Corporation (the
“Company”) and its shareholders by encouraging selected
officers and key employees of the Alfa Mutual Insurance Company
(“Mutual”) and the Company who provide substantive
management, administrative, sales and other employment services to
the Company or Mutual to invest in or acquire the Company’s
capital stock (the “Stock” as herein defined), thereby
giving them as shareholders an increased personal interest in the
Company’s profits and its continuing growth, development and
financial success, providing them an additional incentive in their
efforts on behalf of the Company and Mutual, and strengthening
their desire to continue to provide management, sales and other
employment services to the Company and Mutual. So long as the
Company, Mutual and other affiliated insurance companies mutually
participate in the pooled premium revenues of such companies,
employee services to either the Company or Mutual are considered to
be for the benefit of both the Company and Mutual. This Plan amends
and restates the Company’s 1993 Stock Incentive Plan and the
Company’s Amended and Restated Stock Incentive Plan effective
January 1, 2001.
2. Definitions. When
used herein, except where the context clearly indicates otherwise,
the following terms have the meaning set forth below:
(a) “ Act
” means the Securities Exchange Act of 1934, as in effect
from time to time.
(b) “ Award
” means a SAR, Restricted Share, Restricted Share Unit, or
Performance Share.
(c) “ Award
Agreement ” means a written or electronic agreement
executed on behalf of the Company by the Chief Executive Officer
(or another officer designated by the Committee) and delivered to
the Grantee and containing terms and provisions of Awards,
consistent with the Plan, as the Committee may approve. Such
agreement may, but is not required to be, executed by a
Grantee.
(d) “ Base Price
” means the initial value of a SAR as established by the
Committee on the Date of Grant.
(e) “ Board
” means the Board of Directors of Alfa
Corporation.
(f) “ Code
” means the Internal Revenue Code of 1986 as amended or
recodified from time to time.
(g) “ Committee
” means the Compensation Committee of the Board or any other
standing or special committee that may be established and appointed
by the Board for the purpose of administering this Plan and
performing such other duties as are contemplated to be performed by
the Committee as herein provided. If the Board shall act as a
committee of the
whole in any matter under this Plan,
either because of its inherent discretion to do so or because no
such Committee then exists, then, in that event, references herein
to “Committee” shall be deemed to include the Board of
Directors acting in such a capacity.
(h) “ Company
” means Alfa Corporation and includes any corporation which
is or may become a parent or subsidiary (as defined in Section
424(e) and (f) of the Code) of Alfa Corporation.
(i) “ Date of
Grant ” means the date specified by the Committee on
which a grant of a Stock Option or Award shall become effective
(which date shall not be earlier than the date on which the
Committee takes action with respect thereto).
(j) “ Dividend
Equivalents ” means the nonforfeitable right of a
Grantee, if such right is explicitly granted in connection with
each share of Stock subject to a Stock Option or an Award, to an
amount equal to the cash dividends paid on a share of Stock related
to such Stock Option or Award as specified in the Plan and in the
Stock Option Agreement or Award Agreement.
(k) “ Fair Market
Value ” means, with respect to a share of Stock,
whichever of the following is applicable:
(i) if the Stock is then
traded either in the over-the-counter market or on an exchange, the
last sales price per share of Stock as reported at the close of
business on the date of grant by the NASDAQ National Market System
or by the principal exchange on which the Stock is traded, or by
any other responsible reporting service selected by the Committee,
or if there were no transactions in the Stock on such date, then
the last preceding date on which transactions took place,
or
(ii) if the Stock is not then
actively traded either in the over-the-counter market or on an
exchange, in such manner as the Committee, in its sole discretion,
may determine by a good faith effort.
Notwithstanding the foregoing, the
Committee may determine the Fair Market Value in any other manner
as is permitted or required by applicable law or
regulations.
(l) “ Grantee
” means a person who is eligible to participate in this Plan
and has been granted one or more Stock Options or Awards under this
Plan.
(m) “ Incentive
Stock Option ” means an option to purchase Stock which
qualifies as an incentive stock option under Section 422 of the
Code and which is designated by the Committee to be an Incentive
Stock Option.
(n) “ Mutual
” means Alfa Mutual Insurance Company.
(o) “ Nonqualified
Stock Option ” means an option to purchase Stock which is
designated as such or which does not qualify as an Incentive Stock
Option.
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(p) “ Option
Price ” means the purchase price per share of Stock
payable on exercise of a Stock Option.
(q) “ Performance
Share ” means a contractual right awarded pursuant to
Section 10 of this Plan to receive a share of Stock (or its value
in cash) that is forfeitable by the Grantee until the achievement
of pre-established objectives over an established
period.
(r) “ Plan
” means the Alfa Corporation 2005 Amended and Restated Stock
Incentive Plan as contained herein and any amendments hereto or
restatements hereof.
(s) “ Prior
Plans ” means the Alfa Corporation Amended and Restated
Stock Incentive Plan, effective January 1, 2001, and the 1993 Stock
Incentive Plan.
(t) “ Restricted
Share ” means an award of a share of Stock made pursuant
to Section 9 of this Plan that is forfeitable by the Grantee until
the completion of a specified period of future service, the
achievement of pre-established performance objectives or until
otherwise determined by the Committee.
(u) “ Restricted
Share Unit ” means a contractual right awarded pursuant
to Section 9 of this Plan to receive a share of Stock (or its value
in cash) that is forfeitable by the Grantee until the completion of
a specified period of future service, the achievement of
pre-established performance objectives or until otherwise
determined by the Committee.
(v) “ SAR
” means a stock appreciation right granted under Section 8 of
the Plan in respect of one or more shares of Stock that entitles a
Grantee to receive, in cash or shares of Stock, at the discretion
of the Committee, an amount equal to the excess, if any, of the
Fair Market Value of a share of Stock on the date the SAR is
exercised over the Base Price.
(w) “ Stock
” means the Common Stock, $1.00 par value, of the
Company.
(w) “ Stock
Option ” (unless further qualified) means either an
Incentive Stock Option or a Nonqualified Stock Option granted under
Sections 6 and 7 of the Plan.
(y) “ Stock Option
Agreement ” means the agreement entered into between the
Company and any Grantee of a Stock Option under this Plan, defining
the terms, conditions, restrictions, rights and privileges with
respect to such Stock Options.
(z) “ Ten Percent
Shareholder ” means a person who owns, directly or
indirectly through the stock attribution rules of Section 424(d) of
the Code, stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the
Company.
3. Eligibility and
Participation. Officers and employees of either Mutual or the
Company or other persons who are performing or who have been
employed to perform services of significant importance to the
management, operation or development of the Company or Mutual are
eligible to participate in this Plan. Eligible employees may
include employees who are also officers of the Company and members
of the Board. Nonemployee members of the Board shall not be
eligible to participate in this Plan.
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Stock Options and Awards may
be granted to those persons eligible to participate in the Plan at
such times and upon such terms and conditions as the Committee, in
its sole discretion, shall determine.
4. Shares Subject to the
Plan. (a) Total Number of Shares. A maximum of Three
Million Eight Hundred Thousand (3,800,000) shares of Stock may be
issued under the Plan. The shares authorized by this Plan shall not
include shares previously authorized and made the subject of grants
of options under the Prior Plans which shares shall continue to be
subject to issuance and shall be governed by the terms of the Prior
Plans. Shares issuable under the Plan may include authorized but
unissued or reacquired shares of Stock. Notwithstanding the
foregoing, the following rules shall apply for purposes of the
determination of the number of Shares available for grant under the
Plan:
(i) When a SAR is granted in
tandem with a Stock Option, so that only one may be exercised with
the other terminating upon such exercise, the number of shares
subject to the tandem Stock Option and SAR shall only be taken into
account once (and not as to both awards) for purposes of this limit
or any other limit set forth in this Plan.
(ii) Any shares of Stock
which are subject to Stock Options or Awards under this Plan, but
not the Prior Plans, that are terminated, unexercised, forfeited or
surrendered or that expire for any reason (including, but not
limited to, shares of Stock tendered to exercise outstanding Stock
Options or shares tendered or withheld for taxes under any Stock
Option or Award under this Plan) shall again be available for
issuance under the Plan.
(iii) SARs, Restricted Stock
Units and Performance Shares that can only be settled in cash shall
not result in a charge against the aggregate number of shares
available for issuance. For purposes of determining the maximum
number of shares available for issuance under the Plan, SARs,
Restricted Stock Units and Performance Shares that may be settled
in shares of Stock shall cause the available reserve to be reduced
by the maximum number of shares of Stock that may be issued in
connection with the Award. Notwithstanding the foregoing, any
shares not actually issued at exercise or settlement shall again be
available for issuance under the Plan.
(iv) The shares available for
issuance under the Plan shall be subject to adjustment as provided
in Section 13 of this Plan.
(b) Individual Limits.
Notwithstanding anything in this Plan to the contrary, and subject
to adjustment as provided in Section 13 of this Plan, in any
calendar year no Grantee shall be granted under this Plan (i) Stock
Options or SARs for more than 200,000 shares of Stock or (ii) any
Restricted Shares, Restricted Share Units or Performance Shares
intended to be performance based compensation under Section 11 for
more than 40,000 shares of Stock. The purpose of the limits set
forth in this Section 4(b) is to comply with Section 162(m) of the
Code and not to create a presumption that any person is entitled to
a grant of a Stock Option or Award for the maximum amount
stated.
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5.
Administration.
(a) Powers of the
Committee. The Committee shall administer the Plan and shall
have all powers necessary or appropriate to enable it to properly
administer the Plan, including but not limited to the following
powers:
(i) To grant Incentive Stock
Options, Nonqualified Stock Options and Awards under the Plan,
including the power to determine those eligible to receive Stock
Options or Awards, the number of shares of Stock subject to such
Stock Options or Awards, and the terms and conditions of Stock
Option Agreements and Award Agreements (which shall include the
terms and conditions of this Plan but may also include other terms
and conditions not inconsistent with the Plan);
(ii) To accelerate the
exercise or settlement of any Stock Option or Award;
(iii) To cancel any Stock
Option or Award awarded under the Plan (1) if a Grantee (while an
officer or employee of the Company or Mutual or while otherwise
employed or engaged, contractually or otherwise, to perform
services in accordance with Section 3 of this Plan) conducts or
conducted himself in a manner which the Committee determines to be
inimical to the best interests of the Company, including, but not
limited to, a Grantee’s admission of guilt or conviction of
any crime resulting from dishonesty in connection with the affairs
of the Company, Mutual, or any affiliate thereof, a finding by the
Committee that the Grantee has engaged in any act of fraud or any
fraudulent activity (whether or not admitted to by the Grantee or
prosecuted by the Company) or a finding by the Committee that the
Grantee has conducted the affairs of the Company, Mutual, or any
affiliate thereof, in his or her own interests and contrary to the
interests of the Company, Mutual, or any affiliate thereof, or (2)
if a Grantee’s employment or engagement, contractual or
otherwise, is terminated by the Company or Mutual for
“cause,” which for this purpose shall be determined by
the Committee and shall mean, unless defined otherwise in the Stock
Option Agreement or Award Agreement, (x) the engaging by the
Grantee in willful, reckless or grossly negligent misconduct which
is determined by the Committee to be materially injurious to the
Company, Mutual, or any affiliate thereof, monetarily or otherwise,
or (y) the Grantee’s pleading guilty to or conviction of a
felony;
(iv) To construe and
interpret the Plan, to establish rules and regulations relating to
the interpretation and administration of the Plan, to delegate
administrative responsibilities as it deems proper, and to perform
all other acts it deems necessary to carry out the purpose and
intent of the Plan; and
(v) To correct any defect,
supply any omission or reconcile any inconsistency in the Plan or
in any Stock Option or Award granted pursuant to the Plan in such a
manner and to the extent it deems necessary or
appropriate.
(b) Designation of Stock
Options. At the time of the grant of a Stock Option under this
Plan, the Committee shall designate whether it is an Incentive
Stock Option or a Nonqualified Stock Option, provided, however,
that if it is not otherwise designated, it shall be treated as a
Nonqualified Stock Option.
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(c) Conduct of Committee
Business. A majority of the Committee shall constitute a
quorum; the action of a majority of members of the Committee
present at any meeting held in any manner provided in the bylaws of
the Company (e.g., in person or by telephone) at which a quorum is
present or actions unanimously adopted in writing without the
holding of a meeting shall be the acts of the Committee. Any
decision made or action taken by the Committee arising out of or in
connection with the interpretation and administration of the Plan
shall be final and conclusive, subject only to review by the Board,
in which event the determination of the Board shall be final and
conclusive.
(d) Discretion of the
Committee. The Committee’s determinations under the Plan
(including, without limitation, its determinations of the persons
to receive grants; the number of shares subject to each Stock
Option or Award; and the form, terms and provisions of such grants)
need not be uniform and may be made selectively among persons who
receive or are eligible to receive grants under the Plan, whether
or not such persons are similarly situated.
6. Terms and Conditions of
Stock Options. Each Stock Option granted under the Plan shall
be evidenced by a written Stock Option Agreement, consistent with
the Plan, in a form approved by the Committee. Such agreement shall
be subject to or shall contain the following provisions and shall
contain such other provisions not inconsistent with the terms of
this Plan as the Committee may determine:
(a) Number of Options
Granted. The agreement shall specify whether the grant is of an
Incentive Stock Option or a Nonqualified Stock Option and the
number of shares subject to the Stock Option. Unless determined
otherwise by the Committee, Stock Options will not be granted with
Dividend Equivalents.
(b) Price. The
agreement shall specify the Option Price which shall not be less
than 100% of the Fair Market Value per share of Stock on the Date
of Grant.
(c) Period. The
Committee shall determine the period during which a Stock Option
may be exercised; however, subject to Section 12, no Stock Option
shall be exercisable after ten years from the Date of
Grant.
(d) Installment
Exercise. Subject to Section 12, the Stock Option Agreement may
(but need not) provide that the right to exercise a Stock Option
shall vest or accrue in such incremental installments over such a
period of time as shall be designated by the granting
authority.
(e) Manner of
Exercise. A Stock Option, or any portion thereof, shall be
exercised by delivery to the Company of a written notice of
exercise by the Grantee in such form as the Committee shall
reasonably require and payment by the Grantee of the full Option
Price.
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(f) Payment. The price
of an exercised Stock Option, or any portion thereof, shall be paid
in any of the following methods as determined by the Committee at
the time of the grant of the Stock Option and as set forth or
referred to in the Stock Option Agreement:
(i) in cash, or by check,
bank draft or money order payable to the order of the Company (all
of which will be accepted as full payment subject to
collection);
(ii) in the sole discretion
of the Committee, by the delivery of certificates (duly endorsed
for transfer) or by a duly authorized attestation regarding the
delivery of such certificates acceptable to the Committee for
shares of Stock having an aggregate Fair Market Value equal to the
Option Price of the Shares being paid in such medium of payment
provided such shares have been held for at least six
months;
(iii) in the sole discretion
of the Committee, by any combination of (i) and (ii) above;
or
(iv) to the extent permitted
by law, a broker assisted cashless exercise
7. Special Rules for
Incentive Stock Options. Notwithstanding any other provision of
the Plan, in the case of any Stock Option granted under the Plan
which is designated as an Incentive Stock Option, the provisions
set forth in this Section 7 will apply. References to Section 422
of the Code shall mean Section 422, or any successor section, as it
may from time to time be amended.
(a) Employment by the
Company. No Incentive Stock Option may be granted to a Grantee
who is not determined to be an “employee” of the
Company (which may include “dual employment” status
with both the Company and Mutual) within the meaning of Section 422
of the Code.
(b) Options Granted at
Fair Market Value. Incentive Stock Options shall be granted at
Option Prices which are not less than fair market value as defined
in Section 422 of the Code (which includes “Fair Market
Value”).
(c) Special Rules for 10%
Shareholders. No Incentive Stock Option shall be granted to an
employee who, at the time of grant, is a Ten Percent Shareholder,
unless the Option Price is at least 110% of the Fair Market Value
of the Stock subject to the Stock Option and such Stock Option, by
its terms, is not exercisable after the expiration of 5 years from
the Date of Grant.
(d) Options for Stock
Having Fair Market Value in Excess of $100,000. No Incentive
Stock Option shall be granted to an employee which, if aggregated
with all other Incentive Stock Options (within the meaning of Code
Section 422, whether or not issued under this Plan) would result in
Stock having a Fair Market Value (determined at the Date of Grant
of each Stock Option) in excess of $100,000 (or such larger
individual employee maximum amount as may be in effect from time to
time under the Code at the time the Incentive Stock Option is
granted) becoming first exercisable during any one calendar
year.
(e) Notification of
Disposition of Shares within Certain Time Periods. Any Grantee
who disposes of shares of Stock transferred to him pursuant to the
exercise of an Incentive Stock Option either (i) within two years
after the Date of Grant of the Incentive Stock Option under which
the Stock was transferred to him or (ii) within one year after the
transfer of such shares to the Grantee shall notify the Company of
such disposition and of the amount realized upon such
disposition.
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(f) Compliance with Other
Code Requirements Applicable to Incentive Stock Options.
Incentive Stock Options shall comply with the grant terms required
of such Stock Options as provided in Section 422 of the
Code.
8. SARs. The Committee
may from time to time authorize grants to any Grantee of SARs upon
such terms and conditions as the Committee may determine in
accordance with the provisions set forth below.
(a) Each grant shall specify
the number of shares of Stock to which it pertains, subject to the
limitations set forth in Section 4 of this Plan. Unless determined
otherwise by the Committee, SARs will not be granted with Dividend
Equivalents.
(b) Each grant shall specify
the Base Price, which unless determined otherwise by the Committee,
shall not be less than 100% of the Fair Market Value on the Date of
Grant.
(c) SARs may be granted in
tandem with a Stock Option, or may be granted on a freestanding
basis, not related to any Stock Option.
(d) Subject to Section 12,
each grant shall specify the required period or periods (if any) of
service by the Grantee with the Company and/or any other conditions
to be satisfied before the SARs or installments thereof shall
become exercisable.
(e) Subject to Section 12 and
except as otherwise provided in an Award Agreement, no SAR shall be
exercisable more than 10 years from the Date of Grant.
(f) A Grantee may exercise a
SAR in whole or in part at any time and from time to time during
the period within which the SAR may be exercised. A Grantee shall
give written notice to the Company specifying the number of SARs to
be exercised. Upon exercise of a SAR, the Grantee shall be entitled
to receive payment, at the discretion of the Committee, in cash, in
shares of Stock, or in a combination thereof.
(g) Each grant shall be
evidenced by an Award Agreement.
9.
Restricte
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