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Exhibit
10.4
Safeco Long-Term Incentive
Plan of 1997
(As Amended and Restated
May 2, 2007)
Safeco Long-Term Incentive
Plan of 1997
(As Amended and Restated
May 2, 2007)
TABLE OF
CONTENTS
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| Section |
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Page |
| 1. |
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Purpose |
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1 |
| 2. |
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Definitions |
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1 |
| 3. |
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Administration |
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3 |
| 4. |
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Shares
Subject to Plan |
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4 |
| 5. |
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Eligibility |
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6 |
| 6. |
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Price and
Term of Options |
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6 |
| 7. |
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Limitations on Exercise of Options |
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6 |
| 8. |
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Method of
Exercise |
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7 |
| 9. |
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Form of
Option Agreement |
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7 |
| 10. |
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Stock
Appreciation Rights |
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7 |
| 11. |
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Restricted Stock Rights |
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8 |
| 12. |
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Performance Stock Rights |
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9 |
| 13. |
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Other
Stock-Based Awards |
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10 |
| 14. |
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Termination of Employment, Retirement, Disability and
Death |
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10 |
| 15. |
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Forfeiture |
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11 |
| 16. |
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Transferability |
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11 |
| 17. |
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Withholding |
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12 |
| 18. |
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Rights as
Shareholder |
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12 |
| 19. |
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Amendments to the Plan |
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12 |
| 20. |
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Termination of the Plan |
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13 |
| 21. |
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Changes
in Capital Structure |
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13 |
| 22. |
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Change in
Control |
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13 |
| 23. |
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Approvals |
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14 |
| 24. |
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No
Individual Rights |
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15 |
| 25. |
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Effect on
Other Employee Benefit Plans |
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15 |
| 26. |
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No Trust
or Fund |
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15 |
| 27. |
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Successors |
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15 |
| 28. |
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Choice of
Law |
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16 |
| 29. |
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Severability |
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16 |
| 30. |
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Original
Effective Date of Plan |
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16 |
Safeco Long-Term Incentive
Plan of 1997
As Amended and Restated
May 2, 2007
1. Purpose
The purpose of the Safeco Long-Term
Incentive Plan of 1997 (the “Plan”) is to enhance the
long-term profitability and shareholder value of Safeco Corporation
(the “Company”) by offering incentives and rewards to
officers, directors and employees of the Company and its
Subsidiaries (as defined in Section 2) as an inducement to
them to remain in the service of the Company and to acquire and
maintain stock ownership in the Company.
2. Definitions
| (a) |
“Affiliate” means a person controlling, controlled
by or under common control with the Company. |
| (b) |
“Award” shall mean any award or grant made pursuant
to the Plan, including, without limitation, awards or grants of
stock options, stock appreciation rights, restricted stock rights,
performance stock rights, stock or any combination of the
foregoing. Awards may be granted singly, in combination, or in
tandem so that the settlement or payment of one automatically
reduces or cancels the other. |
| (c) |
“Award Agreement” means a written agreement between
the Company and a Plan participant evidencing an Award. |
| (d) |
“Beneficial Owner” has the meaning set forth in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). |
| (e) |
“Change in Control” shall be deemed to have
occurred if the event set forth in any one of the following
paragraphs has occurred: |
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(i) |
Any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or its Affiliates) representing
25% or more of the combined voting power of the Company’s
then outstanding securities, excluding any Person who becomes such
a Beneficial Owner in connection with a transaction described in
clause (x) of paragraph (iii) of this Section 2(e);
or |
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(ii) |
The following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who,
on the date the Plan is adopted by the Company’s
shareholders, constitute the Board of Directors of the Company and
any new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board of Directors or nomination for
election by the Company’s shareholders was approved by a vote
of at least two-thirds of the directors then still in office who
either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved or
recommended; or |
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(iii) |
There is consummated a merger or consolidation of the Company
or any Subsidiary with any other corporation, other than
(x) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof), in combination with
the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any Subsidiary at
least 75% of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (y) a
merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no Person is or
becomes the Beneficial Owner, directly or indirectly, of securities
of the Company (not including in the securities beneficially owned
by such Person any securities acquired directly from the Company or
its Affiliates other than in connection with the acquisition by the
Company or its Affiliates of a business) representing 25% or more
of the combined voting power of the Company’s then
outstanding securities; or |
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(iv) |
The shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated
an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets, other than a sale
or disposition by the Company of all or substantially all of the
Company’s assets to an entity, at least 75% of the combined
voting power of the voting securities of which are owned by
shareholders of the Company in substantially the same proportions
as their ownership of the Company immediately prior to such
sale. |
Notwithstanding the foregoing, a
“Change in Control” shall not be deemed to have
occurred by virtue of the consummation of any transaction or series
of integrated transactions immediately following which the record
holders of the Company’s common stock immediately prior to
such transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity which
owns all or substantially all of the Company’s assets
immediately following such transaction or series of
transactions.
| (f) |
“Committee” shall mean the Company’s Board of
Directors or a committee or sub-committee described in
Section 3 selected by the Company’s Board of Directors
to administer the Plan. |
| (g) |
“Fair Market Value” shall mean, with respect to the
Company’s common stock, the closing price of the
Company’s common stock on the Nasdaq National Market, a
national securities exchange or other recognized national market or
service reporting sales, during regular trading on the date in
question, or if not trading on that date, such price on the last
preceding date on which the Company’s common stock was
traded, unless determined otherwise by the Committee using such
methods or procedures as it may establish. |
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| (h) |
“Person” for purposes of Section 2(e) means
any person (as defined in Section 3(a)(9) of the Exchange Act,
as such term is modified in Sections 13(d) and 14(d) of the
Exchange Act), other than (i) any employee plan
established by the Company, (ii) the Company or any of its
affiliates (as defined in Rule 12b-2 promulgated under the Exchange
Act), (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by shareholders of the
Company in substantially the same proportions as their ownership of
the Company. |
| (i) |
“Retirement” shall mean a termination of employment
with the Company or a Subsidiary occurring on or after an
individual attains age 55, has ten or more years of service with
the Company or a Subsidiary and whose age plus years of service add
up to at least 75, or such other termination of employment as the
Committee may approve as a retirement from time to time for
purposes of the Plan. |
| (j) |
“Subsidiary” shall mean any corporation of which
more than 50% of the total combined voting power of all classes of
stock entitled to vote is directly or indirectly owned by the
Company. |
| (k) |
“Substitute Awards” shall mean Awards granted or
shares of the Company’s common stock issued by the Company in
substitution or exchange for awards previously granted by any
entity acquired by the Company or an Affiliate or with which the
Company or an Affiliate merges or combines. |
3. Administration
| (a) |
The Plan shall be administered by a Committee to be appointed
from time to time by the Company’s Board of Directors and
shall consist of at least two members of the Board, each of whom is
an “outside director” as defined in regulations
promulgated under Section 162(m) of the Internal Revenue Code
of 1986, as amended (the “Code”). In addition, if the
Committee does not also consist solely of “non-employee
directors” as defined in Rule 16b-3 under the Exchange Act,
the Plan shall be administered with respect to officers subject to
Section 16 of the Exchange Act by a sub-committee of the
Committee to be appointed from time to time by the Company’s
Board of Directors and consisting of at least two members of the
Board, each of whom is a “non-employee director.” To
the extent consistent with applicable law, the Board may also
authorize one or more senior executive officers to grant Awards
within the limits specifically prescribed by the Committee or
Board. |
| (b) |
Except for
the terms and conditions explicitly set forth in the Plan, the
Committee shall have the exclusive authority to determine, in its
sole discretion, all matters relating to Awards under the Plan,
including the selection of individuals to be granted Awards; the
type of Awards; the number of shares of common stock subject to an
Award; all terms, conditions, restrictions and limitations, if any,
of an Award; and the terms of any instrument that evidences the
Award. The Committee may, in its discretion, accelerate the
exercisability of or waive any or all of the restrictions and
conditions applicable to any
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Award and may, with the
consent of the holder, modify any agreement governing an Award. The
Committee may permit or require the deferral of any Award payment,
subject to such rules and procedures as it may establish, which may
include provisions for the payment or crediting of interest or
dividend equivalents on the deferred payment. Any deferred payment
may require the payment to be forfeited under certain circumstances
in accordance with Section 15. The Committee shall also have
exclusive authority to interpret the Plan and may adopt, amend and
rescind rules and procedures relating to the Plan. In no event,
however, shall the Committee have the right to (i) without
shareholder approval, cancel or amend outstanding stock options for
the purpose of repricing, replacing or regranting such options with
a purchase price that is less than the purchase price of the
original option (except as contemplated in Section 21) or
(ii) issue a stock option or amend an outstanding option to
provide for the grant or issuance of a new option on exercise of
the original option. The Committee may delegate administrative
duties to such of the Company’s officers as it so determines.
Subject to Section 7(a), the effect on the vesting of an Award
of a Company-approved leave of absence or a participant’s
working less than full-time shall be determined by the
Company’s chief human resources officer or other person
performing that function and with respect to directors or executive
officers, by the Committee, whose determination shall be
final.
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| (c) |
The Board of Directors shall designate one member of the
Committee as its Chair, and the Committee shall hold its meetings
at such times and places as it shall deem advisable. At least
one-half of its members shall constitute a quorum for the conduct
of business, and any decision or determination approved by a
majority of members present at any meeting in which a quorum exists
shall be deemed to have been made by the Committee. In addition,
any decision or determination reduced to writing and signed by all
of the members shall be deemed to have been made by the Committee.
The Committee may appoint a secretary, shall keep minutes of its
meetings, and may make such rules and regulations for the conduct
of its business and for the carrying out of the Plan as it deems
appropriate. |
| (d) |
The interpretation and construction by the Committee of any
provisions of the Plan and of Awards thereunder and all actions
taken and determinations made by the Committee pursuant to the Plan
shall be final and conclusive on all persons having any interest
therein. |
| (e) |
Notwithstanding anything in the Plan to the contrary, the
Committee, in its absolute discretion, may bifurcate the Plan so as
to restrict, limit or condition the use of any provision of the
Plan to participants who are subject to Section 16 of the
Exchange Act without so restricting, limiting or conditioning the
Plan with respect to other participants in the Plan. |
4. Shares Subject to
Plan
| (a) |
Subject to the provisions of Section 21 (relating to
adjustments due to changes in capital structure), a maximum of
12,000,000 shares of the Company’s common stock shall be
available for issuance pursuant to Awards under the
Plan. |
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| (b) |
Shares of the Company’s common stock covered by an Award
shall not be counted as used unless and until they are actually
issued and delivered to an individual. If any Award lapses,
expires, terminates or is canceled prior to the issuance of shares
thereunder or if shares of the Company’s common stock are
issued under the Plan to an individual and thereafter are forfeited
to or otherwise reacquired by the Company, the shares subject to
such Awards and the forfeited or reacquired shares shall again be
available for issuance under the Plan. Any shares of the
Company’s common stock (i) tendered by an individual or
retained by the Company as full or partial payment to the Company
for the purchase price of an Award or to satisfy tax withholding
obligations in connection with an Award, or (ii) covered by an
Award that is settled in cash, or in a manner such that some or all
of the shares of the Company’s common stock covered by the
Award are not issued, shall be available for Awards under the Plan.
Any dividends or dividend equivalents that are reinvested into
additional shares of the Company’s common stock or credited
as additional shares of the Company’s common stock with
respect to an Award shall not reduce the number of shares of the
Company’s Common Stock available for issuance under the
Plan. |
| (c) |
The Committee shall also, without limitation, have the
authority to grant Awards as an alternative to or as the form of
payment for grants or rights earned or due under other compensation
plans or arrangements of the Company. |
| (d) |
Notwithstanding anything in the Plan to the contrary, the
Committee may grant Substitute Awards under the Plan. Substitute
Awards shall not reduce the number of shares authorized for
issuance under the Plan. In the event that an entity acquired by or
with which the Company or an Affiliate combines has shares
available for awards or grants under one or more preexisting plans
not adopted in contemplation of such acquisition or combination,
then, to the extent determined by the Board or the Committee, the
shares available for grant pursuant to the terms of such
preexisting plan (as adjusted, to the extent appropriate, using the
exchange ratio or other adjustment or valuation ratio or formula
used in such acquisition or combination to determine the
consideration payable to holders of common stock of the entities
that are parties to such acquisition or combination) may be used
for Awards under the Plan and shall not reduce the number of shares
of the Company’s common stock authorized for issuance under
the Plan; provided, however, that Awards using such available
shares shall not be made after the date awards or grants could have
been made under the terms of such preexisting plans, absent the
acquisition or combination, and shall only be made to individuals
who were not employees or directors of the Company or an Affiliate
prior to such acquisition or combination. In the event that a
written agreement between the Company and an entity pursuant to
which a merger, consolidation or statutory share exchange is
completed is approved by the Board and said agreement sets forth
the terms and conditions of the substitution for or assumption of
outstanding awards of the entity, said terms and conditions shall
be deemed to be the action of the Committee without any further
action by the Committee, except as may be required for compliance
with Rule 16b-3 under the Exchange Act, and the persons holding
such awards shall be deemed to be participants under the
Plan. |
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| (e) |
Subject to the provisions of Section 21 (relating to
adjustments due to changes in capital structure), the maximum
number of shares with respect to which options may be granted under
the Plan to any individual during any calendar year is 750,000, and
the aggregate maximum number of shares that may be issued upon the
exercise of incentive stock options shall equal the aggregate share
number stated in Section 4(a). With respect to performance
stock rights granted prior to January 1, 2005 and subject to
the provisions of Section 21 (relating to adjustments due to
changes in capital structure), the maximum number of shares payable
under a performance stock right for any Performance Cycle (as
defined in Section 12(a)) is 500,000 shares, or in the event
the performance stock right is paid in cash, the equivalent cash
value on the date the performance stock right would otherwise be
settled in shares. The limitations in this Section 4(e) are to
be applied in a manner consistent with the requirements of, and
only to the extent required for compliance with, the exclusion from
the limitation on deductibility of compensation under
Section 162(m) of the Code. |
5. Eligibility
Awards may be granted to any officer,
director or salaried employee of the Company or a Subsidiary that
the Committee, or an authorized senior executive officer pursuant
to Section 3(a), from time to time selects.
6. Price and Term of
Options
| (a) |
The exercise price for shares purchased under each option will
be determined by the Committee but shall not be less than 100% of
the Fair Market Value of the shares of stock covered by the option
on the date of grant of the option. |
| (b) |
The term of each option shall be as determined by the
Committee, but not in excess of ten years from the date it is
granted. An option granted for an initial term of less than ten
years may be extended by amendment for a period of up to ten years
from the date of the initial grant, provided that no such amendment
of an option shall be made without the prior consent of the
optionee. |
7. Limitations on Exercise of
Options
| (a) |
Any minimum period during which an optionee must provide
services or be continuously employed or any performance goals that
must be met prior to a |
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