Document:

Exhibit 10.3

THE ALLSTATE CORPORATION

2006 EQUITY COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

As Amended and Restated effective as of
September 10, 2006

ARTICLE I.   Establishment, Purpose and Duration

 

Section 1.1.        Establishment of the Plan.   The
Allstate Corporation, a Delaware corporation (hereinafter referred to as the “Company”),
hereby establishes an equity compensation plan for non-employee directors, to
be known as “The Allstate Corporation 2006 Equity Compensation Plan for
Non-Employee Directors” (hereinafter referred to as the “Plan”), as set
forth in this document.  The Plan permits
the grant of Stock Options, Election Shares, Stock, Restricted Stock, and
Restricted Stock Units to Non-Employee Directors of the Company.

Section 1.2.        Purpose of the Plan.   The
purpose of the Plan is to promote the success and enhance the value of the
Company by linking the personal interests of members of the Company’s Board of
Directors (the “Board”) to those of Company stockholders and
customers.  The Plan is further intended
to assist the Company in its ability to motivate, attract and retain highly
qualified individuals to serve as directors of the Company.

Section 1.3.        Duration of the Plan.   The
Plan shall become effective when approved by the stockholders at the 2006
Annual Meeting of Stockholders on May 16, 2006 (the “Effective Date”)
and shall remain in effect, subject to the right of the Board to terminate the
Plan at any time pursuant to Article X herein, until all shares of Stock
subject to the Plan shall have been purchased or acquired according to the Plan’s
provisions.

ARTICLE II.   Definitions

 

Whenever used in the
Plan, the following terms shall have the meanings set forth below and, when
such meaning is intended, the initial letter of the word is capitalized:

Section 2.1.        “Award”
means, individually or collectively, a grant under the Plan of Stock Options,
Election Shares, Stock, Restricted Stock, and Restricted Stock Units or any
other type of award permitted under Article IX.

Section 2.2.        “Award
Agreement” means an agreement setting forth the terms and provisions
applicable to an Award granted to a Participant under the Plan.

Section 2.3.        “Board”
shall have the meaning set forth in Section 1.2 herein.

Section 2.4.        “Code”
means the Internal Revenue Code of 1986, as amended from time to time.

Section 2.5.        “Committee”
means the Company’s Nominating and Governance Committee or such other committee
as the Board shall select.

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Section 2.6.        “Company”
shall have the meaning set forth in Section 1.1 herein, or any successor to the
Company as provided in Article XI herein.

Section 2.7.        “Disability”
means a medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months which, in the opinion of the Committee, renders a
Participant unable to engage in any substantial gainful activity.

Section 2.8.        “Dividend
Equivalent” means, with respect to shares of Stock subject to an Award, a
right to be paid an amount equal to cash dividends declared on an equal number
of outstanding shares of Stock.

Section 2.9.        “Effective
Date” shall have the meaning set forth in Section 1.3 herein.

Section 2.10.      “Election
Shares” means any shares of Stock issued to a Non-Employee Director
pursuant to the election of such person to receive such shares of Stock in lieu
of cash compensation made in accordance with Section 8.2 herein.

Section 2.11.      “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time, or any successor act thereto.

Section 2.12.      “Exercise
Period” means the period during which a Stock Option is exercisable, as set
forth in the related Award Agreement.

Section 2.13.      “Fair Market
Value” means, as of any applicable date, the average of the high and low
prices of the Stock as reported in the consolidated transaction reporting system,
or if there was no such reported sale on the relevant date, then on the last
previous day on which a sale was reported.

Section 2.14.      “Family
Member” means any spouse, child, stepchild or grandchild, including
adoptive relationships; a trust in which these persons have more than fifty
(50) percent of the beneficial interest; a foundation in which these persons
(or the Non-Employee Director) control the management of assets; and any other
entity in which these persons (or the Non-Employee Director) own more than
fifty (50) percent of the voting interests.

Section 2.15.      “Non-Employee
Director” means each member of the Board who is not an officer or employee
of the Company or any of its Subsidiaries.

Section 2.16.      “Option
Exercise Price” means the price at which a share of Stock may be purchased
by a Participant pursuant to a Stock Option, as determined by the Committee and
set forth in the applicable Award Agreement.

Section 2.17.      “Participant”
means a Non-Employee Director who has an outstanding Award granted under the
Plan.

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Section 2.18.      “Period of Restriction” means the
period during which Restricted Stock or Restricted Stock Units are subject to
transfer and/or forfeiture restrictions, as provided in Article VII herein.

Section 2.19.      “Plan” shall have the meaning set
forth in Section 1.1 herein.

Section 2.20.      “Restricted Stock” means an Award
of shares of Stock granted to a Participant pursuant to Article VII
herein.  Delivery of Restricted Stock
shall be effected by either (i) a stock certificate or certificates or (ii) book-entry
form, in an appropriate number of shares of Stock based upon the number of
shares of Restricted Stock issued.

Section 2.21.      “Restricted Stock Unit” means a
contractual right to acquire a share of Stock pursuant to an Award granted to a
Participant as provided in Article VII herein.

Section 2.22.      “Section 409A” shall have the
meaning set forth in Section 12.5 herein.

Section 2.23.      “Securities Act” means the
Securities Act of 1933, as amended.

Section 2.24.      “Stock” means the common stock,
$.01 par value, of the Company.

Section 2.25.      “Stock Option” means an option to
purchase shares of Stock, granted under Article VI herein.

ARTICLE III.   Administration

 

Section 3.1.        The Committee.   The Plan
shall be administered by the Committee.

Section 3.2.        Authority of the Committee.   The
Committee shall have full power except as limited by law, the Articles of
Incorporation or the Bylaws of the Company, subject to such other restricting
limitations or directions as may be imposed by the Board and subject to the
provisions herein, to recommend to the full Board the size and types of Awards
and the terms and conditions of such Awards, in a manner consistent with the
Plan; to construe and interpret the Plan and any agreement or instrument entered
into under the Plan; to establish, amend or waive rules and regulations for the
Plan’s administration; to recommend the amendment of the terms and conditions
of any outstanding Award; and to authorize any action of or make any
determination by the Company as the Committee shall deem necessary or advisable
for carrying out the purposes of the Plan; provided, however,
that the terms and conditions of any outstanding Award shall not be amended so
as to adversely affect in any material way such Award without the written
consent of the Participant holding such Award (or if the Participant is not
then living, the Participant’s personal representative or estate), unless such
amendment is required by applicable law. 
Further, the Committee shall interpret and make all other determinations
which may be necessary or advisable for the administration of the Plan.  As permitted by law, the Committee may
delegate its authorities as identified hereunder.

Section 3.3.        Delivery of Stock by Company;
Restrictions on Stock.   Notwithstanding any other provision of the
Plan, the Company shall have no liability to deliver any shares of Stock or
benefits under the Plan unless such delivery would comply with all applicable
laws 

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(including, without limitation, the Code, the Securities
Act and the Exchange Act) and applicable requirements of any securities
exchange or similar entity.  The
Committee may recommend that the Board impose such restrictions on any shares
of Stock acquired under the Plan as it may deem advisable, including, without
limitation, restrictions to comply with applicable Federal securities laws,
with the requirements of any stock exchange or market upon which such Stock is
then listed and/or traded and with any blue sky or state securities laws
applicable to such Stock.

Section 3.4.        Approval.   The
Committee or the full Board shall approve all Awards made under the Plan and
all elections made by Participants, prior to their effective date, to the
extent necessary to comply with Rule 16b-3 under the Exchange Act.

Section 3.5.        Decisions
Binding.   All determinations and decisions made by the Committee
pursuant to the provisions of the Plan and all related orders or resolutions of
the Board shall be final, conclusive and binding on all persons, including the
Company, its stockholders, Participants and their estates.  No member of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any Award.

Section 3.6.        Costs.   The
Company shall pay all costs of administration of the Plan.

ARTICLE IV.   STock Subject to the Plan

 

Section 4.1.        Number of
Shares.  Subject to Section 4.2
herein, the maximum number of shares of Stock that may be issued pursuant to
Awards under the Plan shall be 600,000. 
Shares of Stock underlying lapsed or forfeited Awards of Restricted
Stock shall not be treated as having been issued pursuant to an Award under the
Plan.  Shares of Stock that are
potentially deliverable under an Award that expires or is cancelled, forfeited,
settled in cash or otherwise settled without delivery of shares of Stock shall
not be treated as having been issued under the Plan.  Shares of Stock that are tendered or withheld
to satisfy the Option Exercise Price related to a Stock Option or other Award
shall be deemed to be shares of Stock issued under the Plan.  Shares of Stock issued pursuant to the Plan
may be (i) authorized but unissued shares of Stock, (ii) treasury
stock, or (iii) shares purchased on the open market.

Section 4.2.        Adjustments
in Authorized Stock and Awards.   In the event of any equity
restructuring (within the meaning of Financial Accounting Standards No. 123
(revised 2004)) that causes the per share value of shares of Stock to change,
such as a stock dividend, stock split, spin off, rights offering, or recapitalization
through a large, nonrecurring cash dividend, the Committee shall cause there to
be made an equitable adjustment to the number and kind of shares that may be
issued under the Plan and to the number and kind of shares or units subject to
and the exercise price (if applicable) of any then outstanding Awards of Stock
Options, Restricted Stock, Restricted Stock Units or any other Awards related
to shares of Stock (to the extent such other Awards would not otherwise
automatically adjust in the equity restructuring).  In the event of any other change in corporate
capitalization, such as a merger, consolidation, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, such
equitable adjustments described in the foregoing sentence shall be made as may
be determined to be appropriate and equitable by the Board upon recommendation
of the Committee to 

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prevent dilution or enlargement of rights.  In either case, any such adjustment shall be
conclusive and binding for all purposes of the Plan.  Unless otherwise determined by the Board upon
recommendation of the Committee, the number of shares of Stock subject to an
Award shall always be a whole number.  In
no event shall an outstanding Stock Option be amended for the sole purpose of
reducing the Option Exercise Price thereof.

ARTICLE V.   Eligibility and Participation

 

Section 5.1.        Eligibility and Participation.   Subject
to the provisions of the Plan, the Committee may, from time to time, recommend
to the full Board the Non-Employee Directors to whom Awards shall be granted
and shall determine the nature and amount of each Award.

ARTICLE VI.   Stock Options

 

Section 6.1.        Grant of Stock Options.   Subject
to the terms and conditions of the Plan, Stock Options may be granted to a
Non-Employee Director at any time and from time to time, as shall be determined
by the Board upon recommendation of the Committee.  The Committee shall recommend to the full
Board the number of shares of Stock subject to Stock Options granted to each
Participant (subject to Article IV herein) and, consistent with the provisions
of the Plan, terms and conditions pertaining to such Stock Options.

(a)           Dividend
Equivalents and Other Distributions.   The Committee shall
recommend to the full Board whether and to what extent any Participant shall be
entitled to Dividend Equivalents and/or other distributions paid with respect
to Stock Options, provided that any such right shall be evidenced by an Award
Agreement containing terms and conditions that are consistent with the
provisions of Section 409A and applicable guidance promulgated thereunder.

Section 6.2.        Stock Option Award Agreement.   Each
Stock Option grant shall be evidenced by an Award Agreement that shall specify
the Option Exercise Price, the term of the Stock Option (which shall not be
greater than ten years), the number of shares of Stock to which the Stock
Option pertains, the Exercise Period and such other provisions as the Board
shall determine upon recommendation of the Committee.  The Option Exercise Price shall not be less
than 100 % of the Fair Market Value of the Stock on the date of grant.

(a)           Vesting.  Except as
otherwise recommended by the Committee to the full Board and set forth in the
applicable Award Agreement evidencing a Stock Option, each Stock Option shall
vest in three installments as follows: 
(i) on each of the first and second anniversaries of the date of grant,
as to one-third of the shares of Stock subject to such Stock Option (with any
resulting fractional share rounded to the nearest whole share) and (ii) on the
third anniversary of the date of grant, as to the remaining unvested portion of
such Stock Option.

Section 6.3.        Exercise of and Payment for Stock
Options.   Stock Options granted under the Plan shall be exercisable at
such times and shall be subject to such restrictions and conditions as the
Board shall in each instance approve upon recommendation of the Committee and
set forth in the Award Agreement.  Without
limiting the generality of the foregoing, a 

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Participant may exercise a Stock Option at any time
during the Exercise Period.  Stock
Options shall be exercised by the delivery of a written notice of exercise to
the Company or its designee, setting forth the number of shares of Stock with
respect to which the Stock Option is to be exercised, accompanied by provision
for full payment of the Stock.  The
Option Exercise Price shall be payable: 
(i) in cash or its equivalent, (ii) by tendering (by actual
delivery of shares or by attestation) previously acquired shares of Stock
having an aggregate Fair Market Value at the time of exercise equal to the
total Option Exercise Price, (iii) by broker-assisted cashless exercise, (iv)
by share withholding or (v) by a combination of (i), (ii), (iii) and/or
(iv).  As soon as practicable after
receipt of a written notification of exercise of a Stock Option and provisions
for full payment therefor, the Company shall (a) deliver to the Participant, in
the Participant’s name or the name of the Participant’s designee, a stock
certificate or certificates in an appropriate aggregate amount based upon the
number of shares of Stock purchased under the Stock Option, or (b) cause
to be issued in the Participant’s name or the name of the Participant’s
designee, in book-entry form, an appropriate number of shares of Stock based
upon the number of shares of Stock purchased under the Stock Option.

Section 6.4.        Termination
of Director Status.   Except as otherwise recommended by the Committee
to the full Board and set forth in the applicable Award Agreement evidencing a
Stock Option, the provisions of this Section 6.4 related to vesting and
exercise of Stock Options shall apply.

(a)           Vesting.   Upon a Non-Employee
Director’s mandatory retirement pursuant to the policies of the Board, the
unvested portions of any outstanding Stock Options held by such Non-Employee
Director shall fully vest.  Upon the
termination of a Non-Employee Director’s tenure for any other reason, the
unvested portions of any outstanding Stock Options shall expire and no Stock
Options granted to such Non-Employee Director shall vest after the termination
of such Non-Employee Director’s tenure on the Board.

(b)           Exercise Period.   Upon the
termination of the Non-Employee Director’s position on the Board of the Company
for any reason, each outstanding vested and previously unexercised Stock Option
shall expire three months after the date of such termination; provided
that (a) upon the termination of a Participant’s position on the Board as a
result of death or Disability, each outstanding vested and previously
unexercised Stock Option shall expire two years after the date of his or her
termination as a Non-Employee Director; and (b) upon the mandatory retirement
of a Participant pursuant to the policies of the Board, each outstanding vested
and previously unexercised Stock Option shall expire five years after the date
of his or her termination as a Non-Employee Director.  In no event shall the provisions of this
Section 6.4 operate to extend the original expiration date of any Stock Option.

Section 6.5             Transferability
of Options.   Except as otherwise recommended by the Committee to the
full Board and set forth in the applicable Award Agreement, all Stock Options
granted to a Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant or by such Participant’s guardian or other
legal representative, and no Stock Option granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution; provided, however,
that the vested portions of Stock Options may be transferred by the Participant
during his lifetime to any Family Member. 
A transfer of a Stock Option pursuant hereto may only be effected by the

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Company at the written request of a Participant and
shall become effective only when recorded in the Company’s record of
outstanding Stock Options.  In the event
a Stock Option is transferred as contemplated herein, such transferred Stock
Option may not be subsequently transferred by the transferee except by will or
the laws of descent and distribution. 
Otherwise, a transferred Stock Option shall continue to be governed by
and subject to the terms and limitations of the Plan and the relevant Award
Agreement, and the transferee shall be entitled to the same rights as the
Participant, as if no transfer had taken place. 
In no event shall a Stock Option be transferred for consideration.

Section 6.6.            Change
of Control.   In the event of a change of control of the Company, as
defined by the Board, the Stock Options may be assumed by the successor
corporation or a parent of such successor corporation or substantially
equivalent Stock Options may be substituted by the successor corporation or a
parent of such successor corporation, and if the successor corporation does not
assume the Stock Options or substitute options, then all outstanding and
unvested Stock Options shall become immediately exercisable and all outstanding
Stock Options shall terminate if not exercised as of the date of the change of
control (or other prescribed period of time). 
The Company shall provide at least 30 days prior written notice of the
change of control to the holders of all outstanding Stock Options, which notice
shall state whether (a) the Stock Options will be assumed by the successor
corporation or substantially equivalent stock options will be substituted by
the successor corporation, or (b) the Stock Options are thereafter vested and
exercisable and will terminate if not exercised as of the date of the change of
control (or other prescribed period of time).

 

ARTICLE VII.   Restricted Stock and Restricted Stock Units

 

Section 7.1.        Grant of Restricted Stock and
Restricted Stock Units.   Subject to the terms and conditions of the
Plan, Restricted Stock and/or Restricted Stock Units may be granted to a
Non-Employee Director at any time and from time to time, as shall be determined
by the Board upon recommendation of the Committee.  The Committee shall recommend to the full
Board the number of shares of Restricted Stock and/or Restricted Stock Units
granted to each Participant (subject to Article IV herein) and, consistent with
the provisions of the Plan, the terms and conditions pertaining to such Awards.

(a)           Dividends,
Dividend Equivalents and Other Distributions.   The Committee
shall recommend to the full Board whether and to what extent any Participant
shall be entitled to cash dividends, Dividend Equivalents and/or other
distributions paid with respect to Restricted Stock and Restricted Stock Units,
provided that any such right shall be evidenced by an Award Agreement
containing terms and conditions that are consistent with the provisions of
Section 409A and applicable guidance promulgated thereunder.

Section 7.2.        Restricted Stock/Restricted Stock
Unit Award Agreement.   Each grant of Restricted Stock and/or
Restricted Stock Units grant shall be evidenced by an Award Agreement that
shall specify the number of shares of Restricted Stock and/or Restricted Stock
Units granted, the Period or Periods of Restriction, the conditions upon which
Restricted Stock and/or Restricted Stock Units shall no longer be forfeitable,
and such other provisions as recommended by the Committee.

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Section 7.3.        Transferability.   Restricted
Stock and Restricted Stock Units granted hereunder may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until
the end of the applicable Period of Restriction recommended by the Committee
and specified in the Award Agreement. 
During the applicable Period of Restriction, all rights with respect to
the Restricted Stock and Restricted Stock Units granted to a Participant under
the Plan shall be available during his or her lifetime only to such Participant
or his or her legal representative.

Section 7.4.        Restricted Stock Certificates.   The
Company shall have the right to retain the certificates (if any) representing
Restricted Stock in the Company’s possession until such time as all
restrictions applicable to such shares have been satisfied.

Section 7.5.        Forfeiture Restriction.   Restricted
Stock shall become freely transferable and no longer subject to forfeiture
after the last day of the Period of Restriction applicable thereto.  Unless otherwise determined by the Board upon
recommendation of the Committee, the Period of Restriction applicable to
Restricted Stock and Restricted Stock Units shall lapse upon the earlier of (i)
the date of the Non-Employee Director’s death or Disability and (ii) the first anniversary of the date on which
the Non-Employee Director is no longer serving on the Board.  Payment of vested Restricted Stock
Units shall be made following the close of the Period of Restriction.  Once Restricted Stock is released from the
restrictions, the Participant shall be entitled to receive a stock certificate.  The Board, upon recommendation of the
Committee, may determine whether payment of Restricted Stock Units shall be in
cash or shares of Stock (or a combination thereof), which have an aggregate
Fair Market Value equal to the value of the Restricted Stock Units at the close
of the applicable Period of Restriction. 
Delivery of Stock shall be effected by either (a) delivery to the
Participant, in the Participant’s name or the name of the Participant’s
designee, a stock certificate or certificates in an appropriate aggregate amount
based upon the number of shares of Stock underlying the Restricted Stock Units,
or (b) book-entry form, in an appropriate number of
shares of Stock based upon the number of shares of Stock underlying the
Restricted Stock Units.

Section 7.6.        Voting Rights.   Unless
otherwise recommended by the Committee to the full Board and set forth in the
applicable Award Agreement, during the Period of Restriction, Participants may
exercise full voting rights with respect to the Restricted Stock.

Section 7.7.        Change of Control.   In the
event of a change of control of the Company, as defined by the Board, the
Restricted Stock Units may be assumed by the successor corporation or a parent
of such successor corporation or substantially equivalent restricted stock
units may be substituted by the successor corporation or a parent of such
successor corporation, and if the successor corporation does not assume the
Restricted Stock Units or substitute restricted stock units, then all
outstanding Restricted Stock Units shall immediately be payable in Stock upon
consummation of the change of control. 
The Company shall provide at least 30 days prior written notice of the
change of control to the holders of all outstanding Restricted Stock Units,
which notice shall state whether (a) the Restricted Stock Units will be assumed
by the successor corporation, or (b) the Restricted Stock Units are immediately
payable upon consummation of the change of control.

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ARTICLE VIII.   Election to Receive Stock in Lieu of Cash
Compensation

 

Section 8.1.        General.   In lieu of
receiving the cash compensation, including annual and committee retainer fees
(collectively, the “Annual Retainer Fees”), payable for services to be rendered
by a Non-Employee Director for any period beginning on June 1 and continuing to
the following May 31 (or such other period for which cash compensation is
payable to Non-Employee Directors pursuant to the policies of the Board), a
Non-Employee Director may make a written irrevocable election to reduce the
Annual Retainer Fees by a specified percentage (which percentage shall be in
ten percent increments) and receive an equivalent value in Election Shares
granted in accordance with this Article VIII.

Section 8.2.        Election.   The election
shall be made on a form prescribed by the Committee and must be returned to the
Committee or its designee no later than five business days prior to the period
for which the election is to be effective. 
The election form shall state the amount of cash compensation to be
received in the form of Election Shares (expressed as a percentage of the cash
compensation otherwise payable in cash).  
Such election shall remain in effect until revoked or changed for any
subsequent period.

Section 8.3.        Issuance of Election Shares.   If
a Non-Employee Director elects pursuant to Section 8.2 above to receive
Election Shares, there shall be issued to such Director on the first day of the
period to which such election relates and is effective, a number of Election
Shares equal to the amount of compensation otherwise payable divided by the
Fair Market Value of the Election Shares. 
Cash will be paid to the Non-Employee Director in lieu of any fractional
Election Shares based upon the Fair Market Value of such fractional Election
Share.

ARTICLE IX.   STOCK
AND Other Awards

 

Section 9.1.        Stock Awards.   The Board,
upon recommendation of the Committee, shall have the right to issue Stock free
of any forfeiture or transferability restrictions. 

Section 9.2.        Other Awards.   The Board,
upon recommendation of the Committee, shall have the right to grant other
Awards and determine the manner and timing of payment under or settlement of
any such Awards. 

(a)           Dividends,
Dividend Equivalents and Other Distributions.   The Committee
shall recommend to the full Board whether and to what extent any Participant
shall be entitled to cash dividends, Dividend Equivalents and/or other
distributions paid with respect to such other Awards, provided that any such
right shall be evidenced by an Award Agreement containing terms and conditions
that are consistent with the provisions of Section 409A and applicable guidance
promulgated thereunder.

ARTICLE X.   Amendment, Modification and Termination

 

Section 10.1.      The Board may, at any time and from time
to time, alter, amend, suspend or terminate the Plan, in whole or in part, provided
that no amendment shall be made which shall increase the total number of shares
of Stock that may be issued under the Plan, 

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materially modify the requirements for participation
in the Plan, or materially increase the benefits accruing to Participants under
the Plan, in each case unless such amendment is approved by the stockholders of
the Company.  The Plan was amended and
restated by the Board at a meeting held on September 10, 2006.

ARTICLE XI.   Successors

 

Section 11.1.      All obligations of the Company under the
Plan, with respect to Awards granted hereunder, shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation or otherwise of all or
substantially all of the business and/or assets of the Company.

ARTICLE XII.   General Provisions

 

Section 12.1.      Gender and Number.   Except
where otherwise indicated by the context, any masculine term used herein also
shall include the feminine, the plural shall include the singular and the
singular shall include the plural.

Section 12.2.      Severability.   In the event
any provision of the Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or invalid provision
had not been included.

Section 12.3.      Requirements of Law.   The
granting of Awards and the issuance of Stock under the Plan shall be subject to
all applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

Section 12.4.      Governing Law.   To the extent
not preempted by Federal law, the Plan, and all agreements hereunder, shall be
construed in accordance with, and governed by, the laws of the State of
Delaware, except with regard to conflicts of law provisions.

Section 12.5.      Code Section 409A Compliance.   To
the extent applicable, it is intended that this Plan and any Awards granted
hereunder comply with the requirements of Section 409A of the Code and any
related regulations or other guidance promulgated with respect to such Section
by the U.S. Department of the Treasury or the Internal Revenue Service (“Section 409A”).  Any provision that would cause the Plan or
any Award granted hereunder to fail to satisfy Section 409A shall have no force
or effect until amended to comply with Section 409A, which amendment may be
retroactive to the extent permitted by Section 409A.

Section 12.6.          Rights
of Board Members.   Nothing in this Plan shall interfere with or limit
in any way the rights of stockholders of the Company or the Board to elect or
remove members of the Board at any time or confer upon any Participant any
right to continue as a member of the Board.

Section 12.7.      No Right to Specific Assets.   Nothing
contained in the Plan and no action taken pursuant to the Plan shall create or
be construed to create a trust of any kind or any fiduciary relationship
between the Company and any Participant, the executor, administrator or other
personal representative or designated beneficiary of such Participant, or any
other

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persons.  To the
extent that any Participant or his executor, administrator, or other personal
representative, as the case may be, acquires a right to receive any benefit
from the Company pursuant to the Plan, such right shall be no greater than the
right of an unsecured general creditor of the Company.

Section 12.8.      Rights as a Stockholder.   A
Participant shall have no rights as a stockholder with respect to any Stock
until he shall have become the holder of record of such Stock.

.

 

 11Exhibit 10.4

THE ALLSTATE
CORPORATION

EQUITY INCENTIVE
PLAN FOR NON-EMPLOYEE DIRECTORS

As
Amended and Restated effective as of September 10, 2006

I.              Purpose.

The purpose of The Allstate Corporation Equity
Incentive Plan for Non-Employee Directors (the “Plan”) is to promote the
interests of The Allstate Corporation (the “Company”) by providing an
inducement to obtain and retain the services of qualified persons as members of
the Company’s Board of Directors (the “Board”) and to align more closely
the interests of such persons with the interests of the Company’s stockholders
by providing a significant portion of the compensation provided to such persons
in the form of equity securities of the Company.

II.            Administration.

The Plan shall be administered by the Committee.  The Committee shall have full power to
construe and interpret the Plan and Shares, RSUs and Options granted hereunder,
to establish and amend rules for its administration and to correct any defect
or omission and to reconcile any inconsistency in the Plan or in any Share, RSU
or Option granted hereunder to the extent the Committee deems desirable to
carry the Plan or any Share, RSU or Option granted hereunder into effect.  Any decisions of the Committee in the
administration of the Plan shall be final and conclusive.  The Committee may authorize any one or more
of its members, the secretary of the Committee or any officer of the Company to
execute and deliver documents on behalf of the Committee.  Each member of the Committee, and, to the
extent provided by the Committee, any other person to whom duties or powers
shall be delegated in connection with the Plan, shall incur no liability with
respect to any action taken or omitted to be taken in connection with the Plan
and shall be fully protected in relying in good faith upon the advice of
counsel, to the fullest extent permitted under applicable law.

III.           Eligibility.

Each Non-Employee Director shall be eligible to
participate in the Plan.

IV.           Limitation on Aggregate Shares.

A.            Maximum
Number of Shares.   The aggregate maximum number of Shares that may be
granted pursuant to the Plan or delivered upon settlement of RSUs or upon
exercise of Options granted pursuant to the Plan shall be 580,000 Shares.  Such maximum number of Shares is subject to
adjustment under the provisions of Section IV.B.  The Shares to be granted pursuant to the Plan
or delivered upon settlement of RSUs or upon exercise of Options may be either
(i) authorized but unissued Shares or (ii) Shares previously issued which have
been reacquired by 

 

the Company (“Treasury Shares”); provided, however,
that on or after June 1, 2001, only Treasury Shares shall be granted pursuant
to the Plan or delivered upon settlement of RSUs or exercise of Options (other
than upon exercise of Options granted prior to such date).  In the event any RSU, Option or Reload Option
shall, for any reason, terminate or expire or be surrendered without having
been exercised in full or without all Shares subject thereto having been
delivered, the Shares subject to such RSU, Option or Reload Option but not
delivered or purchased thereunder shall be available for future RSUs, Options
or Reload Options to be granted under the Plan.

B.            Adjustment.   The
maximum number of Shares referred to in Section IV.A of the Plan, the number of
RSUs granted pursuant to Section VI of the Plan, the number of Shares subject
to outstanding RSUs granted under Section VI of the Plan, the number of Options
granted pursuant to Section VII of the Plan, and the option price and the
number of Shares which may be purchased under any outstanding Option granted
under Section VII of the Plan shall be proportionately adjusted for (i) any
increase or decrease in the number of issued and outstanding Shares as the
result of (a) the declaration and payment of a dividend payable in Common
Stock, or the division of the Common Stock outstanding at the date hereof (or
the date of the grant of any such outstanding Option or RSU, as applicable)
into a greater number of Shares without the receipt of consideration therefore
by the Company, or any other increase in the number of such Shares of the
Company outstanding at the date hereof (or the date of the grant of any such
outstanding Option or RSU, as applicable) which is effective without the
receipt of consideration therefore by the Company (exclusive of any Shares
granted by the Company to employees of the Company or any of its Subsidiaries
without receipt of separate consideration by the Company), or (b) the
consolidation of the Shares outstanding at the date hereof (or the date of the
grant of any such outstanding Option or RSU, as applicable) into a smaller
number of Shares without the payment of consideration thereof by the Company,
or any other decrease in the number of such Shares outstanding at the date
hereof (or the date of the grant of any such outstanding Option or RSU, as
applicable) effected without the payment of consideration by the Company or
(ii) to the extent not addressed in (i), any equity restructuring (within the
meaning of Financial Accounting Standards No. 123 (revised 2004)) that causes
the per share value of the Common Stock to change; provided, however,
that the total option price for all Shares which may be purchased upon the
exercise of any Option granted pursuant to the Plan (computed by multiplying
the number of Shares originally purchasable thereunder, reduced by the number
of such Shares which have theretofore been purchased thereunder, by the
original option price per share before any of the adjustments herein provided
for) shall not be changed.

In the event of a change in the Common Stock as
presently constituted which is limited to a change of the Company’s authorized
shares with a par value into the same number of shares with a different par
value or without par value, the shares resulting from any such change will be
deemed to be the Common Stock within the meaning of this Plan and no adjustment
will be required pursuant to this Section IV.B.

The foregoing adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive.  Except as expressly provided
in this Section IV.B, 

 2
 

 

a Non-Employee Director shall have no rights by reason
of any subdivision or consolidation of shares of stock of any class or the
payment of any stock dividend or any other increase or decrease in the number
of shares of stock of any class.

V.            Definitions.

The following terms shall have the meanings set forth
below when used herein:

“Code” means the Internal Revenue Code of 1986,
as amended.

“Committee” means the Nominating and Governance
Committee of the Board, any successor committee of the Board performing similar
functions or, in the absence of such a committee, the Board.

“Common Stock” means the Common Stock, par
value $.01 per share, of the Company.

“Disability” means a mental or physical
condition which, in the opinion of the Committee, renders a Non-Employee
Director unable or incompetent to carry out his or her duties as a member of
the Board and which is expected to be permanent or for an indefinite duration.

“Dividend Equivalent Right” means an unfunded
and unsecured promise to pay a cash amount equal to the regular cash dividends
that would be paid on a Share of Common Stock underlying a Restricted Stock
Unit if such Share had been delivered pursuant to the Restricted Stock Unit
award.

“Election Shares” means any Shares issued to a
Non-Employee Director pursuant to the election of such person to receive such
Shares in lieu of cash compensation made in accordance with Section VIII.B.

“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended.

“Exchange Act” means the Securities Exchange
Act of 1934, as amended.

“Fair Market Value” of any Share means, as of
any applicable date, the mean between the high and low prices of the Shares as
reported on the New York Stock Exchange-Composite Tape, or if no such reported
sale of the Shares shall have occurred on such date, on the next preceding date
on which there was such a reported sale.

“Initial Election Date” means, for each
Non-Employee Director, the later to occur of (i) the date the Plan is
approved and adopted by the Company’s stockholders pursuant to Section XIII of
the Plan, and (ii) the date of such member’s initial election or
appointment to the Board.

 3
 

 

“Non-Employee Director” means each member of
the Board who is not an officer or employee of the Company or any of its
Subsidiaries.

“Option” means an option to purchase shares of
Common Stock.

“Restricted Stock Unit” or “RSU” means a
restricted stock unit award, which represents an unfunded and unsecured promise
to deliver a Share of Common Stock in accordance with Article VI.

“Shares” means shares of Common Stock.

“Subsidiary” means any partnership,
corporation, association, limited liability company, joint stock company,
trust, joint venture, unincorporated organization or other business entity of
which (i) if a corporation, a majority of the total voting power of shares
of stock entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by the Company or one or more of the
other Subsidiaries of the Company or a combination thereof, or (ii) if a
partnership, association, limited liability company, joint stock company,
trust, joint venture, unincorporated organization or other business entity, a
majority of the partnership or other similar equity ownership interest thereof
is at the time owned or controlled, directly or indirectly, by the Company or
one or more Subsidiaries of the Company or a combination thereof.  For purposes hereof, the Company or a
Subsidiary shall be deemed to have a majority ownership interest in a
partnership, association, limited liability company, joint stock company,
trust, joint venture, unincorporated organization or other business entity if
the Company or such Subsidiary shall be allocated a majority of partnership,
association, limited liability company, joint stock company, trust, joint
venture, unincorporated organization or other business entity gains or losses
or shall be or control the managing director, the trustee, the manager or the
general partner of such partnership, association, limited liability company,
joint stock company, trust, joint venture, unincorporated organization or other
business entity.

VI.           Formula Restricted Stock Unit Grants
for Non-Employee Directors.

A.            Annual
Grant of Restricted Stock Units.   Beginning December 1, 2004, on
December 1 of each year 2,000 RSUs shall automatically be granted to each
Non-Employee Director serving on the Board on such date who has served in such
capacity since June 1 of such year.  If
any person serving as a Non-Employee Director on June 1 of 2004 or any
subsequent year ceases to serve as a director of the Company prior to December
1 of such year, such director shall be automatically granted on his or her last
day of service a number of RSUs equal to (i) 2,000 multiplied by (ii) a
fraction, the numerator of which is the number of full calendar months such
Non-Employee Director has served on the Board during the period beginning on
such June 1 and ending on such director’s last date of service and the
denominator of which is 6.

B.            Grant
for Newly Appointed Directors.   If after
June 1, 2004 a Non-Employee

 4
 

 

 

Director is initially elected or appointed to the
Board effective on any date other than June 1, such Non-Employee Director
shall automatically be granted, on the June 1 following the date he or she
joins the Board (or such earlier date as he or she ceases to serve as a
director), a number of RSUs equal to (i) 2,000 multiplied by (ii) 
a fraction, the numerator of which is the number of full calendar months such
Non-Employee Director has served on the Board during the period beginning on
the date such director joined the Board and ending on the following May 31 (or
such earlier date as he or she ceases to serve as a director) and the
denominator of which is 6; provided that such fraction shall in no event be
greater than one.

C.            Delivery
of Shares.   Unless otherwise determined by the Board, the Non-Employee
Director shall be entitled to delivery of Shares that underlie the RSUs then
outstanding (which amount shall be rounded to the nearest whole number to avoid
delivery of fractional Shares) upon the earlier of (i) the date of the
Non-Employee Director’s death or Disability, and (ii) one year after the
date on which the Non-Employee Director is no longer serving as a director of
the Company.  Delivery of Shares shall be
effected by book entry credit to the Non-Employee Director’s account with the
Company’s transfer agent.

D.            Restrictions.   A
Non-Employee Director shall have only the rights of a general unsecured
creditor of the Company and shall have no rights as a shareholder of the
Company with respect to the RSUs.  Upon
delivery of Shares pursuant to Section VI.C the Non-Employee Director will
obtain full voting and other rights as a shareholder of the Company.  The RSUs granted pursuant to this Section VI
shall be fully vested but may not be sold, transferred, pledged, assigned, or
otherwise alienated at any time.

E.             Dividend Equivalent Rights.   Each
RSU shall include a Dividend Equivalent Right that shall entitle the
Non-Employee Director to receive at or as soon as practicable after the time of
distribution of any regular cash dividend paid by the Company in respect of a
Share the record date for which occurs on or after the date such RSU is
granted, a cash payment equal to such regular dividend payment as would have
been made in respect of each Share underlying such RSU.  Payment with respect to a Dividend Equivalent
Right shall be made only with respect to such RSUs that are outstanding on the
dividend record date.

F.            Sale of the Company.   In
the event of a merger of the Company with or into another corporation
constituting a change of control of the Company, a sale of all or substantially
all of the Company’s assets or a sale of a majority of the Company’s
outstanding voting securities (a “Sale of the Company”), the RSUs may be
assumed by the successor corporation or a parent of such successor corporation
or substantially equivalent RSUs may be substituted by the successor
corporation or a parent of such successor corporation, and if the successor
corporation does not assume the RSUs or substitute RSUs, then all outstanding
RSUs shall immediately be payable in Shares upon consummation of the Sale of
the Company.  The Company shall provide
at least 30 days prior written notice of the Sale of the Company to the holders
of all outstanding RSUs, which notice shall state whether (a) the RSUs
will be assumed by the successor corporation or substantially equivalent RSUs
will be substituted by the successor corporation, or (b) the RSUs are
immediately payable upon consummation of the Sale of the Company.

 5
 

 

 

VII.         Formula Stock Option Grants for
Non-Employee Directors.

A.            Annual
Grant of Options.   On June 1 of each year, beginning June 1, 2001,
Options to purchase 4,000 Shares shall automatically be granted to each
Non-Employee Director serving on the Board on such date.  If any such Non-Employee Director will be
required to retire (pursuant to the policies of the Board) during the 12 month
period beginning on the date of any grant (or if any such Non-Employee Director
has notified the Board that he or she intends to resign from the Board for any
reason during the 12 month period beginning on the date of any grant), such
director shall instead be granted on June 1 of the relevant year Options to
purchase a number of Shares equal to (i) 4,000, multiplied by (ii) a
fraction, the numerator of which is the number of full calendar months such
Non-Employee Director will serve on the Board during the period beginning on
such June 1 and ending on such director’s last date of service and the
denominator of which is 12.

B.            Grant
for Newly Appointed Directors.   If after June 1, 2001 a Non-Employee
Director is initially elected or appointed to the Board effective on any date
other than June 1, such Non-Employee Director shall automatically be
granted, on the date he or she joins the Board, Options to purchase a number of
Shares equal to (i) 4,000, multiplied by (ii) a fraction, the
numerator of which is the number of full calendar months such Non-Employee
Director will serve on the Board during the period beginning on the date such
director joins the Board and ending on the following May 31 and the denominator
of which is 12.

C.            Option
Exercise Price.   The exercise price per Share for each Option shall be
100% of the Fair Market Value of a Share on the date of grant, subject to
Section IV.B.

D.            Term
of Options.   Each Option shall be exercisable for ten years after the date
of grant, subject to Section VII.F.

E.             Conditions
and Limitations on Exercise.

(i)     Vesting.   Each Option shall
vest in three installments as follows: 
(i) on each of the first and second anniversaries of the date of
grant, as to one-third of the Shares subject to such Option (with any resulting
fractional Share rounded to the nearest whole Share) and (ii) on the third
anniversary of the date of grant, as to the remaining unvested portion of such
Option.  Upon a Non-Employee Director’s
mandatory retirement pursuant to the policies of the Board, the unvested
portions of any outstanding Options held by such Non-Employee Director shall
fully vest.  Upon the termination of a
Non-Employee Director’s tenure for any other reason, the unvested portions of
any outstanding Options shall expire and no Options granted to such
Non-Employee Director shall vest after the termination of such director’s
tenure on the Board.

(ii)    Exercise.   Each Option shall be
exercisable in one or more installments and shall not be exercisable for less
than 100 Shares, unless the exercise represents the 

 6
 

 

entire remaining
exercisable balance of a grant or grants. 
Each Option shall be exercised by delivery to the Company of written
notice of intent to purchase a specific number of Shares subject to the
Option.  The option price of any Shares
as to which an Option shall be exercised shall be paid in full at the time of
the exercise.  Payment may, at the
election of the Non-Employee Director, be made in any one or any combination of
the following forms:

(a)           check or wire transfer of funds in
such form as may be satisfactory to the Committee;

(b)           delivery of Shares valued at their
Fair Market Value on the date of exercise or, if the date of exercise is not a
business day, the next preceding business day;

(c)           through simultaneous sale through a
broker of unrestricted Shares acquired on exercise, as permitted under
Regulation T of the Federal Reserve Board; or

(d)           by authorizing the Company in his or
her written notice of exercise to withhold from issuance a number of Shares
issuable upon exercise of such Option which, when multiplied by the Fair Market
Value of Common Stock on the date of exercise (or, if the date of exercise is
not a business day, the next preceding business day), is equal to the aggregate
exercise price payable with respect to the Option so exercised.

In the event a
Non-Employee Director elects to pay the exercise price payable with respect to
an Option pursuant to clause (b) above, (i) only a whole number of
Share(s) (and not fractional Shares) may be tendered in payment, (ii) such
Non-Employee Director must present evidence acceptable to the Company that he
or she has owned any such Shares tendered in payment of the exercise price (and
that such Shares tendered have not been subject to any substantial risk of
forfeiture) for at least six months prior to the date of exercise, and (iii) the
certificate(s) for all such Shares tendered in payment of the exercise price
must be accompanied by duly executed instruments of transfer in a form
acceptable to the Company.  When payment
of the Option exercise price is made by the tender of Shares, the difference,
if any, between the aggregate exercise price payable with respect to the Option
being exercised and the Fair Market Value of the Share(s) tendered in payment
(plus any applicable taxes) shall be paid by check or wire transfer of
funds.  No Non-Employee Director may
tender Shares having a Fair Market Value exceeding the aggregate exercise price
payable with respect to the Option being exercised.

In the event a
Non-Employee Director elects to pay the exercise price payable with respect to
an Option pursuant to clause (d) above, (i) only a whole number of
Share(s) (and not fractional Shares) may be withheld in payment and
(ii) such Non-Employee Director must present evidence acceptable to the
Company that he or she has owned a number of Shares at least equal to the
number of Shares to be withheld in payment of the exercise price (and that such

 7
 

 

 

owned Shares have not been subject to any substantial
risk of forfeiture) for at least six months prior to the date of exercise.  When payment of the Option exercise price is
made by the withholding of Shares, the difference, if any, between the
aggregate exercise price payable with respect to the Option being exercised and
the Fair Market Value of the Share(s) withheld in payment (plus any applicable
taxes) shall be paid by check or wire transfer of funds.  No Non-Employee Director may authorize the
withholding of Shares having a Fair Market Value exceeding the aggregate
exercise price payable with respect to the Option being exercised.  Any withheld Shares shall no longer be
issuable under such Option.

F.          Additional Provisions.

(i)       Accelerated Expiration of Options Upon
Termination of Directorship.   Upon the termination of a Non-Employee
Director’s tenure for any reason, each outstanding vested and previously
unexercised Option shall expire three months after the date of such
termination; provided that (a) upon the termination of a
Non-Employee Director’s tenure as a result of death or Disability, each
outstanding vested and previously unexercised Option shall expire two years
after the date of his or her termination as a director, and (b) upon the
mandatory retirement of a Non-Employee Director pursuant to the policies of the
Board, each outstanding vested and previously unexercised Option shall expire
five years after the date of his or her termination as a director.  In no event shall the provisions of this Section
VII.F operate to extend the original expiration date of any Option.

(ii)      Sale of the Company.   In the
event of a merger of the Company with or into another corporation constituting
a change of control of the Company, a sale of all or substantially all of the
Company’s assets or a sale of a majority of the Company’s outstanding voting
securities (a “Sale of the Company”), the Options may be assumed by the
successor corporation or a parent of such successor corporation or
substantially equivalent options may be substituted by the successor
corporation or a parent of such successor corporation, and if the successor
corporation does not assume the Options or substitute options, then all
outstanding and unvested Options shall become immediately exercisable and all
outstanding Options shall terminate if not exercised as of the date of the Sale
of the Company (or other prescribed period of time).  The Company shall provide at least 30 days
prior written notice of the Sale of the Company to the holders of all
outstanding Options, which notice shall state whether (a) the Options will
be assumed by the successor corporation or substantially equivalent options
will be substituted by the successor corporation, or (b) the Options are
thereafter vested and exercisable and will terminate if not exercised as of the
date of the Sale of the Company (or other prescribed period of time).

(iii)     Liquidation or Dissolution.   In
the event of the liquidation or dissolution of the Company, Options shall
terminate immediately prior to the liquidation or dissolution.

 8
 

 

G.            Grant of Reload Options.   A
Non-Employee Director who exercises all or any portion of an Option granted
under the Plan before June 1, 2004 by the tender or withholding of Shares which
have a Fair Market Value equal to not less than 100% of the exercise price for
such Options (the “Exercised Options”) shall be granted, subject to
Section IV, an additional option (a “Reload Option”) for a number of
Shares equal to the sum of the number of Shares tendered or withheld in payment
of the exercise price for the Exercised Options.  Options granted on and after June 1, 2004 shall
not provide for the grant of a Reload Option upon exercise.

Reload Options
shall be subject to the following terms and conditions:

(i)       the grant date for each Reload Option
shall be the date of exercise of the Exercised Option to which it relates;

(ii)      subject to clause (iii) below, the Reload
Option may be exercised at any time during the unexpired term of the Exercised
Option (subject to earlier termination thereof as provided in the Plan); and

(iii)     the other terms of the Reload Option shall
be the same as the terms of the Exercised Option to which it relates and shall
be subject to the provisions of the Plan, except that (a) the option price
shall be the Fair Market Value of the Shares on the grant date of the Reload
Option, (b) no Reload Option may be exercised within six months from the
grant date thereof, and (c) no other Reload Option shall be granted upon
exercise of such Reload Option.

H.            Non-Qualified Stock Options.   All
Options granted under the Plan shall be non-qualified options not entitled to
special tax treatment under Code Section 422, as may be amended from time to
time.

VIII.        Election to Receive Stock in Lieu of
Cash Compensation

A.            General.   A Non-Employee
Director may elect to reduce the cash compensation otherwise payable for
services to be rendered by him or her as a director for any period beginning on
June 1 and continuing to the following May 31 (or such other period
for which cash compensation is payable to Non-Employee Directors pursuant to
the policies of the Board), beginning June 1, 1996 and to receive in lieu
thereof Election Shares as provided in this Section VIII.

B.            Election.   By the later
of (i) the date of the Company’s annual meeting of stockholders next
preceding the June 1 to which such election relates (but in no event less
than five business days prior to such June 1) and (ii) such Non-Employee
Director’s Initial Election Date, each Non-Employee Director may make an
irrevocable election to receive, in lieu of all or a specified percentage
(which percentage shall be in 10% increments) of the cash compensation to which
such director would otherwise be entitled as a member of the Board and any
committee thereof (including the annual retainer fee and any meeting or other
fees payable for services on 

 9
 

 

 

the Board or any committee thereof, but excluding any
reimbursement for out-of-pocket expenses) for the year beginning the following
June 1 (or such other period for which cash compensation is payable to such
Non-Employee Director pursuant to the policies of the Board), an equivalent
value in Election Shares granted in accordance with this Section VIII.  An election shall be effective (i) if
made in accordance with clause (i) of the preceding sentence, beginning on the
June 1 following such election; and (ii) if made on such Non-Employee
Director’s Initial Election Date, immediately.

Each such election shall
(i) be in writing in a form prescribed by the Company, (ii) specify
the amount of cash compensation to be received in the form of Election Shares
(expressed as a percentage of the compensation otherwise payable in cash), and
(iii) be delivered to the Secretary of the Company.  Such election may not be revoked or changed
thereafter except as to compensation for services to be rendered in any 12
month period beginning on any June 1 at least six months following such
revocation or new election.

C.            Issuance of Common Stock.   If
a Non-Employee Director elects pursuant to Section VIII.B above to receive
Election Shares, there shall be issued to such director promptly following each
subsequent June 1 for which such election is effective (or promptly
following the first day of such other period for which such election is
effective) a number of Election Shares equal to the amount of compensation
otherwise payable for the 12 month period beginning on such June 1 (or the
other period for which such election is effective) divided by the Fair Market
Value of the Election Shares on such June 1 (or on the first day of such
other period).  To the extent that the
application of the foregoing formula would result in fractional shares of
Common Stock being issuable, cash will be paid to the Non-Employee Director in
lieu of such fractional Election Shares based upon the Fair Market Value of
such fractional Election Share.

D.            Compliance with Exchange Act.   The
election to receive Election Shares is intended to comply in all respects with
Rule 16b-3(d)(1) promulgated under Section 16(b) of the Exchange Act
such that the issuance of Election Shares under the Plan on a grant date
occurring at least six months after the election shall be exempt from
Section 16(b) of the Exchange Act.

E.             Grant Date.   The grant
date for each Election Share for the Non-Employee Director electing such option
shall be the first day of the period to which such election relates and is
effective.

IX.           Miscellaneous Provisions.

A.            Rights of Non-Employee Directors.   No
Non-Employee Director shall be entitled under the Plan to voting rights,
dividends or other rights of a stockholder prior to the issuance of Common
Stock.  Neither the Plan nor any action
taken hereunder shall be construed as giving any Non-Employee Director any
right to be retained in the service of the Company.

B.            Limitations
on Transfer and Exercise.   All Options granted under the Plan shall
not be transferable by the Non-Employee Director, other than by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order, as defined by Section 1 et  seq, of 

 10
 

 

 

the Code, Title I of ERISA or the rules and
regulations thereunder, and shall be exercisable during the Non-Employee
Director’s lifetime only by such Non-Employee Director or by such Non-Employee
Director’s guardian or other legal representative; provided, however, that the vested portions of Options may be transferred by
the Non-Employee Director during his lifetime to (a) any member of his
immediate family, (b) to a trust established for the exclusive benefit of
himself or one or more members of his immediate family, or (c) to a
partnership, the partners of which are limited to the Non-Employee Director and
members of his immediate family.  A
transfer of an Option pursuant to this paragraph may only be effected by the
Company at the written request of a Non-Employee Director and shall become
effective only when recorded in the Company’s record of outstanding
Options.  In the event an Option is
transferred as contemplated in this paragraph, any Reload Options associated
with such transferred Option shall terminate, and such transferred Option may
not be subsequently transferred by the transferee except by will or the laws of
descent and distribution.  Otherwise, a
transferred Option shall continue to be governed by and subject to the terms
and limitations of the Plan and the relevant grant, and the transferee shall be
entitled to the same rights as the Non-Employee Director, as if no transfer had
taken place.  As used in this paragraph, “immediate
family” shall mean, with respect to any person, his/her spouse, any child,
stepchild or grandchild, and shall include relationships arising from legal
adoption.

C.            Compliance with Laws.   No
shares of Common Stock shall be issued hereunder unless counsel for the Company
shall be satisfied that such issuance will be in compliance with applicable
federal, state, local and foreign securities, securities exchange and other
applicable laws and requirements.  Each
Share delivered pursuant to Section VI or granted pursuant to
Section VIII and each Option granted pursuant to Section VII shall be
subject to the requirement that if at any time the Committee shall determine,
in its discretion, that the listing, registration or qualification of the
Shares delivered, granted or subject to the Option upon any securities exchange
or under any state or federal securities or other law or regulation, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition to or in connection with the granting or delivery of
such Share, such Option or the issuance or purchase of Shares thereunder, no
such Share may be issued or delivered and no Option may be exercised or paid in
Common Stock, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee. 
The holder of an RSU, Share or Option will supply the Company with such
certificates, representations and information as the Company shall request and
shall otherwise cooperate with the Company in obtaining such listing,
registration, qualification, consent or approval.  The Committee may at any time impose any
limitations upon the delivery of a Share pursuant to an RSU, the sale of a Share
or the exercise of an Option or the sale of the Shares delivered pursuant to an
RSU or issued upon exercise of an Option that, in the Committee’s discretion,
are necessary or desirable in order to comply with Section 16(b) of the
Exchange Act and the rules and regulations thereunder.  The Committee may at any time impose
additional limitations, or may amend or delete the existing limitations, upon
the exercise of Options by the tender or withholding of Shares in accordance
with Section VII.E (including an amendment or deletion of the related ownership
period for Shares specified in such Section), if such additional, amended or
deleted limitations are necessary, desirable or no longer required (as the case
may be) 

 11
 

 

 

to remain in compliance with applicable accounting
pronouncements relating to the treatment of the plan as a fixed plan for
accounting purposes.

D.            Payment of Withholding Tax.   Whenever
Shares are to be delivered pursuant to Section VI or issued pursuant to
Section VIII of the Plan or upon exercise of Options issued pursuant to
Section VII of the Plan, the Company shall be entitled to require as a
condition of delivery (i) that the participant remit an amount sufficient
to satisfy all federal, state and local withholding tax requirements related
thereto, (ii) the withholding of Shares due to the participant under the
Plan with a Fair Market Value equal to such amount, or (iii) any
combination of the foregoing.

E.             Expenses.   The expenses
of the Plan shall be borne by the Company and its Subsidiaries.

F.             Deemed Acceptance, Ratification
and Consent.   By accepting any Common Stock hereunder or other benefit
under the Plan, each Non-Employee Director and each person claiming under or
through him or her shall be conclusively deemed to have indicated his or her
acceptance and ratification of, and consent to, any action taken under the Plan
by the Company, the Board or the Committee.

G.            Securities Act Registration.   The
Company shall use its best efforts to cause to be filed under the Securities
Act of 1933, as amended, a registration statement covering the Shares issued,
and issuable upon delivery of Shares pursuant to RSUs and exercise of Options
granted, under the Plan.

H.            Governing Law.  The provisions of the Plan shall be governed
by and construed in accordance with the laws of the State of Delaware.

I.              Election Shares.   Pending
the grant of Election Shares hereunder, all compensation earned by a
Non-Employee Director with respect to which an election to receive the grant of
Election Shares pursuant to Section VIII.B has been made shall be the
property of such director and shall be paid to him or her in cash in the event
that Election Shares are not granted by the Company hereunder.

J.             Headings; Construction.   Headings
are given to the sections of the Plan solely as a convenience to facilitate
reference.  Such headings, numbering and
paragraphing shall not in any case be deemed in any way material or relevant to
the construction of the Plan or any provisions hereof.  The use of the singular shall also include
within its meaning the plural, where appropriate, and vice versa.

X.            This section intentionally left
blank.

 XI.          Amendment.

 12
 

 

The Plan may be
amended at any time and from time to time by resolution of the Board as the
Board shall deem advisable; provided, however, that no amendment
shall become effective without stockholder approval if such stockholder
approval is required by law, rule or regulation.  No amendment of the Plan shall materially and
adversely affect any right of any participant with respect to any Options,
Shares or RSUs theretofore granted under the Plan without such participant’s
written consent, except for any modifications required to maintain compliance
with any federal or state statute or regulation.

XII.         Termination.

The Plan shall
terminate upon the earlier of the following dates or events to occur:

(i)                       upon the
adoption of a resolution of the Board terminating the Plan; and

(ii)        ten years from the date the Plan is
initially approved and adopted by the stockholders of the Company in accordance
with Article XIII.

Except as specifically
provided herein, no termination of the Plan shall materially and adversely
affect any of the rights or obligations of any person without his or her
consent with respect to any Options, Shares or RSUs theretofore granted under
the Plan.

XIII.        Stockholder Approval and Adoption.

The Plan was originally
adopted by the Board on March 12, 1996 and was approved and adopted at a
meeting of the stockholders of the Company held on May 21, 1996.  The Plan was amended and restated by the
Board at meetings held on November 12, 1996, August 14, 1997 and, in
connection with a 2-for-1 stock split in the form of a dividend, effective as
of July 2, 1998.  The Plan was
further amended and restated by the Board at meetings held on November 10,
1998, on September 18, 2000, effective as of June 1, 2001 and on
September 8, 2003 effective as of June 1, 2004.  Until June 1, 2004, the Plan as amended
and restated on September 18, 2000, effective as of June 1, 2001
remained in effect.  The Plan was further
amended and restated by the Board at 
meetings held on November 9, 2004 and September 10, 2006.

 

 13

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