Document:

EXHIBIT 10.04

 

Exhibit 10.04

The Hartford Financial Services Group, Inc.

17,211,837 Shares of Common Stock, par value $.01 per share

THE HARTFORD INCENTIVE STOCK PLAN

PLAN INFORMATION

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES

THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

The Prospectus covers such additional securities as may be issuable as a result
of anti-dilution provisions contained in the instruments pursuant to which
securities covered by the Prospectus are issued.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Amended and Restated as of May 19, 2004

 

     Additional information about The Hartford Incentive Stock Plan (the
“Plan”) and its administration may be obtained without charge by written or
oral request to the Manager of Stock Option Plan Administration, The Hartford
Financial Services Group, Inc. (“the Company”), Hartford Plaza, Hartford, CT
06115, telephone number (860) 547-5000.

AVAILABLE INFORMATION

     The Company will provide, without charge, upon the written or oral request
of any person to whom this Prospectus is delivered, a copy of any of the
following documents, all of which are incorporated by reference in this
Prospectus:

	(a)	 	The Company’s latest Annual Report on Form 10-K filed with
the Securities and Exchange Commission (the “Commission”) pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”);
	 
	(b)	 	All other reports filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since the end of the fiscal year covered by the
Form 10-K referred to in (a) above; and
	 
	(c)	 	The description of the Company’s common stock and the rights
associated with the Company’s common stock contained in a
registration statement filed under the Exchange Act, including any
amendment or report filed for the purpose of updating such
description.

     All documents subsequently filed with the Commission by the Company
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, after the
date hereof and prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold shall be deemed to be incorporated by
reference in the Prospectus and to be a part thereof from the date of filing
such documents.

     In addition, the Company will provide, without charge, upon the written or
oral request of any person to whom this Prospectus is delivered, the following
documents:

	(a)	 	When updating information is furnished, a copy of all
documents previously delivered containing Plan information that then
constitute part of this Prospectus; and
	 
	(b)	 	A copy of whichever of the following was previously
distributed pursuant to Rule 428(b)(2) under the Securities Act of
1933, as amended (the “Securities Act”):

	(i)	 	The Company’s annual report to stockholders
containing the information required by Rule 14a-3(b) under the
Exchange Act for its latest fiscal year;

	(ii)	 	The Company’s annual report on Form 10-K for its
latest fiscal year; or

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	(iii)	 	The latest prospectus filed pursuant to Rule
424(b) under the Securities Act that contains audited
financial statements for the Company’s latest fiscal year.

Any statement contained in a document incorporated or deemed to be
incorporated by reference in the Prospectus shall be deemed to be
modified or superseded for purposes of the Prospectus to the extent that
a statement contained in the Prospectus or in any other subsequently
filed document which also is or is deemed to be incorporated by reference
in the Prospectus modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Prospectus. Any such
document, as well as the Company’s most recent annual report to
shareholders and any other report or communication distributed to the
Company’s shareholders generally, may be obtained without charge by
written or oral request to the Manager of Stock Option Plan
Administration, The Hartford Financial Services Group, Inc., Hartford
Plaza, Hartford, CT 06115, telephone number: (860) 547-5000.

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TABLE OF CONTENTS

	 	 	 	 	 
	General Information
	 	 	4	 
	The Hartford Incentive Stock Plan
	 	 	5	 
	Administration
	 	 	23	 
	Federal Tax Treatment
	 	 	23	 

GENERAL INFORMATION

     The Plan contains a limit on the aggregate number of shares which may be
awarded for the duration of the Plan. The maximum limit applicable to all
share awards for the duration of the Plan is eight percent (8%) of the total
outstanding shares of the Company’s common stock as of the date of shareholder
approval of the Plan. In addition, no more than 20% of the total may be
available for awards of restricted stock or performance shares under the Plan.
The Plan limits the award of stock options to any one person in any year to no
more than 1,000,000 shares. The Plan limits the award of performance shares to
any one person in any year to no more than 200,000 shares.

     The Plan permits the committee administering the Plan to award performance
shares and restricted stock, as well as non-qualified stock options and
incentive stock options, with or without stock appreciation rights. Reference
is made to the text of the Plan herein for a complete description of awards
permitted under the Plan and the relevant provisions and conditions applicable
thereto.

     The prospectus does not cover resales of the Company’s common stock
acquired pursuant to the provisions of the Plan. Resales may be subject to
restrictions or limitations imposed by the Securities Act of 1933 and the
Securities Exchange Act of 1934.

     The Plan is not subject to any of the provisions of the Employee
Retirement Income Security Act of 1974. Furthermore, Section 401 of the
Internal Revenue Code relating to certain qualified pension, profit-sharing and
stock bonus plans does not apply to the Plan.

     Plan participants receive information with respect to their participation,
including the date of grant, the exercise price, the amount exercisable and the
expiration date, as well as applicable information concerning whatever
performance shares or restricted stock may be relevant to them.

     Set forth below is the text of the Plan.

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THE HARTFORD INCENTIVE STOCK PLAN

1. Purpose

     The purpose of the Plan is to motivate and reward superior
performance on the part of Key Employees of The Hartford and to thereby
attract and retain Key Employees of superior ability. In addition, the
Plan is intended to further opportunities for stock ownership by such Key
Employees and Directors in order to increase their proprietary interest
in The Hartford and, as a result, their interest in the success of the
Company. Awards will be made, in the discretion of the Committee, to Key
Employees (including officers and directors who are also Key Employees)
whose responsibilities and decisions directly affect the performance of
any Participating Company and its subsidiaries, and also to Directors.
Such incentive awards may consist of stock options and stock appreciation
rights payable in stock or cash for Key Employees or Directors, and
performance shares, restricted stock or any combination of the foregoing
for Key Employees, as the Committee may determine.

2. Definitions

     When used herein, the following terms shall have the following
meanings:

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

     “Award” means an award granted to any Key Employee or Director in
accordance with the provisions of the Plan in the form of Options,
Rights, Performance Shares or Restricted Stock, or any combination of the
foregoing, as applicable.

     “Award Document” means the written notice, agreement, or other
document evidencing each Award granted under the Plan.

     “Beneficial Owner” means any Person who, directly or indirectly, has
the right to vote or dispose of or has “beneficial ownership” (within the
meaning of Rule 13d-3 under the Act) of any securities of a company,
including any such right pursuant to any agreement, arrangement or
understanding (whether or not in writing), provided that: (a) a Person
shall not be deemed the Beneficial Owner of any security as a result of
an agreement, arrangement or understanding to vote such security (i)
arising solely from a revocable proxy or consent given in response to a
public proxy or consent solicitation made pursuant to, and in accordance
with, the Act and the applicable rules and regulations thereunder, or
(ii) made in connection with, or to otherwise participate in, a proxy or
consent solicitation made, or to be made, pursuant to, and in accordance
with, the applicable provisions of the Act and the applicable rules and
regulations thereunder, in either case described in clause (i) or (ii)
above, whether or not such agreement, arrangement or understanding is
also then reportable by such Person on Schedule 13D under the Act (or any
comparable or successor report); and (b) a Person engaged in business as
an underwriter of securities shall not be deemed to be the

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Beneficial Owner of any security acquired through such Person’s
participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.

     “Beneficiary” means the beneficiary or beneficiaries designated
pursuant to the Plan to receive the amount, if any, payable under the
Plan upon the death of an Award recipient.

     “Board” means the Board of Directors of the Company.

     “Change of Control” means the occurrence of an event defined in
Section 9 of the Plan.

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

     “Committee” means the Compensation and Personnel Committee of the
Board or such other committee as may be designated by the Board to
administer the Plan.

     “Company” means The Hartford Financial Services Group, Inc. and its
successors and assigns.

     “Director” means a member of the Board who is not an employee of any
Participating Company.

     “Eligible Employee” means an Employee as defined in the Plan;
provided, however, that except as the Board or the Committee, pursuant to
authority delegated by the Board, may otherwise provide on a basis
uniformly applicable to all persons similarly situated, “Eligible
Employee” shall not include any “Ineligible Person,” which includes: (a)
a person who (i) holds a position with the Company’s “HARTEMP” Program,
(ii) is hired to work for a Participating Company through a temporary
employment agency, or (iii) is hired to a position with a Participating
Company with notice on his or her date of hire that the position will
terminate on a certain date; (b) a person who is a leased employee
(within the meaning of Code Section 414(n)(2)) of a Participating Company
or is otherwise employed by or through a temporary help firm, technical
help firm, staffing firm, employee leasing firm, or professional employer
organization, regardless of whether such person is an Employee of a
Participating Company, and (c) a person who performs services for a
Participating Company as an independent contractor or under any other
non-employee classification, or who is classified by a Participating
Company as, or determined by a Participating Company to be, an
independent contractor, regardless of whether such person is
characterized or ultimately determined by the Internal Revenue Service or
any other Federal, State or local governmental authority or regulatory
body to be an employee of a Participating Company or its affiliates for
income or wage tax purposes or for any other purpose.

     Notwithstanding any provision in the Plan to the contrary, if any
person is an Ineligible Person, or otherwise does not qualify as an
Eligible Employee, or otherwise is ineligible to participate in the Plan,
and such person is later required by a court or governmental authority or
regulatory body to be classified as a person who is eligible to

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participate in the Plan, such person shall not be eligible to participate
in the Plan, notwithstanding such classification, unless and until
designated as an Eligible Employee by the Committee, and if so
designated, the participation of such person in the Plan shall be
prospective only.

     “Employee” means any person regularly employed by a Participating
Company, but shall not include any person who performs services for a
Participating Company as an independent contractor or under any other
non-employee classification, or who is classified by a Participating
Company as, or determined by a Participating Company to be, an
independent contractor.

     “Fair Market Value,” unless otherwise indicated in the provisions of
this Plan, means, as of any date, the composite closing price for one
share of Stock on the New York Stock Exchange or, if no sales of Stock
have taken place on such date, the composite closing price on the most
recent date on which selling prices were quoted, the determination to be
made in the discretion of the Committee.

     “Formula Price” means the highest of: (a) the highest composite
daily closing price of the Stock during the period beginning on the 60th
calendar day prior to the Change of Control and ending on the date of
such Change of Control, (b) the highest gross price paid for the Stock
during the same period of time, as reported in a report on Schedule 13D
filed with the Securities and Exchange Commission, or (c) the highest
gross price paid or to be paid for a share of Stock (whether by way of
exchange, conversion, distribution upon merger, liquidation or otherwise)
in any of the transactions set forth in Section 9 of the Plan as
constituting a Change of Control; provided that in the case of the
exercise of any such Right related to an Incentive Stock Option, “Formula
Price” shall mean the Fair Market Value of the Stock at the time of such
exercise.

     “Incentive Stock Option” means a stock option qualified under
Section 422 of the Code.

     “Key Employee” means an Eligible Employee (including any officer or
director who is also an Eligible Employee) whose responsibilities and
decisions, in the judgment of the Committee, directly affect the
performance of the Company and its subsidiaries.

     “Option” means an option awarded under Section 5 of the Plan to
purchase Stock of the Company, which option may be an Incentive Stock
Option or a non-qualified stock option.

     “Participating Company” means the Company or any subsidiary or other
affiliate of the Company; provided, however, for Incentive Stock Options
only, “Participating Company” means the Company or any corporation which
at the time such Option is granted qualifies as a “subsidiary” of the
Company under Section 424(f) of the Code.

     “Performance Share” means a performance share awarded under Section
6 of the Plan.

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     “Person” has the meaning ascribed to such term in Section 3(a)(9) of
the Act, as supplemented by Section 13(d)(3) of the Act; provided,
however, that Person shall not include: (a) the Company, any subsidiary
of the Company or any other Person controlled by the Company, (b) any
trustee or other fiduciary holding securities under any employee
benefit plan of the Company or of any subsidiary of the Company, or (c) a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
securities of the Company.

     “Plan” means The Hartford Incentive Stock Plan, as the same may be
amended, administered or interpreted from time to time.

     “Plan Year” means the calendar year.

     “Potential Change of Control” means the occurrence of an event
defined in Section 9 of the Plan.

     “Retirement” means the following:

     (a) Key Employees Hired Before 2001. Solely with
respect to a Key
Employee with an original hire date with a Participating Company before
January 1, 2001 who: (i) is covered in whole or in part under the final
average pay formula of the Retirement Plan, or (ii) is not eligible for
coverage under the Retirement Plan, “Retirement” means satisfaction of
the requirements for early or normal retirement under the final average
pay formula of the Retirement Plan (assuming such Key Employee were
covered under the final average pay formula of the Retirement Plan),
provided such event results in such Key Employee’s separation from
employment with the Company, or

     (b) Key Employees Hired During 2001. Solely with respect to a Key
Employee with an original hire date with a Participating Company on or
after January 1, 2001 but before January 1, 2002 who: (i) is covered
under the cash balance formula of the Retirement Plan, or (ii) is not
eligible for coverage under the Retirement Plan, “Retirement” means
satisfaction of the requirements for early or normal retirement under the
final average pay formula of the Retirement Plan (assuming such Key
Employee were covered under the final average pay formula of the
Retirement Plan), provided such event results in such Member’s separation
from the employment of the Company.

     “Retirement Plan” means The Hartford Retirement Plan for U.S.
Employees, as amended from time to time.

     “Restricted Stock” means Stock awarded under Section 7 of the Plan
subject to such restrictions as the Committee deems appropriate or
desirable.

     “Right” means a stock appreciation right awarded in connection with
an Option under Section 5 of the Plan.

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     “Stock” means the common stock ($.01 par value) of The Hartford.

     “The Hartford” means the Company and its subsidiaries, and their
successors and assigns.

     “Total Disability” means the complete and permanent inability of a
Key Employee to perform all of his or her duties under the terms of his
or her employment with any Participating Company, as determined by the
Committee upon the basis of such evidence, including independent medical
reports and data, as the Committee deems appropriate or necessary.

     “Transferee” means any person or entity to whom or to which a
non-qualified stock option has been transferred and assigned in
accordance with Section 5(h) of the Plan.

3. Shares Subject to the Plan

     The aggregate number of shares of Stock which may be awarded under
the Plan shall be subject to a maximum limit applicable to all Awards for
the duration of the Plan (the “Maximum Limit”). The Maximum Limit shall
be eight percent (8%) of the total of the outstanding shares of Stock as
of the date of shareholder approval of the Plan.

     In addition to the foregoing, in no event shall more than twenty
percent (20%) of the total number of shares on a cumulative basis be
available for Restricted Stock and Performance Share Awards. Further, for
any Plan Year: (a) no individual Key Employee may receive an Award of
Options for more than 1,000,000 shares, and (b) no individual Key
Employee may receive an Award of Performance Shares for more than 200,000
shares.

     Subject to the above limitations, shares of Stock to be issued under
the Plan may be made available from the authorized but unissued shares,
or shares held by the Company in treasury or from shares purchased in the
open market.

     For the purpose of computing the total number of shares of Stock
available for Awards under the Plan, there shall be counted against the
foregoing limitations the number of shares of Stock subject to issuance
upon exercise or settlement of Awards and the number of shares of Stock
which equals the value of performance share Awards, in each case
determined as at the dates on which such Awards are granted. If any
Awards under the Plan are forfeited, terminated, expire unexercised, are
settled in cash in lieu of Stock or are exchanged for other Awards, the
 shares of Stock which were theretofore subject to such Awards shall again
be available for Awards under the Plan to the extent of such forfeiture,
termination, expiration, cash settlement or exchange of such Awards.
Further, any shares of Stock that are exchanged (either actually or
constructively) by optionees as full or partial payment to the Company of
the purchase price of shares of Stock being acquired through the exercise
of an Option granted under the Plan may be available for subsequent
Awards.

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4. Grant of Awards and Award Documents

     (a) Subject to the provisions of the Plan, the Committee shall: (i)
determine and designate from time to time those Key Employees or groups
of Key Employees to whom Awards are to be granted, and those Directors to
whom Options and Rights may be granted; (ii) determine the form or forms
of Award to be granted to any Key Employee and any Director; (iii)
determine the amount or number of shares of Stock subject to each Award;
and (iv) determine the terms and conditions of each Award.

     (b) Each Award granted under the Plan shall be evidenced by a
written Award Document. Such Award Document shall be subject to and
incorporate the express terms and conditions of each Award, if any,
required under the Plan or required by the Committee.

5. Stock Options and Rights

     (a) With respect to Options and Rights, the Committee shall: (i)
authorize the granting of Incentive Stock Options, non-qualified stock
options, or a combination of Incentive Stock Options and non-qualified
stock options; (ii) authorize the granting of Rights which may be granted
in connection with all or part of any Option granted under this Plan,
either concurrently with the grant of the Option or at any time
thereafter during the term of the Option; (iii) determine the number of
shares of Stock subject to each Option or the number of shares of Stock
that shall be used to determine the value of a Right; and (iv) determine
the time or times when and the manner in which each Option or Right shall
be exercisable and the duration of the exercise period.

     (b) Any option issued hereunder which is intended to qualify as an
Incentive Stock Option shall be subject to such limitations or
requirements as may be necessary for the purposes of Section 422 of the
Code or any regulations and rulings thereunder to the extent and in such
form as determined by the Committee in its discretion.

     (c) The exercise period for a non-qualified stock option and any
related Right shall not exceed ten years and two days from the date of
grant, and the exercise period for an Incentive Stock Option and any
related Right shall not exceed ten years from the date of grant.

     (d) The Option price per share shall be determined by the Committee
at the time any Option is granted and shall be not less than the Fair
Market Value of one share of Stock on the date the Option is granted.

     (e) No part of any Option or Right may be exercised until the Key
Employee who has been granted the Award shall have remained in the employ
of a Participating Company for such period after the date of grant as the
Committee may specify, if any, and the Committee may further require
exercisability in installments.

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     (f) Except as provided in Section 9, the purchase price of the
 shares of Stock as to which an Option is exercised shall be paid to the
Company at the time of exercise either in cash, Stock already owned by
the optionee, or a combination of the foregoing having a total Fair
Market Value equal to the purchase price. The Committee shall determine
acceptable methods for tendering Stock as payment upon exercise of an
Option and may impose such limitations and prohibitions on the use of
Stock for such purpose as it deems appropriate.

     (g) In case of a Key Employee’s termination of employment with all
Participating Companies, the following provisions shall apply:

          (i) If a Key Employee who has been granted an Option shall die
before such Option has expired, his or her Option may be exercised in
full by: (A) the person or persons to whom the Key Employee’s rights
under the Option pass by will, or if no such person has such right, by
his or her executors or administrators; (B) his or her Transferee(s)
(with respect to non-qualified Options); or (C) his or her Beneficiary
designated pursuant to the Plan, at any time, or from time to time,
within five years after the date of the Key Employee’s death or within
such other period, and subject to such terms and conditions as the
Committee may specify, but not later than the expiration date specified
in Section 5(c) above. Any such Options not fully exercisable immediately
prior to such optionee’s death shall become fully exercisable upon such
death unless the Committee, in its sole discretion, shall otherwise
determine.

          (ii) If the Key Employee’s employment with all Participating
Companies terminates: (A) because of his or her Total Disability, or (B)
solely in the case of a Key Employee with an original hire date with a
Participating Company before January 1, 2002, because of his or her
voluntary termination of employment due to Retirement; he or she may
exercise his or her Options in full at any time, or from time to time,
within five years after the date of the termination of his or her
employment, or within such other period, and subject to such terms and
conditions as the Committee may specify, but not later than the
expiration date specified in Section 5(c) above. Any such Options not
fully exercisable immediately prior to such optionee’s Total Disability
or Retirement shall become fully exercisable upon such Total Disability
or Retirement unless the Committee, in its sole discretion, shall
otherwise determine.

          (iii) Except as provided in Section 5(g)(ii) and Section 9, if the
Key Employee shall voluntarily resign from employment or he or she is
terminated for cause as determined by the Committee, the Options or
Rights shall be canceled coincident with the effective date of the
termination of employment.

                    (iv) Except as provided in Section 9, if a Key Employee’s employment
terminates for any other reason, he or she may exercise his or her
Options, to the extent that he or she shall have been entitled to do so
at the date of the termination of his or her employment at any time, or
from time to time, within three months after the date of the
termination of his or her employment, or within such other period, and
subject to such terms and conditions as the Committee may specify, but
not later than the expiration date specified in Section 5(c) above.

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     (h) Except as provided in this Section 5(h) or required by
applicable law, no Option or Right granted under the Plan shall be
transferable other than by will or by the laws of descent and
distribution. During the lifetime of the optionee, an Option or Right
shall be exercisable only by the Key Employee or Director to whom the
Option or Right is granted. Notwithstanding the foregoing, all or a
portion of a non-qualified Option
may be transferred and assigned by such persons designated by the
Committee, to such persons or groups of persons designated as permissible
Transferees by the Committee, and upon such terms and conditions as the
Committee may from time to time authorize and determine in its sole
discretion.

     (i) Except as provided in Section 9, if a Director’s service on the
Board terminates for any reason, including without limitation,
termination due to death, disability or retirement, such Director (or
Beneficiary, in the event of death) may exercise any Option or Right
granted to him or her only to the extent determined by the Committee as
set forth in such Director’s Award Document and/or any administrative
rules or other terms and conditions adopted by the Committee from time to
time applicable to such Option or Right granted to such Director.

     (j) With respect to an Incentive Stock Option, the Committee shall
specify such terms and provisions as the Committee may determine to be
necessary or desirable in order to qualify such Option as an “incentive
stock option” within the meaning of Section 422 of the Code.

     (k) With respect to the exercisability and settlement of Rights:

          (i) Upon exercise of a Right, a Key Employee or Director shall be
entitled, subject to such terms and conditions the Committee may specify,
to receive upon exercise thereof all or a portion of the excess of (A)
the Fair Market Value of a specified number of shares of Stock at the
time of exercise, as determined by the Committee, over (B) a specified
amount which shall not, subject to Section 5(d), be less than the Fair
Market Value of such specified number of shares of Stock at the time the
Right is granted. Upon exercise of a Right, payment of such excess shall
be made as the Committee shall specify in cash, the issuance or transfer
to the Key Employee or Director of whole shares of Stock with a Fair
Market Value at such time equal to any excess, or a combination of cash
and shares of Stock with a combined Fair Market Value at such time equal
to any such excess, all as determined by the Committee. The Company will
not issue a fractional share of Stock and, if a fractional share would
otherwise be issuable, the Company shall pay cash equal to the Fair
Market Value of the fractional share of Stock at such time.

          (ii) In the event of the exercise of such Right, the Company’s
obligation in respect of any related Option or such portion thereof will
be discharged by payment of the Right so exercised.

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6. Performance Shares

     (a) Subject to the provisions of the Plan, the Committee shall: (i)
determine and designate from time to time those Key Employees or groups
of Key Employees to whom Awards of Performance Shares are to be made,
(ii) determine the performance period (the “Performance Period”) and
performance objectives (the “Performance Objectives”) applicable to such
Awards, (iii) determine whether to impose a restriction period (the
“Restriction Period”) following the completion of the Performance Period
applicable to any Key Employees or groups of Key Employees, (iv)
determine the form of settlement of a Performance Share, and (v)
generally determine the terms and conditions of each such Award. At any
date, each Performance Share shall have a value equal to the Fair Market
Value of a
share of Stock at such date; provided that the Committee may limit
the aggregate amount payable upon the settlement of any Award. The
maximum award for any individual employee in any given year shall be
200,000 Performance Shares.

     (b) The Committee shall determine a Performance Period of not less
than one nor more than five years. Performance Periods may overlap and
Key Employees may participate simultaneously with respect to Performance
Shares for which different Performance Periods are prescribed.

     (c) The Committee may impose a Restriction Period of any duration
determined appropriate in its sole discretion, which shall apply
immediately following the completion of the Performance Period to which
it relates.

     (d) The Committee shall determine the Performance Objectives of
Awards of Performance Shares. Performance Objectives may vary from Key
Employee to Key Employee and between groups of Key Employees and shall be
based upon one or more of the following objective criteria, as the
Committee deems appropriate, which may be (i) determined solely by
reference to the performance of the Company, any subsidiary or affiliate
of the Company or any division or unit of any of the foregoing, or (ii)
based on comparative performance of any one or more of the following
relative to other entities: (A) earnings per share, (B) return on equity,
(C) cash flow, (D) return on total capital, (E) return on assets, (F)
economic value added, (G) increase in surplus, (H) reductions in
operating expenses, (I) increases in operating margins, (J) earnings
before income taxes and depreciation, (K) total shareholder return, (L)
return on invested capital, (M) cost reductions and savings, (N) earnings
before interest, taxes, depreciation and amortization (“EBITDA”), (O)
pre-tax operating income, (P) productivity improvements, or (iii) a Key
Employee’s attainment of personal objectives with respect to any of the
foregoing criteria or other criteria such as growth and profitability,
customer satisfaction, leadership effectiveness, business development,
negotiating transactions and sales or developing long term business
goals. If during the course of a Performance Period there shall occur
significant events which the Committee expects to have a substantial
effect on the applicable Performance Objectives during such period, the
Committee may revise such Performance Objectives.

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     (e) At the beginning of a Performance Period, the Committee shall
determine for each Key Employee or group of Key Employees the number of
Performance Shares or the percentage of Performance Shares which shall be
paid to the Key Employee or member of the group of Key Employees
following completion of the Performance Period or if later, following any
applicable Restriction Period, if the applicable Performance Objectives
are met in whole or in part.

     (f) If a Key Employee terminates service with all Participating
Companies during a Performance Period or any applicable Restriction
Period: (i) because of death, (ii) because of Total Disability, (iii)
solely in the case of a Key Employee with an original hire date with a
Participating Company before January 1, 2002, because of his or her
voluntary termination of employment due to Retirement, or (iv) under
other circumstances where the Committee in its sole discretion finds that
a waiver would be in the best interests of the Company; that Key Employee
may, as determined by the Committee, be entitled to payment in settlement
of such Performance Shares at the end of the Performance Period or if
later, at the end of any applicable Restriction Period, based upon the
extent to which the Performance Objectives were satisfied at the end of
such Performance Period and prorated for the portion of the Performance
Period together with any applicable Restriction Period during which the
Key Employee was actively employed by any Participating Company;
provided, however, the Committee may provide for an earlier payment in
settlement of such Performance Shares in such amount and under such terms
and conditions as the Committee deems appropriate or desirable. If a Key
Employee terminates service with all Participating Companies during a
Performance Period or any applicable Restriction Period for any other
reason, then such Key Employee shall not be entitled to any Award with
respect to that Performance Period and/or Restriction Period unless the
Committee shall otherwise determine.

     (g) Each Award of a Performance Share shall be paid in whole shares
of Stock, or cash, or a combination of Stock and cash either as a lump
sum payment or in annual installments, all as the Committee shall
determine, with payment to commence as soon as practicable after the end
of the relevant Performance Period or if later, at the end of any
applicable Restriction Period.

     (h) Except as otherwise required by applicable law, no Performance
Share granted under the Plan shall be transferable other than by will or
by the laws of descent or distribution.

14

 

7. Restricted Stock

     (a) Except as provided in Section 9, Restricted Stock shall be
subject to a restriction period (after which restrictions will lapse)
which shall mean a period commencing on the date the Award is granted and
ending on such date as the Committee shall determine (the “Restriction
Period”). The Committee may provide for the lapse of restrictions in
installments where deemed appropriate and it may also require the
achievement of predetermined performance objectives in order for such
 shares to vest. Except as otherwise provided in the Plan, certificates
for shares of Restricted Stock shall be delivered to a Key Employee as
soon as administratively practicable following the end of the applicable
Restriction Period.

     (b) Except when the Committee determines otherwise pursuant to
Section 7(d), if a Key Employee terminates employment with all
Participating Companies for any reason before the expiration of the
Restriction Period, all shares of Restricted Stock still subject to
restriction shall be forfeited by the Key Employee and shall be
reacquired by the Company.

     (c) Except as otherwise provided in this Section 7 or required by
applicable law, no shares of Restricted Stock received by a Key Employee
shall be sold, exchanged, transferred, pledged, hypothecated or otherwise
disposed of during the Restriction Period.

     (d) In cases of: (i) death, (ii) Total Disability, (iii) solely in
the case of a Key Employee with an original hire date with a
Participating Company before January 1, 2002, a voluntary termination of
employment due to Retirement, or (iv) in cases of special circumstances,
the Committee may, in its sole discretion when it finds that a waiver
would be in the best interests of the Company, elect to waive any or all
remaining restrictions with respect to such Key Employee’s Restricted
Stock.

     (e) The Committee may require, under such terms and conditions as it
deems appropriate or desirable, that the certificates for Stock delivered
under the Plan may be held in custody by a bank or other institution, or
that the Company may itself hold such shares in custody until the
Restriction Period expires or until restrictions thereon otherwise lapse,
or later as provided in Section 14 hereof. The Committee may require, as
a condition of any Award of Restricted Stock that the Key Employee shall
have delivered a stock power endorsed in blank relating to the Restricted
Stock, and shall require, as a condition of settlement of any Award of
Stock, that the Key Employee satisfy applicable tax withholding
obligations as provided in Section 14 hereof.

     (f) Nothing in this Section 7 shall preclude a Key Employee from
exchanging any shares of Restricted Stock subject to the restrictions
contained herein for any other shares of Stock that are similarly
restricted.

15

 

     (g) Subject to Section 7(e) and Section 8, each Key Employee
entitled to receive Restricted Stock under the Plan shall be issued a
certificate for the shares of Stock. Such certificate shall be
registered in the name of the Key Employee, and shall bear an appropriate
legend reciting the terms, conditions and restrictions, if any,
applicable to such Award and shall be subject to appropriate
stop-transfer orders. Notwithstanding any provision of the Plan to the
contrary, Restricted Stock may be evidenced on a book entry or electronic
basis or pursuant to other arrangements (including, without limitation,
in an omnibus or nominee account administered by a third party) until
restrictions thereon otherwise lapse, in lieu of issuing physical
certificates to the Key Employee.

8. Certificates for Awards of Stock

     (a) The Company shall not be required to issue or deliver any
certificates for shares of Stock prior to: (i) the listing of such
 shares on any stock exchange on which the Stock may then be listed, (ii)
the completion of any registration or qualification of such shares under
any federal or state law, or any ruling or regulation of any government
body which the Company shall, in its sole discretion, determine to be
necessary or advisable, and (iii) the satisfaction of any tax withholding
obligations as provided in Section 14 hereof.

     (b) All certificates for shares of Stock delivered under the Plan
shall also be subject to such stop-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and
other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed and any applicable federal
or state securities laws, and the Committee may cause a legend or legends
to be placed on any such certificates to make appropriate reference to
such restrictions. In making such determination, the Committee may rely
upon an opinion of counsel for the Company.

     (c) Except for the restrictions on Restricted Stock under Section 7,
each Key Employee who receives Stock in settlement of an Award of Stock,
shall have all of the rights of a shareholder with respect to such
shares, including the right to vote the shares and receive dividends and
other distributions. No Key Employee awarded an Option, a Right or a
Performance Share, and no Director awarded an Option or Right, shall have
any right as a shareholder with respect to any shares of Stock covered by
his or her Option, Right or Performance Share prior to the date of
issuance to him or her of a certificate or certificates for such shares.

9. Change of Control

     (a) For purposes of this Plan, a Change of Control shall occur if:

          (i) a report on Schedule 13D shall be filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Act disclosing that
any Person, other than the Company or a subsidiary of the Company or any
employee benefit plan sponsored

16

 

by the Company or a subsidiary of the Company is the Beneficial
Owner of twenty percent or more of the outstanding stock of the Company
entitled to vote in the election of directors of the Company;

          (ii) any Person other than the Company or a subsidiary of the
Company or any employee benefit plan sponsored by the Company or a
subsidiary of the Company shall purchase shares pursuant to a tender
offer or exchange offer to acquire any stock of the Company (or
securities convertible into stock) for cash, securities or any other
consideration, provided that after consummation of the offer, the Person
in question is the Beneficial Owner of fifteen percent or more of the
outstanding stock of the Company entitled to vote in the election of
directors of the Company (calculated as provided in paragraph (d) of Rule
13d-3 under the Act in the case of rights to acquire stock);

          (iii) any merger, consolidation, recapitalization or
reorganization of the Company approved by the stockholders of the Company
shall be consummated, other than any such transaction immediately
following which the persons who were the Beneficial Owners of the
outstanding securities of the Company entitled to vote in the election of
directors of the Company immediately prior to such transaction are the
Beneficial Owners of at least 55% of the total voting power represented
by the securities of the entity surviving such transaction entitled to
vote in the election of directors of such entity (or the ultimate parent
of such entity) in substantially the same relative proportions as their
ownership of the securities of the Company entitled to vote in the
election of directors of the Company immediately prior to such
transaction; provided that, such continuity of ownership (and
preservation of relative voting power) shall be deemed to be satisfied if
the failure to meet such threshold (or to preserve such relative voting
power) is due solely to the acquisition of voting securities by an
employee benefit plan of the Company, such surviving entity or any
subsidiary of such surviving entity;

          (iv) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all the assets of
the Company approved by the stockholders of the Company shall be
consummated; or

          (v) within any 24 month period, the persons who were directors of
the Company immediately before the beginning of such period (the
“Incumbent Directors”) shall cease (for any reason other than death) to
constitute at least a majority of the Board or the board of directors of
any successor to the Company, provided that any director who was not a
director at the beginning of such period shall be deemed to be an
Incumbent Director if such director (A) was elected to the Board by, or
on the recommendation of or with the approval of, at least two-thirds of
the directors who then qualified as Incumbent Directors either actually
or by prior operation of this clause (v), and (B) was not designated by a
Person who has entered into an agreement with the Company to effect a
transaction described in Section 9(a)(iii) or Section 9(a)(iv) of the
Plan.

     (b) For purposes of this Plan, a Potential Change of
Control shall occur if:

          (i) A Person shall commence a tender offer, which if successfully

17

 

consummated, would result in such Person being the Beneficial Owner of at
least 15% of the stock of the Company entitled to vote in the election of
directors of the Company;

          (ii) The Company enters into an agreement, the consummation of which
would constitute a Change of Control;

          (iii) Solicitation of proxies for the election of directors of the
Company by anyone other than the Company, which, if such directors were
elected, would result in the occurrence of a Change of Control as
described in Section 9(a)(v); or

          (iv) Any other event shall occur which is deemed to be a Potential
Change of Control by the Board, the Committee, or any other appropriate
committee of the Board in its sole discretion.

     (c) Notwithstanding any provision in this Plan to the contrary, upon
the occurrence of a Change of Control:

          (i) Each Option and related Right outstanding on the date such
Change of Control occurs, and which is not then fully vested and
exercisable, shall immediately vest and become exercisable to the full
extent of the original grant for the remainder of its term.

          (ii) The surviving or resulting corporation may, in its discretion,
provide for the assumption or replacement of each outstanding Option and
related Right granted under the Plan on terms which are no less favorable
to the optionee than those applicable to the Options and Rights
immediately prior to the Change of Control. If the surviving or
resulting corporation offers to assume or replace the Options and Rights,
the optionee may elect to have his or her Options and Rights assumed or
replaced, in whole or in part, or to surrender on the date the Change of
Control occurs his or her Options and Rights, in whole or in part, for
cash equal to the excess of the Formula Price over the exercise price.

          (iii) In the event the successor corporation does not offer to
assume or replace the outstanding Options and Rights as described in
Section 9(b)(ii) hereof, each Option and Right will be exercised on the
date such Change of Control occurs for cash equal to the excess of the
Formula Price over the exercise price.

          (iv) The restrictions applicable to shares of Restricted Stock held
by Key Employees pursuant to Section 7 shall lapse upon the occurrence of
a Change of Control, and such Key Employees shall be entitled to elect,
at any time during the 60 calendar days following such Change of Control,
to receive immediately after the date the Key Employee makes such
election either of the following: (A) unrestricted certificates for all
of such shares, or (B) a lump sum cash amount equal to the number of such
 shares multiplied by the Formula Price. If a Key Employee does not make
any election during the foregoing 60 day period, such Key Employee shall
be deemed to have made the election described in Section 9(b)(vi)(A) as
of the 60th day of such period, and unrestricted certificates shall be
issued to such Key Employee immediately following such day as described
in Section 9(b)(vi)(A) hereof.

18

 

          (v) If a Change of Control occurs during the course of a Performance
Period or any Restriction Period applicable to an Award of Performance
Shares pursuant to Section 6, then a Key Employee shall be deemed to have
satisfied the Performance Objectives and to have completed any applicable
Restriction Period effective on the date of such occurrence. Such Key
Employee shall be paid, immediately following the occurrence of such
Change of Control, a lump sum cash amount equal to the number of
outstanding Performance Shares awarded to such Key Employee multiplied by
the Formula Price.

     (d) Notwithstanding any provision in this Plan to the contrary, in
the event of a Change of Control as described in Section 9(b)(iii) or
Section 9(b)(iv) of the Plan, in the case of an awardee whose employment
or service involuntarily terminates on or after the date of a shareholder
approval described in either of such Sections but before the date of a
consummation described in either of such Sections, the date of
termination of such an awardee’s employment or service shall be deemed
for purposes of the Plan to be the day following the date of the
applicable consummation.

10. Beneficiary

     (a) Each Key Employee, Director and/or his or her Transferee may
file with the Company a written designation of one or more persons as the
Beneficiary who shall be entitled to receive the Award, if any, payable
under the Plan upon his or her death. A Key Employee, Director or
Transferee may from time to time revoke or change his or her Beneficiary
designation without the consent of any prior Beneficiary by filing a new
designation with the Company. The last such designation received by the
Company shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Company prior to the Key Employee’s, Director’s or Transferee’s death, as
the case may be, and in no event shall it be effective as of a date prior
to such receipt.

     (b) If no such Beneficiary designation is in effect at the time of
death of a Key Employee, Director or Transferee, as the case may be, or
if no designated Beneficiary survives the Key Employee, Director or
Transferee or if such designation conflicts with applicable law, the
estate of the Key Employee, Director or Transferee, as the case may be,
shall be entitled to receive the Award, if any, payable under the Plan
upon his or her death. If the Committee is in doubt as to the right of
any person to receive such Award, the Company may retain such Award,
without liability for any interest thereon, until the Committee
determines the rights thereto, or the Company may pay such Award into any
court of appropriate jurisdiction and such payment shall be a complete
discharge of the liability of the Company therefor.

19

 

11. Administration of the Plan

     (a) All decisions, determinations or actions of the Committee made
or taken pursuant to grants of authority under the Plan shall be made or
taken in the sole discretion of the Committee and shall be final,
conclusive and binding on all persons for all purposes.

     (b) The Committee shall have full power, discretion and authority to
interpret, construe and administer the Plan and any part thereof, and its
interpretations and constructions thereof and actions taken thereunder
shall be, except as otherwise determined by the Board, final, conclusive
and binding on all persons for all purposes.

     (c) The Committee’s decisions and determinations under the Plan need
not be uniform and may be made selectively among Key Employees, whether
or not such Key Employees are similarly situated.

     (d) The Committee may, in its sole discretion, delegate such of its
powers as it deems appropriate to the Company’s Group Senior Vice
President, Human Resources (or other person holding a similar position)
or the Company’s Chief Executive Officer, except that Awards to executive
officers shall be made, and matters related thereto shall be determined,
solely by the Committee or the Board or any other appropriate committee
of the Board.

12. Amendment, Extension or Termination

     The Board or the Committee may, at any time, amend or modify the
Plan and, specifically, may make such modifications to the Plan as it
deems necessary to avoid the application of Section 162(m) of the Code
and the Treasury regulations issued thereunder. However: (i) with
respect only to Incentive Stock Options, no amendment shall, without
approval by a majority of the Company’s stockholders, (A) alter the group
of persons eligible to participate in the Plan, or (B) except as provided
in Section 13 increase the maximum number of shares of Stock which are
available for Awards under the Plan; or, (ii) with respect to all
Options, allow the Committee to reprice the Options. The Board may
suspend or terminate the Plan at any time without the consent of such
person. Notwithstanding anything in this Plan to the contrary, the Plan
shall not be amended, modified, suspended or terminated during the period
in which a Change of Control is threatened. For purposes of the
preceding sentence, a Change of Control shall be deemed to be threatened
for the period beginning on the date of any Potential Change of Control,
and ending upon the earlier of: (I) the second anniversary of the date of
such Potential Change of Control, (II) the date a Change of Control
occurs, or (III) the date the Board or the Committee determines in good
faith that a Change of Control is no longer threatened. Further,
notwithstanding anything in this Plan to the contrary, no amendment,
modification, suspension or termination following a Change of Control
shall adversely impair or reduce the rights of any person with respect to
a prior Award without the consent of such person.

20

 

13. Adjustments in Event of Change in Common Stock

     In the event of any reorganization, merger, recapitalization,
consolidation, liquidation, stock dividend, stock split,
reclassification, combination of shares, rights offering, split-up or
extraordinary dividend (including a spin-off) or divestiture, or any
other change in the corporate structure or shares, the Committee may make
such adjustment in the Stock subject to Awards, including Stock subject
to purchase by an Option, or the terms, conditions or restrictions on
Stock or Awards, including the price payable upon the exercise of such
Option and the number of shares subject to restricted stock awards, as
the Committee deems equitable.

14. Miscellaneous

     (a) If a Change of Control has not occurred and if the Committee
determines that a Key Employee has taken action inimical to the best
interests of any Participating Company, the Committee may, in its sole
discretion, terminate in whole or in part such portion of any Option
(including any related Right) as has not yet become exercisable at the
time of termination, terminate any Performance Share Award for which the
Performance Period or any applicable Restriction Period has not been
completed or terminate any Award of Restricted Stock for which the
Restriction Period has not lapsed.

     (b) Except as provided in Section 9, nothing in this Plan or any
Award granted hereunder shall confer upon any employee any right to
continue in the employ of any Participating Company or interfere in any
way with the right of any Participating Company to terminate his or her
employment at any time. No Award payable under the Plan shall be deemed
salary or compensation for the purpose of computing benefits under any
employee benefit plan or other arrangement of any Participating Company
for the benefit of its employees unless the Company shall determine
otherwise. No Key Employee shall have any claim to an Award until it is
actually granted under the Plan. To the extent that any person acquires a
right to receive payments from the Company under this Plan, such right
shall be no greater than the right of an unsecured general creditor of
the Company. All payments to
be made hereunder shall be paid from the general funds of the Company and
no special or separate fund shall be established and no segregation of
assets shall be made to assure payment of such amounts except as provided
in Section 7(e) with respect to Restricted Stock.

     (c) The Committee shall have the right to make such provisions as
deemed appropriate in its sole discretion to satisfy any obligation of
the Company to withhold federal, state or local income or other taxes
incurred by reason of the operation of the Plan or an Award under the
Plan, including but not limited to at any time: (i) requiring a Key
Employee to submit payment to the Company for such taxes before making
settlement of any Award of Stock or other amount due under the Plan, (ii)
withholding such taxes from wages or other amounts due to the Key
Employee before making settlement of any Award of Stock or other amount
due under the Plan, (iii) making settlement of any Award of Stock or
other amount due under the Plan to a Key Employee

21

 

part in Stock and part in cash to facilitate satisfaction of such
withholding obligations, or (iv) receiving Stock already owned by, or
withholding Stock otherwise due to, the Key Employee in an amount
determined necessary to satisfy such withholding obligations; provided,
however, that, notwithstanding any language herein to the contrary, any
Key Employee who is an executive officer of the Company (within the
meaning of Section 16 of the Act) shall have the right to satisfy his or
her obligations to the Company pursuant to this Section 14(c) by
instructing the Company not to deliver to the Key Employee Stock
otherwise deliverable to the Key Employee in an amount sufficient to
satisfy such obligations to the Company.

     (d) The Plan and the grant of Awards shall be subject to all
applicable federal and state laws, rules, and regulations and to such
approvals by any government or regulatory agency as may be required.

     (e) The terms of the Plan shall be binding upon the Company and its
successors and assigns.

     (f) Captions preceding the sections hereof are inserted solely as a
matter of convenience and in no way define or limit the scope or intent
of any provision hereof.

15. Effective Date, Term of Plan and Shareholder Approval

     The effective date of the Plan shall be May 18, 2000. No Award shall
be granted under this Plan after the Plan’s termination date. The Plan’s
termination date shall be the earlier of: (a) May 18, 2010, or (b) the
date on which the Maximum Limit (as defined in Section 3 of the Plan) is
reached; provided, however, that the Plan will continue in effect for
existing Awards as long as any such Award is outstanding.

22

 

ADMINISTRATION

     The Plan is administered by the Committee of the Board, the members
of which serve at the pleasure of the Board. The Committee is composed of
directors none of whom is an officer or employee of any Participating
Company.

FEDERAL TAX TREATMENT

     The following is a brief summary of the current Federal income tax
rules generally applicable to Options, Rights, Performance Shares and
Restricted Stock. The following summary does not include any discussion
of state, local or foreign income tax consequences or the effect of gift,
estate or inheritance taxes, any of which may be significant to a
particular individual Award recipient. In addition, this summary does
not apply to every specific transaction that may occur. Awardees should
consult their own tax advisors for precise advice pertaining to his or
her particular circumstances regarding the specific tax consequences
applicable to them.

A. Options and Rights

     Options granted under the Plan may be either non-qualified options
or Iincentive Stock Options qualifying under Section 422A of the Code.

Non-qualified Options

     An optionee is not subject to Federal income tax upon grant of a
non-qualified Option. At the time of exercise, the optionee will realize
compensation income (subject to withholding) to the extent that the then
fair market value of the stock exceeds the Option exercise price. The
amount of such income will constitute an addition to the optionee’s tax
basis in the optioned stock. Sale of the shares will result in capital
gain or loss (long-term or short-term depending on the optionee’s holding
period). The Company is entitled to a Federal tax deduction at the same
time and to the same extent that the optionee realizes compensation
income.

Incentive Stock Options

     Options under the Plan denominated as Incentive Stock Options are
intended to constitute incentive stock options under Section 422A of the
Code. An optionee is not subject to Federal income tax upon either the
grant or exercise of an Incentive Stock Option. If the optionee holds
the shares acquired upon exercise for at least one year after issuance of the
optioned shares and until at least two years after grant of the option,
then the difference between the amount realized on a subsequent sale or
other taxable disposition of the shares and the option price will
constitute long-term capital gain or loss. To obtain favorable tax

23

 

treatment, an Incentive Stock Option must be exercised within three
months after termination of employment (other than by retirement,
disability, or death) with the Company or a 50% subsidiary. To obtain
favorable tax treatment, an Incentive Stock Option must be exercised
within three months of retirement
or within one year of cessation of employment for disability (with
no limitation in the case of death), notwithstanding any longer exercise
period permitted under the terms of the Plan. The Company will not be
entitled to a Federal tax deduction with respect to the grant or exercise
of the Incentive Stock Option.

     If the optionee sells the shares acquired under an Incentive Stock
Option before the requisite holding period, he or she will be deemed to
have made a “disqualifying disposition” of the shares and will realize
compensation income in the year of disposition equal to the lesser of the
fair market value of the shares at exercise or the amount realized on
their disposition over the exercise price for the Option. (However, if
the disposition is by gift or by sale to a related party, the
compensation income must be measured by the value of the shares at
exercise over the exercise price.) Any gain recognized upon a
disqualifying disposition in excess of the ordinary income portion will
constitute either short-term or long-term capital gain. In the event of a
disqualifying disposition, the Company will be entitled to a Federal tax
deduction in the amount of the compensation income realized by the
optionee.

     The option spread on the exercise of an Incentive Stock Option is an
adjustment in computing alternative minimum taxable income. No adjustment
is required, however, if the optionee made a disqualifying disposition of
the shares in the same year as he or she is taxed on the exercise.

Rights

     Rights may have been awarded to officers and directors of The
Hartford subject to Section 16(b) of the Act with respect to both
Incentive Stock Options and non-qualified Options granted under the Plan.
An optionee is not taxed upon the grant of Rights. An optionee exercising
Rights for cash will realize compensation income (subject to withholding)
in the amount of the cash received. The Company is entitled to a tax
deduction at the same time and to the same extent that the optionee
realizes compensation income.

B. Performance Shares

     An awardee of Performance Shares will generally realize compensation
income (subject to withholding) when and to the extent that payment is
made, whether in the form of cash or shares of Stock. To the extent that
payment is made in the form of Stock, income shall be measured by the
then fair market value of the shares, which shall constitute an addition
to the awardee’s tax basis in such shares. The Company will be entitled
to a Federal tax deduction for the value of payment at the time of
payment.

24

 

C. Restricted Stock

     An awardee of Restricted Stock normally will not realize taxable
compensation income and the Company will not be entitled to a deduction
upon the grant of restricted stock. At the time the shares of restricted
stock are no longer subject to a substantial risk of forfeiture (as
defined in the Code) or become transferable, an awardee will realize
taxable ordinary compensation income (subject to tax withholding) in an
amount equal to the fair market value of such number of shares of Stock
which have become nonforfeitable or transferable and the Company will be
entitled to a deduction in the same amount, provided the Company complies
with applicable tax withholding requirements. However, an awardee may
make an income recognition election under Section 83(b) of the Code (an
“83(b) Election”) and recognize taxable ordinary compensation income
(subject to tax withholding) in the year the shares of restricted stock
are awarded in an amount equal to their fair market value at the time of
the award, determined without regard to the restrictions. In that event,
the Company will be entitled to a deduction in such year in the same
amount, provided the Company complies with applicable tax withholding
requirements, and any gain or loss realized by the employee upon the
subsequent disposition of Stock will be capital gain or loss and will not
result in any further deduction to the Company.

Any dividends with respect to the shares of restricted stock that are
paid or made available to an awardee who has not made an 83(b) Election
while the shares remain forfeitable are treated as additional
compensation taxable as ordinary compensation income (subject to
withholding) to the awardee and deductible by the Company when paid. If
an 83(b) Election has been made with respect to the restricted stock, the
dividends represent ordinary dividend income to the awardee and are not
deductible by the Company. If the awardee makes an 83(b) Election and
subsequently forfeits the shares of restricted stock, the awardee is not
entitled to a deduction as a consequence of such forfeiture for taxes
previously paid on the award of restricted shares, and the Company must
include as ordinary income the amount it previously deducted in the year
of grant with respect to such shares.

D. Golden Parachute Tax Penalties

     Options, Rights, Performance Shares or Restricted Stock which are
granted, accelerated or enhanced upon the occurrence of a Change of
Control may give rise, in whole or in part, to “excess parachute
payments” within the meaning of Section 280G of the Internal Revenue Code
and, to such extent, will be nondeductible by the Company and subject to
a 20% excise tax to the awardee.

25

 

RESALE RESTRICTIONS

Except for the restrictions on Restricted Stock under Section 7, the Plan
contains no restrictions on the resale of Stock issued in settlement of an
Award. However, affiliates of the Company, which may include directors and
certain officers of the Company, may not reoffer or resell shares of Stock in a
transaction which is not registered under the Securities Act of 1933, as
amended (the “Securities Act”), except pursuant to Rule 144 under the
Securities Act or another exemption thereunder. Rule 144 requires, among other
things, that (1) any sales of Stock by an affiliate must be through a broker,
and (2) Securities and Exchange Commission Form 144 must be mailed to the
Securities and Exchange Commission prior to or concurrently with the placing of
a sell order with the broker if the amount sold during any three month period
exceeds 500 shares or has an aggregate sale price of more than $10,000.

26

 

Annex A

THE HARTFORD

KEY EMPLOYEE RESTRICTED STOCK AWARD

	 	 	 
	Notice of Award / Award Agreement

	 	[Date]
	 
	 	 

			
	[Name]
	 	THE HARTFORD FINANCIAL SERVICES GROUP, INC.

Effective this date, you have been granted a restricted stock award as
summarized below:

The Hartford Financial Services Group, Inc. (“The Hartford”) Restricted Stock Award

(Under The Hartford Incentive Stock Plan (“The Plan”))

[XXX] Shares of The Hartford Common Stock

This award of restricted stock is subject to the period of restriction as
indicated below during which you may not sell, exchange, transfer, pledge,
hypothecate or otherwise dispose of the shares awarded. One or more legended
stock certificates evidencing your award will be held by The Hartford during
the period of restriction. While your shares are being held by The Hartford,
you will enjoy the benefits of share ownership including dividend payments and
voting rights. Unless otherwise provided by the Plan, your shares will vest
provided that you are continuously and actively employed by The Hartford until
the end of the vesting period, at which time you will be issued one or more
unrestricted stock certificates after satisfactory payment of applicable taxes.
For further details regarding your award, including circumstances in which
your shares may vest earlier than the time identified below, refer to the
Summary of the provisions of the Plan relating to restricted stock attached
hereto as Attachment A and the copy of the Plan attached hereto as Attachment
B. One or more beneficiaries for your shares may be designated on the
Beneficiary Designation Form attached hereto as Attachment C. Unless revoked,
your Beneficiary Designation will apply to all restricted shares previously
awarded to you under the Plan and any restricted shares that may be awarded to
you in the future under the Plan. Should you wish to make a beneficiary
designation, the Beneficiary Designation Form must be returned to Executive
Compensation, HO-1-141, The Hartford, Hartford Plaza,
Hartford, CT 06115. If the form is not returned to Executive Compensation, your shares
transferable to a designated beneficiary will be transferred to your estate in
the event of your death.

	 	 	 	 	 
	Restricted
Shares

	 	 
	 	Restriction Period

	1/3
of Shares awarded

2/3 of Shares awarded

	 	 
	 	[Three
years from date of award]

[Five years from date of award]

Your restricted stock award is subject to the terms and conditions set forth in
this notice, the attached Summary, the Plan, and the administrative rules,
procedures and interpretations adopted pursuant to the Plan, and such
amendments as may be made to each of the foregoing from time to time. The
foregoing documents, including any amendments, collectively constitute your
restricted stock award agreement with The Hartford for purposes of the award
referred to herein.

	 	 	 
	

	 	Ann M. de Raismes
	

	 	Executive Vice President, Human Resources
	

	 	The Hartford Financial Services Group, Inc.
	 
	 	 
	

	 	Business Address:
	

	 	THE HARTFORD
	

	 	HARTFORD PLAZA
	

	 	HARTFORD,     CT       06115

 

 

Annex B

FORM OF STOCK
OPTION/PERFORMANCE SHARES AWARD FOR KEY EMPLOYEES

[DATE]

[Key Employee]

[Address]

[City, State, Zip]

I am pleased to inform you that effective [DATE], the Compensation and
Personnel Committee (the “Committee”) of the Board of Directors of The Hartford
Financial Services Group, Inc. (“The Hartford”) approved an award on your
behalf under The Hartford’s Long-term Incentive Compensation Program. Your
award is comprised of two parts: a stock option, and performance shares.

You have been granted a non-qualified option to purchase all or any portion of
x,xxx shares of common stock of The Hartford under the terms of The Hartford
Incentive Stock Plan (the “Plan”) at an exercise price of $[XXX] per share,
being the New York Stock Exchange closing price of The Hartford’s common stock
on [DATE] (the date of grant of the option). This option will become
exercisable in three consecutive annual installments, each equal to one-third
of the shares subject to the option, as follows: one-third will become
exercisable one year after the date of grant, two-thirds will become
exercisable two years after the date of grant, and the option will be
exercisable in full three years after the date of grant. However, any
unexercised portion of your option expires in full [ten years and two days
following the date of the grant].

You have also been granted xxxxxx [operating division] performance shares of
The Hartford’s common stock. This is a contingent award, and the extent to
which you may ultimately receive all or any of these performance shares depends
upon whether and to what extent the following [performance objectives] are
achieved over the [performance] period, [DATE –
DATE]: [operating division performance objective(s)].

The estimated value of your long-term award (the option and the performance
shares) as of the date of grant was $XXXX. Ultimately, the value of the award
will depend on the stock price at the time of option exercise, whether and to
what extent the performance share objectives are achieved, and other factors.

Enclosed is information related to performance shares. More information on
option awards can be obtained from The Hartford’s Intranet Directory as
follows:

From iConnect, select the LifeStyle tab, under My Personal Finance Links,
select Stock Options Information. Some of the information and documents
available include the following: The Hartford Incentive Stock Plan Prospectus,
Beneficiary Designation Forms, Service Provider to Contact, and award treatment
upon termination of employment.

You are strongly urged to review all of the above documents, as well as the
other information provided, at your earliest convenience, and certainly prior
to exercising your options.

If you cannot access the information, please contact Executive
Compensation, The Hartford, HO-1-141, Hartford Plaza, Hartford, CT 06115,
(860) 547-3624, for paper copies.

Please note that this letter and the Plan constitute your option and
performance share agreement with The Hartford. Although you are not required
to sign any formal documents, your option and performance share grants are
subject to all of the terms and conditions of the Plan, as it may be amended
from time to time, and all of the rules, procedures and interpretations of the
Plan that the Committee may adopt from time to time. Specifically, please
refer to Sections 5 and 6 of the Plan for information on what happens to your
option and performance shares should your employment with The Hartford
terminate, and Section 11(f) describing other circumstances that may affect
your award. You have already received information about exercising your
options from the Plan’s stock option broker, UBS. These exercise procedures
must be followed, and may change from time to time.

Your selection as an award recipient is significant recognition of your past
and anticipated future contributions to The Hartford’s success. Please accept
this award with my warm congratulations.

Sincerely,

Ramani Ayer

 

Annex C

THE HARTFORD

NON-QUALIFIED STOCK OPTION AWARD FOR NON-EMPLOYEE DIRECTORS

	 	 	 
	Notice of Award

	 	[DATE]

	 	 	 
	[NAME]

	 	THE HARTFORD FINANCIAL SERVICES GROUP, INC.

Effective [DATE], in conjunction with your service on the Board of Directors of
The Hartford Financial Services Group, Inc. (“The Hartford”), you have been
granted a non-qualified stock option.

This option provides the ability for you to purchase all or any portion of
x,xxx shares of common stock of The Hartford under the terms of The Hartford
Incentive Stock Plan (the “Plan”) at an exercise price of $xx.xx per share,
being the New York Stock Exchange closing price of The Hartford’s common stock
on [DATE] (the date of the grant of the option). Your option will vest provided
you actively and continuously serve as a director of The Hartford until vesting
occurs (unless otherwise provided by the Plan). The vesting schedule that
applies to your option is as follows: one-third of the option will become
exercisable one year after the date of grant, an additional one-third of the
option will become exercisable two years after the date of grant, and the
option will become exercisable in full three years after the date of grant.
(Your options may vest earlier before the end of the vesting period in certain
circumstances described in the Plan.) However, any unexercised portion expires
in full on [DATE].

Please note that this notice, the Plan, and the administrative rules of the
Compensation and Personnel Committee (the “Committee”) of the Board of
Directors of The Hartford with respect to the Non-Employee Directors’ Option
Program (a copy of which is attached hereto) constitute your option agreement
with The Hartford. Although you are not required to sign any formal documents,
your option grant is subject to all of the terms and conditions of the Plan, as
it may be amended from time to time, and all of the rules, procedures and
interpretations of the Plan that the Committee may adopt from time to time.
Specifically, please refer to the Plan and the administrative rules for
information on what happens to your option should your service as a director of
The Hartford terminate. Enclosed are a Plan prospectus (Attachment A) that
includes a copy of the Plan and related information, a copy of the
administrative rules for the Plan (Attachment B) and a form for you to
designate a beneficiary for your option (Attachment C). Should you wish to
designate a beneficiary for your option, the Beneficiary Designation Form must
be returned to me at The Hartford, Hartford Plaza, HO-1-01, Hartford, CT 06115,
Fax (860) 547-4562. If the form is not returned to me, your option
transferable to a designated beneficiary will be transferred to your estate in
the event of your death, except to the extent that you previously filed a
Beneficiary Designation Form applicable to future awards under the Plan.
Unless revoked, your Beneficiary Designation Form will apply to all options
previously granted under the Plan and any options that may be awarded to you in
the future under the Plan. You will receive information about exercising your
option from the Plan’s stock option administrator. These exercise procedures
must be followed, and may change from time to time.

	 	 	 
	

	 	
	

	 	Ann M. de Raismes
	

	 	Executive Vice President, Human Resources
	

	 	The Hartford Financial Services Group, Inc.
	 
	 	 
	

	 	Business Address:
	

	 	THE HARTFORD
	

	 	HARTFORD PLAZA
	

	 	HARTFORD, CT 06115EXHIBIT 10.05

 

Exhibit 10.05

THE HARTFORD FINANCIAL SERVICES GROUP, INC.

200,000 Shares of Common Stock, par value $.01 per share

THE HARTFORD RESTRICTED STOCK PLAN

FOR NON-EMPLOYEE DIRECTORS

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING

SECURITIES THAT HAVE BEEN REGISTERED UNDER

THE SECURITIES ACT OF 1933.

     The Prospectus covers such additional securities as may be issuable as a
result of anti-dilution provisions contained in the instruments pursuant to
which securities covered by the Prospectus are issued.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Amended and Restated as
of October 16, 2003

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page

	General Information
	 	 	2	 
	The Hartford Restricted Stock Plan for
Non-Employee Directors
	 	 	3	 
	Administration of the Plan
	 	 	11	 
	Federal Tax Treatment
	 	 	11	 
	Resale Restrictions
	 	 	12	 
	Available Information
	 	 	12	 

GENERAL INFORMATION

     The Hartford Financial Services Group, Inc. (the “Company”) is offering up
to 200,000 shares of its common stock, par value $.01 per share pursuant to The
Hartford Restricted Stock Plan For Non-Employee Directors (the “Plan”).
Directors of the Company who are not employees of the Company or any of its
subsidiaries are eligible to participate in the Plan. As more fully set forth
in the Plan, the dollar amount determined by the Nominating and Corporate
Governance Committee of the Board of Directors of the Company from time to time
to be appropriate for annual awards to non-employee directors pursuant to the
Plan will be paid in the form of annual automatic grants of shares of
restricted common stock. The Plan is set forth below.

 

 

THE HARTFORD RESTRICTED STOCK PLAN

FOR NON-EMPLOYEE DIRECTORS

ARTICLE I — PLAN ADMINISTRATION AND ELIGIBILITY

	1.1	 	Purpose

     The purpose of The Hartford Financial Services Group, Inc. Restricted
Stock Plan for Non-Employee Directors (the “Plan”) is to attract and retain
persons of ability as directors of The Hartford Financial Services Group, Inc.
(the “Company”) who are not officers of, or otherwise employed by, the Company
or any of its subsidiaries or affiliates (“Directors”), and to provide them
with a closer identity with the interests of the Company’s stockholders by
making an annual award of common stock of the Company, par value $.01 per share
(the “Stock”) subject to certain restrictions as described herein (the
“Restricted Stock”).

	1.2	 	Administration

     The Plan shall be administered by the Compensation and Personnel Committee
of the Board of Directors of the Company (the “Committee”). The Committee shall
have the responsibility of interpreting the Plan and establishing and amending
such rules and regulations necessary or appropriate for the administration of
the Plan. All interpretations of the Plan or any Restricted Stock awards issued
under it shall be final and binding upon all persons having an interest in the
Plan. No member of the Committee shall be liable for any action or
determination taken or made in good faith with respect to this Plan or any
Restricted Stock award granted hereunder. The Committee may, in its sole
discretion, delegate such of its powers as it deems appropriate to the
Company’s Group Senior Vice President, Human Resources (or other person holding
a similar position) or the Company’s Chief Executive Officer, except that
awards of Restricted Stock to Directors shall be made, and matters related
thereto shall be determined, solely by the Committee or the Board of Directors
of the Company (the “Board”) or any other appropriate committee thereof.

	1.3	 	Eligibility

     Directors shall be eligible to participate in the Plan.

	1.4	 	Stock Subject to the Plan

     (A) The maximum number of shares which may be granted under the Plan shall
be 200,000 shares of Stock.

- 3 -

 

     (B) If any Restricted Stock is forfeited by a Director in accordance with
the provisions of Section 2.2(C), such shares of Restricted Stock shall be
restored to the total number of shares available for grant pursuant to the
Plan.

     (C) Upon the grant of a Restricted Stock award the Company may distribute
newly issued shares or treasury shares, reacquired Stock, Stock purchased in
the open market, or any combination of the foregoing.

ARTICLE II — RESTRICTED STOCK

	2.1	 	Restricted Stock Awards

     (A) Restricted Stock awards shall be made automatically each year to each
Director expected to stand for re-election at the next Annual Meeting of
Stockholders. Such awards shall be made on the date selected by the Nominating
and Corporate Governance Committee of the Board (the “Nominating Committee”)
from time to time for annual Director Restricted Stock awards. Except as
otherwise provided in such administrative rules for the Plan as may be adopted
by the Committee, each award shall equal the number of whole shares (rounded to
the nearest whole share) arrived at by dividing (i) the dollar amount
determined appropriate by the Nominating Committee from time to time for annual
Director Restricted Stock awards for the particular year, by (ii) the Fair
Market Value of the Company’s common stock on the date of award.

     (B) “Fair Market Value” shall mean, unless otherwise required by the Plan,
as of any date, the composite closing price for one share of Stock on the New
York Stock Exchange or, if no sales of Stock have taken place on such date, the
composite closing price on the most recent date on which selling prices were
quoted, the determination to be made in the discretion of the Committee.

	2.2	 	Terms and Conditions of Restricted Stock Awards

     (A) Written Award Document — Each award of Restricted Stock granted under
the Plan shall be evidenced by a written notice, agreement, or other document
(the “Award Document”). Such Award Document shall be subject to and
incorporate the express terms and conditions of each award of Restricted Stock,
if any, required under the Plan or required by the Committee.

     (B) Shares held in Custody — The Restricted Stock awarded hereunder shall
be registered in the name of the Director and held in custody by the Company,
or by a bank or other institution designated by the Company, until the
restrictions on such Restricted Stock lapse as described below.

- 4 -

 

     (C) Restrictions — Restricted Stock awarded to a Director shall be
subject to a restriction period (after which restrictions will lapse) which
shall mean a period commencing on the date the Restricted Stock is awarded and
ending on the date determined appropriate by the Nominating Committee from time
to time for lapse of restrictions on annual Director Restricted Stock awards
for the particular year (the “Restriction Period”). During the Restriction
Period, Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise disposed of, except by will or the laws of descent and distribution.
Except as otherwise provided in this Section 2.2(C), if a Director’s service on
the Board terminates for any reason before the expiration of the Restriction
Period, all shares of Restricted Stock still subject to restrictions shall be
forfeited by the Director and reacquired by the Company. Notwithstanding the
foregoing, the restrictions on Restricted Stock awarded to a Director shall
lapse automatically upon the occurrence of any of the following events:

          (i) Retirement from service on the Board at age 72.

          (ii) A “Change of Control” of the Company. A “Change of Control” shall be
deemed to have occurred if :

               (a) a report on Schedule 13D shall be filed with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities and Exchange
Act of 1934 (the “Act”) disclosing that any Person (as defined in Section
2.2(F) of this Plan), other than the Company or a subsidiary of the Company or
any employee benefit plan sponsored by the Company or a subsidiary of the
Company is the Beneficial Owner of twenty percent or more of the outstanding
stock of the Company entitled to vote in the election of directors of the
Company;

               (b) any Person (as defined in Section 2.2(F) of this Plan), other than
the Company or a subsidiary of the Company or any employee benefit plan
sponsored by the Company or a subsidiary of the Company shall purchase shares
pursuant to a tender offer or exchange offer to acquire any Stock of the
Company (or securities convertible into stock) for cash, securities or any
other consideration, provided that after consummation of the offer, the Person
in question is the Beneficial Owner (as defined in Section 2.2(F) of this Plan)
of fifteen percent or more of the outstanding stock of the Company entitled to
vote in the election of directors of the Company (calculated as provided in
paragraph (d) of Rule 13d-3 under the Act in the case of rights to acquire
stock;

               (c) any merger, consolidation, recapitalization or reorganization of the
Company approved by the stockholders of the Company shall be consummated, other
than any such transaction immediately following which the persons who were the
Beneficial Owners of the outstanding securities of the Company entitled to vote
in the election of directors of the Company immediately prior to such
transaction are the Beneficial Owners of at least 55% of the total voting power
represented by the securities of the entity surviving such transaction entitled
to vote in the election of directors of such entity (or the ultimate parent of
such entity) in substantially the same

- 5 -

 

relative proportions as their ownership of the securities of the Company
entitled to vote in the election of directors of the Company immediately prior
to such transaction; provided that, such continuity of ownership (and
preservation of relative voting power) shall be deemed to be satisfied if the
failure to meet such threshold (or to preserve such relative voting power) is
due solely to the acquisition of voting securities by an employee benefit plan
of the Company, such surviving entity or any subsidiary of such surviving
entity;

               (d) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all the assets of the
Company approved by the stockholders of the Company shall be consummated; or

               (e) within any 24 month period, the persons who were directors of the
Company immediately before the beginning of such period (the “Incumbent
Directors”) shall cease (for any reason other than death) to constitute at
least a majority of the Board or the board of directors of any successor to the
Company, provided that any director who was not a director at the beginning of
such period shall be deemed to be an Incumbent Director if such director (I)
was elected to the Board by, or on the recommendation of or with the approval
of, at least two-thirds of the directors who then qualified as Incumbent
Directors either actually or by prior operation of this Section 2.2( C)(ii)(e),
and (II) was not designated by a Person who has entered into an agreement with
the Company to effect a transaction described in Section 2.2(C)(ii)( c) or
Section 2.2(C)(ii)(d) of the Plan;

provided that, notwithstanding any provision in this Plan to the contrary, in
the event of a Change of Control as described in Section 2.2(C)(ii)(c ) or
Section 2.2( C)(ii)(d) of the Plan, in the case of a Directors whose or service
on the Board of Directors involuntarily terminates on or after the date of a
shareholder approval described in either of such Sections but before the date
of a consummation described in either of such Sections, date of termination of
such a Director’s service on the Board of Directors shall be deemed for
purposes of the Plan to be the day following the date of the applicable
consummation.

          (iii) Death of the Director.

          (iv) Total Disability of the Director, as defined in The Hartford
Incentive Stock Plan, as may be amended from time to time.

          (v) Resignation by the Director under cases of special circumstances and
the Committee, in its sole discretion, consents to waive any remaining
restrictions.

     (D) Dividends and Voting Rights — A Director shall, subject to Section
2.2(C), possess all incidents of ownership of the shares of Restricted Stock
awarded to him or her, including the right to receive dividends with respect to
such shares and to vote such shares.

- 6 -

 

     (E) The Company shall deliver to the Director, or the beneficiary of such
Director, if applicable, unrestricted certificates for all of the shares of
Stock that were awarded to the Director as Restricted Stock: (i) immediately
following any lapse of restrictions on such shares pursuant to Section
2.2(C)(ii) hereof, or (ii) within 30 days following any lapse of restrictions
under the remaining provisions of Section 2.2(C).

     (F) Special Definitions. For purposes of the Plan, he following special
definitions apply:

     (i) “Beneficial Owner” means any Person who, directly or indirectly,
has the right to vote or dispose of or has “beneficial ownership” (within
the meaning of Rule 13d-3 under the Act) of any securities of a company,
including any such right pursuant to any agreement, arrangement or
understanding (whether or not in writing), provided that: (a) a Person
shall not be deemed the Beneficial Owner of any security as a result of an
agreement, arrangement or understanding to vote such security (I) arising
solely from a revocable proxy or consent given in response to a public
proxy or consent solicitation made
pursuant to, and in accordance with, the Act and the applicable rules and
regulations thereunder, or (II) made in connection with, or to otherwise
participate in, a proxy or consent solicitation made, or to be made,
pursuant to, and in accordance with, the applicable provisions of the Act
and the applicable rules and regulations thereunder, in either case
described in clause (I) or (II) above, whether or not such agreement,
arrangement or understanding is also then reportable by such Person on
Schedule 13D under the Act (or any comparable or successor report); and
(b) a Person engaged in business as an underwriter of securities shall
not be deemed to be the Beneficial Owner of any security acquired through
such Person’s participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.

     (ii) “Person” has the meaning ascribed to such term in Section
3(a)(9) of the Act, as supplemented by Section 13(d)(3) of the Act;
provided, however, that Person shall not include (a) the Company, any
subsidiary of the Company or any other Person controlled by the Company,
(b) any trustee or other fiduciary holding securities under any employee
benefit plan of the Company or of any subsidiary of the Company, or (c) a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
securities of the Company.

ARTICLE III — GENERAL PROVISIONS

	3.1	 	Adjustments in the Event of Change in Common Stock of the Company

     In the event of any reorganization, merger, recapitalization,
consolidation, liquidation, stock dividend, stock split, reclassification,
combination of shares, rights offering, split-up, or extraordinary dividend
(including a spin-off) or divestiture, or any other change in the corporate

- 7 -

 

structure or shares, the number and kind of shares which thereafter may be
granted under the Plan and the number of shares of Restricted Stock awarded
pursuant to Section 2.1 with respect
to which all restrictions have not lapsed, shall be appropriately adjusted
consistent with such change in such manner as the Board in its discretion may
deem equitable to prevent substantial dilution or enlargement of the rights
granted to, or available for, Directors participating in the Plan. Any
fractional shares resulting from such adjustments shall be eliminated.

	3.2	 	Rights of Directors

     The Plan shall not be deemed to create any obligation on the part of the
Board to nominate any Director for reelection by the Company’s stockholders or
to retain any Director at any particular rate of compensation. The Company
shall not be obligated to issue Stock pursuant to
an award of Restricted Stock for which the restrictions hereunder have lapsed
if such issuance would constitute a violation of any applicable law. Except as
provided herein, no Director shall have any rights as a stockholder with
respect to any shares of Restricted Stock awarded to such Director.

	3.3	 	Beneficiary

          (A) Each Director who receives an award under the Plan may file with the
Company a written designation of one or more persons as the Beneficiary who
shall be entitled to receive the award, if any, payable under the Plan upon his
or her death. A Director may from time to time revoke or change his or her
Beneficiary designation without the consent of any prior Beneficiary by filing
a new designation with the Company. The last such designation received by the
Company shall be controlling; provided, however, that no designation, or change
or revocation thereof, shall be effective unless received by the Company prior
to the Director’s death, and in no event shall it be effective as of a date
prior to such receipt.

     (B) If no such Beneficiary designation is in effect at the time of death
of a Director, or if no designated Beneficiary survives the Director or if such
designation conflicts with applicable law, the estate of the Director shall be
entitled to receive the award, if any, payable under the Plan upon his or her
death. If the Committee is in doubt as to the right of any person to receive
such award, the Company may retain such award, without liability for any
interest thereon, until the Committee determines the rights thereto, or the
Company may pay such award into any court of appropriate jurisdiction and such
payment shall be a complete discharge of the liability of the Company therefor.

	3.4	 	Laws and Regulations

     The Committee shall have the right to condition any issuance of shares of
Stock to any Director hereunder on such Director’s undertaking in writing to
comply with such restrictions on the subsequent disposition of such shares as
the Committee shall deem necessary or advisable as a result of any applicable
law or regulation. The Committee may postpone the delivery of Stock following

- 8 -

 

the lapse of restrictions with respect to awards of Restricted Stock for such
time as the Committee in its discretion may deem necessary, in order to permit
the Company with reasonable diligence (A) to effect or maintain registration of the Plan, or the
shares of Stock issuable upon the lapse of certain restrictions respecting
awards of Restricted Stock, under the Securities Act of 1933 or the securities
laws of any applicable jurisdiction, or (B) to determine that such shares and
the Plan are exempt from such registration; the Company shall not be obligated
by virtue of any Restricted Stock agreement or any provision of the Plan to
recognize the lapse of certain restrictions respecting awards of Restricted
Stock or issue shares in violation of said Act or of the law of the government
having jurisdiction thereof.

	3.5	 	Amendment, Suspension and Discontinuance of the Plan

     The Board may from time to time amend, modify, suspend or terminate the
Plan, and the Committee may amend or modify the Plan, provided that the Board
and the Committee may not, without the approval of the holders of a majority of
the outstanding shares entitled to vote, take any action which would cause the
Plan to no longer comply with Rule 16b-3 under the Act, or any successor rule
or other regulatory requirement.

Notwithstanding anything in the Plan to the contrary, no amendment,
modification, suspension or termination shall adversely impair or reduce the
rights of any person with respect to a Restricted Stock award previously
granted under the Plan without the consent of such person. Further,
notwithstanding anything in the Plan to the contrary, the Plan shall not be
amended, modified, suspended or terminated during the period in which a Change
of Control is threatened. For purposes of the preceding sentence, a Change of
Control shall be deemed to be threatened for the period beginning on the date
of any Potential Change of Control (as defined below), and ending upon the
earlier of (A) the second anniversary of the date of such Potential Change of
Control, (B) the date a Change of Control occurs, or (C) the date the Board or
the Committee determines in good faith that a Change of Control is no longer
threatened.

For purposes of the Plan, a Potential Change of Control shall occur if:

     (i) A Person shall commence a tender offer, which if successfully
consummated, would result in such Person being the Beneficial Owner of at
least 15% of the stock of the Company entitled to vote in the election of
directors of the Company;

     (ii) The Company enters into an agreement, the consummation of which
would constitute a Change of Control;

     (iii) Solicitation of proxies for the election of directors of the
Company by anyone other than the Company, which, if such directors were
elected, would result in the occurrence of a Change of Control as
described in Section 2.2(C)(ii)(e); or

- 9 -

 

     (iv) Any other event shall occur which is deemed to be a Potential
Change of Control by the Board, the Committee, or any other appropriate
committee of the Board in its sole discretion.

	3.6	 	Governing Law

     This Plan and all determinations made and actions taken pursuant hereto
shall be governed by the laws of the State of Connecticut.

	3.7	 	Effective Date and Duration of the Plan

     This Plan shall be effective on December 19, 1995 and shall terminate on
December 31, 2005, provided that grants of Restricted Stock made prior to the
termination of the Plan may vest following such termination in accordance with
their terms.

- 10 -

 

ADMINISTRATION

The Plan is administered by the Committee of the Board, the members of which
serve at the pleasure of the Board. The Committee is composed of directors none
of whom is an officer or employee of any Participating Company. The Plan is not
subject to the requirements of the Employee Retirement Income Security Act of
1974 (“ERISA”). The Committee administers the Plan but does not act as a
trustee or in any other fiduciary capacity with respect thereto.

FEDERAL TAX TREATMENT

     Set forth below is a summary of the federal income tax consequences under
the Internal Revenue Code of 1986, as amended (the “Code”) of the grant and
vesting of restricted stock awarded to a Director under the Plan. The
following summary does not include any discussion of state, local or foreign
income tax consequences or the effect of gift, estate or inheritance taxes, any
of which may be significant to a particular Director eligible to receive an
award. In addition, this summary does not apply to every specific transaction
that may occur. Each Director eligible to receive an award should consult his
or her tax advisor for precise advice pertaining to his or her particular
circumstances.

     Under the Code, a Director normally will not realize taxable income and
the Company will not be entitled to a deduction upon the grant of Restricted
Stock. At the time the shares of Restricted Stock are no longer subject to a
substantial risk of forfeiture (as defined in the Code) or become transferable,
a Director will realize taxable ordinary income in an amount equal to the fair
market value of such number of shares of Stock which have become nonforfeitable
or transferable and the Company will be entitled to a deduction in the same
amount. However, a Director may make an income recognition election under
Section 83(b) of the Code (an “83(b) Election”) and recognize taxable ordinary
income in the year the shares of Restricted Stock are awarded in an amount
equal to their fair market value at the time of the award, determined without
regard to the restrictions. In that event, the Company will be entitled to a
deduction in such year in the same amount, and any gain or loss realized by the
Director upon the subsequent disposition of Stock will be capital gain or loss
and will not result in any further deduction to the Company. Any dividends
with respect to the shares of Restricted Stock that are paid or made available
to a Director who has not made an 83(b) Election while the shares remain
forfeitable are treated as additional compensation taxable as ordinary income
to the Director and deductible by the Company when paid. If an 83(b) Election
has been made with respect to the Restricted Stock, the dividends represent
ordinary dividend income to the Director and are not deductible by the Company.
If the Director makes an 83(b) Election and subsequently forfeits the shares
of Restricted Stock, the Director is not entitled to a deduction as a
consequence of such forfeiture, and the Company must include as ordinary income
the amount it previously deducted in the year of grant with respect to such
shares of Restricted Stock.

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RESALE RESTRICTIONS

     The Plan contains no restrictions on the resale of Stock after the
Restriction Period ends. However, affiliates of the Company, which may include
Directors of the Company, may not reoffer or resell shares of Stock in a
transaction which is not registered under the Securities Act of 1933, as
amended (the “Securities Act”) except pursuant to Rule 144 under the Securities
Act or another exemption thereunder. Rule 144 requires, among other things,
that (1) any sales of Stock by a Director must be through a broker, and (2)
Securities and Exchange Commission Form 144 must be mailed to the Securities
and Exchange Commission prior to or concurrently with the placing of a sell
order with the broker if the amount sold during any three month period exceeds
500 shares or has an aggregate sale price of more than $10,000.

AVAILABLE INFORMATION

     The Company will provide, without charge, upon the written or oral request
of any person to whom this Prospectus is delivered, a copy of any of the
following documents, all of which are incorporated by reference in this
Prospectus:

     (a) The Company’s latest annual report filed pursuant to sections 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”);

     (b) All other reports filed by the Company pursuant to sections 13(a),
13(c), 14 and 15(d) of the Exchange Act since the end of the fiscal year
covered by the annual report referred to in (a) above; and

     (c) The description of the Stock and the rights associated with the Stock
contained in a registration statement filed under the Exchange Act, and any
amendment or report filed to update such description.

     In addition, the Company will provide, without charge, upon the written or
oral request of any person to whom this Prospectus is delivered, the following
documents:

	 	(a)	 	When updating information is furnished, a copy of all
documents previously delivered containing Plan information that then
constitute part of this Prospectus; and
	 
	 	(b)	 	A copy of whichever of the following was previously
distributed pursuant to Rule 428(b)(2) under the Securities Act:

	 	(i)	 	The Company’s annual report to stockholders
containing the information required by Rule 14a-3(b) under the
Exchange Act for its latest fiscal year;

- 12 -

 

	 	(ii)	 	The Company’s annual report on Form 10-K for its
latest fiscal year; or
	 
	 	(iii)	 	The latest prospectus filed pursuant to Rule
424(b) under the Securities Act that contains audited
financial statements for the Company’s latest fiscal year.

     Any statement contained in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any other subsequently filed document which
also is or is deemed to be incorporated by reference in this Prospectus
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

     All requests for documents, as well as for other information concerning
the Plan and its administrators, should be directed to the Manager of
Restricted Stock Plan Administration, The Hartford Financial Services Group,
Inc., Hartford Plaza, Hartford, Connecticut 06115, telephone (860) 547-5000.

- 13 -

 

ANNEX A

FORM OF THE HARTFORD

RESTRICTED STOCK AWARD FOR NON-EMPLOYEE DIRECTORS

	 	 	 
	Notice of Award

	 	[DATE]
	 
	 	 
	[NAME]

	 	THE HARTFORD FINANCIAL SERVICES GROUP, INC.

Effective this date, you have been granted a restricted stock award as
summarized below:

The Hartford Financial Services Group, Inc. (“The Hartford”) Restricted Stock Award

(Under The Hartford Restricted Stock Plan For Non-Employee Directors (“the Plan”))

xxx Shares of The Hartford Common Stock

This award of restricted stock is subject to the period of restriction as
indicated below during which you may not sell, assign, transfer, pledge or
otherwise dispose of the shares, except by will or the laws of descent and
distribution. A legended stock certificate evidencing your award will be held
by The Hartford during the period of restriction. While your shares are being
held by The Hartford, you will enjoy the benefits of share ownership including
dividend payments and voting rights. Your shares will vest provided you
actively and continuously serve as a director of The Hartford until the end of
the vesting period (unless otherwise provided by the Plan). Your shares may
vest before the end of the vesting period in certain circumstances described in
the Plan. When your shares vest, you will be issued an unrestricted stock
certificate for the applicable number of shares. However, resignation from the
Board will result in a forfeiture of all shares not vested at the time of such
resignation, unless otherwise determined by the Compensation and Personnel
Committee of The Hartford Board. For further details regarding your award,
refer to the Prospectus attached hereto as Attachment A, which includes a copy
of the Plan as well as a brief summary of the Federal tax consequences of your
award. Attachment B is the Administrative Rules for the Plan. One or more
beneficiaries for your shares may be designated on the Beneficiary Designation
Form attached hereto as Attachment C. Should you wish to designate a
beneficiary for your shares, the Beneficiary Designation Form must be returned
to me at The Hartford, Hartford Plaza, HO-1-01, Hartford, CT 06115, Fax (860)
547-4562. If the form is not returned, your shares transferable to a
designated beneficiary will be transferred to your estate in the event of your
death, except to the extent that you previously filed a Beneficiary Designation
Form applicable to future awards under the Plan. Unless revoked, your
Beneficiary Designation Form will apply to all shares previously granted under
the Plan and any shares that may be awarded to you in the future under the
Plan. Please note that you may elect to be taxed on the value of your shares
in the year of award by making an IRS Section 83(b) election. This election is
made by filing a written statement describing your award with the IRS within 30
days of the date of award. If you make this election, you will have ordinary
compensation income equal to the value of the shares in the year of award
(determined without regard to the restrictions). Also, dividends received
during the restriction period are taxed in the year received as ordinary
dividend income. On a later sale of your shares, any appreciation or
depreciation in the value of your shares from the date of award until the date
of sale will be treated as capital gain or loss. In light of the potential
severe tax cost in the event of a decline in share value or a forfeiture of
your shares, making the Section 83(b) election may be inadvisable. You should
consult your tax advisor for further details about the election and to
determine whether it would be appropriate to make the election in your personal
tax circumstances. If you decide to make the election, please forward a copy
of your election statement to me at the above address.

RESTRICTION PERIOD: [Three years from the date of award] - [Date]
through [Date]

	 	 	 
	

	 	
	

	 	Ann M. de Raismes

	

	 	Executive Vice President, Human Resources

	

	 	The Hartford Financial Services Group, Inc.

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