Document:

EXHIBIT 10.3

 

THE ALLSTATE CORPORATION

AMENDED AND RESTATED 2001 EQUITY
INCENTIVE PLAN

OPTION AWARD AGREEMENT

 

[Addressee]

 

In accordance with the terms of The Allstate Corporation Amended and
Restated 2001 Equity Incentive Plan (the “Plan”), pursuant to action of the
Compensation and Succession Committee of the Board of Directors, The Allstate
Corporation (the “Company”) hereby grants to you (the “Participant”), subject
to the terms and conditions set forth in this Option Award Agreement (including
Annex A hereto and all documents incorporated herein by reference) the right
and option (the “Option”) to purchase from the Company the number of shares of
its common stock, par value $.01 per share, set forth below:

 

	
  Type of Option
  Granted:

  	
  Nonqualified

  
	
   

  	
   

  
	
  Number of Shares to which
  Option Pertains:

  	
  [                 ]

  
	
   

  	
   

  
	
  Date of Grant:

  	
  [                 ]

  
	
   

  	
   

  
	
  Option Exercise Price:

  	
  $                 ,
  which is the Fair Market Value on the Date of Grant

  
	
   

  	
   

  
	
  Vesting:

  	
  [                                                                                                        ]

  
	
   

  	
  (subject to Sections 2
  and 4 of Annex A)]

  
	
   

  	
   

  
	
  Expiration Date:

  	
  Close of
  business on [                   ]

  
	
   

  	
   

  
	
  Exercise Period:

  	
  Date of Vesting
  through Expiration Date (subject to Section 2 of Annex A)

  

 

THIS
OPTION IS SUBJECT TO FORFEITURE AS PROVIDED IN THIS OPTION AWARD AGREEMENT AND
THE PLAN.

 

Further terms and conditions of the Award are set forth in Annex A
hereto, which is an integral part of this Option Award Agreement.

 

All terms, provisions and conditions applicable to the Option Award
Agreement set forth in the Plan and not set forth herein are hereby
incorporated by reference.  To the extent
any provision hereof is inconsistent with a provision of the Plan, the
provision of the Plan will govern.  By
accepting this Award, the Participant hereby acknowledges the receipt of a copy
of this Option Award Agreement including Annex A and a copy of the Prospectus
and agrees to be bound by all the terms and provisions hereof and thereto.

 

 

	
   

  	
  Thomas J. Wilson

  
	
   

  	
  Chairman, President and

  
	
   

  	
    Chief
  Executive Officer

  
	
   

  	
  THE ALLSTATE
  CORPORATION

  
	
  Attachment:     Annex
  A

  	
   

  

 

 

ANNEX A

 

TO

 

THE
ALLSTATE CORPORATION

AMENDED
AND RESTATED 2001 EQUITY INCENTIVE PLAN

OPTION
AWARD AGREEMENT

 

Further Terms and
Conditions of Award. 
It is understood and agreed that the Award of the Option evidenced by
this Option Award Agreement to which this is annexed is subject to the
following additional terms and conditions:

 

1.             Exercise of Option.  To the extent vested and subject to Section 2
below, the Option may be exercised in whole or in part from time to time by
delivery of written notice (or other method acceptable to the Company) of
exercise and payment to Stock Option Record
Office, The Allstate Corporation, 2775 Sanders Road, Ste F5, Northbrook,
Illinois  60062, unless the Company
advises the Participant to send the notice and payment to a different address
or a designated representative. Such notice and payment must be
received not later than the Expiration Date, specifying the number of shares of
Stock to be purchased.  The minimum
number of Shares to be purchased in a partial exercise shall be the lesser of
25 shares and the number of shares remaining unexercised under this Award.  In the event that the Expiration Date falls
on a day that is not a regular business day at the Company’s executive offices
in Northbrook, Illinois, such written notice must be delivered no later than
the next regular business day following the Expiration Date.

 

The Option Exercise Price
shall be payable:  (a) in cash or
its equivalent, (b) by tendering previously acquired Stock (owned for at
least six months) having an aggregate Fair Market Value at the time of exercise
equal to the total Option Exercise Price, (c) by broker-assisted cashless
exercise, (d) by share withholding or (e) by a combination of (a),
(b), (c) and/or (d).

 

With respect to tax
withholding required upon exercise of the Option, the Participant may elect to
satisfy such withholding requirements in whole or in part, by having Stock with
a Fair Market Value equal to the minimum statutory total tax which could be
imposed on the transaction withheld from the shares due upon Option exercise.

 

2.             Termination of Employment.  Except as otherwise specifically provided in Section 4
of this Annex A with respect to vesting, in The Allstate Corporation Change of
Control Severance Plan (to the extent such plan is applicable to the
Participant) or in another written agreement with the Company to which the
Participant is a party, if the Participant has a Termination of Employment, the
following provisions shall apply:(1)

 

2.             Termination of Employment.  Except as otherwise specifically provided in Section 4
below upon the Participant’s Termination of Employment, the following
provisions shall apply:(2)

 

(1) This text
applies to Awards granted on or before December 31, 2008.

(2) This text
applies to Awards granted after December 31, 2008.

 

 

(i)            if the Participant’s Termination of
Employment is on account of death or Disability, then the Option, to the extent
not vested, shall vest, and the Option may be exercised, in whole or in part,
by the Participant (or his personal representative, estate or transferee, as
the case may be) at any time on or before the earlier to occur of (x) the
Expiration Date of the Option and (y) the second anniversary of the date
of such Termination of Employment;

 

(ii)           if the Participant’s Termination of
Employment is on account of Retirement at the Normal Retirement Date or Health
Retirement Date, the Option to the extent it is not vested, shall continue to
vest in accordance with its terms, and when vested, may be exercised, in whole
or in part, by the Participant at any time on or before the earlier to occur of
(x) the Expiration Date of the Option and (y) the fifth anniversary
of the date of such Termination of Employment;

 

(iii)          if the Participant’s Termination of
Employment is on account of Retirement at the Early Retirement Date, any
portion of the Option that is not vested shall be forfeited, and the Option, to
the extent it is vested on the date of Termination of Employment, may be
exercised, in whole or in part, by the Participant at any time on or before the
earlier to occur of (x) the Expiration Date of the Option and (y) the
fifth anniversary of the date of such Termination of Employment;

 

(iv)          if the Participant’s Termination of
Employment is for any other reason, any portion of the Option that is not
vested shall be forfeited, and the Option, to the extent it is vested on the
date of Termination of Employment, may be exercised, in whole or in part, by
the Participant at any time on or before the earlier to occur of (x) the
Expiration Date of the Option and (y) three months after the date of such
Termination of Employment; and

 

(v)           if (A) the Participant’s Termination
of Employment is for any reason other than death and (B) the Participant
dies after such Termination of Employment but before the date the Option must
be exercised as set forth in the preceding subsections, any portion of the
Option that is not vested shall be forfeited and the Option, to the extent it
is vested on the date of the Participant’s death, may be exercised, in whole or
in part, by the Participant’s personal representative, estate or transferee, as
the case may be, at any time on or before the earliest to occur of (x) the
Expiration Date of the Option, (y) the second anniversary of the date of
death and (z) the applicable anniversary of the Termination of Employment
as set forth in subsections (i) through (iv) above.

 

3.             Transferability of Options.
Except as set forth in this Section 3, the Option shall be exercisable
during the Participant’s lifetime only by the Participant, and may not be
assigned or transferred other than by will or the laws of descent and
distribution.  The Option, to the extent
vested, may be transferred by the Participant during his lifetime to any “Family
Member.”  A transfer of the Option
pursuant to this Section 3 may only be effected by the Company at the
written request of a Participant and shall be effective only when recorded in
the Company’s record of outstanding Options. Such transferred Option may not be
subsequently transferred by the transferee except by will or the laws of
descent and distribution.  A transferred
Option shall continue to be governed by and subject to the terms and
limitations of the Plan and this Option Award Agreement, and the transferee
shall be entitled to the same rights as the Participant, as if no transfer had
taken place.  In no event shall an Option
be transferred for consideration.

 

4.             Change of Control.  Except as otherwise specifically provided in
a written agreement with the Company to which the Participant is a party, the
Option, to the extent not vested, shall vest on the date of a Change of
Control, as defined in Section 8, and the Option may be exercised in whole
or in part, subject to the time periods for exercise set forth in Section 2
of this Annex A.

 

5.             Ratification of Actions.  By accepting the Award or other benefit under
the Plan, the Participant and each person claiming under or through him shall
be conclusively deemed to have 

 

 

indicated the Participant’s
acceptance and ratification of, and consent to, any action taken under the Plan
or the Award by the Company, the Board or the Compensation and Succession
Committee.

 

6.             Notices. 
Any notice hereunder to the Company shall be addressed to its Stock
Option Record Office and any notice hereunder to the Participant shall be
addressed to him at the address specified on this Option Award Agreement,
subject to the right of either party to designate at any time hereafter in
writing some other address.

 

7.             Governing Law and Severability.  To the extent not preempted by Federal law,
this Option Award Agreement will be governed by and construed in accordance
with the laws of the State of Delaware, without regard to conflicts of law
provisions.  In the event any provision
of the Option Award Agreement shall be held illegal or invalid for any reason,
the illegality or invalidity shall not affect the remaining parts of this
Option Award Agreement, and this Option Award Agreement shall be construed and
enforced as if the illegal or invalid provision had not been included.

 

8.             Definitions. 
In addition to the following definitions, capitalized terms not
otherwise defined herein shall have the meanings given them in the Plan.

 

“Board Turnover”
– see clause (c) of the definition of “Change of Control.”

 

“Change of
Control” means, except as otherwise provided at the end of this definition,
the occurrence of any one or more of the following(3):

 

(a)           (Voting Power)  any Person or group (as such term
is defined in Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), other
than a Subsidiary or any employee benefit plan (or any related trust) of the
Company or any of its Subsidiaries, acquires or has acquired during the
12-month period ending on the date of the most recent acquisition by such
Person or Persons, ownership of stock of the Company possessing 30% or more of
the combined voting power of all Voting Securities of the Company (such a Person
or group that is not a Similarly Owned Company (as defined below), a “More
than 30% Owner”), except that no Change of Control shall be deemed to have
occurred solely by reason of such ownership by a corporation with respect to
which both more than 70% of the common stock of such corporation and Voting
Securities representing more than 70% of the combined voting power of the
Voting Securities of such corporation are then owned, directly or indirectly,
by the Persons who were the direct or indirect owners of the common stock and
Voting Securities of the Company immediately before such acquisition in
substantially the same proportions as their ownership, immediately before such
acquisition, of the common stock and Voting Securities of the Company, as the case
may be (a “Similarly Owned Company”); or

 

(b) (Majority Ownership) any Person or group (as such term is
defined in Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), other than a
Subsidiary or any employee benefit plan (or any related trust) of the Company
or any of its Subsidiaries, acquires ownership of more than 50% of the voting
power of all Voting Securities of the Company or of the total fair market value
of the stock of the Company (such a Person or group that is not a Similarly
Owned Company, a “Majority Owner”), except that no Change of Control
shall be deemed to have occurred solely by reason of such ownership by a
Similarly Owned Company; or

 

(3)   The highlighted
language conforms with Section 409A of the Internal Revenue Code.  Provisions pertaining to the former
definition of change of control have been omitted from this draft.

 

 

(c)  (Board Composition) a majority of the members of the Board is
replaced during any 12-month period by directors whose appointment or election
is not endorsed by a majority of the members of the Board before the date of
the appointment or election (“Board Turnover”); or

 

(d)  (Reorganization) the consummation of a merger,
reorganization, consolidation, or similar transaction, or of a plan or
agreement for the sale or other disposition of all or substantially all of the
consolidated assets of the Company, or a plan of liquidation of the Company
(any of the foregoing, a “Reorganization Transaction”) that, does not
qualify as an Exempt Reorganization Transaction.

 

Notwithstanding
anything contained herein to the contrary: 
(i) no transaction or event shall constitute a Change of Control
for purposes of this Agreement unless the transaction or event constituting the
Change of Control also constitutes a change in the ownership of a corporation
(as defined in Treasury Regulation Section 1.409A-3(i)(5)(v)), a change in
effective control of a corporation (as defined in Treasury Regulation Section 1.409A-3(i)(5)(vi))
or a change in the ownership of a substantial portion of the assets of a
corporation (as defined in Treasury Regulation Section 1.409A-3(i)(5)(vii));
and (ii) no sale or disposition of one or more Subsidiaries (“Sale
Subsidiary”) or the assets thereof shall constitute a Change of Control for
purposes of this Agreement if the investments in and advances by the Company
and its Subsidiaries (other than the Sale Subsidiaries) to such Sale Subsidiary
as of immediately prior to the sale or disposition determined in accordance
with Generally Accepted Accounting Principles (“GAAP”) (but after intercompany
eliminations and net of the effect of intercompany reinsurance) are less than
51% of the Consolidated Total Shareholders’ Equity of the Company as of
immediately prior to the sale or disposition. 
Consolidated Total Shareholders’ Equity means, at any date, the total
shareholders’ equity of the Company and its Subsidiaries at such date, as
reported in the consolidated financial statements prepared in accordance with
GAAP.

 

“Exempt
Reorganization Transaction” means a Reorganization Transaction that fails
to result in (a) any Person or group (as such term is defined in Treasury
Regulation Section 1.409A-3(i)(5)(v)(B)) becoming a More than 30% Owner or
a Majority Owner, (b) Board Turnover, or (c) a sale or disposition to
any Person or group (as such term is defined in Treasury Regulation Section 1.409A-3(i)(5)(v)(B))
of the assets of the Company that have a total Gross Fair Market Value equal to
at least forty percent (40%) of the total Gross Fair Market Value of all of the
assets of the Company immediately before such transaction.

 

“Gross Fair Market
Value” means the value of the assets of the Company, or the value of the
assets being disposed of, determined without regard to any liabilities
associated with such assets.

 

“Majority Owner” –
see clause (b) of the definition of “Change of Control.”

 

“More than 30% Owner”
– see clause (a) of the definition of “Change of Control.”

 

“Reorganization
Transaction” – see clause (d) of the definition of “Change of Control.”

 

“Similarly Owned
Company” – see clause (a) of the definition of “Change
of Control.”

 

“Voting Securities”
of a corporation means securities of such corporation that are entitled to vote
generally in the election of directors of such corporation.EXHIBIT 10.4

 

THE
ALLSTATE CORPORATION

AMENDED
AND RESTATED 2001 EQUITY INCENTIVE PLAN

 

Article 1.               Establishment, Purpose and
Duration

 

1.1           Establishment
of the Plan.  The Allstate
Corporation, a Delaware corporation (hereinafter referred to as the “Company”),
hereby establishes an incentive compensation plan for key employees, to be
known as “The Allstate Corporation 2001 Equity Incentive Plan” (hereinafter
referred to as the “Plan”), as set forth in this document.  The Plan permits the grant of nonqualified
stock options (NQSOs), incentive stock options (ISOs), stock appreciation
rights (SARs), unrestricted stock, restricted stock, restricted stock units,
performance units, performance stock and other awards.

 

The
Plan was approved by the Board of Directors on March 13, 2001 and became
effective when approved by the Company’s stockholders on May 15, 2001 (the
“Effective Date”).  The Plan was amended
by the Board of Directors on March 9, 2004.  On March 14, 2006 the Plan was amended
and restated effective upon approval by stockholders at the 2006 Annual Meeting
of Stockholders on May 16, 2006. 
The Plan was further amended and restated by the Board at meetings held
on September 10, 2006,  February 20,
2007, and September 15, 2008, and shall thereafter remain in effect as
provided in Section 1.3 herein.

 

1.2           Purpose of
the Plan. The primary purpose of the Plan is to provide a means by
which key employees of the Company and its Subsidiaries can acquire and
maintain stock ownership, thereby strengthening their commitment to the success
of the Company and its Subsidiaries and their desire to remain employed by the
Company and its Subsidiaries.  The Plan
also is intended to attract and retain key employees and to provide such employees
with additional incentive and reward opportunities designed to encourage them
to enhance the profitable growth of the Company and its Subsidiaries.

 

1.3           Duration of
the Plan.  The Plan shall
commence on the Effective Date, as described in Section 1.1 herein, and
shall remain in effect subject to the right of the Board of Directors to
terminate the Plan at any time pursuant to Article 15 herein, until all
Stock subject to it shall have been purchased or acquired according to the Plan’s
provisions.

 

Article 2.               Definitions

 

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

 

2.1           Award  means, individually or collectively, a grant
under the Plan of NQSOs,  ISOs, SARs,
Unrestricted Stock, Restricted Stock, Restricted Stock Units, Performance
Units, Performance Stock or any other type of award permitted under Article 10
of the Plan.

 

 

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

 

2.3           Base Value
of an SAR means the Fair Market Value of a share of Stock on the date the SAR
is granted.

 

2.4           Board or Board of Directors means the Board of Directors of the
Company.

 

2.5           Code means the Internal Revenue Code of 1986, as amended
from time to time.

 

2.6           Committee means the committee, as specified in Article 3,
appointed by the Board to administer the Plan.

 

2.7           Company means The Allstate Corporation, a Delaware
corporation, or any successor thereto as provided in Article 18 herein.

 

2.8           Covered Employee means any Participant who would be
considered a “covered employee” for purposes of Section 162(m) of the
Code.

 

2.9           Disability means an impairment which  renders a Participant disabled within the
meaning of Code Section 409A(a)(2)(C).

 

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

 

2.11         Eligible Person means a Person who is eligible to
participate in the Plan, as set forth in Section 5.1 herein.

 

2.12         Employee means an individual who is paid on the payroll of
the Company or of one of the Company’s Subsidiaries, who is not covered by any
collective bargaining agreement to which the Company or any of its Subsidiaries
is a party, and is classified on the employer’s human resource payroll system
as a regular full-time or regular part-time employee.

 

2.13         Exchange Act means the Securities Exchange Act of 1934, as
amended from time to time, or any successor act thereto.

 

2.14         Exercise Period means the period during which an SAR or
Option is exercisable, as set forth in the related Award Agreement.

 

2.15         Fair Market
Value, means the price at which a share of the Stock was last sold
in the principal United States market for the Stock as of the date for which
fair market value is being determined, which in the case of Restricted Stock or
Restricted Stock Units is the last day of the Period of Restriction.

 

 

2.16         Family Member means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, or sibling, including adoptive
relationships, a trust in which these persons have more than fifty (50) percent
of the beneficial interest, a foundation in which these persons (or the
Employee) control the management of assets, and any other entity in which these
persons (or the Employee) own more than fifty (50) percent of the voting
interests.

 

2.17         Freestanding
SAR means an SAR that is not a Tandem SAR.

 

2.18         Incentive Stock
Option or ISO means an
option to purchase Stock, granted under Article 6 herein, which is
designated as an Incentive Stock Option and satisfies the requirements of Section 422
of the Code.

 

2.19         Minimum Consideration means the $.01 par value per share or
such larger amount determined pursuant to resolution of the Board to be capital
within the meaning of Section 154 of the Delaware General Corporation Law.

 

2.20         Nonqualified Stock Option or NQSO
means an option to purchase Stock, granted under Article 6 herein, which
is not intended to be an Incentive Stock Option under Section 422 of the
Code.

 

2.21         Option  means an
Incentive Stock Option or a Nonqualified Stock Option.

 

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

 

2.23         Participant means an Eligible Person who has outstanding an
Award granted under the Plan.

 

2.24         Performance Goals
means the performance goals established by the Committee, which shall be based
on one or more of the following measures: 
sales or revenues, earnings per share, stockholder return and/or value,
funds from operations, operating income, gross income, net income, combined ratio,
underwriting income, cash flow, return on equity, return on capital, return on
assets, net earnings, earnings before interest, operating ratios, stock price,
customer satisfaction, customer retention, accomplishment of mergers,
acquisitions, dispositions or similar extraordinary business transactions,
profit returns and margins, financial return ratios and/or market
performance.  Performance goals may be
measured solely on a corporate, subsidiary or business unit basis, or a
combination thereof.  Performance goals
may reflect absolute entity performance or a relative comparison of entity
performance to the performance of a peer group of entities or other external
measure.

 

2.25         Performance Period
means the time period during which Performance Unit/Performance Stock
Performance Goals must be met.

 

 

2.26         Performance Stock
means an Award described in Article 9 herein.

 

2.27         Performance Unit means an Award described in Article 9
herein.

 

2.28         Period of Restriction means the period during which the
transfer of Restricted Stock or Restricted Stock Units  is limited in
some way, as provided in Article 8 herein.

 

2.29         Person means any individual, sole proprietorship,
partnership, joint venture, limited liability company, trust, unincorporated
organization, association, corporation, institution, public benefit
corporation, entity or government instrumentality, division, agency, body or
department.

 

2.30         Plan means The Allstate Corporation Amended and Restated
2001 Equity Incentive Plan.

 

2.31   Qualified Restricted Stock means an Award of Restricted
Stock designated as Qualified Restricted Stock by the Committee at the time of
grant and intended to qualify for the exemption from the limitation on
deductibility imposed by Section 162(m) of the Code that is set forth
in Section 162(m)(4)(C).

 

2.32         Qualified Restricted Stock Unit means an Award of Restricted
Stock Units designated as Qualified Restricted Stock Units by the Committee at
the time of grant and intended to qualify for the exemption from the limitation
on deductibility imposed by Section 162(m) of the Code that is set forth in Section
162(m)(4)(C).

 

2.33         Reload Option means an additional Option related to Options
awarded prior to 2004 as described in Article 6 herein.

 

2.34         Restricted Stock means an Award described in Article 8
herein.

 

2.35         Restricted Stock Unit means an Award described in Article 8
herein.

 

2.36         Retirement means a Participant’s termination from employment
with the Company or a Subsidiary at the Participant’s Early, Normal or Health
Retirement Date, as applicable.

 

(a)                                  Early Retirement Date — shall mean the date prior to the
Participant’s Normal Retirement Date on which a Participant terminates
employment, if such termination date occurs on or after the Participant attains
age fifty-five (55) with twenty (20) years of service and such retirement is in
accordance with the voluntary early retirement policy of the Company or the
Subsidiary with which the Participant is employed on the date of termination of
employment.

 

(b)                                 Normal Retirement Date — shall have the meaning given to it
by the Company or the Subsidiary with which the Participant is employed on the

 

 

date of termination of employment, provided that such
termination is voluntary and occurs on or after the Participant attains age
sixty (60) with at least one (1) year of service at termination of
employment.

 

(c)                                  Health Retirement Date — shall mean the date on which the
Participant terminates employment for health reasons (as determined under the
human resource policy of the Company or the Subsidiary with which the
Participant is employed on the date of termination of employment), provided
that such termination date occurs on or after the Participant attains age fifty
(50) but before the Participant attains age sixty (60), with at least ten (10) years
of continuous service at termination of employment.

 

2.37         Section 409A
shall have the meaning set forth in Section 19.5 herein.

 

2.38         Securities Act means the Securities Act of 1933, as amended.

 

2.39         Stock means the common stock, $.01 par value, of the
Company.

 

2.40         Stock Appreciation Right or SAR means a right, granted alone
or in connection with a related Option, designated as an SAR, to receive a
payment on the day the right is exercised, pursuant to the terms of Article 7
herein. Each SAR shall be denominated in terms of one share of Stock.

 

2.41         Subsidiary means any corporation, business trust, limited
liability  company or partnership with respect to which Allstate owns,
directly or indirectly, Voting Securities representing more than 50% of the
aggregate Voting Power of the then-outstanding Voting Securities.

 

2.42         Tandem SAR means an SAR that is granted in connection with a
related Option, the exercise of which shall require forfeiture of the right to
purchase Stock under the related Option (and when Stock is purchased under the
Option, the Tandem SAR shall be similarly canceled).

 

2.43         Termination of Employment occurs the first day on which an
individual is for any reason no longer employed by the Company or any of its
Subsidiaries, or with respect to an individual who is an Employee of a
Subsidiary, the first day on which the Company no longer owns, directly or
indirectly, Voting Securities possessing at least 50% of the Voting Power of
such Subsidiary.  For purposes of the
Plan, transfer of employment of a Participant between the Company and any one
of its Subsidiaries (or between Subsidiaries) shall not be deemed a termination
of employment.  Notwithstanding anything
herein to the contrary, no issuance of Stock or payment of cash shall be made
upon a Termination of Employment with respect to any Award that constitutes
deferred compensation for purposes of Section 409A unless the Termination
of Employment constitutes a “separation from service” as that term is used in Section 409A(a)(2)(A)(i) of
the Code.

 

2.44         Unrestricted Stock means an Award of Stock not subject to
restrictions described in Article 8 herein.

 

 

2.45         Voting Power for purposes of Sections 2.41 and 2.43 means
the combined voting power of the then-outstanding Voting Securities entitled to
vote generally in the election of directors.

 

2.46         Voting Securities of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors of
such corporation.

 

Article 3.               Administration

 

3.1           The
Committee. The Plan shall be administered by the Compensation and
Succession Committee or such other committee (the “Committee”) as the Board of
Directors shall select, consisting solely of two or more nonemployee members of
the Board.  The members of the Committee
shall be appointed from time to time by, and shall serve at the discretion of,
the Board of Directors.

 

3.2           Authority of
the Committee.  The Committee
shall have full power except as limited by law, the Articles of Incorporation
or the Bylaws of the Company, subject to such other restricting limitations or
directions as may be imposed by the Board and subject to the provisions herein,
to determine the Eligible Persons to receive Awards; to determine when Awards
may be granted and to grant Awards under the Plan (which may include
substituted Awards as described in Article 17 herein); to determine the
size and types of Awards; to determine the terms and conditions of such Awards;
to determine whether Performance Goals have been met; to construe and interpret
the Plan and any agreement or instrument entered into under the Plan; to
establish, amend or waive rules and regulations for the Plan’s
administration; to amend the terms and conditions of any outstanding Award,
including but not limited to amendments with respect to exercisability and
non-forfeitability of Awards upon a Termination of Employment; to make such
adjustments or modifications to Awards to Participants working outside the
United States as are necessary or advisable to fulfill the purposes of the
Plan; to accelerate the exercisability of, and to accelerate or waive any or
all of the restrictions and conditions applicable to, any Award; and to
authorize any action of or make any determination by the Company as the
Committee shall deem necessary or advisable for carrying out the purposes of
the Plan; provided, however, that the Committee may not amend the
terms and conditions of any outstanding Award so as to adversely affect in any
material way such Award without the written consent of the Participant holding
such Award (or if the Participant is not then living, the Participant’s
personal representative or estate), unless such amendment is required by
applicable law; and provided, further, that any discretion
exercised by the Committee pursuant to section 4.2 and the following paragraph
of this section 3.2 shall not be deemed to adversely affect in any material way
an Award.  The Committee may designate
which Subsidiaries participate in the Plan and may authorize foreign
Subsidiaries to adopt plans as provided in Article 14.  Further, the Committee shall interpret and
make all other determinations which may be necessary or advisable for the
administration of the Plan.  As permitted
by law, the Committee may delegate its authorities as identified hereunder.

 

The Committee may, in its discretion, elect at any time, should it
determine it is in the best interest of the Company’s stockholders to cancel
any Awards granted hereunder, to cancel all or any

 

 

of the Awards
granted hereunder and pay the holders of any such Awards an amount (payable in
such proportion as the Committee may determine in cash or in Stock (valued at
the Fair Market Value of a share of Stock on the date of cancellation of such
Award)) equal to (i) for Options, the number of shares of Stock subject to
such cancelled Option, multiplied by the amount (if any) by which the Fair
Market Value of Stock on the date of cancellation of the Option exceeds the
Option Exercise Price; (ii) for Restricted Stock or Performance Stock, the
number of shares of Restricted Stock or Performance Stock multiplied by the
Fair Market Value of Stock on the date of cancellation of the Award; and (iii) for
Restricted Stock Units or Performance Units, the number of units multiplied by
an amount not less than the initial value thereof; provided, however, the
Committee shall not exercise discretion and pay the holder of any Award in cash
or Stock to the extent such Award constitutes deferred compensation for
purposes of Section 409A.  Amounts
payable may be prorated based upon the number of months elapsed in any related
vesting period or Performance Period, in the sole discretion of the
Committee.  In no event shall the
Committee have the right to amend an outstanding Option Award for the sole
purpose of reducing the exercise price thereof.

 

3.3           Delegation of Authority.  Notwithstanding the general
authority of the Committee to grant Awards under the Plan, the Board may, by
resolution, expressly delegate to another committee, established by the Board
and consisting of one or more employee or non-employee directors, the
authority, within parameters specified by the Board, to determine the Eligible
Persons to receive Awards; to determine when Awards may be granted and to grant
Awards under the Plan; to determine the size and types of Awards; and to
determine the terms and conditions of such Awards; provided, however that such
committee may not grant Awards to Eligible Persons who (i) are subject to Section 16(a) of
the Exchange Act at the time of grant, or (ii) are at the time of grant,
or are anticipated to become during the term of the Award, “covered employees”
as defined in Section 162(m)(3) of the Code.  Such committee shall report regularly to the
Committee, who shall report to the Board, regarding any Awards so granted.

 

3.4           Delivery of Stock by Company; Restrictions on Stock.  Notwithstanding any other provision of the
Plan, the Company shall have no liability to deliver any Stock or benefits
under the Plan unless such delivery would comply with all applicable laws
(including, without limitation, the Code, the Securities Act, and the Exchange
Act) and applicable requirements of any securities exchange or similar entity
and unless the Participant’s tax obligations have been satisfied as set forth
in Article 16.

 

The Committee may impose such restrictions on any Stock acquired
pursuant to Awards under the Plan as it may deem advisable, including, without
limitation, restrictions to comply with applicable Federal securities laws,
with the requirements of any stock exchange or market upon which such Stock is
then listed and/or traded and with any blue sky or state securities laws
applicable to such Stock.

 

3.5           Decisions Binding. 
All determinations and decisions made by the Committee pursuant to the
provisions of the Plan and all related orders or resolutions of the Board shall
be final, conclusive and binding on all persons, including the Company, its
stockholders, Eligible Persons,

 

 

Employees,
Participants and their estates.  No
member of the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Award.

 

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

 

Article 4.               Stock Subject to the Plan

 

4.1           Number of
Shares.  Subject to Section 4.2
herein, the maximum number of shares of Stock available for grant under the
Plan shall be 49,000,000 plus any shares of Stock remaining available for
awards pursuant to the terms of The Allstate Corporation Equity Incentive Plan.  Shares of Stock underlying lapsed or
forfeited Awards of Restricted Stock shall not be treated as having been issued
pursuant to an Award under the Plan. 
Shares of Stock that are potentially deliverable under an Award that
expires or is cancelled, forfeited, settled in cash or otherwise settled
without delivery of shares of Stock shall not be treated as having been issued
under the Plan.  With respect to an SAR
that is settled in Stock, the full number of shares underlying the exercised
portion of the SAR shall be treated as having been issued under the Plan,
regardless of the number of shares used to settle the SAR upon exercise.  Shares of Stock that are tendered or withheld
to satisfy tax withholding obligations related to an Award or to satisfy the
Option Exercise Price related to an Option or other Award shall be deemed to be
shares of Stock issued under the Plan. 
If, before June 30, 2003, the Option Exercise Price is satisfied by
tendering Stock, only the number of shares issued net of the shares tendered
shall be deemed issued under the Plan. 
Stock granted pursuant to the Plan may be (i) authorized but
unissued shares of common stock or (ii) treasury stock.

 

4.2           Adjustments
in Authorized Stock and Awards. 
In the event of any equity restructuring (within the meaning of
Financial Accounting Standards No. 123 (revised 2004)) that causes the per
share value of shares of Stock to change, such as a stock dividend, stock
split, spin off, rights offering, or recapitalization through a large,
nonrecurring cash dividend, the Committee shall cause there to be made an
equitable adjustment to (i) the number and kind of shares available for
grant under the Plan, (ii) the number of shares or Awards that may be
granted to any individual under the Plan or that may be granted pursuant to any
Articles or types of Awards and (iii) the number and kind of shares or
units subject to and the Option Exercise Price or Base Value (if applicable) of
any then outstanding Awards of or related to shares of Stock.  In the event of any other change in corporate
capitalization, such as a merger, consolidation, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, such
equitable adjustments described in the foregoing sentence shall be made as may
be determined to be appropriate and equitable by the Committee, in its sole
discretion, to prevent dilution or enlargement of rights.  In either case, any such adjustment shall be
conclusive and binding for all purposes of the Plan.  Unless otherwise determined by the Board upon
recommendation of the Committee, the number of shares of Stock subject to an
Award shall always be a whole number.  In
no event shall an outstanding Stock Option be amended for the sole purpose of
reducing the Option Exercise Price thereof. Notwithstanding the foregoing, (i) each
such adjustment with respect to an Incentive Stock Option shall comply with the
rules of Section 424(a) of the Code and (ii) in no event
shall any adjustment be made which would render any

 

 

Incentive Stock
Option granted hereunder to be other than an incentive stock option for
purposes of Section 422 of the Code.

 

4.3           Award
Limitations.  Subject to Section 4.2
above, (i) the total number of shares of Stock with respect to which
Options or SARs may be granted in any calendar year to any Participant shall
not exceed 1,200,000 shares; (ii) the total number of shares of Qualified
Restricted Stock or Qualified Restricted Stock Units that may be granted in any
calendar year to any Participant shall not exceed 1,200,000 shares or Units, as
the case may be; (iii) the total number of shares of Performance Stock or
Performance Units that may be granted in any calendar year to any Participant
shall not exceed 1,200,000 shares or Units, as the case may be; (iv) the
total number of shares of Stock that are intended to qualify for deduction
under Section 162(m) of the Code granted pursuant to Article 10
herein in any calendar year to any Participant shall not exceed 1,200,000
shares; (v) the total cash Award that is intended to qualify for deduction
under Section 162(m) of the Code that may be paid pursuant to Article 10
herein in any calendar year to any Participant shall not exceed $1,200,000; and
(vi) the aggregate number of Dividend Equivalents that are intended to
qualify for deduction under Section 162(m) of the Code that a
Participant may receive in any calendar year shall not exceed 4,800,000.

 

No more than an aggregate of 9,000,000 shares of Stock may be granted
under Article 8 and Article 10. 
The maximum number of shares of Stock that may be granted subject to
Incentive Stock Options shall be 9,000,000 shares.  The maximum number of shares of Stock that
may be granted under Article 9 shall be 5,000,000 shares.

 

Article 5.               Eligibility and
Participation

 

5.1           Eligibility.  Persons eligible to participate in the Plan (“Eligible
Persons”) include all key Employees of the Company and its Subsidiaries, as
determined by the Committee.

 

5.2           Actual
Participation. Subject to the provisions of the Plan, the Committee
may, from time to time, select from all Eligible Persons those to whom Awards
shall be granted.

 

Article 6.               Stock Options

 

6.1           Grant of
Options.  Subject to the terms
and conditions of the Plan, Options may be granted to an Eligible Person at any
time and from time to time, as shall be determined by the Committee.

 

The Committee shall have complete discretion in determining the number
of shares of Stock subject to Options granted to each Eligible Person (subject
to Article 4 herein) and, consistent with the provisions of the Plan, in
determining the terms and conditions pertaining to such Options.  The Committee may grant ISOs, NQSOs or a
combination thereof.

 

 

6.2           Option Award
Agreement.  Each Option grant
shall be evidenced by an Option Award Agreement that shall specify the Option
Exercise Price, the term of the Option (which shall not be greater than ten (10) years),
the number of shares of Stock to which the Option pertains, the Exercise Period
and such other provisions as the Committee shall determine, including but not
limited to special provisions relating to a change of control.  The Option Award Agreement shall also specify
whether the Option is intended to be an ISO or NQSO.  The Option Exercise Price shall not be less
than 100% of the Fair Market Value of the Stock on the date of grant.

 

6.3           Exercise of
and Payment for Options. 
Options granted under the Plan shall be exercisable at such times and
shall be subject to such restrictions and conditions as the Committee shall in
each instance approve.

 

A Participant may exercise an Option at any time during the Exercise
Period. Options shall be exercised by the delivery of a written notice of
exercise to the Company, or such method acceptable to the Company, setting
forth the number of shares of Stock with respect to which the Option is to be
exercised, accompanied by provision for full payment of the Stock.

 

The Option Exercise Price shall be payable:  (i) in cash or its equivalent, (ii) by
tendering (by actual delivery of shares or by attestation) previously acquired
Stock (owned for at least six months) having an aggregate Fair Market Value at
the time of exercise equal to the total Option Exercise Price, (iii) by
broker-assisted cashless exercise, (iv) with respect to Options granted on
and after May 16, 2006, by share withholding or (v) by a combination
of (i), (ii), (iii) and/or (iv).

 

Options may not be exercised for less than 25 shares of Stock unless
the exercise represents the entire remaining balance of the Award.

 

Stock received upon exercise of an Option may be
granted subject to any restrictions deemed appropriate by the Committee.

 

6.4           Reload
Options Related to Options Granted Prior to 2004.  The Committee may provide in an Award Agreement
with respect to an Option granted prior to 2004 that a Participant who
exercises all or any portion of an Option with Stock which has a Fair Market
Value equal to not less than 100% of the Option Exercise Price for such Option
shall be granted, subject to Article 4, an additional option (“Reload
Option”) for a number of shares of Stock equal to the sum (“Reload Number”) of
the number of shares of Stock tendered in payment of the Option Exercise Price
for the Options plus, if so provided by the Committee, the number of shares of
Stock, if any, retained by the Company in connection with the exercise of the
Options to satisfy any federal, state or local tax withholding
requirements.  Reload Options may not be
included in any Option Awards granted in 2004 or later.

 

To the extent that a Reload Option is granted upon exercise of Options
granted prior to 2004, the Reload Options shall be subject to the following
terms and conditions:

 

 

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

 

(ii)           subject
to (iii) below, the Reload Option, upon vesting, may be exercised at any
time during the unexpired term of the Option to which it relates (subject to
earlier termination thereof as provided in the Plan and in the applicable Award
Agreement); and

 

(iii)          the
terms of the Reload Option shall be the same as the terms of the Option to
which it relates, except that (A) the Option Exercise Price shall be the
Fair Market Value of the Stock on the grant date of the Reload Option and (B) the
Reload Option shall be subject to new vesting provisions, commencing one (1) year
after the grant date of the Reload Option and vesting upon the same schedule as
the Option to which it relates.

 

Reload Options may not be granted to Participants who exercise Options
after a Termination of Employment.

 

Stock subject to this Plan may be used for Reload Options granted under
The Allstate Corporation Equity Incentive Plan.

 

6.5           Termination.  Each Option Award Agreement shall set forth
the extent to which the Participant shall have the right to exercise the Option
following termination of the Participant’s employment with the Company and its
Subsidiaries.  Such provisions shall be
determined in the sole discretion of the Committee (subject to applicable law),
shall be included in the Option Award Agreement entered into with Participants,
need not be uniform among all Options granted pursuant to the Plan or among
Participants and may reflect distinctions based on the reasons for termination.

 

To the extent the Option Award Agreement does not set forth termination
provisions, the provisions of Article 13 shall control.

 

6.6           Transferability
of Options.  Except as
otherwise determined by the Committee, all Options granted to a Participant
under the Plan shall be exercisable during his or her lifetime only by such
Participant, and no Option granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will
or by the laws of descent and distribution. 
ISOs are not transferable other than by will or by the laws of descent
and distribution. The Committee shall have the authority, in its discretion, to
grant (or to sanction by way of amendment to an existing Award) Nonqualified
Stock Options, the vested portions of which may be transferred by the
Participant during his lifetime to any Family Member.  A transfer of an Option pursuant hereto may
only be effected by the Company at the written request of a Participant and
shall become effective only when recorded in the Company’s record of
outstanding Options.  In the event an
Option is transferred as contemplated herein, any Reload Options associated
with such transferred Option shall terminate, and such transferred Option may
not be subsequently transferred by the transferee except by will or the laws of
descent and distribution.  Otherwise, a
transferred Option shall continue to be governed by and subject to the terms
and limitations of the Plan and the relevant 

 

 

Award Agreement,
and the transferee shall be entitled to the same rights as the Participant, as
if no transfer had taken place.  In no
event shall an Option be transferred for consideration.

 

Article 7.               Stock Appreciation Rights

 

7.1           Grant of
SARs.  Subject to the terms
and conditions of the Plan, an SAR may be granted to an Eligible Person at any
time and from time to time as shall be determined by the Committee.  The Committee may grant Freestanding SARs,
Tandem SARs or any combination of these forms of SARs.

 

The Committee shall have complete discretion in determining the number
of SARs granted to each Eligible Person (subject to Article 4 herein) and,
consistent with the provisions of the Plan, in determining the terms and
conditions pertaining to such SARs.

 

7.2           SAR Award
Agreement.  Each SAR grant
shall be evidenced by an SAR Award Agreement that shall specify the number of
SARs granted, the Base Value, the term of the SAR (which shall not be greater
than ten (10) years), the Exercise Period and such other provisions as the
Committee shall determine, including but not limited to special provisions
relating to a change of control.

 

7.3           Exercise and
Payment of SARs.  Tandem SARs
may be exercised for all or part of the Stock subject to the related Option
upon the surrender of the right to exercise the equivalent portion of the
related Option.  A Tandem SAR may be
exercised only with respect to the shares of Stock for which its related Option
is then exercisable.

 

Notwithstanding any other provision of the Plan to the contrary, with
respect to a Tandem SAR granted in connection with an ISO:  (i) the Tandem SAR will expire no later
than the expiration of the underlying ISO; (ii) the value of the payout
with respect to the Tandem SAR may be for no more than one hundred percent
(100%) of the difference between the Option Exercise Price of the underlying
ISO and the Fair Market Value of the shares of Stock subject to the underlying
ISO at the time the Tandem SAR is exercised; (iii) the Tandem SAR may be
exercised only when the Fair Market Value of the shares of Stock subject to the
ISO exceeds the Option Exercise Price of the ISO; and (iv) the Tandem SAR
may be transferred only when the underlying ISO is transferable, and under the
same conditions.

 

Freestanding SARs may be exercised upon whatever terms and conditions
the Committee, in its sole discretion, imposes upon them.

 

A Participant may exercise an SAR at any time during the Exercise
Period.  SARs shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of SARs being exercised.  Upon
exercise of an SAR, a Participant shall be entitled to receive payment from the
Company in an amount equal to the product of:

 

 

(a)                                  the
excess of (i) the Fair Market Value of a share of Stock on the date of
exercise over (ii) the Base Value multiplied by

 

(b)                                 the
number of shares of Stock with respect to which the SAR is exercised.

 

At the sole discretion of the Committee, the payment to the Participant
upon SAR exercise may be in cash, in shares of Stock of equivalent value or in
some combination thereof.

 

7.4           Termination.  Each SAR Award Agreement shall set forth the
extent to which the Participant shall have the right to exercise the SAR
following termination of the Participant’s employment with the Company and its
Subsidiaries.  Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
SAR Award Agreement entered into with Participants, need not be uniform among
all SARs granted pursuant to the Plan or among Participants and may reflect
distinctions based on the reasons for termination.

 

To the extent the SAR Award Agreement does not set forth termination
provisions, the provisions of Article 13 shall control.

 

7.5           Transferability
of SARs.  Except as otherwise
determined by the Committee, all SARs granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such Participant or his
or her legal representative, and no SAR granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution.  To the extent the Committee permits the
transfer of an SAR, in no event shall an SAR be transferred for consideration.

 

Article 8.               Unrestricted Stock, Restricted Stock  and
Restricted Stock Units

 

8.1           Grant of
Unrestricted Stock, Restricted Stock and Restricted Stock Units.
Subject to the terms and conditions of the Plan, Unrestricted Stock, Restricted
Stock and/or Restricted Stock Units may be granted to an Eligible Person at any
time and from time to time, as shall be determined by the Committee.

 

The Committee shall have complete discretion in determining the number
of shares of Unrestricted Stock, Restricted Stock and/or Restricted Stock Units
granted to each Eligible Person (subject to Article 4 herein) and,
consistent with the provisions of the Plan, in determining the terms and
conditions pertaining to such Awards.

 

In addition, the Committee may, prior to or at the time of grant,
designate an Award of Restricted Stock or Restricted Stock Units as Qualified
Restricted Stock or Qualified Restricted Stock Units, as the case may be, in
which event it will condition the grant or vesting, as applicable, of such
Qualified Restricted Stock or Qualified Restricted Stock Units, as the case may
be, upon the attainment of the Performance Goals selected by the Committee.

 

 

8.2           Unrestricted
Stock, Restricted Stock/Restricted Stock Unit Award Agreement.  Each grant of Unrestricted Stock, Restricted
Stock and/or Restricted Stock Units shall be evidenced by an Award Agreement
that shall specify the number of shares of Unrestricted Stock, Restricted Stock
and/or Restricted Stock Units granted, the initial value (if applicable), the
Period or Periods of Restriction (if applicable), and such other provisions as
the Committee shall determine, including but not limited to special provisions
relating to a change of control.

 

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

 

8.4           Certificates.  No certificates representing Stock shall be
delivered to a Participant until such time as all restrictions applicable to
such shares have been satisfied.

 

8.5           Removal of
Restrictions.  Restricted
Stock shall become freely transferable by the Participant after the last day of
the Period of Restriction applicable thereto. 
Once Restricted Stock is released from the restrictions, the Participant
shall be entitled to receive a certificate.

 

Payment of Restricted Stock Units shall be made after the last day of
the Period of Restriction applicable thereto. 
The Committee, in its sole discretion, may pay Restricted Stock Units in
cash or in shares of Stock of equivalent value (or in some combination
thereof).

 

8.6           Voting
Rights.  During the Period of
Restriction, Participants may exercise full voting rights with respect to the
Restricted Stock.

 

8.7           Dividends
and Other Distributions. 
Subject to the Committee’s right to determine otherwise at the time of
grant, during the Period of Restriction, Participants shall receive all regular
cash dividends paid with respect to the Restricted Stock while they are so
held.  All other distributions paid with
respect to such Restricted Stock shall be credited to Participants subject to
the same restrictions on transferability and forfeitability as the Restricted
Stock with respect to which they were paid and shall be paid to the Participant
promptly after the full vesting of the Restricted Stock with respect to which
such distributions were made.

 

Rights, if any, to Dividend Equivalents on Restricted Stock Units shall
be established by the Committee at the time of grant and set forth in the Award
Agreement.

 

8.8           Termination.  Each Restricted Stock/Restricted Stock Unit
Award Agreement shall set forth the extent to which the Participant shall have
the right to receive Restricted Stock and/or a Restricted Stock Unit payment
following termination of the Participant’s employment with the Company and its
Subsidiaries.  Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the
Award Agreement entered into with Participants, need not be 

 

 

uniform among all
grants of Restricted Stock/Restricted Stock Units or among Participants and may
reflect distinctions based on the reasons for termination.

 

To the extent the Restricted Stock/Restricted Stock Unit Award
Agreement does not set forth termination provisions, the provisions of Article 13
shall control.

 

Article 9.               Performance Units and Performance Stock

 

9.1           Grant of
Performance Units and Performance Stock.  Subject to the terms and conditions of the
Plan, Performance Units and/or Performance Stock may be granted to an Eligible
Person at any time and from time to time, as shall be determined by the
Committee.

 

The Committee shall have complete discretion in determining the number
of Performance Units and/or shares of Performance Stock granted to each
Eligible Person (subject to Article 4 herein) and, consistent with the
provisions of the Plan, in determining the terms and conditions pertaining to
such Awards.

 

9.2           Performance
Unit/Performance Stock Award Agreement.  Each grant of Performance Units and/or shares
of Performance Stock shall be evidenced by a Performance Unit and/or
Performance Stock Award Agreement that shall specify the number of Performance
Units and/or shares of Performance Stock granted, the initial value (if
applicable), the Performance Period, the Performance Goals and such other
provisions as the Committee shall determine, including but not limited to
special provisions relating to a change of control and any rights to Dividend
Equivalents.

 

9.3           Value of
Performance Units/Performance Stock. 
Each Performance Unit shall have an initial value that is established by
the Committee at the time of grant.  The
value of a share of Performance Stock shall be equal to the Fair Market Value
of the Stock.  The Committee shall set
Performance Goals in its discretion which, depending on the extent to which
they are met, will determine the number and/or value of Performance
Units/Performance Stock that will be paid out to the Participants.

 

9.4           Earning of
Performance Units/Performance Stock. 
After the applicable Performance Period has ended, the Participant shall
be entitled to receive a payout with respect to the Performance
Units/Performance Stock earned by the Participant over the Performance Period,
to be determined as a function of the extent to which the corresponding
Performance Goals have been achieved.

 

9.5           Form and
Timing of Payment of Performance Units/Performance Stock.  Payment of earned Performance
Units/Performance Stock shall be made following the close of the applicable
Performance Period.  The Committee, in
its sole discretion, may pay earned Performance Units/Performance Stock in cash
or in Stock (or in a combination thereof), which has an aggregate Fair Market
Value equal to the value of the earned Performance Units/Performance Stock at
the close of the applicable Performance Period. 
Such Stock may be granted subject to any restrictions deemed appropriate
by the Committee.

 

 

9.6           Termination.  Each Performance Unit/Performance Stock Award
Agreement shall set forth the extent to which the Participant shall have the
right to receive a Performance Unit/Performance Stock payment following
termination of the Participant’s employment with the Company and its
Subsidiaries during a Performance Period. 
Such provisions shall be determined in the sole discretion of the
Committee, shall be included in the Award Agreement entered into with
Participants, need not be uniform among all grants of Performance
Units/Performance Stock or among Participants and may reflect distinctions
based on reasons for termination.

 

To the extent the Performance Unit/Performance Stock Award Agreement
does not set forth termination provisions, the provisions of Article 13
shall control.

 

9.7           Transferability.  Except as otherwise determined by the
Committee, a Participant’s rights with respect to Performance Units/Performance
Stock granted under the Plan shall be available during the Participant’s
lifetime only to such Participant or the Participant’s legal representative and
Performance Units/Performance Stock may not be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution. To the extent the Committee permits the
transfer of Performance Units/Performance Stock, in no event shall Performance
Units/Performance Stock be transferred for consideration.

 

Article 10.            Other Awards

 

The Committee shall have the right to grant other Awards which may
include, without limitation, the payment of Stock in lieu of cash, the payment
of cash based on attainment of Performance Goals established by the Committee
and the payment of Stock in lieu of cash under other Company incentive or bonus
programs. Payment under or settlement of any such Awards shall be made in such
manner and at such times as the Committee may determine.

 

Article 11.            Deferrals

 

The Committee may, in its sole discretion, permit a Participant to
defer the Participant’s receipt of the payment of cash or the delivery of Stock
that would otherwise be due to such Participant under the Plan. If any such
deferral election is permitted, the Committee shall, in its sole discretion,
establish rules and procedures for such payment deferrals.

 

Article 12.            Rights of
Participants

 

12.1         Termination.
Nothing in the Plan shall interfere with or limit in any way the right of the
Company or any Subsidiary to terminate any Participant’s employment or other
relationship with the Company or any Subsidiary at any time, for any reason or
no reason in the Company’s or the Subsidiary’s sole discretion, nor confer upon
any Participant any right to continue in the employ of, or otherwise in any
relationship with, the Company or any Subsidiary.

 

12.2         Participation.  No Eligible Person shall have the right to be
selected to receive an Award under the Plan, or, having been so selected, to be
selected to receive a future Award.

 

 

12.3         Limitation
of Implied Rights.  Neither a
Participant nor any other Person shall, by reason of the Plan, acquire any
right in or title to any assets, funds or property of the Company or any
Subsidiary whatsoever, including, without limitation, any specific funds,
assets or other property which the Company or any Subsidiary, in their sole
discretion, may set aside in anticipation of a liability under the Plan.  A Participant shall have only a contractual
right to the Stock or amounts, if any, payable under the Plan, unsecured by any
assets of the Company or any Subsidiary. 
Nothing contained in the Plan shall constitute a guarantee that the
assets of such companies shall be sufficient to pay any benefits to any Person.

 

Except as otherwise provided in the Plan, no Award under the Plan shall
confer upon the holder thereof any right as a stockholder of the Company prior
to the date on which the individual fulfills all conditions for receipt of such
rights.

 

12.4         Waiver.  Each Participant, by acceptance of an Award,
waives all rights to specific performance or injunctive or other equitable
relief and acknowledges that he has an adequate remedy at law in the form of
damages.

 

Article 13.            Termination of Employment

 

13.1         Options.  If a Participant has a Termination of
Employment, then, unless otherwise provided by the Committee or in the Award
Agreement, the following provisions shall apply:

 

(i)            if the
Participant’s Termination of Employment is on account of death or Disability,
then all outstanding Options, to the extent not vested, shall vest, and all
outstanding Options may be exercised, in whole or in part, by the Participant
(or his personal representative, estate or transferee, as the case may be) at
any time on or before the earlier to occur of (x) the Expiration Date of
the Option and (y) the second anniversary of the date of such Termination
of Employment;

 

(ii)           if the
Participant’s Termination of Employment is on account of Retirement at the
Normal Retirement Date or Health Retirement Date, unvested Options shall
continue to vest in accordance with their terms, and all outstanding Options,
when vested, may be exercised, in whole or in part, by the Participant at any
time on or before the earlier to occur of (x) the Expiration Date of the
Option and (y) the fifth anniversary of the date of such Termination of
Employment;

 

(iii)          if
the Participant’s Termination of Employment is on account of Retirement at the
Early Retirement Date, unvested Options shall be forfeited, and Options, to the
extent they are vested on the date of Termination of Employment, may be
exercised, in whole or in part, by the Participant at any time on or before the
earlier to occur of (x) the Expiration Date of the Option and (y) the
fifth anniversary of the date of such Termination of Employment;

 

 

(iv)          if the
Participant’s Termination of Employment is for any other reason, unvested
Options shall be forfeited, and Options, to the extent they are vested on the
date of Termination of Employment, may be exercised, in whole or in part, by
the Participant at any time on or before the earlier to occur of (x) the
Expiration Date of the Option and (y) three months after the date of such
Termination of Employment; and

 

(v)           if (A) the
Participant’s Termination of Employment is for any reason other than death and (B) the
Participant dies after such Termination of Employment but before the date the
Options must be exercised as set forth in the preceding subsections, unvested
Options shall be forfeited and any Options, to the extent they are vested on
the date of the Participant’s death, may be exercised, in whole or in part, by
the Participant’s personal representative, estate or transferee, as the case
may be, at any time on or before the earliest to occur of (x) the
Expiration Date of the Option, (y) the second anniversary of the date of
death and (z) the applicable anniversary of the Termination of Employment
as set forth in subsections (i) through (iv) above.

 

Reload Options may not be granted after a Termination of Employment.

 

13.2         Other Awards.  If a
Participant has a Termination of Employment, then, unless otherwise provided by
the Committee or in the Award Agreement, all Awards other than Options shall
terminate and be forfeited on the date of such Termination of Employment.

 

Article 14.            Equity Incentive Plans of
Foreign Subsidiaries

 

The Committee may authorize any foreign Subsidiary to adopt a plan for
granting Awards (“Foreign Equity Incentive Plan”) and awards granted under such
Foreign Equity Incentive Plans may be treated as grants under the Plan, if the
Committee so determines.  Such Foreign
Equity Incentive Plans shall have such terms and provisions as the Committee
permits not inconsistent with the provisions of the Plan and which may be more
restrictive than those contained in the Plan. 
Awards granted under such Foreign Equity Incentive Plans shall be
governed by the terms of the Plan except to the extent that the provisions of
the Foreign Equity Incentive Plans are more restrictive than the terms of the
Plan, in which case such terms of the Foreign Equity Incentive Plans shall
control.

 

Article 15.            Amendment, Modification
and Termination

 

The Board may, at any time and from time to time, alter, amend, suspend
or terminate the Plan in whole or in part, provided that no amendment shall be
made which shall increase the total number of shares of Stock that may be
issued under the Plan, materially modify the requirements for participation in
the Plan, or materially increase the benefits accruing to Participants under the
Plan, in each case unless such amendment is approved by the stockholders of the
Company.

 

No termination, amendment or modification of the Plan
shall adversely affect in any material way any Award previously granted under
the Plan, without the written consent of the Participant

 

 

holding such Award,
unless such termination, modification or amendment is required by applicable
law and except as otherwise provided herein.

 

Article 16.            Payment for Awards and
Withholding

 

16.1         Payment for
Awards.  In the event a
Participant elects to pay the Option Exercise Price or make payment for any
other Award through tender of previously acquired Stock, (i) only a whole
number of share(s) of Stock (and not fractional shares of Stock) may be
tendered in payment, (ii) such Participant must present evidence
acceptable to the Company that he has owned any such shares of Stock tendered
in payment (and that such shares of Stock tendered have not been subject to any
substantial risk of forfeiture) for at least six months prior to the date of
exercise and (iii) Stock must be tendered to the Company, either by actual
delivery of the shares or by attestation. 
When payment is made by tender of Stock, the difference, if any, between
the aggregate amount payable and the Fair Market Value of the share(s) of
Stock tendered in payment (plus any applicable taxes) shall be paid by
check.  No Participant may tender shares
of Stock having a Fair Market Value exceeding the aggregate Option Exercise
Price or other payment due.

 

16.2         Loans and Guarantees.  The Committee may, in its discretion to the
extent permitted by applicable law:

 

(i)            allow a
Participant to defer payment to the Company of all or any portion of (x) the
Option Exercise Price of any option or (y) any taxes associated with a
benefit hereunder which is not a cash benefit at the time such benefit is so
taxable, or

 

(ii)           cause the
Company to guarantee a loan from a third party to the Participant, in an amount
equal to all or any portion of such Option Exercise Price or any related taxes.

 

Any such payment deferral or guarantee by the Company pursuant to this
section shall be on a secured or unsecured basis, for such periods, at such
interest rates, and on such other terms and conditions as the Committee may
determine.  Notwithstanding the
foregoing, a Participant shall not be entitled to defer the payment of such
Option Exercise Price or any related taxes unless the Participant (x) enters
into a binding obligation to pay the deferred amount and (y) except with
respect to treasury stock, pays upon exercise of an Option an amount equal to
or greater than the aggregate Minimum Consideration therefor.  If the Committee has permitted a payment
deferral or caused the Company to guarantee a loan pursuant to this section,
then the Committee may, in its discretion, require the immediate payment of
such deferred amount or the immediate release of such guarantee upon the
Participant’s Termination of Employment or if the Participant sells or
otherwise transfers the Participant’s shares of Stock purchased pursuant to
such deferral or guarantee.

 

16.3         Notification
under Section 83(b).  The Committee may, on the grant
date or any later date, prohibit a Participant from making the election
described below.  If the Committee has
not prohibited such Participant from making such election, and the Participant
shall, in connection with the exercise of any Option, or the grant of any share
of Restricted Stock, make the election permitted under Section 83(b) of
the Code (i.e., an election to include in such Participant’s gross income in
the

 

 

year of transfer
the amounts specified in Section 83(b) of the Code), such Participant
shall notify the Company of such election within 10 days of filing notice of
the election with the Internal Revenue Service, in addition to any filing and
notification required pursuant to regulations issued under the authority of Section 83(b) of
the Code.

 

16.4         Tax
Withholding.  The Company
shall have the power and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount (including any Stock withheld as
provided below) sufficient to satisfy Federal, state and local taxes (including
the Participant’s FICA obligation) required by law to be withheld with respect
to an Award made under the Plan.

 

16.5         Stock
Withholding.  With respect to
tax withholding required upon the exercise of Options or SARs, upon the lapse
of restrictions on Restricted Stock or Restricted Stock Units, or upon any
other taxable event arising out of or as a result of Awards granted hereunder,
Participants may elect to satisfy the withholding requirement, in whole or in
part, by tendering Stock held by the Participant (by actual delivery of the
shares or by attestation) or by having the Company withhold Stock having a Fair
Market Value equal to the minimum statutory total tax which could be imposed on
the transaction.  All elections shall be
irrevocable, made in writing (or other method acceptable to the Company) and
signed by the Participant.  In the event
a Participant fails to make an election by the date required, the Participant
will be deemed to have made an election to have the Company withhold Stock
having a Fair Market Value equal to the minimum statutory total tax which could
be imposed on the transaction.

 

Article 17.            Substituted Awards

 

The Committee may grant substituted awards for any cancelled Award
granted under this Plan or any plan of any entity acquired by the Company or
any of its Subsidiaries in accordance with this Article; provided, however,
that a substituted award cannot be of a type different than the cancelled Award
without approval by the stockholders of the Company.  If the Committee cancels any Award (granted
under this Plan, or any plan of any entity acquired by the Company or any of
its Subsidiaries), and a new Award is substituted therefor, then the Committee
may, in its discretion, determine the terms and conditions of such new Award
provided that, subject to Section 4.2, an Option or SAR granted in
exchange for, or in connection with, the cancellation or surrendering of an
Option, SAR or other award must have an Option Exercise Price or SAR Base Value
not lower than that of the cancelled Option or SAR, and further may provide
that the grant date of the cancelled Award shall be the date used to determine
the earliest date or dates for exercising or vesting the new substituted Award
so that the Participant may exercise the substituted Award, or the substituted
Award may vest, at the same time as if the Participant had held the substituted
Award since the grant date of the cancelled Award.

 

 

Article 18.            Successors

 

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

 

Article 19.            Legal
Construction

 

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

 

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

 

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

 

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

 

19.5        Code Section 409A Compliance.  To the extent applicable, it is intended that
this Plan and any Awards granted hereunder comply with the requirements of Section 409A
of the Code and any related regulations or other guidance promulgated with
respect to such Section by the U.S. Department of the Treasury or the
Internal Revenue Service (“Section 409A”) and the Plan and any Awards
granted under the Plan shall be interpreted and construed in a manner
consistent with such intent.

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