As filed with the Securities and Exchange Commission on August 28, 1997
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------------------
THE ALLSTATE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
2775 Sanders Road
Northbrook, Illinois 60062
(847) 402-5000
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
36-3871531
(I.R.S. Employer Identification No.)
---------------------
ROBERT W. PIKE
VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
THE ALLSTATE CORPORATION
2775 SANDERS ROAD
NORTHBROOK, ILLINOIS 60062
(847) 402-6075
(Name,address, including zip code, and telephone number, including area code,
of agent for service of each registrant)
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement in connection
with the exercise of stock options described herein.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. | |
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. | |
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. | |
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. | |
CALCULATION OF REGISTRATION FEE
Title of Securities Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered offering price aggregate offering registration
per share(1) price(1) fee
Common Shares, par
value $0.01 per share 2,000,000 shares $75.41 $150,820,000 $45,703.03
===============================================================================
(1) The filing fee has been calculated pursuant to Rule 457(h) based on the
average of the high and low prices for Allstate common stock on August 25, 1997
of $75.41.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION -- DATED AUGUST 28, 1997
PROSPECTUS
THE ALLSTATE CORPORATION
2,000,000 SHARES OF COMMON STOCK ($.01 PAR VALUE PER SHARE)
________________________
This Prospectus relates to up to 2,000,000 shares of common stock, par
value $0.01 per share, ("Common Stock"), of The Allstate Corporation (the
"Company"), which may be offered and sold to immediate family members, including
trusts for the benefit of immediate family members, of certain Participants in
The Allstate Corporation Equity Incentive Plan (the "Equity Plan"), The Allstate
Corporation Employees Replacement Stock Plan (the "Replacement Plan") and The
Allstate Corporation Equity Incentive Plan for Non-Employee Directors (the
"Directors' Plan," and together with the Equity Plan and the Replacement Plan,
referred to collectively as the "Plans"), pursuant to nonqualified stock options
granted to such Participants under the Plans, the vested portions of some or all
of which may be transferred by Participants to immediate family members, or to
trusts for the benefit of immediate family members, in accordance with the Plans
and the grant documents specifying the terms and conditions of the stock
options. This prospectus also relates to the offer and sale of Common Stock
pursuant to the stock options to the beneficiaries of such immediate family
members, or the executors, administrators or beneficiaries of their estates, or
other persons duly authorized by law to administer the estate or assets of such
persons.
--------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THESE SECURITIES IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION.
-------------------------------
THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE.
-------------------------------
The date of this Prospectus is August 28, 1997.
TABLE OF CONTENTS
Page
Available Information................................................. 3
Incorporation of Certain Documents by Reference....................... 3
The Company........................................................... 4
Use of Proceeds....................................................... 4
Plan of Distribution.................................................. 4
Description of the Plans.............................................. 4
Transferability of Options Under the Plans............................ 9
Federal Income Tax Consequences........................................ 11
Experts................................................................ 14
Legal Opinion and Tax Matters.......................................... 14
2
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Reports, proxy statements, and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, as well as the following Regional Offices of the Commission: Midwest
Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2551 and Northeast Regional Office, Seven World Trade Center, New York,
New York 10048. Copies of such material can also be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington D.C.
20549 at prescribed rates. Reports, proxy statements, and other information
concerning the Company may also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005, and the Chicago Stock
Exchange, 440 South LaSalle Street, Chicago, Illinois 60605. The Commission
maintains a web site at http://www.sec.gov containing reports, proxy statements
and other information regarding registrants, including the Company, that file
electronically with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December
31, 1996, Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997
and June 30, 1997, filed with the Commission pursuant to Section 13(a) of the
Securities Exchange Act of 1934 (the "Exchange Act"), and the description of the
Company's common shares under the caption "Description of Capital Stock"
contained in the Company's prospectus dated June 2, 1993, filed with the
Commission on June 4, 1993 pursuant to Rule 424(b) under the Securities Act of
1933, as amended (the "Securities Act") and deemed to be a part of the Company's
Registration Statement on Form S-1 (File No. 33-59676); are incorporated by
reference herein.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of the securities registered hereunder shall be
deemed to be incorporated by reference herein and to be part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes hereof to the extent that a statement
contained herein or in any other subsequently file document which also is or is
deemed to be incorporated by reference herein 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 hereof.
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The Company will provide without charge to each person to whom this
prospectus is delivered, on the written or oral request of any such person any
or all of the documents incorporated by reference in this prospectus (without
exhibits other than exhibits specifically incorporated by reference). Requests
for such copies may be directed to Investor Relations, The Allstate Corporation,
3075 Sanders Road, Northbrook, Illinois 60062-6127, (800) 416-8803.
THE COMPANY
The Company is a holding company for Allstate Insurance Company
("AIC"). The Company, through its subsidiaries (collectively, "Allstate"), is
engaged in the property-liability insurance and life insurance businesses.
Allstate is the country's second largest personal property and casualty insurer
on the basis of 1996 statutory premiums earned and is a major life insurer.
The Company is a corporation organized under Delaware law on November
5, 1992. The Company's executive offices are located at 2775 Sanders Road,
Northbrook, Illinois 60062, and at Suite 738, One Commerce Center, Wilmington,
Delaware 19801. Its telephone number is (847) 402-5000.
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Common
Stock offered hereby for general corporate purposes.
PLAN OF DISTRIBUTION
The shares of Common Stock of the Company covered by this Prospectus
are being offered by the Company to transferees of transferable options granted
to the non-employee directors of the Company and to the officers and certain
other key employees of the Company and certain of its subsidiaries pursuant to
the "Plans." Each of the Plans, as they relate to transferable awards, are
described below.
DESCRIPTION OF THE PLANS
Copies of the Plans are filed as exhibits to the Registration Statement
of which this Prospectus forms a part. The following summary of certain
provisions of the Plans does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the Plans,
including the definitions therein of certain terms. The Plans are not pension,
profit-sharing, or stock bonus plans designed to qualify under Section 401(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), or employee benefit
plans subject to any of the provisions of the Employee Retirement Income
Security Act of 1974. The Plans are administered by the Compensation and
Nominating Committee (the "Committee"), which is constituted to meet the
requirements of Rule 16b-3 promulgated under the Exchange Act. The Committee
members serve at
4
the pleasure of the Company's Board of Directors. They presently are Warren L.
Batts, who chairs the Committee, James G. Andress, Edward A. Brennan and
Christopher F. Edley, none of whom is employed by the Company. The Committee's
address is c/o Corporate Secretary, The Allstate Corporation, 2775 Sanders Road,
Northbrook, Illinois 60062. The Committee has the power to interpret the Plans
and to prescribe rules and regulations relating thereto. Copies of the Plans and
additional information about the Plans and the administrators may be obtained
from The Allstate Corporation, Stock Option Office, 2775 Sanders Road,
Northbrook, Illinois 60062 (telephone 847/402-6413).
The Company's Board of Directors may modify, amend, or terminate the
Plans at any time, except that, to the extent then required by applicable law,
rule, or regulation, approval of the Company's stockholders will be required. No
amendment, modification or termination shall adversely affect the rights of a
Participant or a Stock Option Transferee (as defined below) under a grant
previously made to a Participant without the consent of the Participant (or the
Transferee, in the case of a transferred Stock Option).
The Equity Plan
The Equity Plan was adopted by the Board of Directors of the Company
effective June 2, 1993 and was approved by the Company's stockholders on May 19,
1994. On May 23, 1995, the Company's stockholders approved amendments to the
Equity Plan which increased to 20,000,000, the number of shares of Common Stock
authorized to be issued under the Equity Plan. The primary purpose of the Equity
Plan is to provide a means by which key employees of the Company and its
subsidiaries can acquire and maintain Common 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 Equity Plan provides for the grant of nonqualified stock options,
incentive stock options intended to satisfy the requirements of Section 422 of
the Code, restricted stock and unrestricted stock to employees of the Company or
its subsidiaries. A maximum of 20,000,000 shares of Common Stock is available
for awards under the Equity Plan, of which a maximum of 1,800,000 shares may be
granted as restricted or unrestricted stock awards. No more than 900,000 stock
options may be granted to any single employee under the Equity Plan.
The Committee may equitably adjust the number of shares of Common Stock
subject to the Equity Plan, and equitably adjust, terminate or continue the
awards under the Equity Plan in the event of a stock dividend, stock split,
reverse stock split, share combination, recaptalization, merger, consolidation,
acquisition of property or shares, separation, spin-off, reorganization, stock
rights offering, liquidation, or similar event of or by the Company.
As stated above, the Equity Plan provides for the grant of nonqualified
stock options and incentive stock options to purchase shares of Common Stock. At
the time of
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grant, the Committee establishes the exercise price (which may not be less than
100% of the Fair Market Value of the underlying Common Stock on the date of
grant), the expiration date (which may not be more than 12 years from the date
of grant for nonqualified stock options and 10 years from the date of grant for
incentive Stock Options), and the times and installments in which the Stock
Options may be exercised. Stock Options may include "Reload Options" under which
an optionee who tenders Common Stock to pay an option exercise price will
receive an option for a number of shares equal to those tendered, at an option
price equal to 100% of the fair market value on the date of exercise of the
stock option. The exercise price of a stock option may be paid in cash, in
Common Stock, by withholding Common Stock issuable on exercise provided the
optionee demonstrates ownership of at least an equal number of shares of Common
Stock for at least six months, by the simultaneous sale through a broker of
shares acquired upon exercise, or by any combination of the foregoing.
No stock option may be exercised after termination of employment, but
stock options which are vested at the date of termination may be exercised
within the earlier of (i) three months after termination, and (ii) the
expiration date of the stock options. If termination is due to disability, stock
options vested at termination may be exercised within the earlier of (i) two
years after termination and (ii) the expiration date of the stock options. If
termination is due to retirement at or after age 65 or an early retirement
approved by the Company, stock options vested at termination may be exercised
within the earlier of (i) five years after termination and (ii) the expiration
date of the stock options. If termination is due to death, or if death occurs
after termination but during a period when options may be exercised, stock
options vested on the date of death may be exercised within two years after the
date of death.
The Replacement Plan
The Replacement Plan was adopted by the Board of Directors on January
16, 1995 and was approved by the Company's stockholders on May 23, 1995. The
purpose of the Replacement Plan is to provide continuation of benefits granted
under employee stock plans of Sears, Roebuck and Co. ("Sears"), the Company's
former parent corporation, by replacing them with substantially similar awards
relating to Common Stock of the Company. Any awards to Company employees under
Sears stock plans were canceled, effective June 30, 1995. A total of 4,500,000
shares of Common Stock are reserved for issuance under the Replacement Plan.
The Replacement Plan provides for awards of nonqualified stock options,
reload options, tax benefit rights, limited stock appreciation rights and
restricted stock. Reload options provide the right to purchase shares of Company
Common Stock equal to the number of shares of Company Common Stock tendered to
exercise an option, at an option price equal to fair market value at exercise
date. Tax benefit rights provide a right to receive, upon exercise of an option,
a cash payment equal to the then-applicable highest federal income tax rate for
corporations multiplied by the amount of federal income taxable compensation
that the grantee recognizes upon exercise of the option.
6
Limited stock appreciation rights provide a right, with respect to an option, to
receive, during a period of 60 days following a change of control of the
Company, a cash payment equal to the difference between the exercise price of
such option and the value of a share of Company Common Stock on the date the
limited stock appreciation right is exercised. For purposes of limited stock
appreciation rights, a change of control of the Company means, generally, (a)
with certain exceptions, the acquisition by any person or group of beneficial
ownership of 20% or more of the outstanding stock or voting power of the
Company, (b) a change in the majority of the board, other than a change approved
by a vote of at least two-thirds of the directors of the incumbent board, or (c)
approval by the stockholders of the Company of certain corporate events, such as
a merger, reorganization or consolidation, liquidation or dissolution of the
Company or sale or other disposition of all or substantially all the assets of
the Company. Eligibility is limited to employees or former employees of the
Company who held grants under any employee stock plan of Sears immediately prior
to June 30, 1995, the date Sears distributed to its stockholders all of its
80.3% ownership of Company Common Stock.
Each Replacement Plan stock option was granted July 5, 1995, and was
designed to have the same aggregate exercise price, cover the same aggregate
fair market value of Common Stock and to continue the vesting schedule and other
exercisability provisions of the Sears option it replaced. Any reload options,
limited stock appreciation rights and tax benefit rights associated with a
replaced Sears option were replicated in the Company Stock Option. Similarly,
awards of restricted stock under the Sears stock plans were replaced with awards
of restricted Company Common Stock having substantially the same value as the
Sears stock and subject to the same vesting and other conditions applicable to
the Sears awards. Stock options granted under the Replacement Plan can be
exercised at any time after vesting (optionees subject to Section 16 of the
Securities Exchange Act of 1934 could not exercise a stock option until six
months after grant under the Replacement Plan) and prior to expiration
(generally 10 or 12 years from the date of the Sears option it replaced). The
option exercise price may be paid in cash (including cash obtained through the
simultaneous sale through a broker of shares acquired on exercise) or with
shares of Company Common Stock held for at least six months, or in a combination
thereof.
Upon termination of the grantee's employment, only vested options may
be exercised, and exercise must be made within three months after termination
but not later than expiration date of the option. If termination is due to
retirement of the grantee at or after age 65 (or age 55, if approved by the
Company), options vested at termination must be exercised within two years after
termination but not later than the expiration date of the option. If termination
is due to death of the grantee, or if the grantee dies after termination but
during a period set forth above when an option could have been exercised,
options vested at death may be exercised within two years after death but not
later than the expiration date of the option.
7
The Directors Plan
The Directors Plan was adopted by the Board of Directors on March 12,
1996 and was approved by the Company's stockholders on May 21, 1996. A maximum
of 300,000 shares of Company Common Stock is reserved for issuance under the
Directors Plan. Each director of the Company who is not also an officer or
employee of the Company is eligible to participate in the Directors Plan. The
purpose of the Directors Plan is to enhance the Company's long-term prospects
and serve the Company's stockholders by giving non-employee directors a direct
and personal financial stake in the Company and by aligning the financial
interests of such directors with the interests of the Company's stockholders.
Grants, which are fixed in amount and terms and conditions under a formula
contained in the Directors Plan, of restricted Company Common Stock and
non-qualified stock options are made annually. Directors may also make an
irrevocable election to receive all or part of future retainer fees for any year
in shares of Company Common Stock.
Grants are made to each non-employee director under the Directors Plan
of 500 shares of Company Common Stock each December 1, subject to restrictions
on sale, transfer, pledge or assignment for the period of six months after
grant. The Company also pays each director's federal, state and local tax
liabilities as a result of each grant of restricted stock, assuming maximum
applicable statutory rates of tax. Also, each June 1 each non-employee director
is granted a non-qualified option to purchase 1,500 shares of Company Common
Stock at a per share exercise price equal to the fair market value of the Common
Stock on the date of grant. The options vest in three equal annual installments
on the first, second and third anniversaries of the date of grant. Options which
are vested on the date of termination of directorship must be exercised, or they
expire by the earliest of ten years after date of grant, five years after
termination from Board service due to retirement under the Board's mandatory
retirement policy, two years after termination from Board service due to death
or disability, or three months after termination of Board service for any other
reason. All options include reload option rights, upon exercise through the
tender of Company Common Stock, to an option for a number of shares equal to the
shares tendered and at an option price equal to fair market value at the
exercise date. The exercise price for stock options may be paid by check or in
cash, in shares of Company Common Stock, through simultaneous sales through a
broker of shares acquired in exercise, by withholding shares issuable on
exercise, or through any combination of such methods.
In the event of a change of control of the Company or a sale of
substantially all of the Company's assets or of a majority of its outstanding
voting securities (collectively, a "Sale of the Company"), and the failure of
the successor corporation or its parent to assume outstanding stock options or
to provide for substantially equivalent stock options, all outstanding stock
options, including unvested stock options, under the Directors Plan shall become
exercisable but shall terminate if not exercised within a period to be
prescribed. Participants shall receive at least 30 days prior written notice
prior to such termination date.
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TRANSFERABILITY OF OPTIONS UNDER THE PLANS
Each of the Plans provides that stock options are generally not
transferable by a Participant except by will or the laws of descent and
distribution and are exercisable during the Participant's lifetime only by the
Participant. Notwithstanding the foregoing, the Equity Plan and the Replacement
Plan permits the Committee to grant (or sanction by amending an existing grant),
and the Directors Plan grants (and amends existing grants) nonqualified stock
options, the vested portions of which may be transferred by the Participant
during his or her lifetime to any member of his or her immediate family or a
trust established for the exclusive benefit of one or more members of his or her
immediate family, in order to permit Participants who receive transferable
grants to make a gift of stock options to such persons for estate planning
purposes. Any reload rights associated with a transferred stock option shall
terminate upon a transfer, and the transferred stock option may not be again
transferred, except by will or the laws of descent and distribution. The term
"immediate family" is defined for such purpose as children, stepchildren and
grandchildren, including relationships arising from legal adoption. As used
herein, "Stock Option Transferee" refers to an immediate family member of a Plan
Participant (or such person's beneficiary, estate or other legal
representative), or a trust for the benefit of one or more immediate family
members, that has received stock options in a valid transfer, and "Participant
Transferor" refers to the Plan Participant who transferred stock options held by
a particular Stock Option Transferee.
Upon transfer to a Stock Option Transferee, a stock option continues to
be governed by and subject to the terms and limitations of the relevant Plan and
the relevant grant (except, as noted below, with respect to reload option rights
and prohibition of subsequent transfer), and the Stock Option Transferee is
entitled to the same rights as the Participant Transferor thereunder as if no
transfer had taken place. Accordingly, the rights of the Stock Option Transferee
are subject to the terms and limitations of the original grant to the
Participant Transferor, including provisions relating to expiration date,
exercisability, exercise price and forfeiture. For information regarding the
terms of a particular stock option grant, Stock Option Transferees may contact
the Stock Option Office, The Allstate Corporation, 2775 Sanders Road,
Northbrook, Illinois 60062 (telephone 847/402-6413).
Once a stock option has been transferred to a Stock Option Transferee,
any reload rights (a "reload right" permits a Participant who tenders Company
Stock in payment for all or part of the option price to receive another option
for the same number of shares tendered at an option price equal to the Company
Stock's fair market value on the date of exercise) associated with the
transferred stock option terminate, and the stock option may not be subsequently
transferred by the Stock Option Transferee except by will or the laws of descent
and distribution. A Stock Option Transferee may designate in writing to the
9
Company before his or her death one or more beneficiaries to receive, in the
event of his or her death, any rights to which the Stock Option Transferee would
be entitled under the relevant Plan. A Stock Option Transferee may also
designate an alternate beneficiary to receive payments if the primary
beneficiary predeceases the Stock Option Transferee. A beneficiary designation
may be changed or revoked in writing by the Stock Option Transferee at any time.
Changes in beneficiary designation should be sent (return receipt requested) to
the attention of the Stock Option Office, The Allstate Corporation, 2775 Sanders
Road, Northbrook, Illinois 60062.
A stock option may be exercised by a Stock Option Transferee at any
time from the time first set by the Committee in the original grant to the
Participant Transferor until the close of business on the expiration date of the
stock option. The purchase price of the shares as to which stock options are
exercised shall be paid to the Company at the time of exercise (i) in cash
(including simultaneous sale through a broker of shares acquired upon exercise),
(ii) by delivering shares of Common Stock already owned by the Stock Option
Transferee having a total Fair Market Value on the date of exercise at least
equal to the purchase price or (iii) a combination of cash and shares of Common
Stock equal in value to the purchase price. The Equity Plan and the Directors'
Plan also permit the withholding of shares issuable upon exercise to satisfy
part or all of the purchase price.
A stock option will be deemed exercised on the date the Company's Stock
Option Office has received a copy of the stock option exercise form (by mail or
facsimile transmission), completed in all respects and signed by the Stock
Option Transferee (accompanied by a check and/or shares of Common Stock, where
applicable). The stock option shares will generally be transferred to the Stock
Option Transferee as of the day following the date that (i) the above conditions
have been met, and (ii) the funds and/or shares of Common Stock paid by the
Stock Option Transferee in satisfaction of the exercise price have been received
by the Company free and clear of all restrictions (if all or part of the
exercise price requires the sale through a broker of shares acquired upon
exercise, proceeds of the sale in excess of the exercise price and brokerage
charges will be transferred by the third business day after such sale).
Stock certificates for the appropriate number of shares will be
delivered to the Stock Option Transferee or his or her estate or beneficiaries,
or otherwise delivered in such manner as the person(s) entitled thereto may
direct.
Upon the exercise of a stock option by a Stock Option Transferee, any
federal, state or local withholding taxes arising from the exercise are the
obligation of the Participant Transferor.
Effect Of Transferor's Termination Of Employment
Because stock options transferred to Stock Option Transferees continue
to be governed by the terms of the relevant Plan and the original grant, their
exercisability continues to be affected by the Participant's Transferor's
employment or directorship
10
status. See discussion above under "The Equity Plan," "The Replacement Plan" or
"The Directors Plan," as appropriate, for the limitations on exercise of options
upon termination of the Participant Transferor's employment or directorship
status.
FEDERAL INCOME TAX CONSEQUENCES
General
This section is not intended to be a complete statement of the Federal
income tax aspects of the Plans and does not describe the possible effects of
state and other income taxes or of gift, estate and inheritance taxes. Due to
the complexity of various tax laws and their application to particular
circumstances, participants are advised to consult a qualified tax adviser
before taking any action permitted by the Plans.
Stock Options
A grantee does not recognize any taxable income, and the Company is not
entitled to a deduction, upon the grant of a nonqualified stock option. Upon the
exercise of a nonqualified stock option, the grantee recognizes ordinary income
(subject to, under the Equity Plan and the Replacement Plan, wage and employment
tax withholding) equal to the excess of the fair market value of the share
acquired over the option exercise price. However, in the case of a grantee
subject to Section 16 of the Exchange Act (including, in certain cases, members
of such grantee's family), income is recognized, and such excess is determined
by using the fair market value on the later of the date of exercise and the date
six months after the grant date unless such grantee elects to be taxed based on
the fair market value of the Company's Common Stock on the date of exercise by
filing an election with the Internal Revenue Service within 30 days after the
exercise date to recognize income on the exercise date (a "Section 83(b)
Election"). A grantee's basis in the stock received is equal to such stock's
fair market value on the date of exercise (or on the date six months after the
grant date, if later, in the case of a grantee subject to Section 16 who makes
no such Section 83(b) election). The Company is entitled to a deduction equal to
the compensation taxable to the grantee.
If a grantee sells shares acquired pursuant to the exercise of a
nonqualified option, such grantee will recognize capital gain or loss equal to
the difference between the selling price of the shares and the grantee's basis
in the shares. Such capital gain or loss is long-or short-term, depending on
whether the grantee has held the shares for more than one year. If the shares
are held for over 18 months more preferential long-term capital gains rates may
apply under recently enacted tax legislation. In the case of a grantee who is
subject to Section 16 and who does not make a Section 83(b) Election, any such
capital gain will be long-term only if the Shares have been held for more than
one year after the later of the exercise date or the date six months after the
grant date. The Company is not entitled to any deduction with respect to any
capital gain recognized by the grantee.
11
If a grantee delivers previously acquired shares, however acquired, in
payment of all or any part of the exercise price of a nonqualified option, the
grantee will not, as a result of such delivery, be required to recognize as
taxable income or loss any appreciation or depreciation in the value of the
previously acquired shares after their acquisition date. The grantee's tax basis
in, and holding period for, the previously acquired shares surrendered carries
over to an equal number of the option shares received on a share-for-share
basis. The fair market value of the shares received in excess of the shares
surrendered constitutes compensation taxable to the grantee as ordinary income
(reduced by any portion of the option price paid other than by delivering
previously acquired shares). Such income is recognized and such fair market
value is determined on the date of exercise, except in the case of persons
subject to Section 16 as discussed above. The tax basis for such shares is equal
to their fair market value as so determined, and such shares' holding period
begins on the date on which the fair market value of such shares is determined.
The Company is entitled to a tax deduction equal to the compensation income
recognized by the grantee.
As of the date of this Prospectus no incentive stock options ("ISO")
have been granted under any of the Plans. A grantee of an ISO will not realize
taxable income upon the grant or the exercise of the ISO (other than alternative
minimum tax, if applicable, upon exercise). If shares received upon the exercise
of an ISO are disposed of within one year after exercise or within two years
after grant, then, in general, the grantee must recognize taxable ordinary
income in the year of disposition in an amount equal to the excess of the fair
market value of the shares disposed of at the date of exercise over their
exercise price, and long-term or short-term capital gain or loss in an amount
equal to the difference between the sales price of the shares and their fair
market value on the date of exercise. If shares received upon the exercise of an
ISO are disposed of at least two years after grant and one year after exercise,
the grantee recognizes long-term capital gain or loss on the difference between
the net sales price and the exercise price. If shares are held for over 18
months after exercise and are disposed of at least two years after grant, more
preferential long-term capital gains rates may apply under recently enacted tax
legislation. The Company is not entitled to a tax deduction upon the grant,
exercise or disposition of shares acquired in exercise of an ISO, except to the
extent and at the time the grantee is required to recognize ordinary income upon
the disposition of shares.
If the exercise price of an ISO is paid with shares of stock of the
Company acquired through a prior exercise of an ISO, gain will be realized on
the shares surrendered (and will be taxed as ordinary income) if those shares
have not been held for the minimum holding period (two years from the date of
grant and one year from the date of transfer), but the exchange will not affect
the tax treatment, as described in the immediately preceding paragraph, of the
shares received.
The Company is entitled to deduct from any payment under the Equity
Plan and the Replacement Plan the amount of any tax required by law to be
withheld with respect to such payment or may require any participant to pay such
amount to the Company prior to and as a condition of making such payment. The
Committee, in its discretion and
12
subject to such rules as it may adopt from time to time, has adopted rules to
permit each participant to elect to have the Company withhold from any payment
under the Plans (or to have the Company accept from the participant) for tax
withholding purposes shares of Common Stock of the Company valued at their fair
market value. The Code treats the use of shares of Company Common Stock to
satisfy any withholding requirement (or election) as a sale of such shares for
an amount equal to the fair market value of the stock on the date when the
amount of taxes to be withheld is determined. The disposition of such shares may
result in the recognition of gain or loss by the participant for tax purposes.
A deduction otherwise available to the Company for any year with
respect to compensation payable to the "Named Executive Officers" in the
Company's Proxy Statement for the year may be denied to the extent that it
exceeds $1 million. For these purposes, it is anticipated that grants of stock
options with an exercise price no less than 100% of fair market value of the
stock on the date of grant will generally qualify for an exception to that
limitation for eligible performance-based compensation.
Transferred Options
Neither the grantee nor the transferee will realize taxable income at
the time of a grantee transfer of a non-qualified stock option without
consideration. Upon the subsequent exercise of the option by the transferee, the
grantee will realize ordinary income in an amount measured by the difference
between the fair market value of the shares on the date of exercise and the
exercise price, and the Company will generally be entitled to a corresponding
deduction. Upon a subsequent disposition of the shares by the transferee, the
transferee will generally realize short-term or long-term capital gain or loss,
with the basis for computing such gain or loss equal to the fair market value of
the stock at the time of exercise.
Restricted Shares and Other Shares
A grantee who receives restricted shares will recognize ordinary income
on the date the vesting period with respect to such shares expires (or, if
later, upon expiration of any short-swing profit liability with respect to such
shares under Section 16(b) of the Exchange Act), unless the grantee makes a
Section 83(b) Election to recognize ordinary income on the date the restricted
shares are received. The amount of ordinary income recognized by the grantee
will be equal to the excess of the fair market value of the restricted shares or
other shares on the date the grantee recognizes ordinary income with respect to
such shares over the amount paid for such shares, if any. In addition, the
grantee must recognize ordinary income with respect to any cash payment received
in connection with a grant of restricted shares. The Company is entitled to a
deduction equal to such amounts of ordinary income recognized by grantees. Any
dividends paid on restricted shares prior to the date income is recognized by
the grantee under these rules
13
are taxed as compensation income (rather than dividend income) to the grantee
and therefore are also deductible by the Company.
The grantee will hold restricted shares with a basis equal to their
fair market value, and a holding period that begins, on the date the vesting
period expires with respect to such shares (or, if the grantee makes a Section
83(b) Election with respect to the shares, on the date the grantee received such
shares). Any appreciation (or depreciation) in the value of restricted shares or
other shares after such date will be taxed as capital gain (or loss) upon a
subsequent sale of the shares.
EXPERTS
The consolidated financial statements and related financial statements
schedules of the Company and its subsidiaries incorporated in this Prospectus by
reference from the Company's Annual Report on Form 10K for the year ended
December 31, 1996, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their reports which are incorporated by reference herein,
and have been so incorporated in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
With respect to unaudited interim financial information for the periods
ended March 31, 1997 and 1996 and June 30, 1997 and 1996 which is incorporated
herein by reference, Deloitte & Touche LLP have applied limited procedures in
accordance with professional standards for a review of such information.
However, as stated in their reports included in the Company's Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1997 and June 30, 1997 and
incorporated by reference herein, they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. Deloitte & Touche LLP are
not subject to the liability provisions of Section 11 of the Securities Act of
1933, as amended (the "Securities Act") for their reports on the unaudited
interim financial information because these reports are not "reports" or a
"part" of the registration statement prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the Securities Act.
LEGAL OPINION AND TAX MATTERS
The legality of the shares of Common Stock offered hereby has been
passed upon by Joseph T. Kane, Counsel, Corporate Law Department of Allstate
Insurance Company, a wholly-owned subsidiary of the Company. The Tax Department
of Allstate Insurance Company has advised the Company concerning certain Federal
income tax consequences related to Stock Options under the Plans and the
transfer and exercise thereof.
14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses in connection with the
issuance and distribution of the securities being registered. All the amounts
shown are estimates, except the registration fee.
Registration fee................................................. $45,703.03
Fees and expenses of accountants................................. 5,000.00
Fee and expenses of counsel...................................... 0
Blue Sky fees and expenses....................................... 0
Duplicating Costs and Postage.................................... 500.00
Miscellaneous.................................................... 100.00
------------
Total................................................... $51,303.03
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL"), inter
alia, empowers a Delaware corporation to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than an action by or in the right of
the corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. Similar
indemnity is authorized for such persons against expenses (including attorneys'
fees) actually and reasonably incurred in connection with the defense or
settlement of any such threatened, pending or completed action or suit if such
person acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and provided further that
(unless a court of competent jurisdiction otherwise provides) such person shall
not have been adjudged liable to the corporation. Any such indemnification may
be made only as authorized in each specific case upon a determination by the
shareholders or disinterested directors or by independent legal counsel in a
written opinion that indemnification is proper because the indemnitee has met
the applicable standard of conduct.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the
II-1
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145. The Company
maintains policies insuring its and its subsidiaries' officers and directors
against certain liabilities for actions taken in such capacities, including
liabilities under the Securities Act.
Article IV of the By-laws of the Company provides for indemnification
of the directors and officers of the Company to the fullest extent permitted by
law, as now in effect or later amended. In addition, the By-laws provide for
indemnification against expenses incurred by a director or officer to be paid by
the Company in advance of the final disposition of such action, suit or
proceeding; provided, however, that an advancement of expenses will be made only
upon receipt of an undertaking by or on behalf of the director or officer to
repay such amount unless it shall be ultimately determined that he is entitled
to be indemnified by the Company. The By-laws further provide for a contractual
cause of action on the part of directors and officers of the Company with
respect to indemnification claims which have not been paid by the Company.
The Company also has provided liability insurance for each director and
officer for certain losses arising from claims or charges made against them
while acting in their capacities as directors or officers of the Company.
Article Ninth of the Company's Restated Certificate of Incorporation
limits, to the fullest extent permitted by the DGCL, as the same exists or may
be amended, the personal liability of the Company's directors to the Company or
its stockholders for monetary damages for a breach of their fiduciary duty as
directors. Section 102(b)(7) of the DGCL currently provides that such provisions
do not eliminate the liability of a director (i) for a breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL (relating to the declaration of
dividends and purchase or redemption of shares in violation of the DGCL), or
(iv) for any transaction from which the director derived an improper personal
benefit.
ITEM 16. EXHIBITS
The Exhibits to this Registration Statement are listed in the Exhibit Index
of this Registration Statement, which Index is incorporated herein by reference.
ITEM 17. UNDERTAKINGS
(a) The Company hereby undertakes:
II-2
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
(iii) to include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any
material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any
action, suit or proceeding) is
II-3
asserted by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Cook County, State of Illinois, on August 28, 1997.
THE ALLSTATE CORPORATION
By: /s/Robert W. Pike
-----------------
Name: Robert W. Pike
Title: Vice President, Secretary
and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated. Each person whose signature appears
below constitutes and appoints Jerry D. Choate, Edward M. Liddy, Robert W. Pike
and Thomas J. Wilson, and each of them, his true and lawful attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any or all amendments
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, thereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitutes, may lawfully do or cause to
be done by virtue hereof.
Signature Title Date
/s/Jerry D. Choate Director, August 14, 1997
- ------------------ Chairman of the Board of Directors,
Jerry D. Choate and Chief Executive Officer
(Principal Executive Officer)
/s/Thomas J. Wilson Vice President and Chief Financial Officer August 14, 1997
- -------------------
Thomas J. Wilson (Principal Financial Officer)
II-5
/s/Samuel H. Pilch Controller (Principal Accounting Officer) August 14, 1997
- ------------------
Samuel H. Pilch
/s/James G. Andress Director August 14, 1997
- -------------------
James G. Andress
/s/Warren L. Batts Director August 14, 1997
- ------------------
Warren L. Batts
/s/Edward A. Brennan Director August 14, 1997
- --------------------
Edward A. Brennan
/s/James M. Denny Director August 14, 1997
- -----------------
James M. Denny
/s/Christopher F. Edley Director August 14, 1997
- -----------------------
Christopher F. Edley
/s/Michael A. Miles Director August 14, 1997
- -------------------
Michael A. Miles
/s/Joshua I. Smith Director August 14, 1997
- ------------------
Joshua I. Smith
/s/Mary Alice Taylor Director August 14, 1997
- --------------------
Mary Alice Taylor
II-6
Exhibit EXHIBIT INDEX Sequentially
Number Numbered Page
- -------------------------------------------------------------------------------
Description of Exhibit
----------------------
4(a) Restated Certificate of Incorporation of the Company
(incorporated by reference to Exhibit 3(a) of the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995).
4(b) By-Laws of the Company (incorporated by reference to Exhibit
3(b) of the Company's Annual Report on Form 10-K for the year
ended December 31, 1995).
4(c) The Allstate Corporation Equity Incentive Plan.
4(d) The Allstate Corporation Employees Replacement Stock Plan.
4(e) The Allstate Corporation Equity Incentive Plan for
Non-Employee Directors.
5 Opinion of Joseph T. Kane.
15 Acknowledgment of Deloitte & Touche LLP
regarding unaudited interim financial
information.
23(a) Consent of Joseph T. Kane (included in Exhibit 5).
23(b) Consent of Deloitte & Touche LLP.
E-1
EXHIBIT 4(c)
THE ALLSTATE CORPORATION
EQUITY INCENTIVE PLAN
As Amended and Restated on August 14, 1997
TABLE OF CONTENTS
-----------------
Page
----
1. Purpose................................................... 1
2. Definitions............................................... 1
3. Scope of the Plan......................................... 3
(a) Number of Shares Available For Delivery Under the
Plan............................................. 3
(b) Effect of Expiration or Termination.............. 3
(c) Treasury Stock................................... 3
(d) Committee Discretion to Cancel Options........... 4
4. Administration............................................ 4
(a) Committee Administration......................... 4
(b) Board Reservation and Delegation................. 4
(c) Committee Authority.............................. 4
(d) Committee Determinations Final................... 5
5. Eligibility............................................... 5
6. Conditions to Grants...................................... 6
(a) General Conditions............................... 6
(b) Grant of Options and Option Price................ 6
(c) Grant of Incentive Stock Options................. 6
(d) Grant of Reload Options.......................... 8
(e) Grant of Shares of Restricted Stock.............. 8
(f) Grant of Unrestricted Stock...................... 10
7. Limitations on Transferability............................ 11
8. Exercise.................................................. 11
(a) Exercise of Options.............................. 11
(b) Special Rules for Section 16 Grantees............ 13
(c) Permissible Shares Issued........................ 13
9. Loans and Guarantees...................................... 13
10. Notification under Section 83(b).......................... 14
11. Mandatory Withholding Taxes............................... 14
-i-
12. Elective Share Withholding................................ 14
13. Termination of Employment................................. 15
(a) Restricted Stock................................. 15
(b) Other Awards..................................... 15
(c) Maximum Extension................................ 16
14. Equity Incentive Plans of Foreign Subsidiaries............ 16
15. Substituted Awards........................................ 16
16. Securities Law Matters.................................... 16
17. No Funding Required....................................... 17
18. No Employment Rights...................................... 17
19. Rights as a Stockholder................................... 17
20. Nature of Payments........................................ 17
21. Non-Uniform Determinations................................ 17
22. Adjustments............................................... 18
23. Amendment of the Plan..................................... 18
24. Termination of the Plan................................... 18
25. No Illegal Transactions................................... 18
26. Controlling Law........................................... 19
27. Severability.............................................. 19
-ii-
The Plan. The Company established The Allstate Corporation
Equity Incentive Plan (as set forth herein and from time to time amended, the
"Plan"), effective June 2, 1993. Amendments to the Plan were approved by the
Company's stockholders on May 19, 1994. On March 9, 1995, the Board of Directors
approved amendments to the Plan, subject to the approval of the Company's
stockholders of such amendments and of an amendment to increase the Company's
authorized Common Stock to 1,000,000,000 shares, and subject to the occurrence
of the proposed Distribution described in the Proxy Statement dated February 21,
1995 of Sears, Roebuck and Co. On May 21, 1996, November 12, 1996 and August 14,
1997 the Plan was further amended and restated.
1. Purpose. 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.
2. Definitions. As used in the Plan, terms defined parenthetically
immediately after their use shall have the respective meanings provided by such
definitions and the terms set forth below shall have the following meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):
(a) "Award" means options, shares of restricted Stock, or shares
of unrestricted Stock granted under the Plan.
(b) "Award Agreement" means the written agreement by which an Award
is evidenced.
(c) "Board" means the board of directors of the Company.
(d) "Committee" means the committee of the Board appointed pursuant
to Article 4.
(e) "Company" means The Allstate Corporation, a Delaware corporation.
(f) "Disability" means, as relates to the exercise of an incentive stock
option after Termination of Employment, a permanent and total disability within
the meaning of Section 22(e)(3) of the Internal Revenue Code, and for all other
purposes, a mental or physical condition which, in the opinion of the Committee,
renders a Grantee unable or incompetent to carry out the job responsibilities
which such Grantee held or the duties to which such Grantee was assigned at the
time the disability was incurred, and which is expected to be permanent or for
an indefinite duration.
(g) "Effective Date" means the date described in the first paragraph
of the Plan.
-1-
(h) "Fair Market Value" of the Stock means, as of any applicable date
(other than on the Effective Date) the mean between the high and low prices of
the Stock as reported on the New York Stock Exchange Composite Tape, or if no
such reported sale of the Stock shall have occurred on such date, on the next
preceding date on which there was such a reported sale, provided, however, that
if the Stock is acquired and sold in a simultaneous sale pursuant to the
provisions of Article 8(a)(iv), Fair Market Value means the price received upon
such sale. Solely as of the effective date of the IPO, Fair Market Value of the
Stock means the price to the public pursuant to the form of final prospectus
used in connection with the IPO, as indicated on the cover page of such
prospectus or otherwise.
(i) "Grant Date" means the date of grant of an Award determined in
accordance with Article 6.
(j) "Grantee" means an individual who has been granted an Award.
(k) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, and regulations and rulings thereunder. References to a particular
section of the Internal Revenue Code shall include references to successor
provisions.
(l) "IPO" means such term as defined in the first paragraph of the Plan.
(m) "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.
(n) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(o) "Option Price" means the per share purchase price of (i) Stock
subject to an option or (ii) restricted Stock subject to an option.
(p) [deleted]
(q) "Plan" has the meaning set forth in the introductory paragraph.
(r) "Reload Option" has the meaning specified in Article 6(d).
(s) "Retirement" means a Termination of Employment occurring on or after
an individual attains age 65, or a Termination of Employment approved by the
Company as an early retirement; provided that in the case of a Section 16
Grantee, such early retirement must be approved by the Committee.
(t) "SEC" means the Securities and Exchange Commission.
-2-
(u) "Section 16 Grantee" means a person subject to potential liability
with respect to equity securities of the Company under Section 16(b) of the 1934
Act.
(v) "Stock" means common stock of the Company, par value $.01 per share.
(x) "Subsidiary" means a corporation as defined in Section 424(f) of the
Internal Revenue Code, with the Company being treated as the employer
corporation for purposes of this definition.
(y) "10% Owner" means a person who owns stock (including stock treated
as owned under Section 424(d) of the Internal Revenue Code) possessing more than
10% of the Voting Power of the Company.
(z) "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 voting securities
possessing at least 50% of the Voting Power of such Subsidiary.
(aa) "Voting Power" means the combined voting power of the
then-outstanding voting securities entitled to vote generally in the election of
directors.
3. Scope of the Plan.
-----------------
(a) Number of Shares Available For Delivery Under the Plan. A maximum of
20,000,000 shares of Stock may be awarded under the Plan. Awards may be made
from authorized but unissued shares of Stock or from Treasury Stock. No more
than an aggregate of 1,800,000 shares of the aforesaid 20,000,000 shares of
Stock may be granted under Article 6(e) and (f). No more than 900,000 shares of
Stock may be granted as stock options to any employee during the duration of the
Plan.
(b) Effect of Expiration or Termination. If and to the extent an Award ,
other than an Award granted under Article 6(e) or (f),shall expire or terminate
for any reason without having been exercised in full (including, without
limitation, a cancellation and regrant of an option pursuant to Article
4(c)(vii)), or shall be forfeited, without, in either case, the Grantee having
enjoyed any of the benefits of stock ownership, the shares of Stock associated
with such Award shall become available for other Awards. Except in the case of a
Reload Option granted to a Section 16 Grantee, the grant of a Reload Option
shall not reduce the number of shares of Stock available for other Awards.
(c) Treasury Stock. The Committee shall have the authority to cause the
Company to purchase from time to time shares of Stock to be held as treasury
shares and used for or in connection with Awards.
-3-
(d) Committee Discretion to Cancel Options. 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 options granted hereunder, to cancel
all or any of the options granted hereunder and pay the holders of any such
options 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 option)) equal to 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 Price; provided that if the Committee should determine that not making
payment of such amount to the holders of such option upon the cancellation would
be in the best interests of stockholders of the Company (ignoring in such
determination the cost of such payment and considering only other matters), the
Committee may void options granted hereunder and declare that no payment shall
be made to the holders of such options.
4. Administration.
--------------
(a) Committee Administration. Subject to Article 4(b), the Plan shall be
administered by the Committee, which shall consist of not less than two persons
appointed by the Board, who are directors of the Company and not employees of
the Company or any of its Subsidiaries. Membership on the Committee shall be
subject to such limitations (including, if appropriate, a change in the minimum
number of members of the Committee) as the Board deems appropriate to permit
transactions pursuant to the Plan to be exempt from potential liability under
Section 16(b) of the 1934 Act and to comply with Section 162 (m) of the Internal
Revenue Code.
(b) Board Reservation and Delegation. The Board may, in its discretion,
reserve to itself or delegate to another committee of the Board any or all of
the authority and responsibility of the Committee with respect to Awards to
Grantees who are not Section 16 Grantees at the time any such delegated
authority or responsibility is exercised. Such other committee may consist of
one or more directors who may, but need not be, officers or employees of the
Company or of any of its Subsidiaries. To the extent that the Board has reserved
to itself or delegated the authority and responsibility of the Committee to such
other committee, all references to the Committee in the Plan shall be to such
other committee.
(c) Committee Authority. The Committee shall have full and final authority,
in its sole and absolute discretion, but subject to the express provisions of
the Plan, as follows:
(i) to grant Awards,
(ii) to determine (A) when Awards may be granted, and (B)
whether or not specific Awards shall be identified with other specific
Awards, and if so, whether they shall be exercisable cumulatively with,
or alternatively to, such other specific Awards,
-4-
(iii) to interpret the Plan and to make all determinations
necessary or advisable for the administration of the Plan,
(iv) to prescribe, amend, and rescind rules and regulations
relating to the Plan, including, without limitation, rules with respect
to the exercisability and nonforfeitability of Awards upon the
Termination of Employment of a Grantee,
(v) to determine the terms and provisions of the Award
Agreements, which need not be identical and, with the consent of the
Grantee, to modify any such Award Agreement at any time,
(vi) to cancel options in accordance with the provision of
Section 3(d),
(vii) except as provided in Section 4(c)(vi) hereof, to cancel,
with the consent of the Grantee, outstanding Awards, and to grant new
Awards in substitution thereof,
(viii) to accelerate the exercisability of, and to accelerate
or waive any or all of the restrictions and conditions applicable to,
any Award,
(ix)to authorize foreign Subsidiaries to adopt plans as provided
in Article 14,
(x) to make such adjustments or modifications to Awards to
Grantees working outside the United States as are necessary and
advisable to fulfill the purposes of the Plan,
(xi) 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,
(xii) to make appropriate adjustments to, cancel or continue
Awards in accordance with Article 22, and
(xiii) to impose such additional conditions, restrictions, and
limitations upon the grant, exercise or retention of Awards as the
Committee may, before or concurrently with the grant thereof, deem
appropriate, including, without limitation, requiring simultaneous
exercise of related identified Awards, and limiting the percentage of
Awards which may from time to time be exercised by a Grantee.
(d) Committee Determinations Final. The determination of the Committee on
all matters relating to the Plan or any Award Agreement shall be conclusive and
final. 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.
5. Eligibility. Awards may be granted to any employee of the Company or any
of its Subsidiaries. In selecting the individuals to whom Awards may be granted,
as well as in
-5-
determining the number of shares of Stock subject to, and the other terms and
conditions applicable to, each Award, the Committee shall take into
consideration such factors as it deems relevant in promoting the purposes of the
Plan.
6. Conditions to Grants.
--------------------
(a) General Conditions.
------------------
(i) The Grant Date of an Award shall be the date on which the
Committee grants the Award or such later date as specified in advance by
the Committee.
(ii) The term of each Award (subject to Articles 6(c) and 6(d)
with respect to incentive stock options and Reload Options,
respectively) shall be a period of not more than 12 years from the Grant
Date, and shall be subject to earlier termination as herein provided.
(iii) A Grantee may, if otherwise eligible, be granted
additional Awards in any combination.
(iv) The Committee may grant Awards with terms and conditions
which differ among the Grantees thereof. To the extent not set forth in
the Plan, the terms and conditions of each Award shall be set forth in
an Award Agreement.
Grant of Options and Option Price. The Committee may, in its discretion,
grant options (which may be options to acquire unrestricted Stock or restricted
Stock) to any employee eligible under Article 5 to receive Awards. No later than
the Grant Date of any option, the Committee shall determine the Option Price;
provided that the Option Price shall, except as provided in subsection (c) below
and in Article 15, not be less than 100% of the Fair Market Value of the Stock
on the Grant Date.
Grant of Incentive Stock Options. At the time of the grant of any
option, the Committee may designate that such option shall be made subject to
additional restrictions to permit it to qualify as an "incentive stock option"
under the requirements of Section 422 of the Internal Revenue Code. Any option
designated as an incentive stock option:
(i) shall have an Option Price of (A) not less than 100% of the
Fair Market Value of the Stock on the Grant Date or (B) in the case of a
10% Owner, not less than 110% of the Fair Market Value of the Stock on
the Grant Date;
(ii) shall have a term of not more than 10 years (five years, in
the case of a 10% Owner) from the Grant Date, and shall be subject to
earlier termination as provided herein or in the applicable Award
Agreement;
-6-
(iii) shall not have an aggregate Fair Market Value (determined
for each incentive stock option at its Grant Date) of Stock with respect
to which incentive stock options are exercisable for the first time by
such Grantee during any calendar year (under the Plan and any other
employee stock option plan of the Grantee's employer or any parent or
subsidiary thereof ("Other Plans")), determined in accordance with the
provisions of Section 422 of the Internal Revenue Code, which exceeds
$100,000 (the "$100,000 Limit");
(iv) shall, if the aggregate Fair Market Value of Stock
(determined on the Grant Date) with respect to all incentive stock
options previously granted under the Plan and any Other Plans ("Prior
Grants") and any incentive stock options under such grant (the "Current
Grant") which are exercisable for the first time during any calendar
year would exceed the $100,000 Limit, be exercisable as follows:
(A) the portion of the Current Grant exercisable for
the first time by the Grantee during any calendar year which
would be, when added to any portions of any Prior Grants
exercisable for the first time by the Grantee during such
calendar year with respect to stock which would have an
aggregate Fair Market Value (determined as of the respective
Grant Date for such options) in excess of the $100,000 Limit
shall, notwithstanding the terms of the Current Grant, be
exercisable for the first time by the Grantee in the first
subsequent calendar year or years in which it could be
exercisable for the first time by the Grantee when added to all
Prior Grants without exceeding the $100,000 Limit; and
(B) if, viewed as of the date of the Current Grant, any
portion of a Current Grant could not be exercised under the
provisions of the immediately preceding sentence during any
calendar year commencing with the calendar year in which it is
first exercisable through and including the last calendar year
in which it may by its terms be exercised, such portion of the
Current Grant shall not be an incentive stock option, but shall
be exercisable as a separate option at such date or dates as are
provided in the Current Grant;
(v) shall be granted within 10 years from the earlier of the
date the Plan is adopted or the date the Plan is approved by the
stockholders of the Company; and
(vi) shall require the Grantee to notify the Committee of any
disposition of any Stock issued pursuant to the exercise of the
incentive stock option under the circumstances described in Section
421(b) of the Internal Revenue Code (relating to certain disqualifying
dispositions), within 10 days of such disposition.
Notwithstanding the foregoing and Article 4(c)(v), the Committee may take any
action with respect to any option, including but not limited to an incentive
stock option, without the consent of the Grantee, in order to prevent such
option from being treated as an incentive stock option.
-7-
Grant of Reload Options. The Committee may provide in an Award Agreement
that a Grantee who exercises all or any portion of an option for shares of Stock
which have a Fair Market Value equal to not less than 100% of the Option Price
for such options ("Exercised Options") and who paid the Option Price with shares
of Stock shall be granted, subject to Article 3, 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 or withheld in payment of the Option
Price for the Exercised 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 Exercised Options to satisfy any federal, state or local tax
withholding requirements.
Reload Options shall be subject to the following terms and conditions:
(i) the Grant Date for each Reload Option shall be the date of
exercise of the Exercised Option to which it relates;
(ii) subject to Article 6(d)(iii) below, the Reload Option may
be exercised at any time during the unexpired term of the Exercised
Option (subject to earlier termination thereof as provided in the Plan
and in the applicable Award Agreement); and
(iii) the terms of the Reload Option shall be the same as the
terms of the Exercised Option to which it relates, except that (A) the
Option Price shall be the Fair Market Value of the Stock on the Grant
Date of the Reload Option and (B) no Reload Option may be exercised
within one year from the Grant Date thereof.
(e) Grant of Shares of Restricted Stock.
-----------------------------------
(i) The Committee may, in its discretion, grant shares of
restricted Stock to any employee eligible under Article 5 to receive
Awards.
(ii) Before the grant of any shares of restricted Stock, the
Committee shall determine, in its discretion:
(A) whether the certificates for such shares shall be
delivered to the Grantee or held (together with a stock power
executed in blank by the Grantee) in escrow by the Secretary of
the Company until such shares become nonforfeitable or are
forfeited,
(B) the per share purchase price of such shares,
which may be zero provided, however, that
(1) the per share purchase price of all such
shares (other than treasury shares) shall not be less
than the Minimum Consideration for each such share; and
-8-
(2) if such shares are to be granted to a
Section 16 Grantee, the per share purchase price of any
such shares shall also be at least 50% of the Fair
Market Value of the Stock on the Grant Date unless such
shares are granted for no monetary consideration (in
which case treasury shares are to be delivered) or with
a purchase price per share equal to the Minimum
Consideration for the Stock, and
(C) the restrictions applicable to such grant;
(iii) Payment of the purchase price (if greater than zero) for
shares of restricted Stock shall be made in full by the Grantee before
the delivery of such shares and, in any event, no later than 10 days
after the Grant Date for such shares. Such payment may, at the election
of the Grantee, be made in any one or any combination of the following:
(A) cash,
(B) Stock valued at its Fair Market Value on the date
of payment or, if the date of payment is not a business day, the
next succeeding business day, or
(C) with the approval of the Committee, shares of
restricted Stock, each valued at the Fair Market Value of a
share of Stock on the date of payment or, if the date of payment
is not a business day, the next succeeding business day
provided, however, that, in the case of payment in Stock or restricted
Stock,
(1) the use of Stock or restricted Stock in
payment of such purchase price by a Section 16 Grantee
is subject to (i) the availability of an exemption of
such use of stock from potential liability under
Section 16(b) of the 1934 Act, or (ii) the
inapplicability of such Section;
(2) in the discretion of the Committee and to
the extent permitted by law, payment may also be made
in accordance with Article 9; and
(3) if the purchase price for restricted Stock
("New Restricted Stock") is paid with shares of
restricted Stock ("Old Restricted Stock"), the
restrictions applicable to the New Restricted Stock
shall be the same as if the Grantee had paid for the
New Restricted Stock in cash unless, in the judgment of
the Committee, the Old Restricted Stock was subject to
a greater risk of forfeiture, in which case a number of
shares of New Restricted Stock equal to the number of
shares of Old Restricted Stock tendered in payment for
New Restricted Stock may in the discretion of the
-9-
Committee be subject to the same restrictions as the
Old Restricted Stock, determined immediately before
such payment.
(iv) The Committee may, but need not, provide that all or any
portion of a Grantee's Award of restricted Stock shall be forfeited
(A) except as otherwise specified in the Award
Agreement, upon the Grantee's Termination of Employment within a
specified time period after the Grant Date, or
(B) if the Company or the Grantee does not achieve
specified performance goals within a specified time period after
the Grant Date and before the Grantee's Termination of
Employment, or
(C) upon failure to satisfy such other restrictions as
the Committee may specify in the Award Agreement.
(v) If a share of restricted Stock is forfeited, then
(A) the Grantee shall be deemed to have resold such
share of restricted Stock to the Company at the lesser of (1)
the purchase price paid by the Grantee (such purchase price
shall be deemed to be zero dollars ($0) if no purchase price was
paid) or (2) the Fair Market Value of a share of Stock on the
date of such forfeiture;
(B) the Company shall pay to the Grantee the amount
determined under clause (A) of this sentence as soon as is
administratively practical; and
(C) such share of restricted Stock shall cease to be
outstanding, and shall no longer confer on the Grantee thereof
any rights as a stockholder of the Company, from and after the
date of the Company's tender of the payment specified in clause
(B) of this sentence, whether or not such tender is accepted by
the Grantee.
(vi) Any share of restricted Stock shall bear an appropriate
legend specifying that such share is non-transferable and subject to the
restrictions set forth in the Plan. If any shares of restricted Stock
become nonforfeitable, the Company shall cause certificates for such
shares to be issued or reissued without such legend and delivered to the
Grantee or, at the request of the Grantee, shall cause such shares to be
credited to a brokerage account specified by the Grantee.
(f) Grant of Unrestricted Stock. The Committee may, in its discretion,
grant shares of unrestricted Stock to any employee eligible under Article 5 to
receive Awards.
-10-
7. Limitations on Transferability. Except as otherwise provided in the
terms of a specific grant, each Award (other than unrestricted Stock) granted
hereunder shall by its terms not be assignable or transferable other than by
will or the laws of descent and distribution and may be exercised, during the
Grantee's lifetime, only by the Grantee. Each share of restricted Stock shall be
non-transferable until such share becomes nonforfeitable. Notwithstanding the
foregoing, the Committee shall have the authority, in its discretion, to grant
(or to sanction by way of amendment of an existing grant) nonqualified stock
options the vested portions of which may be transferred by the Grantee during
his lifetime to any member of his immediate family or to a trust established for
the exclusive benefit of himself or one or more members of his immediate family.
A transfer of a stock option pursuant to this section 7 may only be effected by
the Company at the written request of a Grantee and shall become effective only
when recorded in the Company=s record of outstanding stock options. In the event
a stock option is transferred as contemplated in this section 7 any Reload
Options associated with such transferred stock option shall terminate, and such
transferred stock option may not be subsequently transferred by the transferee
except by will or the laws of descent and distribution. Otherwise, a transferred
stock option shall continue to be governed by and subject to the terms and
limitations of the Plan and the relevant grant, and the transferee shall be
entitled to the same rights as the Grantee, as if no transfer had taken place.
As used in this section 7, Aimmediate family@ shall mean, with respect to any
person, his/her spouse, any child, stepchild or grandchild, and shall include
relationships arising from legal adoption.
8. Exercise.
--------
(a) Exercise of Options. Subject to Articles 4(c)(vii), 14 and 17, and
such terms and conditions as the Committee may impose, each option shall be
exercisable in one or more installments commencing not earlier than the first
anniversary of the Grant Date of such option. Options shall not be exercisable
for twelve months following a hardship distribution that is subject to Treasury
Regulation ' 1.401(k)-1(d)(2)(iv)(B)(4), except to the extent permitted
thereunder. Options shall not be exercisable for less than 25 shares of Stock
unless the exercise represents the entire remaining balance of a grant or
grants. Each option shall be exercised by delivery to the Company of written
notice of intent to purchase a specific number of shares of Stock or restricted
Stock subject to the option. The Option Price of any shares of Stock or
restricted Stock as to which an option shall be exercised shall be paid in full
at the time of the exercise. Payment may, at the election of the Grantee, be
made in any one or any combination of the following forms:
(i) check in such form as may be satisfactory to the Committee,
(ii) Stock valued at its Fair Market Value on the date of
exercise or, if the date of exercise is not a business day, the next
succeeding business day,
(iii) with the approval of the Committee, shares of restricted
Stock, each valued at
-11-
the Fair Market Value of a share of Stock on the date of exercise or, if
the date of exercise is not a business day, the next succeeding business
day,
(iv) through simultaneous sale through a broker of shares of
unrestricted Stock acquired on exercise, as permitted under Regulation T
of the Federal Reserve Board, or
(v) by authorizing the Company in his or her written notice of
exercise to withhold from issuance a number of shares of Stock issuable
upon exercise of such option which, when multiplied by the Fair Market
Value of Common Stock on the date of exercise (or, if the date of
exercise is not a business day, the next succeeding business day), is
equal to the aggregate Option Price payable with respect to the option
so exercised.
In the event a Grantee elects to pay the Option Price payable with
respect to an option pursuant to clause (ii) above, (A) only a whole number of
share(s) of Stock (and not fractional shares of Stock) may be tendered in
payment, (B) such Grantee must present evidence acceptable to the Company that
he or she has owned any such shares of Stock tendered in payment of the Option
Price (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 (C) Stock must be delivered to the Company. Delivery may, at the
election of the Grantee, be made either by (I) delivery of the certificate(s)
for all such shares of Stock tendered in payment of the Option Price,
accompanied by duly executed instruments of transfer in a form acceptable to the
Company, or (II) direction to the Grantee=s broker to transfer, by book entry,
such shares of Stock from a brokerage account of the Grantee to a brokerage
account specified by the Company. When payment of the Option Price is made by
tender of Stock, the difference, if any, between the aggregate Option Price
payable with respect to the option being exercised and the Fair Market Value of
the share(s) of Stock tendered in payment (plus any applicable taxes) shall be
paid by check. No Grantee may tender shares of Stock having a Fair Market Value
exceeding the aggregate Option Price payable with respect to the Option being
exercised.
In the event a Grantee elects to pay the Option Price payable with
respect to an option pursuant to clause (v) above, (A) only a whole number of
share(s) of Stock (and not fractional shares of Stock) may be withheld in
payment and (B) such Grantee must present evidence acceptable to the Company
that he or she has owned a number of shares of Stock at least equal to the
number of shares of Stock to be withheld in payment of the Option Price (and
that such owned shares of Stock have not been subject to any substantial risk of
forfeiture) for at least six months prior to the date of exercise. When payment
of the Option Price is made by the withholding of shares of Stock, the
difference, if any, between the aggregate Option Price payable with respect to
the option being exercised and the Fair Market Value of the share(s) of Stock
withheld in payment (plus any applicable taxes) shall be paid by check. No
Grantee may authorize the withholding of shares of Stock having a Fair Market
Value exceeding the aggregate Option Price payable with respect to the option
being exercised. Any withheld shares of Stock shall no longer be issuable under
such option.
-12-
If restricted Stock ("Tendered Restricted Stock") is used to pay the
Option Price for Stock, then a number of shares of Stock acquired on exercise of
the option equal to the number of shares of Tendered Restricted Stock shall be
subject to the same restrictions as the Tendered Restricted Stock, determined as
of the date of exercise of the option. If the Option Price for restricted Stock
is paid with Tendered Restricted Stock, and if the Committee determines that the
restricted Stock acquired on exercise of the option is subject to restrictions
("Greater Restrictions") that cause it to have a greater risk of forfeiture than
the Tendered Restricted Stock, then notwithstanding the preceding sentence, all
the restricted Stock acquired on exercise of the option shall be subject to such
Greater Restrictions.
Shares of unrestricted Stock acquired by a Grantee on exercise of an
option shall be delivered to the Grantee or, at the request of the Grantee,
shall be credited directly to a brokerage account specified by the Grantee.
(b) Special Rules for Section 16 Grantees. Subject to Article 15, no option
shall be exercisable by a Section 16 Grantee during the first six months after
its Grant Date, if such exercise (or the sale of shares received upon exercise)
would result in the loss of an exemption for a grant under Section 16(b) of the
1934 Act.
(c) Permissible Shares Issued. No shares of Stock shall be issued hereunder
upon option exercise except shares of Stock available under Article 3(a). EACH
GRANTEE, 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.
9. Loans and Guarantees. The Committee may, in its discretion:
--------------------
(a) allow a Grantee to defer payment to the Company of all or any
portion of (i) the Option Price of an option, (ii) the purchase price of a share
of restricted Stock, or (iii) any taxes associated with a benefit hereunder
which is not a cash benefit at the time such benefit is so taxable, or
(b) cause the Company to guarantee a loan from a third party to the
Grantee, in an amount equal to all or any portion of such Option Price, purchase
price, or any related taxes.
Any such payment deferral or guarantee by the Company pursuant to this Article 9
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 Grantee shall not be entitled to defer the
payment of such Option Price, purchase price, or any related taxes unless the
Grantee (i) enters into a binding obligation to pay the deferred amount and (ii)
except with respect to treasury shares, pays upon exercise of an option or grant
of shares of restricted Stock, as the case may be, 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
-13-
a loan pursuant to this Article 9, then the Committee may, in its discretion,
require the immediate payment of such deferred amount or the immediate release
of such guarantee upon the Grantee's Termination of Employment or if the Grantee
sells or otherwise transfers the Grantee's shares of Stock purchased pursuant to
such deferral or guarantee.
10. Notification under Section 83(b). The Committee may, on the Grant Date or
any later date, prohibit a Grantee from making the election described below. If
the Committee has not prohibited such Grantee from making such election, and the
Grantee 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 Internal Revenue Code (i.e., an election to include in such Grantee's
gross income in the year of transfer the amounts specified in Section 83(b) of
the Internal Revenue Code), such Grantee 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 Internal Revenue
Code.
11. Mandatory Withholding Taxes.
---------------------------
(a) Whenever under the Plan, cash or shares of Stock are to be delivered
upon exercise or payment of an Award or upon a share of restricted Stock
becoming nonforfeitable, or any other event with respect to rights and benefits
hereunder, the Company shall be entitled to require as a condition of delivery
(i) that the Grantee remit an amount sufficient to satisfy all federal, state,
and local withholding tax requirements related thereto, (ii) the withholding of
such sums from compensation otherwise due to the Grantee or from any shares of
Stock due to the Grantee under the Plan or (iii) any combination of the
foregoing.
(b) If any disqualifying disposition described in Article 6(c)(vi) is
made with respect to shares of Stock acquired under an incentive stock option
granted pursuant to the Plan or any election described in Article 10 is made,
then the person making such disqualifying disposition or election shall remit to
the Company an amount sufficient to satisfy all federal, state, and local
withholding taxes thereby incurred; provided that, in lieu of or in addition to
the foregoing, the Company shall have the right to withhold such sums from
compensation otherwise due to the Grantee or from any shares of Stock due to the
Grantee under the Plan.
12. Elective Share Withholding.
--------------------------
(a) Subject to the prior approval of the Committee and to Article 12(b),
a Grantee may elect the withholding ("Share Withholding") by the Company of a
portion of the shares of Stock otherwise deliverable to such Grantee upon the
exercise or payment of an Award or upon a share of restricted Stock's becoming
nonforfeitable (each a "Taxable Event") having a Fair Market Value equal to
(i) the minimum amount necessary to satisfy required federal,
state, or local
-14-
withholding tax liability attributable to the Taxable Event; or
(ii) with the Committee's prior approval, a greater amount, not
to exceed the estimated total amount of such Grantee's tax liability
with respect to the Taxable Event.
(b) Each Share Withholding election by a Grantee shall be subject to
the following restrictions:
(i) any Grantee's election shall be subject to the Committee's
right to revoke its approval of Share Withholding by such Grantee at any
time before the Grantee's election if the Committee has reserved the
right to do so at the time of its approval;
(ii) if the Grantee is a Section 16 Grantee, such Grantee's
election shall be subject to the disapproval of the Committee at any
time, whether or not the Committee has reserved the right to do so; and
(iii) the Grantee's election must be made before the date (the
"Tax Date") on which the amount of tax to be withheld is determined.
13. Termination of Employment.
-------------------------
Restricted Stock. Except as otherwise provided by the Committee on or
after the Grant Date, a Grantee's shares of restricted Stock that are
forfeitable shall be forfeited upon the Grantee's Termination of Employment.
Other Awards. If a Grantee has a Termination of Employment, then, unless
otherwise provided in the Grant Agreement, any unexercised option to the extent
exercisable on the date of the Grantee's Termination of Employment may be
exercised by the Grantee, in whole or in part, at any time within three months
following such Termination of Employment, except that
(i) if the Grantee's Termination of Employment is on
account of Disability, then any unexercised option to the extent
exercisable at the date of such Termination of Employment, may be
exercised, in whole or in part, by the Grantee at any time within two
years after the date of such Termination of Employment; and
(ii) if the Grantee's Termination of Employment is on
account of Retirement, then any unexercised option to the extent
exercisable at the date of such Termination of Employment, may be
exercised, in whole or in part, by the Grantee at any time within five
years after the date of such Termination of Employment; and
(iii) if the Grantee's Termination of Employment is
caused by the death of the Grantee or if the Grantee's death occurs
during the period following Termination of
-15-
Employment during which the option would be exercisable under the preceding
clause of Article 13(b) or under Article 13(b)(i) or (ii), then any
unexercised option to the extent exercisable on the date of the Grantee's
death, may be exercised, in whole or in part, at any time within two years
after the Grantee's death by the Grantee's personal representative or by
the person to whom the option is transferred by will or the applicable
laws of descent and distribution.
(c) Maximum Extension. Notwithstanding the foregoing, no Award shall be
exercisable beyond the maximum term permitted under the original Award Agreement
unless the Committee explicitly extends such original term, in which case such
term shall not be extended beyond the maximum term permitted by the Plan.
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"). All awards granted under such Foreign Equity Incentive
Plans shall be treated as grants under the Plan. 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.
15. Substituted Awards. The Committee may grant substitute 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 15. 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, and may provide that the Grant Date of
the cancelled Award shall be the date used to determine the earliest date or
dates for exercising the new substituted Award under Article 8 hereof so that
the Grantee may exercise the substituted Award at the same time as if the
Grantee had held the substituted Award since the Grant Date of the cancelled
Award.
16. Securities Law Matters.
----------------------
(a) If the Committee deems necessary to comply with the Securities Act of
1933, the Committee may require a written investment intent representation by
the Grantee and may require that a restrictive legend be affixed to certificates
for shares of Stock.
(b) If based upon the opinion of counsel for the Company, the Committee
determines that the exercise or nonforfeitability of, or delivery of benefits
pursuant to, any Award could violate any applicable provision of (i) federal or
state securities law or regulations or (ii) the listing requirements of any
national securities exchange on which are listed any of the
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Company's equity securities, then the Committee may postpone any such exercise,
nonforfeitability or delivery, as the case may be, but the Company shall use its
best efforts to cause such exercise, nonforfeitability or delivery to comply
with all such provisions at the earliest practicable date.
17. No Funding Required. Benefits payable under the Plan to any person
shall be paid directly by the Company. The Company shall not be required to
fund, or otherwise segregate assets to be used for payment of, benefits under
the Plan.
18. No Employment Rights. Neither the establishment of the Plan, nor the
granting of any Award shall be construed to (a) give any Grantee the right to
remain employed by the Company or any of its Subsidiaries or to any benefits not
specifically provided by the Plan or (b) in any manner modify the right of the
Company or any of its Subsidiaries to modify, amend, or terminate any of its
employee benefit plans.
19. Rights as a Stockholder. A Grantee shall not, by reason of any Award
(other than restricted Stock) have any right as a stockholder of the Company
with respect to the shares of Stock which may be deliverable upon exercise or
payment of such Award until such shares have been delivered to him. Shares of
restricted Stock held by a Grantee or held in escrow by the Secretary of the
Company shall confer on the Grantee all rights of a stockholder of the Company,
except as otherwise provided in the Plan or the Award Agreement. The Committee,
in its discretion, at the time of grant of restricted Stock, may permit or
require the payment of cash dividends thereon to be deferred and, if the
Committee so determines, reinvested in additional restricted Stock to the extent
shares are available under Article 3, or otherwise reinvested in Stock. Stock
dividends, deferred cash dividends and dividends in the form of property other
than cash, issued with respect to restricted Stock shall, unless otherwise
provided in the Award Agreement, be treated as additional shares of restricted
Stock that are subject to the same restrictions and other terms as apply to the
shares with respect to which such dividends are issued. The Committee may, in
its discretion, provide for crediting and payment of interest on deferred cash
dividends.
20. Nature of Payments. Any and all grants, payments of cash, or deliveries
of shares of Stock hereunder shall constitute special incentive payments to the
Grantee and shall not be taken into account in computing the amount of salary or
compensation of the Grantee for the purposes of determining any pension,
retirement, death or other benefits under (a) any pension, retirement,
profit-sharing, bonus, life insurance or other employee benefit plan of the
Company or any of its Subsidiaries or (b) any agreement between the Company or
any Subsidiary, on the one hand, and the Grantee, on the other hand, except as
such plan or agreement shall otherwise expressly provide.
21. Non-Uniform Determinations. Neither the Committee's nor the Board's
determinations under the Plan need be uniform and may be made by the Committee
or the Board selectively among persons who receive, or are eligible to receive,
Awards (whether or not such
-17-
persons are similarly situated). Without limiting the generality of the
foregoing, the Committee shall be entitled, among other things, to make
non-uniform and selective determinations, to enter into non-uniform and
selective Award Agreements as to (a) the identity of the Grantees, (b) the terms
and provisions of Awards, and (c) the treatment, under Article 13, of
Terminations of Employment.
22. Adjustments. The Committee may make such provision with respect to
Awards, including without limitation, equitable adjustment of
(a) the aggregate numbers of shares of Stock available under Articles 3(a)
and 3(b),
(b) the number of shares of Stock or shares of restricted Stock covered by
an Award, and
(c) the Option Price, or
the termination or continuation of an Award as it may determine to be
appropriate and equitable to reflect a stock dividend, stock split, reverse
stock split, share combination, recapitalization, merger, consolidation,
acquisition of property or shares, separation, spin-off, reorganization, stock
rights offering, liquidation, or similar event, of or by the Company.
23. Amendment of the Plan. The Board may from time to time in its
discretion amend or modify the Plan without the approval of the stockholders of
the Company, except as such stockholder approval may be required (a) to permit
transactions in Stock pursuant to the Plan to be exempt from potential liability
under Section 16(b) of the 1934 Act, (b) to permit the Company to deduct, in
computing its income tax liability pursuant to the provisions of the Internal
Revenue Code, compensation resulting from Awards, (c) to retain incentive stock
option treatment under Section 422 of the Internal Revenue Code, or (d) under
the listing requirements of any securities exchange on which are listed any of
the Company's equity securities.
24. Termination of the Plan. The Plan shall terminate on the tenth (10th)
anniversary of the Effective Date or at such earlier time as the Board may
determine. Any termination, whether in whole or in part, shall not affect (a)
any Award then outstanding under the Plan, or (b) the Company's ability to make
adjustments to or cancel or continue Awards in accordance with Article 22.
25. No Illegal Transactions. The Plan and all Awards granted pursuant to it
are subject to all laws and regulations of any governmental authority which may
be applicable thereto; and notwithstanding any provision of the Plan or any
Award, Grantees shall not be entitled to exercise Awards or receive the benefits
thereof and the Company shall not be obligated to deliver any Stock or pay any
benefits to a Grantee if such exercise, delivery, receipt or payment of benefits
would constitute a violation by the Grantee or the Company of any provision of
any such law or regulation.
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26. Controlling Law. The law of the State of Delaware except its law with
respect to choice of law, shall be controlling in all matters relating to or
arising out of the Plan or any Award.
27. Severability. If all or any part of the Plan is declared by any court
or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any portion of the Plan not declared to
be unlawful or invalid. Any Article or part of an Article so declared to be
unlawful or invalid shall, if possible, be construed in a manner which will give
effect to the terms of such Article or part of an Article to the fullest extent
possible while remaining lawful and valid.
EXHIBIT 4(d)
THE ALLSTATE CORPORATION
EMPLOYEES REPLACEMENT STOCK PLAN
As Amended and Restated on August 14, 1997
TABLE OF CONTENTS
-----------------
Page
----
1. Purpose.......................................................... 1
2. Definitions...................................................... 1
3. Scope of the Plan................................................ 5
(a) Number of Shares Available Under Plan................... 5
(b) Expired or Terminated Awards not Available............... 5
(c) Treasury Stock.......................................... 6
4. Administration................................................... 6
(a) Committee Administration................................ 6
(b) Board Reservation and Delegation........................ 6
(c) Committee Authority..................................... 6
(d) Committee Determinations Final.......................... 7
5. Eligibility...................................................... 7
6. Awards........................................................... 7
(a) In General.............................................. 7
(b) Options and Reload Options.............................. 7
(c) Stock Appreciation Rights............................... 9
(d) Restricted Stock........................................ 10
7. Limitations on Transferability................................... 11
8. Exercise......................................................... 12
(a) Exercise of Replacement Options......................... 12
(b) Exercise of Replacement Stock Appreciation Rights....... 12
(c) Special Rules for Section 16 Grantees................... 12
9. Notification under Section 83(b)................................. 12
10. Withholding Taxes................................................ 13
(a) Mandatory Withholding................................... 13
(b) Elective Share Withholding.............................. 13
11. Termination of Employment........................................ 14
(a) Restricted Stock........................................ 14
(b) Other Awards............................................ 14
-i-
12. Securities Law Matters........................................... 14
13. No Funding Required.............................................. 15
14. No Employment Rights............................................. 15
15. Rights as a Stockholder.......................................... 15
16. Nature of Payments............................................... 15
17. Non-Uniform Determinations....................................... 16
18. Adjustments...................................................... 16
19. Amendment of the Plan............................................ 16
20. Termination of the Plan.......................................... 16
21. No Illegal Transactions.......................................... 16
22. Controlling Law.................................................. 17
23. Severability..................................................... 17
-ii-
The Plan. The Allstate Corporation ("Company") Employees Replacement Stock
Plan (as set forth herein and from time to time amended, the "Plan"), was
adopted by the Company's Board of Directors on January 16, 1995 and was approved
by the Company's stockholders on May 23, 1995. The Plan was amended and restated
by the Board on November 12, 1996 and on August 14, 1997.
1. Purpose. The purpose of the Plan is to provide continuation of benefits
and opportunities provided to former participants in any of the Sears Plans,
which benefits and opportunities were lost, terminated, forfeited, cancelled
(with or without consent of the grantee) or reduced as a result of the
Distribution, by providing for the grant of substitute Awards hereunder.
2. Definitions
-----------
As used in the Plan, terms defined parenthetically immediately after their
use shall have the respective meanings provided by such definitions and the
terms set forth below shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
(a) "Allstate Group Grantee" means any individual who is employed on
the Distribution Date or who, immediately prior to his most recent Termination
of Employment prior to the Distribution Date, was employed by The Allstate
Corporation or any Allstate Affiliate, as defined in the Separation Agreement,
except The PMI Group, Inc. ("PMI") or any of PMI's subsidiaries.
(b) "Award" means an option, share of restricted Stock, or stock
appreciation right granted under the Plan.
(c) "Award Agreement" means the written agreement by which an Award is
evidenced.
(d) "Board" means the Board of Directors of the Company.
(e) "Change of Control" means any of the following occurring more than
five business days after the Distribution:
(i) the acquisition by any person or group of beneficial
ownership of any of the Stock or the Voting Power of the Company, which
acquisition results in such person or group having beneficial ownership
of 20% or more of either the then-outstanding Stock or Voting Power of
the Company, except that (A) no such person or group shall be deemed to
own beneficially (1) any securities acquired directly from the Company
pursuant to a written agreement with the Company, (2) any securities
held by the Company or a Subsidiary or any employee benefit plan (or
any related trust) of the Company or a Subsidiary, or (3) any
securities acquired directly from any Grantee, except securities
acquired in transactions effected through the facilities of a
registered national securities exchange or any automated quotation
system of the National Association of
1
Securities Dealers, Inc., and (B)
no Change of Control shall be deemed to have occurred solely by reason
of any such acquisition by a corporation with respect to which, after
such acquisition, more than 60% of both the then-outstanding common
shares of such corporation and the Voting Power of such corporation are
then beneficially owned, directly or indirectly, by the persons who
were the beneficial owners of the Stock and Voting Power of the Company
immediately before such acquisition in substantially the same
proportion as their ownership, immediately before such acquisition, of
the then-outstanding Stock or the Voting Power of the Company, as the
case may be;
(ii) individuals who, as of the Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided that any individual who becomes
a director after the Effective Date whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at
least two-thirds of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors
of the Company (as such terms are used in Rule 14a-11 under the 1934
Act); or
(iii) approval by the stockholders of the Company of (A) a
merger, reorganization or consolidation with respect to which the
individuals and entities who were the respective beneficial owners of
the Stock and Voting Power of the Company immediately before such
merger, reorganization or consolidation do not, after such merger,
reorganization or consolidation, beneficially own, directly or
indirectly, more than 60% of, respectively, the then outstanding common
shares and the Voting Power of the corporation resulting from such
merger, reorganization or consolidation, (B) a liquidation or
dissolution of the Company or (C) the sale or other disposition of all
or substantially all of the assets of the Company; provided, however,
that for the purposes of this clause (iii), the votes of all Section 16
Grantees shall be disregarded in determining whether stockholder
approval has been obtained.
For purposes of this definition, "person" means such term as used in SEC Rule
13d-5(b) under the 1934 Act, "beneficial owner" means such term as defined in
SEC Rule 13d-3 under the 1934 Act, and "group" means such term as defined in
Section 13(d) of the 1934 Act.
Notwithstanding the foregoing, (a) a Change of Control shall be deemed
not to have occurred with respect to any Section 16 Grantee if such Section 16
Grantee is, by agreement (written or otherwise), a participant on such Section
16 Grantee's own behalf in a transaction which causes the Change of Control to
occur; and (b) the Distribution shall not be deemed to be a Change in Control.
(f) "Change of Control Value" means the Fair Market Value of a share of
Stock on the date of receipt of notice of exercise of a limited stock
appreciation right issued to replace a limited stock appreciation right granted
under a Sears Plan.
2
(g) "Committee" means the committee of the Board appointed pursuant to
Article 4.
(h) "Company" means The Allstate Corporation, a Delaware corporation.
(i) "Distribution" means the distribution by Sears to holders of Sears
common shares of all of the shares of Stock owned by it.
(j) "Distribution Date" means the date to be determined by the board of
directors of Sears, as of which the Distribution shall be effected.
(k) "Effective Date" means the date described in the first paragraph
of the Plan.
(l) "Fair Market Value" of any security of the Company or any other
issuer (other than Fair Market Value of Stock as of the Distribution Date and
Fair Market Value of a Sears common share as of the Distribution Date) means, as
of any applicable date:
(i) if the security is listed for trading on the New York
Stock Exchange, the mean between the high and low prices of the
security as reported on the New York Stock Exchange Composite Tape, or
if no such reported sale of the security shall have occurred on such
date, on the next preceding date on which there was such a reported
sale, or
(ii) if the security is not so listed, but is listed on
another national securities exchange or authorized for quotation on the
National Association of Securities Dealers Inc.'s NASDAQ National
Market ("NASDAQ/NM"), the closing price, regular way, of the security
on such exchange or NASDAQ/NM, as the case may be, or if no such
reported sale of the security shall have occurred on such date, on the
next preceding date on which there was such a reported sale, or
(iii) if the security is not listed for trading on a national
securities exchange or authorized for quotation on NASDAQ/NM, the
average of the closing bid and asked prices as reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ")
or, if no such prices shall have been so reported for such date, on the
next preceding date for which such prices were so reported, or
(iv) if the security is not listed for trading on a national
securities exchange or authorized for quotation on NASDAQ/NM or NASDAQ,
the fair market value of the security as determined in good faith by
the Committee.
Notwithstanding paragraphs (i) through (iv) above, "Fair Market Value" of a
Sears common share as of the Distribution Date shall be the sum of the average
of the high and low per share prices, regular way, of such share as reported on
the New York Stock Exchange Composite Tape on each of the five business days
beginning on and including the tenth business day preceding the record date
associated with the Distribution ("Record Date"), on which there was a reported
sale of such stock, divided by five (or, if less, the number of such days on
which there was such a reported sale); and "Fair Market Value" of Stock as of
the Distribution Date shall be the sum of
3
the average of the high and low per share prices, regular way, of the Stock as
reported on the New York Stock Exchange Composite Tape on each of the five
business days beginning on and including the tenth business day preceding the
Record Date, on which there was a reported sale of such stock divided by five
(or, if less, the number of such days on which there was such a reported sale).
(m) "Grant Date" means, except as provided in Article 6, the date on
which the Committee grants the Award or such later date as specified in advance
by the Committee.
(n) "Grantee" means an individual who has been granted an Award.
(o) "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, and regulations and rulings thereunder. References to a particular
section of the Internal Revenue Code shall include references to successor
provisions.
(p) "Minimum Consideration" means the $.01 par value per share of the
Stock 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.
(q) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(r) "Option Price" means the per share purchase price of Stock subject
to an option.
(s) "Plan" has the meaning set forth in the introductory paragraph.
(t) "Reload Option" has the meaning set forth in Article 6(b)(ii).
(u) "Retirement" means a Termination of Employment occurring on or
after an individual attains age 65, or a Termination of Employment after an
individual attains age 55 approved by Allstate Insurance Company as an early
retirement, provided that in the case of a Section 16 Grantee, such early
retirement must be approved by the Committee.
(v) "Sears" means Sears, Roebuck and Co., a New York corporation.
(w) "Sears Option" means an option granted under a Sears Plan.
(x) "Sears Plans" means the following plans of Sears: the 1994
Employees Stock Plan, the 1990 Employees Stock Plan, the 1986 Employees Stock
Plan, the 1982 Employees Stock Plan, the 1978 Employees Stock Plan and the 1979
Incentive Compensation Plan.
(y) "Sears Restricted Stock" means restricted shares granted under a
Sears Plan.
(z) "Sears SAR" means a stock appreciation right, limited stock
appreciation right or tax benefit right granted under a Sears Plan.
4
(aa) "SEC" means the Securities and Exchange Commission.
(bb) "Section 16 Grantee" means a person subject to potential liability
with respect to equity securities of the Company under Section 16(b) of the 1934
Act.
(cc) "Separation Agreement" means the separation agreement between
Sears and the Company dated as of January ___, 1995.
(dd) "Stock" means common stock of the Company, par value $.01 per
share.
(ee) "Subsidiary" means a corporation as defined in Section 424(f) of
the Internal Revenue Code, with the Company being treated as the employer
corporation for purposes of this definition.
(ff) "10% Owner" means a person who owns stock (including stock treated
as owned under Section 424(d) of the Internal Revenue Code) possessing more than
10% of the total combined voting power of all classes of stock of the Company.
(gg) "Termination of Employment" occurs as of 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, directly or
indirectly, owns voting securities possessing at least 50% of the aggregate
Voting Power of such Subsidiary.
(hh) "Voting Power" of a corporation or other entity means the combined
voting power of the then-outstanding voting securities of such corporation or
other entity entitled to vote generally in the election of directors.
3. Scope of the Plan.
-----------------
(a) Number of Shares Available Under Plan. An aggregate number of
shares of Stock is hereby made available and is reserved for delivery on account
of the exercise of Awards and payment of benefits in connection with Awards
equal to the number of shares of Stock determined pursuant to the formulas set
forth in Article 6 to be required to replace awards under the Sears Plans;
provided that in no event shall the aggregate number of such shares of Stock
exceed 4,500,000 shares of Stock. Subject to the foregoing limits, shares of
authorized but unissued Stock or shares of Stock held as treasury shares by the
Company may be used for or in connection with Awards.
(b) Expired or Terminated Awards not Available. If and to the extent an
Award shall expire or terminate for any reason without having been exercised in
full, or shall be forfeited, regardless of whether, in either case, the Grantee
enjoyed any of the benefits of stock ownership, the shares of Stock (including
restricted Stock) and stock appreciation rights associated with such Award shall
not become available for other Awards.
5
(c) Treasury Stock. The Committee shall have the authority to cause the
Company to purchase from time to time shares of Stock to be held as treasury
shares and used for or in connection with Awards.
4. Administration.
--------------
(a) Committee Administration. Subject to Article 4(b), the Plan shall
be administered by the Committee, which shall consist of not less than three
persons who are appointed by the Board, who are directors of the Company and not
employees of the Company or any of its affiliates. Membership on the Committee
shall be subject to such limitations (including, if appropriate, a change in the
minimum number of members of the Committee) as the Board deems appropriate to
permit transactions pursuant to the Plan to be (1) exempt from potential
liability under Section 16(b) of the 1934 Act, and Rule 16b-3 pursuant thereto,
as in effect both before and after September 1, 1995, or such other date as the
SEC shall determine, and (2) exempt from limitations on deductibility under
Section 162(m) of the Internal Revenue Code.
(b) Board Reservation and Delegation. The Board may, in its discretion,
reserve to itself or delegate to another committee of the Board any or all of
the authority and responsibility of the Committee with respect to Awards to
Grantees who are not Section 16 Grantees at the time any such delegated
authority or responsibility is exercised. Such other committee may consist of
one or more directors who may, but need not, be officers or employees of the
Company or of any of its Subsidiaries. To the extent that the Board has reserved
to itself or delegated the authority and responsibility of the Committee to such
other committee, all references to the Committee in the Plan shall be to the
Board or such other committee, as the case may be.
(c) Committee Authority. The Committee shall have full and final
authority, in its discretion, but subject to the express provisions of the Plan,
as follows:
(i) to grant Awards on or after the Distribution Date as
described in Article 6,
(ii) to determine (A) when Awards may be granted, and (B) whether
or not specific Awards shall be identified with other specific Awards,
and if so, whether they shall be exercisable cumulatively with, or
alternatively to, such other specific Awards,
(iii) to interpret the Plan and to make all determinations
necessary or advisable for the administration of the Plan,
(iv) to prescribe, amend, and rescind rules and regulations
relating to the Plan, including, without limitation, rules with respect
to the exercisability and nonforfeitability of Awards upon the
Termination of Employment of a Grantee,
(v) to determine the terms and provisions of the Award
Agreements, which need not be identical and, with the consent (to the
extent required by the Plan) of the Grantee, to modify any such Award
Agreement at any time,
6
(vi) to accelerate the exercisability of, and to accelerate or
waive any or all of the restrictions and conditions applicable to, any
Award,
(vii) to make such adjustments or modifications to Awards to
Grantees working outside the United States as are necessary and
advisable to fulfill the purposes of the Plan, and
(viii) to impose such additional conditions, restrictions, and
limitations upon the grant, exercise or retention of Awards as the
Committee may, before or concurrently with the grant thereof, deem
appropriate, including, without limitation, requiring simultaneous
exercise of related identified Awards, and limiting the percentage of
Awards which may from time to time be exercised by a Grantee.
The Committee shall have full and final authority to authorize any
action or make any determination as the Committee shall deem necessary or
advisable for carrying out the purposes of the Plan, including to correct any
defect, supply any omission and reconcile any inconsistency between the Plan and
the awards under the Sears Plans the Plan is intended to replace.
(d) Committee Determinations Final. The determination of the Committee
on all matters relating to the Plan or any Award Agreement shall be conclusive
and final. 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.
5. Eligibility. Awards may be granted to any employee or former employee
(or to the estate of a deceased employee) of the Company or any of its
Subsidiaries to replace any awards granted to such employee, former employee or
deceased employee under a Sears Plan which were terminated, forfeited, cancelled
or reduced (with or without the consent of the Grantee) in connection with the
Distribution.
6. Awards
------
(a) In General. In accordance with its powers under the Plan, the Committee
may grant replacement Awards, including options (including Reload Options),
replacement stock appreciation rights (including replacement stock appreciation
rights replacing limited stock appreciation rights and tax benefit rights) and
replacement restricted stock in accordance with Article 6 to preserve those
opportunities and benefits of Allstate Group Grantees which were terminated,
forfeited, cancelled, or reduced in connection with the Distribution, provided
that no Grantee shall be granted Awards under the Plan with respect to more than
675,000 shares of Stock.
(b) Options and Reload Options.
--------------------------
(i) Grant of Replacement Options. Subject to Article 3(a), the
Committee may grant options ("Replacement Options") under the Plan to
each Allstate Group Grantee who holds unexercised Sears Options
(whether or not nonforfeitable) at the Distribution
7
Date; provided that such Allstate Group Grantee's right to exercise any Sears
Options has been forfeited or cancelled in connection with the Distribution. The
Award Agreement with respect to such Replacement Options shall provide that the
Grantee may exercise a Replacement Option at the same time as he would have been
able to exercise the Sears Option it replaces, subject to Article 8(c), if
applicable.
(A) The Option Price for a Replacement Option shall
be determined by the following formula; provided that in no event
shall the Option Price be less than the Minimum Consideration:
Option Price = A x B
-----
C
Any fraction of a cent shall be rounded down to the next full cent.
(B) The number of shares of Stock for which the
Replacement Option is exercisable shall be determined in
accordance with the following formula:
Number of shares = C x D
-----
B
Any fractional share shall be rounded up to the next full share.
(C) In the foregoing formulas,
"A" is the option exercise price for a Sears Option
being replaced,
"B" is the Fair Market Value of a share of Stock as of
the Distribution Date,
"C" is the Fair Market Value of a Sears common share as
of the Distribution Date, and
"D" is the number of Sears common shares for which the
Sears Option being replaced is exercisable.
(D) Each Replacement Option shall have the same terms
and conditions (other than the Option Price and the number of
shares of Stock, but including any provision for Reload Options)
as, and not give the Grantee any benefits he did not have, under
the corresponding Sears Option.
(ii) Grant of Reload Options. The Committee may, subject to
Article 3, grant a Reload Option to any Grantee of a Replacement Option
whose Replaced Sears Option included a reload option for Sears shares.
For purposes of the Plan, a "Reload Option" shall mean an option to
purchase a number of shares of Stock granted in connection with the
exercise of the Grantee's Replacement Option (the "Exercised Options")
upon the payment of the Option Price for such Exercised Options with
shares of Stock which have
8
a Fair Market Value equal to not less than
100% of the Option Price for such Exercised Options. The Reload Option
with respect to an Exercised Option shall be for a number of shares of
Stock equal to the number of shares of Stock tendered to exercise the
Exercised 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 Exercised Options to satisfy any federal, state, or
local tax withholding requirements. Reload Options shall be subject to
the following terms and conditions:
(A) the Grant Date for each Reload Option shall be
the date of exercise of the Exercised Option to which it relates;
(B) the Reload Option may be exercised at any time
during the unexpired term of the Replacement Option to which it
relates (subject to earlier termination thereof as provided in
the Plan and in the applicable Award Agreement); and
(C) the terms of the Reload Option shall be the same
as the terms of the Exercised Option to which it relates, except
that (1) the Option Price shall be the Fair Market Value of the
Stock on the Grant Date of the Reload Option and (2) no Reload
Option may be exercised within one year from the Grant Date
thereof.
(c) Stock Appreciation Rights.
(i) Grant of Replacement SARs. The Committee may grant stock
appreciation rights ("Replacement SARs") under the Plan to each
Allstate Group Grantee who holds unexercised limited stock appreciation
rights, and tax benefit rights (whether or not nonforfeitable) under
the Sears Plans; provided that such Allstate Group Grantee's right to
exercise any Sears SARs has been forfeited or cancelled in connection
with the Distribution. Replacement SARs granted in replacement of Sears
SARs identified with Sears Options shall be equal in number to, and
shall be identified with the Replacement Options granted in replacement
of such Sears Options. The Award Agreement with respect to such
Replacement SARs shall provide that the Grantee may exercise a
Replacement SAR at the same time as if the Grantee had held the
Replacement SAR since the grant date of the Sears SAR it replaces,
subject to the limitations of Article 8(c), if applicable.
(ii) Benefit for Replacement Limited Stock Appreciation
Rights. The benefit for each Replacement SAR granted in replacement of
a limited stock appreciation right ("Replacement LSAR") identified with
a Sears Option shall be equal to the difference between the Change of
Control Value of a share of Stock on the date of exercise of such
Replacement SAR and the Option Price of the related Replacement Option.
(iii) Benefit for Replacement Tax Benefit Rights. The benefit
for each Replacement SAR granted in replacement of a tax benefit right
("Replacement Tax Benefit Right") identified with a Sears Option shall
be equal to the then applicable maximum statutory federal income tax
rate for corporations (subject to any limitations
9
thereon contained in the tax benefit right being replaced),
multiplied by the amount of compensation, if any, realized by the
Grantee for federal income tax purposes upon exercise of the related
Replacement Option.
(iv) Terms and Conditions of Replacement SARs. Each
Replacement SAR shall have the same terms and conditions (except as
provided above in this Article 6(c)) as, and not give the Grantee
greater rights than, the corresponding Sears SAR.
(d) Restricted Stock.
(i) Replacement Restricted Stock. The Committee may grant
shares of restricted Stock ("Replacement Restricted Stock") under the
Plan to each Allstate Group Grantee whose Sears Restricted Stock is
forfeited or cancelled in connection with the Distribution. The Award
Agreement with respect to such Replacement Restricted Stock shall
provide that such Replacement Restricted Stock shall become
nonforfeitable at the same time that the Sears Restricted Stock it
replaces would have become nonforfeitable, subject to the limitations
of Article 8(c), if applicable.
(A) The Grantee's basis in the Replacement Restricted
Stock (i.e. the amount of consideration, if any, that shall be
deemed to have been paid by the Grantee for the Replacement
Restricted Stock) shall be determined by the following formula:
E x B
-----
C
The Grantee shall not be required to pay additional
consideration for the grant of Replacement Restricted Stock,
except that the Minimum Consideration shall be paid for any
shares of restricted Stock that are not treasury shares.
(B) The number of shares of Replacement Restricted
Stock to be granted shall be determined by the following formula:
Number of shares = F x C
-----
B
Any fractional share shall be rounded up to the next full share.
(C) In the foregoing formulas,
"B" is the Fair Market Value of a share
of Stock as of the Distribution
Date,
"C" is the Fair Market Value of a Sears
common share as of the Distribution
Date,
10
"E" is the Grantee's average per share
basis, if any, in the Sears
Restricted Stock being replaced, and
"F" is the number of shares of Sears
Restricted Stock being replaced.
(D) Each share of Replacement Restricted Stock shall
be substantially the same terms and conditions (other than the
number of shares and the amount of the Grantee's basis therein)
as, and shall not give the Grantee any benefits which he did not
have, under the corresponding Sears Restricted Stock, except as
otherwise provided by the Committee.
(ii) Additional Conditions for Restricted Stock.
(A) The Committee may provide that any share of
restricted Stock shall be held (together with a stock power
executed in blank by the Grantee) in escrow by the Secretary of
the Company until such shares become nonforfeitable or are
forfeited or may make such other arrangements for the holding of
shares of restricted stock as it deems appropriate.
(B) If a share of restricted Stock is forfeited such
share of restricted Stock shall cease to be outstanding, and
shall no longer confer on the Grantee thereof any rights as a
stockholder of the Company.
(C) Any share of restricted Stock shall bear an
appropriate legend specifying that such share is non-transferable
and subject to the restrictions set forth in the Plan. If any
shares of restricted Stock become nonforfeitable, the Company
shall cause certificates for such shares to be issued or reissued
without such legend and delivered to the Grantee or, at the
request of the Grantee, shall cause such shares to be credited to
a brokerage account specified by the Grantee.
7. Limitations on Transferability. Awards are not transferable by a
Grantee except by will or the laws of descent and distribution; provided,
however, that the Committee shall have the authority, in its discretion, to
grant (or to sanction by way of amendment of an existing grant) Replacement
Options (other than Replacement Options which are Incentive Stock Options under
Section 422 of the Internal Revenue Code), the vested portions of which may be
transferred by the Grantee during his lifetime to any member of his immediate
family or to a trust established for the exclusive benefit of himself or one or
more members of his immediate family. A transfer of an Award may only be
effected by the Company at the written request of a Grantee and shall become
effective only when recorded in the Company=s record of outstanding Awards. In
the event an Award is transferred, any Reload Options associated with such
transferred Award shall terminate, and such transferred Award may not be
subsequently transferred by the transferee except by will or the laws of descent
and distribution. Otherwise, a transferred Award shall continue to be governed
by and subject to the terms and limitations of the Plan and the relevant
11
grant, and the transferee shall be entitled to the same rights as the Grantee,
as if no transfer had taken place. As used in this paragraph, "immediate family"
shall mean, with respect to any person, his/her spouse, any child, stepchild or
grandchild, and shall include relationships arising from legal adoption.
8. Exercise.
--------
(a) Exercise of Replacement Options. Subject to Articles 4 and 6, (i) each
Replacement Option shall be exercisable in one or more installments commencing
not earlier than the first anniversary of the grant date of the Sears Option it
replaces, (ii) options shall not be exercisable for twelve months following a
hardship distribution that is subject to Treasury Regulation '
1.401(k)-1(d)(2)(iv)(B)(4), (iii) each option shall be exercised by delivery to
the Company of written notice of intent to purchase a specific number of shares
of Stock subject to the option, (iv) the Option Price of any shares of Stock as
to which an option shall be exercised shall be paid in full at the time of the
exercise, and (v) payment may be made in either one or any combination of the
following, as provided in the Award Agreement:
(I) cash, or
(II) Stock that has been held for at least six months, valued
at the Fair Market Value on the date of exercise.
Shares of Stock acquired by a Grantee on exercise of an option shall be
delivered to the Grantee or, at the request of the Grantee, shall be credited
directly to a brokerage account specified by the Grantee.
(b) Exercise of Replacement Stock Appreciation Rights. Subject to Articles
4(c)(vi) and 6, (i) each stock appreciation right shall be exercisable not
earlier than the first anniversary of the grant date of the Sears stock
appreciation right it replaces, to the extent the option with which it is
identified, if any, may be exercised, (ii) replacement LSARs shall become fully
exercisable upon the occurrence of a Change of Control and shall be exercisable
for a period of sixty days thereafter, (iii) replacement SARs shall be exercised
by delivery to the Company of written notice of intent to exercise a specific
number of Replacement SARs, and (iv) unless otherwise provided in the applicable
Award Agreement, the exercise of stock appreciation rights which are identified
with shares subject to an option shall result in the cancellation or forfeiture
of such option to the extent of such exercise.
(c) Special Rules for Section 16 Grantees. Subject to Article 6, no stock
appreciation right or option shall be exercisable by a Section 16 Grantee during
the first six months after its Grant Date, except as exempted from Section 16(b)
of the 1934 Act.
9. Notification under Section 83(b). The Committee may, on the Grant Date
or any later date, prohibit a Grantee from making the election described below.
If the Committee has not prohibited such Grantee from making such election, and
the Grantee, in connection with the
12
exercise of any option, or the grant of any share of restricted Stock, makes the
election permitted under Section 83(b) of the Internal Revenue Code to include
in such Grantee's gross income in the year of transfer the amounts specified in
Section 83(b) of the Internal Revenue Code, such Grantee shall notify the
Company of such election within 10 days of filing notice of such election.
10. Withholding Taxes.
-----------------
(a) Mandatory Withholding.
---------------------
(i) Whenever under the Plan, cash or shares of Stock are to be
delivered upon exercise or payment of an Award or upon a share of
restricted Stock becoming nonforfeitable, or any other event with
respect to rights and benefits hereunder, the Company shall be entitled
to require as a condition of delivery (A) that the Grantee remit an
amount sufficient to satisfy all federal, state, and local withholding
tax requirements related thereto, (B) the withholding of such sums from
compensation otherwise due to the Grantee or from any shares of Stock
due to the Grantee under the Plan or (C) any combination of the
foregoing.
(ii) If any election described in Article 9 is made, then the
person making such election shall remit to the Company an amount
sufficient to satisfy all federal, state, and local withholding taxes
thereby incurred; provided that, in lieu of or in addition to the
foregoing, the Company shall have the right to withhold such sums from
compensation otherwise due to the Grantee or from any shares of Stock
due to the Grantee under the Plan.
(b) Elective Share Withholding.
--------------------------
(i)To the extent provided under the terms of the Sears Option or
Sears Restricted Stock Award which it replaces, and subject to the
prior approval of the Committee and to Article 10(b)(ii) below, a
Grantee may elect the withholding ("Share Withholding") by the Company
of a portion of the shares of Stock otherwise deliverable to such
Grantee upon the exercise or payment of an Award or upon a share of
restricted Stock's becoming nonforfeitable (each a "Taxable Event")
having a Fair Market Value equal to
(A) the minimum amount necessary to satisfy required federal,
state, or local withholding tax liability attributable to the
Taxable Event; or
(B) with the Committee's prior approval, a greater amount, not
to exceed the estimated total amount of such Grantee's tax
liability with respect to the Taxable Event.
(ii) Each Share Withholding election by a Grantee shall be
subject to the following restrictions:
13
(A) any Grantee's election shall be subject to the Committee's
right to revoke its approval of Share Withholding by such Grantee
at any time before the Grantee's election if the Committee has
reserved the right to do so at the time of its approval;
(B) if the Grantee is a Section 16 Grantee, such Grantee's
election shall be subject to the disapproval of the Committee at
any time, whether or not the Committee has reserved the right to
do so; and
(C) the Grantee's election must be made before the date (the
"Tax Date") on which the amount of tax to be withheld is
determined.
11. Termination of Employment.
-------------------------
(a) Restricted Stock. Except as otherwise provided by the Committee on or
after the Grant Date, a Grantee's shares of restricted Stock that are
forfeitable shall be forfeited upon the Grantee's Termination of Employment.
(b) Other Awards. Unless otherwise provided in the Award Agreement, any
unexercised option or stock appreciation right, to the extent exercisable on the
date of the Grantee's Termination of Employment, may be exercised, in whole or
in part, at any time within three months after the Grantee's Termination of
Employment, except that
(i) if the Grantee's Termination of Employment is caused by
the death of the Grantee, or if the Grantee's death occurs during the
period following Termination of Employment during which the option or
stock appreciation right would be exercisable under the preceding
clause of Article 11(b) or under Article 11(b)(ii), then any
unexercised option or stock appreciation rights, to the extent
exercisable on the date of the Grantee's death, may be exercised, in
whole or in part, at any time within two years after the Grantee's
death by the Grantee's personal representative or by the person to whom
the option or stock appreciation rights are transferred by will or the
applicable laws of descent and distribution; and
(ii) if the Grantee's Termination of Employment is on account
of Retirement, then any unexercised option or stock appreciation
rights, to the extent exercisable on the date of such Termination of
Employment, may be exercised, in whole or in part, at any time within
two years after such Termination of Employment.
(c) The foregoing provisions of this Article 11 shall not extend the
unexpired term of any Award.
12. Securities Law Matters.
----------------------
(a) If the Committee deems necessary to comply with the Securities Act
of 1933, the Committee may require a written investment intent representation by
the Grantee and may
14
require that a restrictive legend be affixed to certificates for shares of
Stock.
(b) If, based upon the opinion of counsel for the Company, the Committee
determines that the exercise, nonforfeitability of, or delivery of benefits
pursuant to, any Award would violate any applicable provision of (i) federal or
state securities law or regulations or (ii) the listing requirements of any
national securities exchange on which are listed any of the Company's equity
securities, then the Committee may postpone any such exercise, nonforfeitability
or delivery, as the case may be, but the Company shall use its best efforts to
cause such exercise, nonforfeitability or delivery to comply with all such
provisions at the earliest practicable date.
13. No Funding Required. Benefits payable under the Plan to any person
shall be paid directly by the Company. The Company shall not be required to fund
or otherwise segregate assets to be used for payment of benefits under the Plan.
14. No Employment Rights. Neither the establishment of the Plan nor the
granting of any Award shall be construed to (a) give any Grantee the right to
remain employed by the Company or any of its Subsidiaries or to any benefits not
specifically provided by the Plan or (b) alter in any manner the right of the
Company or any of its Subsidiaries to modify, amend, or terminate any of its
employee benefit plans.
15. Rights as a Stockholder. A Grantee shall not, by reason of any Award
(other than restricted Stock) have any right as a stockholder of the Company
with respect to the shares of Stock which may be deliverable upon exercise or
payment of such Award until such Stock has been delivered to him. Shares of
restricted Stock held by a Grantee or held in escrow by the Secretary of the
Company shall confer on the Grantee all rights of a stockholder of the Company,
except as otherwise provided in the Plan or Award Agreement. Subject to Article
6, the Committee may, in its discretion, at the time of grant of restricted
Stock, permit or require the payment of cash dividends thereon to be reinvested
in additional restricted Stock to the extent shares are available under Article
3, or otherwise reinvested in Stock. Stock dividends and deferred cash dividends
with respect to restricted Stock shall be subject to the same restrictions and
other terms as apply to the shares with respect to which such dividends are
issued. Subject to Article 6, the Committee may, in its discretion, provide for
crediting and payment of interest on deferred cash dividends.
16. Nature of Payments. Any and all grants, payments of cash, or deliveries
of shares of Stock hereunder shall constitute special incentive payments to the
Grantee and shall not be taken into account in computing the amount of salary or
compensation of the Grantee for the purposes of determining any pension,
retirement, death or other benefits under (a) any pension, retirement,
profit-sharing, bonus, life insurance or other employee benefit plan of the
Company or any of its Subsidiaries or (b) any agreement between the Company or
any Subsidiary, on the one hand, and the Grantee, on the other hand, except as
such plan or agreement shall otherwise expressly provide.
15
17. Non-Uniform Determinations. The Committee and the Board may make
non-uniform determinations under the Plan and may make determinations
selectively among persons who receive, or are eligible to receive, Awards
(whether or not such persons are similarly situated). Without limiting the
generality of the foregoing, the Committee shall be entitled, among other
things, to make non-uniform and selective determinations, to enter into
non-uniform and selective Award Agreements as to (a) the identity of the
Grantees, (b) the terms and provisions of Awards, and (c) the treatment, under
Article 11, of Terminations of Employment.
18. Adjustments. Subject to Article 6, the Committee shall make equitable
adjustment of
(a) the aggregate numbers of shares of Stock available under
Articles 3(a) and 3(b),
(b) the number of shares of Stock, shares of restricted Stock or
stock appreciation rights covered by an Award,
(c) the Option Price,
(d) the Fair Market Value of Stock to be used to determine the
amount of the benefit payable upon exercise of stock appreciation
rights, and
(e) all other appropriate matters,
to reflect any stock dividend, stock split, reverse stock split, share
combination, recapitalization, merger, consolidation, acquisition of property or
shares, separation, spin-off, reorganization, stock rights offering, liquidation
or similar event of or by the Company.
19. Amendment of the Plan. The Board may from time to time in its
discretion amend or modify the Plan without the approval of the stockholders of
the Company, except as such stockholder approval may be required (a) to permit
transactions in Stock pursuant to the Plan to be exempt from potential liability
under Section 16(b) of the 1934 Act, (b) to permit the Company to deduct, in
computing its income tax liability pursuant to the provisions of the Internal
Revenue Code, compensation resulting from Awards, or (c) under the listing
requirements of any national securities exchange on which are listed any of the
Company's equity securities.
20. Termination of the Plan. The Plan shall terminate on the tenth (10th)
anniversary of the Effective Date or at such earlier time as the Board may
determine. Any termination, whether in whole or in part, shall not affect any
Award then outstanding under the Plan.
21. No Illegal Transactions. The Plan and all Awards granted pursuant to it
are subject to all laws and regulations of any governmental authority which may
be applicable thereto; and notwithstanding any provision of the Plan or any
Award, Grantees shall not be entitled to exercise Awards or receive the benefits
thereof and the Company shall not be obligated to deliver any Stock or pay any
benefits to a Grantee if such exercise, delivery, receipt or payment of
16
benefits would constitute a violation by the Grantee or the Company of any
provision of any such law or regulation.
22. Controlling Law. The law of the State of Delaware, except its law with
respect to choice of law, shall be controlling in all matters relating to the
Plan.
23. Severability. If all or any part of the Plan is declared by any court
or governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any portion of the Plan not declared to be
unlawful or invalid. Any Article or part of an Article so declared to be
unlawful or invalid shall, if possible, be construed in a manner which will give
effect to the terms of such Article or part of an Article to the fullest extent
possible while remaining lawful and valid.
17
EXHIBIT 4(e)
THE ALLSTATE CORPORATION
EQUITY INCENTIVE PLAN FOR NON-EMPLOYEE DIRECTORS
As Amended and Restated on August 14, 1997
I. PURPOSE.
The purpose of The Allstate Corporation Equity Incentive Plan for
Non-Employee Directors (the "Plan") is to promote the interests of The Allstate
Corporation (the "Company") by providing an inducement to obtain and retain the
services of qualified persons as members of the Company's Board of Directors
(the "Board") and to align more closely the interests of such persons with the
interests of the Company's stockholders by providing a significant portion of
the compensation provided to such persons in the form of equity securities of
the Company.
II. ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall
have full power to construe and interpret the Plan and Shares and Options
granted hereunder, to establish and amend rules for its administration and to
correct any defect or omission and to reconcile any inconsistency in the Plan or
in any Share or Option granted hereunder to the extent the Committee deems
desirable to carry the Plan or any Share or Option granted hereunder into
effect. Any decisions of the Committee in the administration of the Plan shall
be final and conclusive. The Committee may authorize any one or more of its
members, the secretary of the Committee or any officer of the Company to execute
and deliver documents on behalf of the Committee. Each member of the Committee,
and, to the extent provided by the Committee, any other person to whom duties or
powers shall be delegated in connection with the Plan, shall incur no liability
with respect to any action taken or omitted to be take in connection with the
Plan and shall be fully protected in relying in good faith upon the advice of
counsel, to the fullest extent permitted under applicable law.
III. ELIGIBILITY.
Each Non-Employee Director shall be eligible to participate in the
Plan.
IV. LIMITATION ON AGGREGATE SHARES.
A. Maximum Number of Shares. The aggregate maximum number of Shares
that may be granted pursuant to the Plan or issued upon exercise of Options
granted pursuant to the Plan shall be 300,000 shares. Such maximum number of
Shares is subject to adjustment under the provisions of Section IV.B. The Shares
to be granted or issued upon exercise of Options may be authorized but unissued
Shares or Shares previously issued which have been reacquired by the
A-1
Company. In the event any Option or Reload Option shall, for any reason,
terminate or expire or be surrendered without having been exercised in full, the
Shares subject to such Option or Reload Option but not purchased thereunder
shall be available for future Options or Reload Options to be granted under the
Plan.
B. Adjustment. The maximum number of Shares referred to in Section IV.A of
the Plan, the number of Shares granted pursuant to Section VI of the Plan, the
number of Options granted pursuant to Section VII of the Plan, and the option
price and the number of Shares which may be purchased under any outstanding
Option granted under Section VII of the Plan shall be proportionately adjusted
for any increase or decrease in the number of issued and outstanding Shares as
the result of (i) the declaration and payment of a dividend payable in Common
Stock, or the division of the Common Stock outstanding at the date hereof (or
the date of the grant of any such outstanding Option, as applicable) into a
greater number of Shares without the receipt of consideration therefor by the
Company, or any other increase in the number of such Shares of the Company
outstanding at the date hereof (or the date of the grant of any such outstanding
Option, as applicable) which is effective without the receipt of consideration
therefor by the Company (exclusive of any Shares granted by the Company to
employees of the Company or any of its Subsidiaries without receipt of separate
consideration by the Company), or (ii) the consolidation of the Shares
outstanding at the date hereof (or the date of the grant of any such outstanding
Option, as applicable) into a smaller number of Shares without the payment of
consideration thereof by the Company, or any other decrease in the number of
such Shares outstanding at the date hereof (or the date of the grant of any such
outstanding Option, as applicable) effected without the payment of consideration
by the Company; provided, however, that the total option price for all Shares
which may be purchased upon the exercise of any Option granted pursuant to the
Plan (computed by multiplying the number of Shares originally purchasable
thereunder, reduced by the number of such Shares which have theretofore been
purchased thereunder, by the original option price per share before any of the
adjustments herein provided for) shall not be changed.
In the event of a change in the Common Stock as presently constituted
which is limited to a change of the Company's authorized shares with a par value
into the same number of shares with a different par value or without par value,
the shares resulting from any such change will be deemed to be the Common Stock
within the meaning of this Plan and no adjustment will be required pursuant to
this Section IV.B.
The foregoing adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive. Except as
expressly provided in this Section IV.B, a Non-Employee Director shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class.
V. DEFINITIONS.
The following terms shall have the meanings set forth below when used
herein:
A-2
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Compensation and Nominating Committee of the
Board, any successor committee of the Board performing similar functions or, in
the absence of such a committee, the Board.
"Common Stock" means the Common Stock, par value $.01 per share, of the
Company.
"Disability" means a mental or physical condition which, in the opinion
of the Committee, renders a Non-Employee Director unable or incompetent to carry
out his or her duties as a member of the Board and which is expected to be
permanent or for an indefinite duration.
"Election Shares" means any Shares issued to a Non-Employee Director
pursuant to the election of such person to receive such Shares in lieu of cash
compensation made in accordance with Section VIII.B.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" of any Share means, as of any applicable date, the
mean between the high and low prices of the Shares as reported on the New York
Stock Exchange-Composite Tape, or if no such reported sale of the Shares shall
have occurred on such date, on the next succeeding date on which there was such
a reported sale.
"Initial Election Date" means, for each Non-Employee Director, the
later to occur of (i) the date the Plan is approved and adopted by the Company's
stockholders pursuant to Section XIII of the Plan, and (ii) the date of such
member's initial election or appointment to the Board.
"Non-Employee Director" means each member of the Board who is not an
officer or employee of the Company or any of its Subsidiaries.
"Option" means an option to purchase shares of Common Stock.
"Shares" means shares of Common Stock.
"Subsidiary" means any partnership, corporation, association, limited
liability company, joint stock company, trust, joint venture, unincorporated
organization or other business entity of which (i) if a corporation, a majority
of the total voting power of shares of stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
the Company or one or more of the other Subsidiaries of the Company or a
combination thereof, or (ii) if a partnership, association, limited liability
company, joint stock company, trust, joint venture, unincorporated organization
or other business entity, a majority of the partnership or other
A-3
similar equity ownership interest thereof is at the time owned or controlled,
directly or indirectly, by the Company or one or more Subsidiaries of the
Company or a combination thereof. For purposes hereof, the Company or a
Subsidiary shall be deemed to have a majority ownership interest in a
partnership, association, limited liability company, joint stock company, trust,
joint venture, unincorporated organization or other business entity if the
Company or such Subsidiary shall be allocated a majority of partnership,
association, limited liability company, joint stock company, trust, joint
venture, unincorporated organization or other business entity gains or losses or
shall be or control the managing director, the trustee, the manager or the
general partner of such partnership, association, limited liability company,
joint stock company, trust, joint venture, unincorporated organization or other
business entity.
VI. FORMULA RESTRICTED STOCK GRANTS FOR NON-EMPLOYEE DIRECTORS.
A. Annual Grant of Shares. Beginning December 1, 1996, on December 1 of
each year 500 Shares shall automatically be granted to each Non-Employee
Director serving on the Board on such date who has served in such capacity since
June 1 of such year. If any person serving as a Non-Employee Director on June 1
of any year ceases to serve as a director of the Company prior to December 1 of
such year, such director shall be automatically granted on his or her last day
of service a number of Shares equal to (i) 500 multiplied by (ii) a fraction,
the numerator of which is the number of full calendar months such Non-Employee
Director has served on the Board during the period beginning on such June 1 and
ending on such director's last date of service and the denominator of which is
6.
B. Grant for Newly Appointed Directors. If after June 1, 1996 a
Non-Employee Director is initially elected or appointed to the Board effective
on any date other than June 1, such Non-Employee Director shall automatically be
granted, on the June 1 following the date he or she joins the Board (or such
earlier date as he or she ceases to serve as a director), a number of Shares
equal to (i) 500 multiplied by (ii) a fraction, the numerator of which is the
number of full calendar months such Non-Employee Director has served on the
Board during the period beginning on the date such director joined the Board and
ending on the following May 31 (or such earlier date as he or she ceases to
serve as a director) and the denominator of which is 6; provided that such
fraction shall in no event be greater than one.
C. Transition Grant for Existing Directors. Subject to stockholder
approval and adoption pursuant to Section XIII of the Plan, on May 31, 1996,
each Non-Employee Director who was serving on the Board on March 12, 1996 shall
be automatically granted a number of Shares equal to (i) 200 multiplied by (ii)
a fraction, the numerator of which is the number of full calendar months of
service by such Non-Employee Director during the period beginning on the later
of (a) such director's last anniversary date for service on the Board and (b)
the date such director first attained the status of Non-Employee Director and
ending on May 31, 1996 (or such earlier date as such director ceases to serve as
a director) and the denominator of which is 12.
D. Rounding of Share Amounts. To the extent that application of the
foregoing formulas would result in fractional Shares being issuable, such
Non-Employee Director shall be granted a number of Shares equal to the nearest
whole number of Shares.
A-4
E. Payment for Estimated Taxes. In addition, the Company shall pay to
each Non-Employee Director, in cash, as soon as practicable after each issuance
of Shares pursuant to this Section VI, an amount equal to the estimated increase
in such Non-Employee Director's federal, state and local tax liabilities as a
result of such grant of Shares, assuming the maximum statutory tax rates
applicable to such Non-Employee Director.
F. Restrictions. The Non-Employee Directors shall have no rights as a
shareholder with respect to any Shares to be granted pursuant to this Section VI
prior to the time such Shares are granted. Upon such grant, the Shares shall be
represented by a stock certificate registered in the name of the holder. The
Shares granted pursuant to this Section VI shall be fully vested, but shall be
subject to certain restrictions during the six month period following the date
of grant (the "Restriction Period"). The holder shall have the right to enjoy
all shareholder rights during the Restriction Period (including the right to
vote the Shares and the right to receive any cash or other dividends paid in
respect thereof) with the exception that (i) the holder may not sell, transfer,
pledge or assign the Shares during the Restriction Period, and (ii) the Company
shall retain custody of the certificates representing the Shares during the
Restriction Period.
All restrictions shall lapse and the holder of the Shares shall be
entitled to the delivery of a stock certificate or certificates representing the
Shares (and to the removal of any restrictive legend set forth on such
certificates) upon the earliest of (i) six months from the date of grant of such
Shares, (ii) the date of the holder's death or Disability, and (iii) the date on
which the holder is no longer serving as a director of the Company.
VII. FORMULA STOCK OPTION GRANTS FOR NON-EMPLOYEE DIRECTORS.
A. Annual Grant of Options. On June 1 of each year, beginning June 1,
1996, Options to purchase 1,500 Shares shall automatically be granted to each
Non-Employee Director serving on the Board on such date. If any such
Non-Employee Director will be required to retire (pursuant to the policies of
the Board) during the 12 month period beginning on the date of any grant (or if
any such Non-Employee Director has notified the Board that he or she intends to
resign from the Board for any reason during the 12 month period beginning on the
date of any grant), such director shall instead be granted on June 1 of the
relevant year Options to purchase a number of Shares equal to (i) 1,500,
multiplied by (ii) a fraction, the numerator of which is the number of full
calendar months such Non-Employee Director will serve on the Board during the
period beginning on such June 1 and ending on such director's last date of
service and the denominator of which is 12.
B. Grant for Newly Appointed Directors. If after June 1, 1996 a
Non-Employee Director is initially elected or appointed to the Board effective
on any date other than June 1, such Non-Employee Director shall automatically be
granted, on the date he or she joins the Board, Options to purchase a number of
Shares equal to (i) 1,500, multiplied by (ii) a fraction, the numerator of which
is the number of full calendar months such Non-Employee Director will serve on
the Board during the period beginning on the date such director joins the Board
and ending on the following May 31 and the denominator of which is 12.
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C. Option Exercise Price. The exercise price per Share for each Option
shall be 100% of the Fair Market Value of a Share on the date of grant, subject
to Section IV.B.
D. Term of Options. Each Option shall be exercisable for ten years after
the date of grant, subject to Section VII.F.
E. Conditions and Limitations on Exercise.
(i) Vesting. Each Option shall vest in three equal
installments on the first, second and third anniversaries of the date
of grant. Upon a Non-Employee Director's mandatory retirement pursuant
to the policies of the Board, the unvested portions of any outstanding
Options held by such Non-Employee Director shall fully vest. Upon the
termination of a Non-Employee Director's tenure for any other reason,
the unvested portions of any outstanding Options shall expire and no
Options granted to such Non-Employee Director shall vest after the
termination of such director's tenure on the Board.
(ii) Exercise. Each Option shall be exercisable in one or
more installments and shall not be exercisable for less than 100
Shares, unless the exercise represents the entire remaining exercisable
balance of a grant or grants. Each Option shall be exercised by
delivery to the Company of written notice of intent to purchase a
specific number of Shares subject to the Option. The option price of
any Shares as to which an Option shall be exercised shall be paid in
full at the time of the exercise. Payment may, at the election of the
Non-Employee Director, be made in any one or any combination of the
following forms:
(a) check or wire transfer of funds in such
form as may be satisfactory to the Committee;
(b) delivery of Shares valued at their Fair Market
Value on the date of exercise or, if the date of exercise is
not a business day, the next succeeding business day;
(c) through simultaneous sale through a broker
of unrestricted Shares acquired on exercise, as permitted
under Regulation T of the Federal Reserve Board; or
(d) by authorizing the Company in his or her written
notice of exercise to withhold from issuance a number of
Shares issuable upon exercise of such Option which, when
multiplied by the Fair Market Value of Common Stock on the
date of exercise (or, if the date of exercise is not a
business day, the next succeeding business day), is equal to
the aggregate exercise price payable with respect to the
Option so exercised.
In the event a Non-Employee Director elects to pay the exercise price
payable with
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respect to an Option pursuant to clause (b) above, (i) only a whole number of
Share(s) (and not fractional Shares) may be tendered in payment, (ii) such
Non-Employee Director must present evidence acceptable to the Company that he or
she has owned any such Shares tendered in payment of the exercise price (and
that such Shares tendered have not been subject to any substantial risk of
forfeiture) for at least six months prior to the date of exercise, and (iii) the
certificate(s) for all such Shares tendered in payment of the exercise price
must be accompanied by duly executed instruments of transfer in a form
acceptable to the Company. When payment of the Option exercise price is made by
the tender of Shares, the difference, if any, between the aggregate exercise
price payable with respect to the Option being exercised and the Fair Market
Value of the Share(s) tendered in payment (plus any applicable taxes) shall be
paid by check or wire transfer of funds. No Non-Employee Director may tender
Shares having a Fair Market Value exceeding the aggregate exercise price payable
with respect to the Option being exercised.
In the event a Non-Employee Director elects to pay the exercise price
payable with respect to an Option pursuant to clause (d) above, (i) only a whole
number of Share(s) (and not fractional Shares) may be withheld in payment and
(ii) such Non-Employee Director must present evidence acceptable to the Company
that he or she has owned a number of Shares at least equal to the number of
Shares to be withheld in payment of the exercise price (and that such owned
Shares have not been subject to any substantial risk of forfeiture) for at least
six months prior to the date of exercise. When payment of the Option exercise
price is made by the withholding of Shares, the difference, if any, between the
aggregate exercise price payable with respect to the Option being exercised and
the Fair Market Value of the Share(s) withheld in payment (plus any applicable
taxes) shall be paid by check or wire transfer of funds. No Non-Employee
Director may authorize the withholding of Shares having a Fair Market Value
exceeding the aggregate exercise price payable with respect to the Option being
exercised. Any withheld Shares shall no longer be issuable under such Option.
F. Additional Provisions.
(i) Accelerated Expiration of Options Upon Termination of
Directorship. Upon the termination of a Non-Employee Director's tenure
for any reason, each outstanding vested and previously unexercised
Option shall expire three months after the date of such termination;
provided that (a) upon the termination of a Non-Employee Director's
tenure as a result of death or Disability, each outstanding vested and
previously unexercised Option shall expire two years after the date of
his or her termination as a director, and (b) upon the mandatory
retirement of a Non-Employee Director pursuant to the policies of the
Board, each outstanding vested and previously unexercised Option shall
expire five years after the date of his or her termination as a
director. In no event shall the provisions of this Section VII.F
operate to extend the original expiration date of any Option.
(ii) Sale of the Company. In the event of a merger of the
Company with or into another corporation constituting a change of
control of the Company, a sale of all or substantially all of the
Company's assets or a sale of a majority of the Company's outstanding
voting securities (a "Sale of the Company"), the Options may be assumed
by
A-7
the successor corporation or a parent of such successor corporation
or substantially equivalent options may be substituted by the successor
corporation or a parent of such successor corporation, and if the
successor corporation does not assume the Options or substitute
options, then all outstanding and unvested Options shall become
immediately exercisable and all outstanding Options shall terminate if
not exercised as of the date of the Sale of the Company (or other
prescribed period of time). The Company shall provide at least 30 days
prior written notice of the Sale of the Company to the holders of all
outstanding Options, which notice shall state whether (a) the Options
will be assumed by the successor corporation or substantially
equivalent options will be substituted by the successor corporation, or
(b) the Options are thereafter vested and exercisable and will
terminate if not exercised as of the date of the Sale of the Company
(or other prescribed period of time).
(iii) Liquidation or Dissolution. In the event of the
liquidation or dissolution of the Company, Options shall terminate
immediately prior to the liquidation or dissolution.
G. Grant of Reload Options. A Non-Employee Director who exercises all
or any portion of an Option by the tender or withholding of Shares which have a
Fair Market Value equal to not less than 100% of the exercise price for such
Options (the "Exercised Options") shall be granted, subject to Section IV, an
additional option (a "Reload Option") for a number of Shares equal to the sum of
the number of Shares tendered or withheld in payment of the exercise price for
the Exercised Options.
Reload Options shall be subject to the following terms and conditions:
(i) the grant date for each Reload Option shall be the
date of exercise of the Exercised Option to which it relates;
(ii) subject to clause (iii) below, the Reload Option may be
exercised at any time during the unexpired term of the Exercised Option
(subject to earlier termination thereof as provided in the Plan); and
(iii) the other terms of the Reload Option shall be the same
as the terms of the Exercised Option to which it relates and shall be
subject to the provisions of the Plan, except that (a) the option price
shall be the Fair Market Value of the Shares on the grant date of the
Reload Option, (b) no Reload Option may be exercised within six months
from the grant date thereof, and (c) no other Reload Option shall be
granted upon exercise of such Reload Option.
H. Non-Qualified Stock Options. All Options granted under the Plan shall be
non-qualified options not entitled to special tax treatment under Code Section
422, as may be amended from time to time.
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VIII. ELECTION TO RECEIVE STOCK IN LIEU OF CASH COMPENSATION.
A. General. A Non-Employee Director may elect to reduce the cash
compensation otherwise payable for services to be rendered by him or her as a
director for any period beginning on June 1 and continuing to the following May
31 (or such other period for which cash compensation is payable to Non-Employee
Directors pursuant to the policies of the Board), beginning June 1, 1996 and to
receive in lieu thereof Shares as provided in this Section VIII.
B. Election. By the later of (i) the date of the Company=s annual
meeting of stockholders next preceding the June 1 to which such election relates
(but in no event less than five business days prior to such June 1) and (ii)
such Non-Employee Director's Initial Election Date, each Non-Employee Director
may make an irrevocable election to receive, in lieu of all or a specified
percentage (which percentage shall be in 10% increments) of the cash
compensation to which such director would otherwise be entitled as a member of
the Board and any committee thereof (including the annual retainer fee and any
meeting or other fees payable for services on the Board or any committee
thereof, but excluding any reimbursement for out-of-pocket expenses) for the
year beginning the following June 1 (or such other period for which cash
compensation is payable to such Non-Employee Director pursuant to the policies
of the Board), an equivalent value in Shares granted in accordance with this
Section VIII. An election shall be effective (i) if made in accordance with
clause (i) of the preceding sentence, beginning on the June 1 following such
election; and (ii) if made on such Non-Employee Director's Initial Election
Date, immediately.
Each such election shall (i) be in writing in a form prescribed by the
Company, (ii) specify the amount of cash compensation to be received in the form
of Election Shares (expressed as a percentage of the compensation otherwise
payable in cash), and (iii) be delivered to the Secretary of the Company. Such
election may not be revoked or changed thereafter except as to compensation for
services to be rendered in any 12 month period beginning on any June 1 at least
six months following such revocation or new election.
C. Issuance of Common Stock. If a Non-Employee Director elects pursuant
to Section VIII.B above to receive Shares, there shall be issued to such
director promptly following each subsequent June 1 for which such election is
effective (or promptly following the first day of such other period for which
such election is effective) a number of Shares equal to the amount of
compensation otherwise payable for the 12 month period beginning on such June 1
(or the other period for which such election is effective) divided by the Fair
Market Value of the Shares on such June 1 (or on the first day of such other
period). To the extent that the application of the foregoing formula would
result in fractional shares of Common Stock being issuable, cash will be paid to
the Non-Employee Director in lieu of such fractional Shares based upon the Fair
Market Value of such fractional Share.
D. Compliance with Exchange Act. The election to receive Election
Shares is intended to comply in all respects with Rule 16b-3(d)(1) promulgated
under Section 16(b) of the Exchange Act such that the issuance of Election
Shares under the Plan on a grant date occurring
A-9
at least six months after the election shall be exempt from Section 16(b) of the
Exchange Act.
E. Grant Date. The grant date for each Election Share for the Non-Employee
Director electing such option shall be the first day of the period to which such
election relates and is effective.
IX. MISCELLANEOUS PROVISIONS.
A. Rights of Non-Employee Directors. No Non-Employee Director shall be
entitled under the Plan to voting rights, dividends or other rights of a
stockholder prior to the issuance of Common Stock. Neither the Plan nor any
action taken hereunder shall be construed as giving any Non-Employee Director
any right to be retained in the service of the Company.
B. Limitations on Transfer and Exercise. All Options granted under the Plan
shall not be transferable by the Non-Employee Director, other than by will or
the laws of descent and distribution or pursuant to a qualified domestic
relations order, as defined by '1 et seq, of the Code, Title I of ERISA or the
rules and regulations thereunder, and shall be exercisable during the
Non-Employee Director's lifetime only by such Non-Employee Director or by such
Non-Employee Director's guardian or other legal representative; provided,
however, that the vested portions of Options, (other than Incentive Stock
Options as defined in Section 422 of the Code), may be transferred by the
Non-Employee Director during his lifetime to any member of his immediate family
or to a trust established for the exclusive benefit of himself or one or more
members of his immediate family. A transfer of an Option pursuant to this
paragraph may only be effected by the Company at the written request of a
Non-Employee Director and shall become effective only when recorded in the
Company=s record of outstanding Options. In the event an Option is transferred
as contemplated in this paragraph, any Reload Options associated with such
transferred Option shall terminate, and such transferred Option may not be
subsequently transferred by the transferee except by will or the laws of descent
and distribution. Otherwise, a transferred Option shall continue to be governed
by and subject to the terms and limitations of the Plan and the relevant grant,
and the transferee shall be entitled to the same rights as the Non-Employee
Director, as if no transfer had taken place. As used in this paragraph,
Aimmediate family@ shall mean, with respect to any person, his/her spouse, any
child, stepchild or grandchild, and shall include relationships arising from
legal adoption.
C. Compliance with Laws. No shares of Common Stock shall be issued
hereunder unless counsel for the Company shall be satisfied that such issuance
will be in compliance with applicable federal, state, local and foreign
securities, securities exchange and other applicable laws and requirements. Each
Share granted pursuant to Section VI or Section VIII and each Option granted
pursuant to Section VII shall be subject to the requirement that if at any time
the Committee shall determine, in its discretion, that the listing, registration
or qualification of the Shares granted or subject to the Option upon any
securities exchange or under any state or federal securities or other law or
regulation, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition to or in connection with the granting of
such Share, such Option or the issuance or purchase of Shares thereunder, no
such Share may be issued and no Option may be exercised or paid in Common Stock,
in whole or in part, unless
A-10
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee. The
holder of such Share or Option will supply the Company with such certificates,
representations and information as the Company shall request and shall otherwise
cooperate with the Company in obtaining such listing, registration,
qualification, consent or approval. The Committee may at any time impose any
limitations upon the sale of a Share or the exercise of an Option or the sale of
the Common Stock issued upon exercise of an Option that, in the Committee's
discretion, are necessary or desirable in order to comply with Section 16(b) of
the Exchange Act and the rules and regulations thereunder. The Committee may at
any time impose additional limitations, or may amend or delete the existing
limitations, upon the exercise of Options by the tender or withholding of Shares
in accordance with Section VII.E (including an amendment or deletion of the
related ownership period for Shares specified in such Section), if such
additional, amended or deleted limitations are necessary, desirable or no longer
required (as the case may be) to remain in compliance with applicable accounting
pronouncements relating to the treatment of the plan as a fixed plan for
accounting purposes.
D. Payment of Withholding Tax. Whenever Shares are to be issued
pursuant to Section VI or Section VIII of the Plan or upon exercise of Options
issued pursuant to Section VII of the Plan, the Company shall be entitled to
require as a condition of delivery (i) that the participant remit an amount
sufficient to satisfy all federal, state and local withholding tax requirements
related thereto, (ii) the withholding of Shares due to the participant under the
Plan with a Fair Market Value equal to such amount, or (iii) any combination of
the foregoing.
E. Expenses. The expenses of the Plan shall be borne by the Company
and its Subsidiaries.
F. Deemed Acceptance, Ratification and Consent. By accepting any Common
Stock hereunder or other benefit under the Plan, each Non-Employee Director and
each person claiming under or through him or her shall be conclusively deemed to
have indicated his or her acceptance and ratification of, and consent to, any
action taken under the Plan by the Company, the Board or the Committee.
G. Securities Act Registration. The Company shall use its best efforts to
cause to be filed under the Securities Act of 1933, as amended, a registration
statement covering the Shares issued, and issuable upon exercise of options
granted, under the Plan.
H. Governing Law. The provisions of the Plan shall be governed by and
construed in accordance with the laws of the State of Delaware.
I. Election Shares. Pending the grant of Election Shares hereunder, all
compensation earned by a Non-Employee Director with respect to which an election
to receive the grant of Election Shares pursuant to Section VIII.B has been made
shall be the property of such director and shall be paid to him or her in cash
in the event that Election Shares are not granted by the Company hereunder.
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J. Headings; Construction. Headings are given to the sections of the Plan
solely as a convenience to facilitate reference. Such headings, numbering and
paragraphing shall not in any case be deemed tn any way material or relevant to
the construction of the Plan or any provisions hereof. The use of the singular
shall also include within its meaning the plural, where appropriate, and vice
versa.
XI. AMENDMENT.
The Plan may be amended at any time and from time to time by resolution
of the Board as the Board shall deem advisable; provided, however, that no
amendment shall become effective without stockholder approval if such
stockholder approval is required by law, rule or regulation. No amendment of the
Plan shall materially and adversely affect any right of any participant with
respect to any Options or Shares theretofore granted under the Plan without such
participant's written consent, except for any modifications required to maintain
compliance with any federal or state statute or regulation.
XII. TERMINATION.
The Plan shall terminate upon the earlier of the following dates or
events to occur:
(i) upon the adoption of a resolution of the Board
terminating the Plan; and
(ii) ten years from the date the Plan is initially approved
and adopted by the stockholders of the Company in accordance with
Article XIII.
Except as specifically provided herein, no termination of the Plan
shall materially and adversely affect any of the rights or obligations of any
person without his or her consent with respect to any Options or Shares
theretofore granted under the Plan.
XIII. STOCKHOLDER APPROVAL AND ADOPTION.
The Plan was originally adopted by the Board on March 12, 1996 and was
approved and adopted at a meeting of the stockholders of the Company held on May
21, 1996. The Plan was amended and restated by the Board at a meeting held on
November 12, 1996 and August 14, 1997.
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EXHIBIT 5
THE ALLSTATE CORPORATION
------------------------
2775 Sanders Road, Suite A8
Northbrook, Illinois
60062-6127
----------------------------
Joseph T. Kane
Counsel
August 28, 1997
The Allstate Corporation
Allstate Plaza
Northbrook, IL 60062
Ladies and Gentlemen:
A Registration Statement on Form S-3 ("Registration Statement") is
being filed on or about the date of this letter with the Securities and Exchange
Commission to register 2,000,000 shares of common stock, par value $.01 per
share (the "Common Stock"), of The Allstate Corporation (the "Company") which
may from time to time be offered to immediate family members, including trusts
for the benefit of immediate family members, of certain participants in The
Allstate Corporation Equity Incentive Plan, The Allstate Corporation Employees
Replacement Stock Plan and The Allstate Corporation Equity Incentive Plan for
Non-Employee Directors (collectively, the "Plans"). This opinion is delivered in
accordance with the requirements of Item 601(b)(5) of Regulation S-K under the
Securities Act of 1933, as amended.
In connection with this opinion, I have examined and am familiar with
originals or copies, certified or otherwise identified to my satisfaction, of
(i) the Registration Statement, ((ii) the Restated Certificate of Incorporation
of the Company as currently in effect, (iii) the By-laws of the Company as
currently in effect, and (iv) resolutions of the Board of Directors of the
Company relating to the filing of the Registration Statement and related
matters. I have also examined originals or copies, certified or otherwise
identified to my satisfaction, of such records of the Company and such other
agreements, instruments, and documents of the Company, and have made such other
investigations, as I have deemed necessary or appropriate as a basis for the
opinions set forth herein.
I have assumed the legal capacity of all natural persons, the
genuineness of all signatures, the authenticity of all documents submitted to me
as originals, the conformity to original documents of all documents submitted to
me as certified to photostatic copies and the authenticity of the originals of
such latter documents. In making my examination of documents executed by parties
other than the Company, I have assumed that such parties had the power,
corporate and otherwise, to enter into and perform their respective obligations
thereunder and have also assumed the due authorization by all requisite action,
corporate and otherwise, and the execution and delivery by such parties of such
documents and the validity and binding effect thereof. As to any facts material
to the opinion expressed herein, I have relied upon oral or written statements
and representations of officers and other representatives of the Company and
others.
Based upon and subject to the foregoing, it is my opinion that the
shares of Common Stock have been duly authorized and, when issued pursuant to
the Plans, will be validly issued, fully paid and non-assessable.
I consent to the inclusion of this opinion as an exhibit to the
Registration Statement referred to above and to the reference in such
Registration Statement.
Very truly yours,
Joseph T. Kane
EXHIBIT 15
To the Board of Directors and Shareholders of
The Allstate Corporation:
We have reviewed, in accordance with standards established by the American
Institute of Certified Public Accountants, the unaudited interim financial
information of The Allstate Corporation and subsidiaries for the periods ended
March 31, 1997 and 1996 and June 30, 1997 and 1996, as indicated in our reports
dated May 14, 1997 and August 13, 1997, respectively; because we did not perform
an audit, we expressed no opinion on that information.
We are aware that our reports referred to above, which were included in your
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997 and June
30, 1997, are being used in this Registration Statement.
We are also aware that the aforementioned reports, pursuant to Rule 436(c) under
the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
Deloitte & Touche LLP
Chicago, Illinois
August 27, 1997
EXHIBIT 23(b)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
The Allstate Corporation on Form S-3 of our reports dated February 21, 1997,
appearing in and incorporated by reference in the Annual Report on Form 10-K of
The Allstate Corporation for the year ended December 31, 1996 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
Deloitte & Touche LLP
Chicago, Illinois
August 27, 1997
