Exhibit 99.1
THIS FORM OF AWARD AGREEMENT IS PART OF A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OHIO CASUALTY CORPORATION
2005 INCENTIVE PLAN
PERFORMANCE-BASED STOCK UNIT AND CASH AWARD AGREEMENT
GRANTED TO ______________________ ON ___________
Ohio Casualty Corporation ("Company") and its shareholders believe that their
business interests are best served by extending to you an opportunity to earn
additional compensation based on the growth of the Company's business. To
this end, the Company and its shareholders adopted the Ohio Casualty
Corporation 2005 Incentive Plan ("Plan") as a means through which you may
share in the Company's success. This is done by granting Awards to key
employees like you. If you satisfy the conditions described in this Agreement
(and the Plan), your Award will mature into cash and common shares of the
Company.
This Award Agreement describes many features of your Award and the conditions
you must meet before you may receive the value associated with your Award.
To ensure you fully understand these terms and conditions, you should:
* Carefully read the Plan, the Plan's prospectus and the supplement to the
Plan's prospectus to ensure you understand how the Plan works;
* Read this Award Agreement carefully to ensure you understand what you must
do to earn your Award; and
* Contact the Compensation Department if you have any questions about your
Award.
Also, no later than 30 days after the Grant Date specified in the attached
description of your Award, you must return a signed copy of the Award
Agreement to:
▇▇▇▇ ▇. ▇▇▇▇▇▇
The Ohio Casualty Insurance Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
If you do not do this, your Award will be revoked automatically as of the date
it was granted and you will not be entitled to receive any amount on account
of the retroactively revoked Award.
Section 409A of the Internal Revenue Code ("Section 409A") imposes substantial
penalties on persons who receive some forms of deferred compensation (see the
Plan's prospectus for more information about these penalties). Your Award has
been designed to avoid these penalties. However, because the Internal Revenue
Service has not yet issued rules fully defining the effect of Section 409A, it
is possible that your Award and the Award Agreement must be revised after the
IRS issues these rules. As a condition of accepting this Award, you must
agree to accept those revisions, without any further consideration, even if
those revisions change the terms of your Award and reduce its value or
potential value.
Nature of Your Award
You have been granted an Award consisting of an opportunity to earn stock
units, which will be converted to common shares of the Company, and cash but
only if you satisfy the conditions described in this Award Agreement. Federal
income tax rules apply to the payment of your Award. These and other
conditions affecting your Award are described in this Award Agreement, the
Plan, the Plan's prospectus and the supplement to the Plan's prospectus, all
of which you should read carefully.
No later than __________________ you must return a signed copy of this Award
Agreement to:
▇▇▇▇ ▇. ▇▇▇▇▇▇
The Ohio Casualty Insurance Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
If you do not do this, your Award will be revoked automatically as of the
Grant Date.
Grant Date: Your Award was issued on__________________
This is the date you begin to measure your Award.
Amount of Award: The amount of your Award and the conditions that must be met
before it will be settled is discussed below in the section below titled
"Settlement".
Performance Period: The period that begins on the Grant Date ______________
and ends on ____________________.
When Your Award Will Be Settled
Settlement: At the end of the Performance Period, the cash portion of your
Award will be paid to you and your stock units will be converted to an equal
number of common shares of the Company or forfeited depending on the extent
to which the criteria described in the following table are met:
If, between July 1, You will receive Also, you will
2005 and December 31, the following receive the
2007, the Company's number of following amount
cumulative after-tax Company shares.. of cash...
operating income is..
Threshold: $238.5 million
(50% of Target Award)
Target: $340.7 million
(100% of Target Award)
Maximum: $511 million
(200% of Target Award)
Settlement pro rations will occur when cumulative after-tax operating income
is above Threshold and Below Target or above Target and below Maximum.
How Your Award Might Be Settled Earlier Than the Normal Settlement Date: Your
Award will be settled earlier than the end of the Performance Period if there
is a Business Combination (as defined in the Plan) during the Performance
Period. If this happens, your Award will be settled as of the date of the
Business Combination and you will receive a pro rata amount equal to [1] your
Award calculated at the "target level" (even if that level is not met when the
Business Combination occurs) or, if higher, the Award level actually met as
of the date of the Business Combination, [2] multiplied by the number of whole
calendar months between the beginning of the Performance Period and the date
of the Business Combination and [3] divided by the whole number of calendar
months in the Performance Period. This amount will be paid to you in a manner
that is consistent with the nature of the Business Combination.
How Your Award May Be Forfeited: Regardless of the normal settlement schedule
just given:
* You will forfeit your Award if the criteria described above are not
met; and
* You may forfeit your Award if you terminate employment before the
end of the Performance Period. The effect of a termination of
employment is described in the Plan's prospectus.
Settling Your Award
If all applicable conditions have been met, your Award will be settled
automatically; you are not required to do anything on the Settlement Date.
Other Rules Affecting Your Award
Rights During the Performance Period: During the Performance Period you may
not cast any votes or receive any dividends otherwise associated with the
shares underlying your stock units. However, these rights will be available
when (and if) your stock units are converted to common shares of the Company.
Also, no interest will be credited on the cash portion of your Award during
the Performance Period.
Beneficiary Designation: You may name a Beneficiary or Beneficiaries to
receive any portion of your Award that is to be settled after you die. This
may be done only on the attached Beneficiary Designation Form and by following
the rules described in that form. This form need not be completed now and is
not required as a condition of receiving your Award. If you die without
completing a Beneficiary Designation Form or if you do not complete that form
properly, your Beneficiary will be your surviving spouse or, if you do not
have a surviving spouse, your estate.
Tax Withholding: Income taxes must be withheld when your Award is settled
(see the Plan's prospectus for a discussion of the tax treatment of your
Award). After the end of the Performance Period (and when the Company
calculates the amount of your Award that has been earned), you will be
contacted about how you want to meet this withholding obligation. You may
meet this withholding obligation in one of several ways. They are:
* The Company may withhold this amount from other amounts owed to
you (e.g., from your salary or from the cash portion of your Award).
* You may pay these taxes by giving the Company a check (payable to
"The Ohio Casualty Insurance Company") in an amount equal to the
taxes that must be withheld and that cannot be met through the cash
portion of the Award.
* By having the Company withhold a portion of the shares that otherwise
would be distributed. The number of shares withheld will have a fair
market value equal to the taxes that must be withheld.
* You may give the Company other shares of Company stock (that you
have owned for at least six months) with a value equal to the taxes
that must be withheld.
You may choose the approach you prefer. However, the Company may reject your
preferred method for any reason (or for no reason). If you do not choose a
method of meeting your withholding obligation (or if the Company rejects your
preferred method of meeting this obligation), the taxes due will be withheld
from cash otherwise due to you, including the cash portion of your Award, or,
if sufficient cash is not due when these taxes must be paid, the Company will
withhold a number of shares with a fair market value equal to the additional
amount that must be withheld.
Transferring Your Award: Normally your Award may not be transferred to another
person. However, you may complete a Beneficiary Designation Form to name the
person to receive the portion of your Award that is to be settled after you
die (see section titled "Beneficiary Designation" above). Also, the Committee
may allow you to place your stock units into a trust established for your
benefit or for the benefit of your family. Contact ▇▇▇▇ ▇. ▇▇▇▇▇▇ at ________
or at the address given below if you are interested in doing this.
Governing Law: This Award Agreement will be construed in accordance with and
governed by the laws of the United States and of the State of Ohio (other
than laws governing conflicts of laws).
Other Agreements: Also, your Award will be subject to the terms of any other
written agreements between you and the Company.
Adjustments to Your Award: Your Award will be adjusted, if appropriate, to
reflect any change to the Company's capital structure (e.g., the number of
your stock units will be adjusted to reflect a stock split).
Other Rules: Your Award also is subject to more rules described in the Plan,
in the Plan's prospectus and in the supplement to the Plan's prospectus. You
should read each of these documents carefully to ensure you fully understand
all the conditions of this Award.
Tax Treatment of Your Award
The federal income tax treatment of your Award is discussed in the Plan's
prospectus.
*****
You may contact the Compensation Department if you have any questions about
your Award or this Award Agreement.
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Your Acknowledgment of Award Conditions
Note: You must sign and return a copy of this Award Agreement to ▇▇▇▇ ▇.
▇▇▇▇▇▇ at the address given below no later than ____________________.
By signing below, I acknowledge and agree that:
* A copy of the Plan has been made available to me;
* I have received a copy of the Plan's prospectus and the supplement
to the Plan's prospectus;
* I understand and accept the conditions placed on my Awards and
understand what I must do to earn my Award;
* I will consent (in my own behalf and in behalf of my beneficiaries
and without any further consideration) to any change to my Award or
this Award Agreement so I can avoid paying penalties under Section
409A of the Internal Revenue Code, even if those changes affect the
conditions of my Award and reduce its value or potential value; and
* If I do not return a signed copy of this Award Agreement to the
address shown below on or before _____________________, my Award
will be revoked automatically as of the date it was granted and I
will not be entitled to receive any amount on account of the
retroactively revoked Award.
_______________________________________
(signature)
Date signed: ____________________________
A signed copy of this form must be sent to the following address no later
than ___________________:
▇▇▇▇ ▇. ▇▇▇▇▇▇
The Ohio Casualty Insurance Company
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After it is received, a representative of the Ohio Casualty Corporation 2005
Incentive Plan Committee will acknowledge receipt of your signed agreement.
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Committee's Acknowledgment of Receipt
A signed copy of this Award Agreement was received on ______________.
By: _________________________
_____ Has complied with the conditions imposed on the grant and the Award
and the Award Agreement remains in effect; or
_____ Has not complied with the conditions imposed on the grant and the
Award and the Award Agreement is revoked as of the Grant Date because
________________________________________________________________
describe deficiency
The Ohio Casualty Corporation 2005 Incentive Plan Designated Representative
By: ______________________________
Date: _____________________________
Note: Send a copy of this completed form to __________ at the address given
below and keep a copy as part of the Plan's permanent records.
