EXHIBIT 10.10
STANCORP 1999 OMNIBUS STOCK INCENTIVE PLAN
RESTRICTED STOCK AGREEMENT
This Restricted Stock Agreement ("Agreement") is made effective as of
[Date], between StanCorp Financial Group, Inc., an Oregon corporation (the
"Company") and [FirstName] [LastName] (the "Employee").
In consideration of the agreements set forth below, the Company and the
Employee agree as follows:
1. Stock Award. Pursuant to the Company's 1999 Omnibus Stock Incentive
Plan (the "Plan"), the Company hereby awards to the Employee [TotalShares]
shares of common stock ("Common Stock") of the Company (the "Grant Shares") in
calendar year 2000 (the "Grant Year"). The Grant Shares shall be owned by the
Employee subject to the terms and conditions of this Agreement and the Plan, a
copy of which has been provided to the Employee. Capitalized terms not
otherwise defined herein shall have the meanings ascribed to them in the Plan.
2. Escrow. For purposes of facilitating the enforcement of Sections 3
and 5 of this Agreement, the Grant Shares shall be delivered to a person or
persons designated by the Company to serve as escrow holder (individually or
jointly, as applicable, the "Escrow Holder"). The Escrow Holder may be an
employee of the Company. Upon delivery into escrow of the Grant Shares, the
Employee shall deliver to the Escrow Holder duly executed stock powers with
respect to the Grant Shares. The Escrow Holder shall hold the Grant Shares and
the stock powers in escrow and shall release the Grant Shares to the Company or
the Employee, as applicable, only in accordance with Section 7 of this
Agreement. The Employee hereby acknowledges that the Company's designee is
appointed as the Escrow Holder with the foregoing authorities as a material
inducement to make this Agreement and that said appointment is coupled with an
interest and is irrevocable. The Employee agrees that said Escrow Holder shall
not be liable to any party to this Agreement (or to any other party) for any
actions or omissions unless the Escrow Holder is grossly negligent with respect
thereto.
3. Vesting of the Grant Shares; Forfeiture.
3.1 Definition of "Termination of Employment". A "Termination of
Employment" shall be deemed to occur on the date on which the Employee ceases to
be employed on a continuous full time basis by the Company or a subsidiary of
the Company (the Company and its subsidiaries being referred to herein as the
"StanCorp Group") for any reason or no reason, with or without cause. The
Employee shall not be treated as having a Termination of Employment during the
time the Employee is receiving long term disability benefits provided by the
Company or a subsidiary of the Company, unless the Employee has received formal
written notice of termination.
3.2 Vesting.
(a) Regular Vesting Schedule. A portion of the Grant Shares
shall become non-forfeitable ("Vested") on each succeeding February 15, starting
with the February 15 following the end of the Grant Year and ending on February
15, 2004, if the following two conditions are satisfied:
(i) The Employee does not have a Termination of Employment
prior to such February 15, other than by reason of Total Disability, Death or
Retirement as such terms are defined in Sections 7.1.4.2, 7.1.4.3 and 7.1.4.6,
respectively, of the Plan; and
(ii) The Employee satisfies the Performance Criteria
described in Section 4 with respect to the calendar year that ended on the
December 31 immediately preceding such February 15 (the "Preceding Calendar
Year").
The exact number of Grant Shares that will vest each February 15 shall be
determined based on the level of achievement of the Performance Criteria during
the Preceding Calendar Year as set forth in Section 4.2.
(b) Accelerated Vesting. Notwithstanding any other provision of
this Agreement, any unvested Grant Shares shall become fully Vested upon the
occurrence of a Change of Control Event. For purposes of this Agreement, a
Change of Control Event shall have occurred if:
(i) Any "Person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") (other than the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, or any company owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company), is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities;
(ii) The shareholders of the Company approve a merger or
other consolidation of the Company with any other company, other than (a) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) 51% or more of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
Person acquires more than 30% of the combined voting power of the Company's then
outstanding securities;
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(iii) The shareholders of the Company approve an agreement
for the sale or disposition by the Company of all or substantially all of its
assets;
(iv) A tender or exchange offer is made for Common Stock (or
securities convertible into Common Stock) of the Company and such offer results
in a portion of those securities being purchased and the offeror after the
consummation of the offer is the beneficial owner (as determined pursuant to
Section 13(d) of the Exchange Act), directly or indirectly, of securities
representing at least 30% of the voting power of outstanding securities of the
Company;
(v) During any period of twelve months or less, individuals
who at the beginning of such period constituted a majority of the Board cease
for any reason to constitute a majority of the Board unless the nomination or
election of such new directors was approved by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning of such
period;
(vi) Any other event or combination of events which the
Board, acting in its sole discretion, determines to be a "Change of Control
Event" for purposes of this Agreement.
3.3 Forfeiture. An Employee shall forfeit to the Company all or a
portion of the Grant Shares upon the occurrence, prior to Vesting of any of the
following:
(a) Termination of Employment. Upon a Termination of
Employment, the Employee shall forfeit any of the Grant Shares that are not
Vested, except that if the Termination of Employment occurs by reason of Total
Disability, Death or Retirement as such terms are defined in Sections 7.1.4.2,
7.1.4.3 and 7.1.4.6, respectively, of the Plan, the Grant Shares shall not be
immediately forfeited but shall continue to Vest under Section 3.2 until the
earlier of (i) the date that is 60 months after the date of Termination of
Employment, (ii) February 16, 2004, or (iii) the date on which the Grant Shares
are forfeited under Section 3.3(c).
(b) Failure to Vest Prior to February 16, 2004. If any portion
of the Grant Shares remain unvested upon the later of (i) February 16, 2004 or
(ii) the occurrence of a Change of Control Event that is pending on February 16,
2004, the Employee shall forfeit the unvested Grant Shares.
(c) Attempted Transfer of Shares Not Vested. If an attempt is
made to assign, encumber, pledge or otherwise transfer any Grant Shares before
they are Vested, in violation of Section 5, the Employee shall forfeit all of
the Grant Shares with respect to which the attempt was made.
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4. Performance Criteria.
4.1 Definitions.
(a) XXX. The term "XXX" shall mean the percentage return on the
common equity of the Company achieved for a calendar year. The XXX calculation
shall be based on (i) the after tax operating income for the Company for that
calendar year determined on a consolidated basis from the audited consolidated
financial statements of the Company and its subsidiaries, divided by (ii) the
arithmetic average of the Company's beginning and ending equity (excluding other
comprehensive income).
In the event that an acquisition, disposition or other similar
transaction or event shall occur during the course of a calendar year, the Chief
Financial Officer of the Company shall calculate an adjusted Return on Equity
that mitigates, to the extent possible, any one-time financial effects of such
transaction. Upon approval of the Plan Administrator, the adjusted XXX shall be
used in the Annual Vesting Determination of the year in which the transaction
occurred.
(b) XXX Target. The term "XXX Target" shall mean, with respect
to each calendar year commencing with the Grant Year, ten and one-half percent
(10.5%) XXX or such higher percentage XXX up to and including fifteen percent
(15%) XXX.
(c) Minimum XXX Target. The term "Minimum XXX Target" shall
mean, with respect to the calendar year commencing with the Grant Year, ten and
one-half percent (10.5%) XXX. For each subsequent calendar year, the Minimum XXX
Target shall mean the greater of 10.5% XXX or the highest XXX computed for any
Preceding Calendar Year since and including the Grant Year, provided that if a
limitation on vesting is imposed by Section 4.2(d) below, the Minimum XXX Target
shall be the XXX Target that correlates to the level to which Vesting became
restricted in the Preceding Calendar Year.
4.2 Annual Vesting Determination.
(a) Determination of XXX. As soon as practicable following
January 1 of each of the four calendar years commencing with the year following
the Grant Year, the Company shall determine the XXX for the Preceding Calendar
Year.
(b) Minimum XXX Target Not Met. If the XXX for a calendar year,
when determined in accordance with Section 4.2 (a), is less than the Minimum
XXX, no Grant Shares shall vest for such calendar year.
(c) Minimum XXX Target Met. If the XXX for a calendar year,
when determined in accordance with Section 4.1, equals or exceeds the Minimum
XXX Target for that year, then a percentage of the Grant Shares shall vest based
on the XXX Target for that calendar year (but not including the XXX Target
achieved in any Preceding Calendar Year). Subject to the
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limitation set forth in Section 4.2(d) below, the percentage of Grant Shares
that shall vest upon achievement of an XXX Target is as follows:
Percent of (Additional)
XXX Target Grant Shares That Vest
---------------- -----------------------
10.5 10
11.0 10
11.5 10
12.0 10
12.5 10
13.0 10
13.5 10
14.0 10
14.5 10
15.0 10
If the calculated XXX for any calendar year falls between the XXX Targets listed
above, such XXX will be used at the end of each calendar year to interpolate the
exact percentage of Grant Shares that Vest for that year and such actual XXX
shall become the Minimum Target XXX for subsequent years.
(d) In no case shall more than 40 percent of the Grant Shares
Vest in any calendar year as a result of the operation of Section 4.
4.3 Adjustment of XXX Target by Board of Directors. The Board, or a
committee thereof to which the Board has delegated authority to administer the
Plan (the "Plan Administrator"), may adjust the XXX Target for a given calendar
year if the Plan Administrator finds, in its absolute discretion, that
unexpected changes in capital structure have resulted in distortion of the XXX
for the year.
4.4 Adjustment of Grant Shares to Vest by Board of Directors. The
Board or the Plan Administrator may adjust in its absolute discretion the number
of Grant Shares that will vest under Section 4 for a given calendar year by plus
or minus 50%. Any adjustment shall be made prior to February 15 of any calendar
year with respect only to Grant Shares that have not yet Vested.
5. Restriction on Transfer. The Employee shall not assign, encumber,
pledge or otherwise transfer, voluntarily or involuntarily, any Grant Shares
that are not Vested.
6. Mergers, Consolidations or Changes in Capital Structure. If, after the
date of this Agreement, the outstanding common shares of the Company are
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another corporation by
reason of any reorganization, merger, consolidation, plan of exchange,
recapitalization, reclassification, stock split, combination of shares or
dividend payable in shares, or in the event of any consolidation, merger or plan
of exchange involving the Company pursuant
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to which the Company's common shares are converted into cash, securities or
other consideration, then the cash, securities or other consideration issued,
distributed or received with respect to the Grant Shares in any such transaction
shall be subject to the restrictions and conditions set forth herein, including
the escrow requirements of Sections 2 and 7.
7. Escrow. The Shares and associated stock powers delivered to the Escrow
Holder pursuant to Section 2.2 of this Agreement shall be held in escrow until
(i) receipt by the Escrow Holder of a certificate of the Company certifying that
some or all of the Grant Shares have Vested, or (ii) receipt by the Escrow
Holder of a certificate of the Company certifying that some or all of the Grant
Shares have been forfeited to the Company pursuant to Section 3.3. Upon receipt
by the Escrow Holder of one of the foregoing certificates, the Escrow Holder
shall deliver to the Employee or the Company, as appropriate, certificates
representing all of the Grant Shares to which the Employee or the Company, as
applicable, is entitled.
8. No Right to Employment. Nothing in this Agreement or the Plan shall
(i) confer upon the Employee any right to be continued in the employment of the
Employee's employer or interfere in any way with the right of such employer to
terminate the Employee's employment at any time, for any reason or no reason,
with or without cause, or to decrease the Employee's compensation or benefits,
or (ii) confer upon the Employee any right to the continuation, extension,
renewal, or modification of any compensation, contract or arrangement with or by
the Company or any subsidiary of the Company.
9. Rights as Shareholder. Subject to Section 2 and the other provisions
of this Agreement, the Employee shall be entitled to all of the rights of a
shareholder with respect to the Grant Shares, including the right to vote such
shares and to receive dividends payable with respect to such shares from the
date of grant. Until the Grant Shares become Vested, they will be treated for
federal income tax purposes as owned by the Company and dividends paid to the
Employee with respect to the Grant Shares will be treated for federal income tax
purposes as additional compensation. The Employee acknowledges that the
certificates representing the Grant Shares may bear such legends as may be
required by law with respect to the rights and restrictions applicable to the
shares.
10. Withholding Taxes. The Company shall have the right to require the
Employee to remit to the Company, or to withhold from other amounts payable to
the Employee, as compensation or otherwise, an amount sufficient to satisfy all
federal, state and local withholding tax requirements.
11. Approvals. The obligations of the Company under this Agreement and
the Plan are subject to the approval of state, federal or foreign authorities or
agencies with jurisdiction in the matter. The Company will use its reasonable
best efforts to take steps required by state, federal or foreign law or
applicable regulations, including rules and regulations of the Securities and
Exchange Commission and any stock exchange on which the Company's shares may
then be listed, in connection with the grant evidenced by this Agreement. The
foregoing notwithstanding, the Company shall not be obligated to deliver the
Grant Shares if such delivery would violate or result in a violation of
applicable state or federal securities laws.
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12. Miscellaneous.
12.1 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Oregon, without regard to the choice of
law principles applied in the courts of such state.
12.2 Severability. If any provision or provisions of this Agreement
are found to be unenforceable, the remaining provisions shall nevertheless be
enforceable and shall be construed as if the unenforceable provisions were
deleted.
12.3 Entire Agreement. This Agreement and the Plan constitute the
entire agreement between the parties with respect to the subject matter hereof
and supersede all prior and contemporaneous oral or written agreements between
the Company and the Employee relating to the subject matter hereof.
12.4 Amendment. This Agreement may be amended or modified only
pursuant to the Plan or by written consent of the Company and the Employee.
12.5 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
COMPANY: STANCORP FINANCIAL GROUP, INC., an Oregon
corporation
By:
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Title:
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EMPLOYEE:
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[FirstName] [LastName]
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