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EXHIBIT 10.22
THE SYMONS INTERNATIONAL GROUP, INC.
1996 STOCK OPTION PLAN
1. Purpose. The purpose of the Symons International Group, Inc. ("SIG" or
the "Company") 1996 Stock Option Plan (the "Plan") is to provide to (i)
certain Officers (including Officers who are members of the Board of
Directors), other key employees, and non-employee Directors of SIG, (ii)
key employees of any direct or indirect Subsidiaries of the Company
(individually a "Subsidiary" and collectively the "Subsidiaries") who
are materially responsible for the management or operation of the
business of SIG or a Subsidiary and (iii) directors of Goran Capital,
Inc., the parent of the Company ("Goran"), a favorable opportunity to
acquire Common Stock, without par value, of the Company ("Common
Stock"), thereby providing them with an increased incentive to work for
the success of the Company and the Subsidiaries and better enabling the
Company and the Subsidiaries to attract and retain the services of
capable personnel. The two means by which an individual may acquire
Common Stock are:
(a) the grant to an individual of an Option to acquire Shares of
Common Stock (an "Option") in accordance with Section 5; and
(b) the grant to a member of the Board of Directors of the Company
(a "Director") of an Option to acquire Shares of Common Stock
(a "Director Option") in accordance with Section 7.
2. Administration of the Plan. The Plan shall be administered, construed
and interpreted by the Executive Committee of the Company's Board of
Directors (the "Committee"); provided, however, that either the
Compensation Committee of the Company's Board of Directors or the
entire Board of Directors of the Company shall approve all specific
transactions pursuant to this Plan upon the advice of the Committee.
The decision of a majority of the members of the Committee shall
constitute the decision of the Committee, and the Committee may act
either at a meeting at which a majority of the members of the Committee
is present or by a written consent signed by all members of the
Committee. The Committee shall determine, consistent with and subject
to the provisions of the Plan:
(a) the individuals (the "Optionees") to whom Options or successive
Options shall be granted under the Plan;
(b) the time when Options shall be granted hereunder;
(c) the number of Shares of Common Stock of the Company to be
covered under each Option;
(d) the price to be paid upon the exercise of each Option;
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(e) the period within which each Option may be exercised;
(f) the extent to which an Option is an Incentive Stock Option or a
Non-Qualified Stock Option;
(g) the extent to which stock appreciation rights shall be awarded in
conjunction with an Option; and
(h) the terms and conditions of the respective agreements by which
Options and stock appreciation rights granted shall be evidenced.
The Committee shall also have authority to prescribe, amend and rescind
rules and regulations relating to the Plan, and to make all other
determinations necessary or advisable in the administration of the Plan.
3. Eligibility. The Committee may, consistent with the purposes of the Plan,
grant Options (and/or related stock appreciation rights) to officers and
other key employees of the Company or of a Subsidiary who, in the opinion
of the Committee, are from time to time materially responsible for the
management or operation of the business of the Company or of a Subsidiary
or directors of Goran; provided, however, that in no event may any employee
of the Company or the Subsidiaries who owns (after application of the
ownership rules in Section 424(d) of the Internal Revenue Code of 1986, as
amended (the "Code")) Shares of Common Stock possessing more than 10% of
the total combined voting power of all classes of Common Stock of the
Company be granted an Incentive Stock Option hereunder unless at the time
such Option is granted the Option price is at least 110% of the fair market
value of the Common Stock subject to the Option and such Incentive Stock
Option by its terms is not exercisable after the expiration of five years
from the date such Option is granted. Subject to the provisions of Section
4 hereof, an individual who has been granted an Option under the Plan, if
he is otherwise eligible, may be granted an additional Option or Options if
the Committee shall so determine.
4. Stock Subject to the Plan. There shall be reserved for issuance upon the
exercise of Options and Director Options granted under the Plan, one
million of the authorized but unissued shares of the Company's Common Stock
(the "Shares"). Subject to Section 8 hereof, the Shares for which Options
and/or Director Options may be granted under the Plan shall not exceed that
number. If any Option and/or Director Option shall expire or terminate for
any reason without having been exercised in full, the unpurchased Shares
subject thereto shall (unless the Plan shall have terminated) become
available for other Options or Director Options under the Plan.
5. Terms of Option. Each Option granted under the Plan shall be subject to
the following terms and conditions and to such other terms and conditions
not inconsistent therewith as the Committee may deem appropriate in each
case:
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(a) Option Price. The price to be paid for Shares upon the exercise of each
Option shall be the average between the high and the low of the Common
Stock on the date of grant (or, if the date of grant is not a trading
date, then on the last previous trading day), but such price in the case
of an Incentive Stock Option in no event shall be less than the fair
market value, as determined by the Committee consistent with the
requirements of Section 422 of the Code, of such Common Stock on the
date on which such Option is granted.
(b) Period for Exercise of Option. An Option shall not be exercisable after
the expiration of such period as shall be fixed by the Committee at the
time such Option is granted, but such period in no event shall
exceed ten years and one day from the date on which such Option is
granted; provided, however, that Incentive Stock Options shall have
terms not in excess of ten years; provided, further, that no Option
shall be exercisable prior to six months from the date of grant or, if
later, the date on which the Plan is approved by Shareholders of the
Company as required by Section 422 of the Code.
(c) Exercise of Options. The Option price of each Share of Common Stock
purchased upon exercise of an Option shall be paid in full (i) in cash
at the time of such exercise, (ii) if the Optionee may do so in
conformity with Regulation T (12 C.F.R. Section 220.3 (e)(4) and without
violating Section 16 (b) or (c) of the 1934 Act (to the extent
applicable) and to the extent permitted under the agreement entered into
by the Committee and the Optionee relating to the Option, by delivering
a properly executed exercise note together with irrevocable instructions
to a broker to deliver promptly to the Company the total Option price in
cash and, if desired, the amount of any taxes to be withheld from the
Optionee's compensation as a result of any withholding tax obligation of
the Company or any of its Subsidiaries, as specified in such notice, or
(iii) subject to the approval of the Board, by tendering to the Company
whole Shares of Common Stock owned by him for at least six (6) months or
any combination of whole Shares of Common Stock owned by him and cash,
having a fair market value equal to the cash exercise price of the
Shares with respect to which the Option is being exercised. For this
purpose, the fair market value of the Shares tendered by the Optionee
shall be computed as of the exercise date in such manner as determined
by the Committee, consistent with the requirements of Section 422 of the
Code. The Committee shall have the authority to grant Options
exercisable in full at any time during their term, or exercisable in
such installments, equal or non-equal, as the Committee shall determine.
An Option may be exercised at any time or from time to time during the
term of the Option as to any or all whole Shares which have become
subject to purchase pursuant to the terms of the Option (including,
without limitation, any quotas with respect to Option exercise) or the
Plan.
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(d) Termination of Option. If an Optionee ceases to be an employee of the
Company or one of the Subsidiaries or a director of Goram or if there is
a disposition of the subsidiary for which the Optionee performed the
majority of his services, any Option granted to him shall forthwith
terminate unless the Option grant to the Optionee provides otherwise.
Leave of absence approved by the Committee shall not constitute
cessation of employment. Notwithstanding the foregoing provisions of
this subsection (d), no Option shall in any event be exercisable after
the expiration of the period fixed by the Committee in accordance with
subsection (b) above. An Option shall also terminate if this Plan is not
approved by the Shareholders of the Company within the requisite time
period set forth in Section 422 of the Code.
(e) Transferability of Option. An Incentive Stock Option may not be
transferred by the Optionee otherwise than by will or the laws of
descent and distribution, and during the lifetime of the Optionee shall
be exercisable only by the Optionee. Any Non-Qualified Stock Options
granted hereunder may be transferred by an Optionee so long as such
transfer does not result in a purchase or sale for purposes of Section
16 of the Securities Exchange Act of 1934.
(f) Investment Representations. Unless the Shares of Common Stock subject
to an Option are registered under applicable federal and state
securities laws, each Optionee by accepting an Option shall be deemed to
agree for himself and his legal representatives that any Option granted
to him and any and all Shares of Common Stock purchased upon the
exercise of the Option shall be acquired for investment and not with a
view to, or for the sale in connection with, any distribution thereof,
and each notice of the exercise of any portion of an Option shall be
accompanied by a representation in writing, signed by the Optionee or
his legal representatives, as the case may be, that the Shares of
Common Stock are being acquired in good faith for investment and not
with a view to, or for sale in connection with, any distribution
thereof (except in case of the Optionee's legal representatives for
distribution, but not for sale, to his legal heirs, legatees and other
testamentary beneficiaries). Any shares issued pursuant to an exercise
of an Option may, but need not, bear a legend evidencing such
representations and restrictions. In addition, if the Options and
Shares of Common Stock issued pursuant to this Plan are issued in
reliance upon Rule 147, promulgated under the Securities Act of 1933,
as amended, the written representations required by such rule shall be
obtained from the Optionees prior to or at the time they are granted
Options, any and all legends required by Rule 147 shall be set forth on
the certificates representing Shares of Common Stock issued pursuant to
the exercise of such Options, and stop transfer instructions shall be
issued to the Company's recordkeeping transfer agent with respect to
such Shares.
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(g) Maximum Incentive Stock Options. The aggregate fair market value
(determined as of the time the Option is granted) of Common Stock
subject to Incentive Stock Options that are exercisable for the first
time by an employee during any calendar year under the Plan or any
other plan of the Company or any Subsidiary shall not exceed $100,000.
For this purpose, the fair market value of such Shares shall be
determined as of the date the Option is granted and shall be computed
in such manner as shall be determined by the Committee, consistent
with the requirements of Section 422 of the Code. If the immediate
exercisability of Incentive Stock Options arising from the retirement,
death or permanent and total disability of an Optionee consistent with
the terms of the applicable Option agreement or arising from any
change of control of the Company in accordance with Section 7 hereof
would cause this $100,000 limitation to be exceeded for an Optionee,
such Incentive Stock Options shall automatically be converted into
Non-Qualified Stock Options as of the date on which such Incentive
Stock Options become exercisable, but only to the extent necessary to
comply with the $100,00 limitation.
(h) Agreement. Each Option shall be evidenced by an agreement between
the Optionee and the Company which shall provide, among other things,
that, with respect to Incentive Stock Options, the Optionee shall
advise the Company immediately upon any sale or transfer of the Shares
of Common Stock received upon exercise of the Option to the extent
such sale or transfer takes place prior to the later of (i) two years
from the date of grant or (ii) one year from the date of exercise.
The agreement shall include the Option term and exercise conditions
and may also provide for an additional cash payment from the Company
to the Grantee of such Non-Qualified Stock Option as soon as
practicable after the exercise date of such Non-Qualified Stock
Option equal to all or a portion of any tax savings to be received by
the Company attributable to the exercise of such Non-Qualified Stock
Option.
(i) Certificates. The certificate or certificates for the Shares
issuable upon an exercise of an Option shall be issued as promptly as
practicable after such exercise. An Optionee shall not have any
rights of a Shareholder in respect to the Shares of Common Stock
subject to an Option until the date of issuance of a stock
certificate to him for such Shares. In no case may a fraction of a
Share be purchased or issued under the Plan, but if, upon the exercise
of an Option, a fractional Share would otherwise be issuable, the
Company shall pay cash in lieu thereof.
(j) No Right to Continued Service. Nothing in this Plan or in any
agreement entered into pursuant hereto shall confer on any person any
right to continue in the employ of the Company or its Subsidiaries or
affect any rights of the Company or, a Subsidiary, or the Shareholders
of the Company to terminate his service at any time.
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(k) Incentive Stock Options and Non-Qualified Stock Options. Options
granted under the Plan may be Incentive Stock Options under Section
422 of the Code or Non-Qualified Stock Options; provided, however,
that Incentive Stock Options may not be granted to any individual who
is not an employee of the Company or a Subsidiary. All Options
granted hereunder shall be clearly identified as either Incentive
Stock Options or Non-Qualified Stock Options. In no event shall the
exercise of an Incentive Stock Option affect the right to exercise any
Non-Qualified Stock Option, nor shall the exercise of any
Non-Qualified Stock Option affect the right to exercise any Incentive
Stock Option. Nothing in this Plan shall be construed to prohibit the
grant of Incentive Stock Options and Non-Qualified Stock Options to
the same person; provided, however, that Incentive Stock Options and
Non-Qualified Stock Options shall not be granted in a manner whereby
the exercise of one Non-Qualified Stock Option or Incentive Stock
Option affects the exercisability of the other.
6. Stock Appreciation Rights. The Committee may, in the event it determines it
to be necessary or desirable to create a reasonable opportunity for an
Optionee to acquire an increased ownership interest in the Company, award a
stock appreciation right in conjunction with either an Incentive Stock
Option or a Non-Qualified Stock Option. Under a stock appreciation right,
the Optionee may, subject to Board approval, surrender all or a part of a
Stock Option and receive in exchange payment of no more than 100% of the
excess of the fair market value of the Common Stock subject to the Option
on the date of exercise over the exercise price of the Option. The award of
a stock appreciation right shall be evidenced by an agreement between the
Company and the Optionee, the provisions of which shall be determined by
the Committee in accordance with the provisions of the Plan.
A stock appreciation right may be exercisable at any date with respect to
no more than the number of Shares for which the related Stock Option is
exercisable. A stock appreciation right may be exercisable only when the
per Share fair market value (as determined in accordance with Section 5(a)
hereof) of the Common Stock subject to the Option exceeds the per Share
exercise price of the Option. Each stock appreciation right shall terminate
no later than the termination date of the related Stock Option, and is
transferable only with and to the extent that the related Stock Option is
transferable.
The Committee may limit the payment on exercise of a stock appreciation
right to less than 100% of the increase in value, as aforesaid, or it may
set a maximum dollar amount of payment not to exceed 100% of the increase
in value. Payment may be made in cash, in Shares of Common Stock, or in a
combination of cash and Shares of Common Stock. Notwithstanding any other
provision in the Plan to the contrary, the Committee shall have the sole
discretion either to (i) determine the form in which payment for the stock
appreciation right will be made (i.e., cash, Shares of Common Stock or a
combination thereof), or (ii) to consent to or disapprove the election of
the Optionee to receive cash in full
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of partial settlement of the stock appreciation right. Such consent or
disapproval must be given within seven calendar days after the date on
which the Optionee initially elects the form of payment. Upon exercise
of a stock appreciation right respecting a given number of Shares
subject to the Option, the right to exercise the related Option
respecting such Shares shall automatically terminate.
To the extent that stock appreciation rights shall be exercised, the
Option with respect to which the stock appreciation rights have been
granted shall be deemed to have terminated for a reason other than the
exercise thereof for the purpose of the limitation on the aggregate
number of Shares reserved under Section 4 of this Plan.
7. Director Options. Director Options shall be granted as of the first day
following the successful closing of the SIG Initial Public Offering
("IPO") ("Grant Date"). As of the Grant Date, each Director serving as
a Director of the Company on this Grant Date shall automatically be
granted a Director Option to purchase 5,000 Shares of Common Stock;
provided, however, that if on such Grant Date the number of remaining
Shares available for Director Option grants is not large enough to
grant each Director with a Director Option of 5,000 Shares, the number
of Shares covered by the final Director Option for each Director shall
be reduced proportionately to the nearest whole Share so that the
number of Shares granted under the Plan does not exceed the number of
Shares reserved under Section 4 hereof. Each Director Option granted
under the Plan shall be a Non-Qualified Stock Option and shall be
evidenced by a Director Stock Option Agreement between the Company and
the Director. The Director Stock Option Agreement shall specify the
number of Shares of Common Stock subject to the Director Option and
shall also be subject to the following terms and conditions.
(a) Director Option Price. The price to be paid for Shares of Common
Stock upon the exercise of each Director Option shall be the IPO
price of the Common Stock on the Grant Date.
(b) Period for Exercise of Director Option. A Director Option shall be
exercisable any time during the period that begins six months
after the Grant Date on which such Director Option is granted and
that ends on a ten year anniversary of that Grant Date.
(c) Exercise of Director Options. The Option price of each Share of
Common Stock purchased upon exercise of a Director Option shall
be paid in full in cash at the time of such exercise; provided,
however, that a Director may exercise a Director Option in whole
or in part by tendering to the Company whole Shares of Common
Stock or any combination of whole Shares of Common Stock and cash,
having a fair market value equal to the cash exercise price of
the Shares with respect to which the Director Option is being
exercised. For this purpose, the fair market value of the
Shares tendered by the Director shall be the average of the high
and low prices of the
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Common Stock as traded on the NASDAQ Stock Market's National
Market on the exercise date (or, if the Common Stock is not
traded on that date, the first preceding date on which the Common
Stock was traded on the NASDAQ Stock Market's National Market).
A Director Option may be exercised at any time or from time to
time during the term of the Director Option as to any or all
whole Shares which have become subject to purchase pursuant to
the terms of the Director Option or the Plan.
(d) Termination of Director Option. If a Director ceases to be a
Director of the Company for any reason other than death, any
Director Option granted to that Director may be exercised in
whole or in part at any time within the six year period
immediately following the date on which his or her status as a
Director terminated. Leave of absence approved by the Inside
Directors shall not constitute termination of status as Director.
In the event of the death of an Director while serving as a
Director of the Company, any Director Option granted to that
Director may be exercised in whole or in part by the executor or
administrator of the Director's estate or by the person or
persons entitled to the Director Option by will or by applicable
laws of descent and distribution within three years after the
date of the Director's death, whether or not the Director Option
was otherwise exercisable at such date of death. Notwithstanding
the foregoing provisions of this subsection (d), no Option shall
in any event be exercisable after the expiration of the period
set forth in Section 7(b) above.
(e) Certificates. The certificate or certificates for the Shares
issuable upon an exercise of a Director Option shall be issued as
promptly as practicable after such exercise. A Director shall
not have any rights of a Shareholder in respect to the Shares of
Common Stock subject to a Director Option until the date of
issuance of a stock certificate for such Shares. In no case may
a fraction of a Share be purchased or issued under the Plan, but
if, upon the exercise of a Director Option, a fractional Share
would otherwise be issuable, then the Company shall pay cash in
lieu thereof.
(f) No Right to Continued Service. Nothing in this Plan or in any
agreement entered into pursuant hereto shall confer on any person
any right to continue as a Director of the Company or affect any
rights the Company or the Shareholders of the Company may have to
terminate that person's status as a Director at any time.
8. Adjustment of Shares. In the event of any change after the effective
date of the Plan in the outstanding Shares of Stock of the Company by
reason of any reorganization, recapitalization, stock split, stock
dividend, combination of Shares, exchange of Shares, merger or
consolidation, liquidation, or any other change after the effective date
of the Plan in the nature of the Shares of Stock of the Company, any
Options granted and outstanding hereunder, and the Exercise Price
thereof, shall be adjusted according to the change in the outstanding
shares of Stock of the Company so as not to cause any dilutive effect to
any Optionee.
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9. Tax Withholding. Whenever the Company proposes or is required to issue or
transfer Shares of Stock under the Plan, the Company shall have the right
to require the Optionee or his legal representative to remit to the Company
an amount sufficient to satisfy any federal, state and/or local tax
withholding requirements prior to the delivery of any certificate or
certificates for such Shares, and whenever under the Plan payments are to
be made in cash, such payments shall be net of an amount sufficient to
satisfy any federal, state and/or local tax withholding requirements;
provided, however, that notwithstanding the above and to the extent
permitted by the Committee, an employee Optionee may make a written
election to have Shares having an aggregate fair market value sufficient to
satisfy the applicable withholding taxes withheld from the Shares otherwise
to be received upon the exercise of the Option.
10. Amendment. The Board of Directors of the Company may amend the Plan from
time to time and, with the consent of the Optionee, the terms and
provisions of his Option or Director Option, except that without the
approval of the Company's Shareholders:
(a) the number of Shares of Common Stock which may be reserved for
issuance under the Plan may not be increased except as provided in
Section 8 hereof;
(b) the period during which an Option or Director Option may be exercised
may not be extended beyond ten years and one day from the date on
which such Option or Director Option was granted; and
(c) the class of employees to whom Options may be granted under the Plan
shall not be modified materially.
No other amendment to the Plan may be made which requires the approval of
the Company's shareholders under applicable law, the Code, or the Rules and
Regulations of NASDAQ.
No amendment of the Plan, however, may, without the consent of the
Optionees, make any changes in any outstanding Options or Director Options
theretofore granted under the Plan which would adversely affect the rights
of such Optionees.
11. Termination. The Board of Directors of the Company may terminate the Plan
at any time and no Option or Director Option shall be granted thereafter.
Such termination, however, shall not affect the validity of any Option or
Director Option theretofore granted under the Plan. In any event, no
Incentive Stock Option may be granted after the conclusion of a ten year
period commencing on the date the Plan is adopted or, if earlier, the date
the Plan is approved by the Company's Shareholders.
12. Successors. The Plan shall be binding upon the successors and assigns of
the Company.
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13. Governing Law. The terms of any Options granted hereunder and the
rights and obligations hereunder of the Company, the Optionees and
Directors and their successors in interest shall, except to the extent
governed by federal law, be governed by Indiana law without regard to
conflict of law rules.
14. Government and Other Regulations. The obligations of the Company to
issue or transfer and deliver Shares under Options or Director Options
granted under the Plan shall be subject to compliance with all
applicable laws, governmental rules and regulations, and administrative
action.
15. Effective Date. The Plan shall become effective when it shall have been
approved by the Company's Board of Directors.
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