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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 and Officers and
employees of Goran Capital Inc. and its subsidiaries who have provided
or are providing valuable assistance or services which benefit the
Company or the Subsidiaries, 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 non-employee 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;
(e) the period within which each Option may be exercised;
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(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 Capital Inc. and
Officers and employees of Goran Capital Inc. and its subsidiaries who,
in the opinion of the Committee, have provided or are providing
valuable assistance or services which benefit the Company or the
Subsidiaries; 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 ("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 the
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 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.
(d) Termination of Option. If an Optionee ceases to be an
employee of the Company or one of the Subsidiaries or a
director or employee of Goran Capital Inc. or one of its
subsidiaries 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
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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. Any 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.
(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.
(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
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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 $100,000
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 Goran Capital Inc. or its subsidiaries,
affect any rights of the Company, Goran Capital Inc., a
Subsidiary, or the Shareholders of the Company may have to
terminate his service at any time.
(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
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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 or 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;
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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 and vest in three equal annual
installments on the first, second and third anniversaries of
the Grant Date and shall expire on the ten year anniversary of
the 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 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
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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.
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:
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(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 persons 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.
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.
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