<PAGE>
SCHEDULE 14A INFORMATION
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
AMERIN CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE>
[LOGO]
AMERIN CORPORATION
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Chicago, Illinois
May 2, 1997
To the Stockholders:
The Annual Meeting of Stockholders of Amerin Corporation (the "Company")
will be held on June 4, 1997, at 10:30 a.m., local time, at the principal
executive offices of the Company, 200 East Randolph Drive, 49th Floor, Chicago,
Illinois 60601-7125, for the following purposes:
1. To elect two Class II directors to serve for a three-year term expiring
in 2000;
2. To approve an amendment to the Company's 1992 Long-Term Stock Incentive
Plan (the "Stock Incentive Plan") increasing from 200,000 to 300,000 the
number of shares of the Company's Common Stock with respect to which
awards may be granted to any participant under the Stock Incentive Plan
in any four-year period beginning on or after September 19, 1995;
3. To ratify the selection of Ernst & Young LLP as independent auditors for
the Company for 1997; and
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
Only holders of record of the Company's Common Stock at the close of
business on April 15, 1997, will be entitled to vote at the meeting or any
adjournment or postponement thereof.
By order of the Board of Directors
Randolph C. Sailer II
SECRETARY
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. YOUR
VOTE IS IMPORTANT.
<PAGE>
AMERIN CORPORATION
200 East Randolph Drive, 49th Floor
Chicago, Illinois 60601-7125
--------------------
PROXY STATEMENT
--------------------
May 2, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the board of directors of Amerin Corporation (the "Company") to be
used at the 1997 Annual Meeting of Stockholders of the Company on June 4, 1997,
at 10:30 a.m., local time, to be held at the principal executive offices of the
Company, 200 East Randolph Drive, 49th Floor, Chicago, Illinois 60601-7125. This
Proxy Statement and accompanying form of proxy are first being mailed to
stockholders on or about May 2, 1997. The Company's Annual Report to
Stockholders for the year ended December 31, 1996 is enclosed.
Only holders of record of the Company's common stock, par value $.01 per
share (the "Common Stock") at the close of business on April 15, 1997, will be
entitled to vote at the meeting. As of such date, there were 24,454,699 shares
of Common Stock issued and outstanding. Each share of Common Stock entitles the
holder to one vote. Holders of the Company's nonvoting common stock, par value
$.01 per share (the "Nonvoting Common Stock"), are not entitled to notice of, or
to vote at, the 1997 Annual Meeting.
The enclosed proxy, if properly signed and returned, will be voted in
accordance with its terms. Any proxy returned without specification as to any
matter will be voted as to each proposal in accordance with the recommendation
of the board of directors. You may revoke your proxy at any time before the vote
is taken by delivering to the Secretary of the Company written revocation or a
proxy bearing a later date, or by attending and voting at the 1997 Annual
Meeting.
The cost of solicitation of proxies will be borne by the Company. In
addition to solicitation of proxies by mail, proxies may be solicited by
directors, officers and regularly engaged employees of the Company. Brokers,
nominees and other similar record holders will be requested to forward
solicitation material to the beneficial owners of Common Stock held of record by
such record holders and will be reimbursed by the Company upon request for their
out-of-pocket expenses.
Votes cast by proxy or in person at the 1997 Annual Meeting will be
tabulated by the election inspectors appointed for the 1997 Annual Meeting. The
presence at the 1997 Annual Meeting in person or by proxy of the holders of a
majority of the shares of Common Stock entitled to vote shall constitute a
quorum. The election inspectors will treat abstentions and "broker non-votes"
(shares held by a broker or nominee as to which a broker or nominee indicates on
the proxy that it does not have the authority, either express or discretionary,
to vote on a particular matter) as shares that are present and entitled to vote
for purposes of determining the presence of a quorum but as unvoted for purposes
of determining the approval of any matter submitted to the stockholders for a
vote.
3
<PAGE>
1. ELECTION OF DIRECTORS
NOMINEES FOR ELECTION
The Company's board of directors is divided into three classes, with the
directors of each class elected for a term of three years and until their
successors are elected. The term of office of one class of directors expires
each year in rotation so that one class is elected at each Annual Meeting for a
three-year term. The following two incumbent directors whose terms expire at the
1997 Annual Meeting have been nominated and recommended by the board of
directors for election to serve as directors for a three-year term of office
ending at the 2000 Annual Meeting and thereafter until a successor is duly
elected and qualified. In December 1996, as the result of the resignation of
Stuart M. Brafman, Mr. Gleason, who had previously been a Class III director
with a term ending in 1998, was reclassified as a Class II director with a term
ending in 1997.
Peter H. Gleason Howard I. Hoffen
Each of the nominees for election has agreed to serve if elected. In the
event that any nominee should become unavailable for election, the board of
directors may designate a substitute nominee, in which event the shares
represented by proxies at the 1997 Annual Meeting will be voted for such
substitute nominee unless an instruction to the contrary is indicated on the
proxy card.
STOCKHOLDER VOTE REQUIRED
Each nominee receiving a plurality of the votes cast at the 1997 Annual
Meeting will be elected as a director. Only votes cast for a nominee will be
counted. Votes cast include votes under proxies which are signed, but which do
not have contrary voting instructions. Broker non-votes, abstentions and
instructions on the accompanying proxy card to withhold authority to vote for
one or both of the nominees will be disregarded in the calculation of a
plurality of the "votes cast."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES NAMED ABOVE AND
DULY SIGNED AND RETURNED PROXIES WILL BE SO VOTED UNLESS YOU INDICATE OTHERWISE.
4
<PAGE>
The following table sets forth as of April 15, 1997, with respect to each
nominee and each director continuing to serve, their name, age, principal
occupation, the year in which they first became a director of the Company and
directorships in certain other corporations.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- -------------------------------------- --- ------------------------------------------------------------
<S> <C> <C>
NOMINATED FOR ELECTION
For a Term Ending 2000
Peter H. Gleason ..................... 52 Mr. Gleason has been a director and a Manager of J. P.
Director Since 1995 Morgan Capital Corporation ("JPMCC") since March 1991 and
was a Vice President of J.P. Morgan & Co. Incorporated from
1989 through March 1991. He is also a director of Consep,
Inc. He has been a director of Amerin Guaranty Corporation
("Amerin Guaranty") since July 1995.
Howard I. Hoffen ..................... 33 Mr. Hoffen is currently a Principal, and from February 1994
Director since 1993 through November 1996 was a Vice President and from
September 1989 through February 1994 an Associate, at Morgan
Stanley & Co. Incorporated. He is a Vice President of The
Morgan Stanley Leveraged Equity Fund II, Inc. ("MSLEF,
Inc."), which is the general partner of the Morgan Stanley
Leveraged Equity Fund II, L.P. ("MSLEF") and a Director of
Coho Energy Inc. Mr. Hoffen has been a director of Amerin
Guaranty since January 1993.
DIRECTORS CONTINUING IN OFFICE
Term Ending 1998
Timothy A. Holt ...................... 44 Mr. Holt has been Senior Vice President of Aetna Life
Director Since 1992 Insurance and Annuity Company since February 1996 and a Vice
President of Aetna Life Insurance Company ("Aetna") since
June 1987. He has been a director of Amerin Guaranty since
September 1992.
Larry E. Swedroe ..................... 45 Mr. Swedroe has been a principal of Buckingham Asset
Director Since 1996 Management, Inc., a personal investment advisory firm, since
May 1996. From January 1994 to April 1996, he was Vice
Chairman of Residential Services Corporation of America
("RSCA"), the holding company for Prudential Home Mortgage
and Lender's Service, Inc. Prior thereto, he served as a
Managing Director of RSCA from November 1986 through
December 1993.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
- -------------------------------------- --- ------------------------------------------------------------
<S> <C> <C>
DIRECTORS CONTINUING IN OFFICE
Term Ending 1999
Gerald L. Friedman ................... 59 Mr. Friedman founded the Company and has been Chairman of
Director Since 1992 the Company and Amerin Guaranty since April 1992 and
President of the Company and Amerin Guaranty since December
1996. Prior thereto, he founded and served as Chairman and
President of Financial Guaranty Insurance Corporation from
September 1983 to December 1990. Mr. Friedman began his
career with Mortgage Guaranty Insurance Corporation ("MGIC")
in 1961, and, from 1978 to 1981, Mr. Friedman was President
of MGIC Investment Corporation, the holding company of MGIC.
Mr. Friedman has been a director of Amerin Guaranty since
April 1992.
Alan E. Goldberg ..................... 42 Mr. Goldberg has been a Managing Director of Morgan Stanley
Director Since 1992 & Co. Incorporated since January 1988, is Vice Chairman of
MSLEF, Inc., and of Morgan Stanley Capital Partners III,
Inc. Mr. Goldberg also serves as director of CIMIC Holdings
Limited, Centre Cat Limited, Hamilton Services Limited,
Jefferson Smurfit Corporation and several private companies.
Mr. Goldberg has been a director of Amerin Guaranty since
April 1992.
</TABLE>
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held five meetings during 1996. All directors
attended at least 75% of the meetings of the board and any committee on which
they serve held during 1996 or the portion of 1996 during which they were a
director.
The board of directors has an Audit Committee, a Compensation Committee and
a Finance Committee. The board does not have a nominating or similar committee.
The present members of the Audit Committee are Timothy A. Holt (Chairman),
Gerald L. Friedman and Peter H. Gleason. The responsibilities of the Audit
Committee include: recommending to the board of directors the independent
auditors to be selected to conduct the annual audit of the books and records of
the Company; reviewing the proposed scope of such audit and approving the audit
fees to be paid; and reviewing the adequacy and effectiveness of the internal
auditing, accounting and financial controls of the Company with the independent
auditors and the Company's financial and accounting staff. The Audit Committee
met twice during 1996.
The current members of the Compensation Committee are Alan E. Goldberg
(Chairman) and Peter H. Gleason, who replaced Gerald L. Friedman as a member on
April 21, 1997. The responsibilities of the Compensation Committee include:
reviewing and approving executive compensation, including setting salaries and
bonuses, approving employment agreements, establishing stock incentive plans and
bonus plans and making awards thereunder and any related matters. The
Compensation Committee met twice during 1996.
6
<PAGE>
The current members of the Finance Committee are Alan E. Goldberg
(Chairman), Gerald L. Friedman and Howard I. Hoffen. The responsibilities of the
Finance Committee include: recommending to the board of directors the investment
advisor(s) to be selected to manage the investment of the Company's assets;
reviewing and modifying as necessary the Company's internal investment
guidelines; and reviewing the performance of the Company's investment portfolio.
The Finance Committee met three times during 1996.
COMPENSATION OF DIRECTORS
No additional compensation is paid to any director who is an employee of the
Company or of any of its subsidiaries for service on the board of directors.
Directors who are not representatives of the original group of five
institutional investors ("Outside Directors") receive $2,000 for each board
meeting attended. In addition, each Outside Director receives (i) at his or her
election, either (A) $22,000 in cash or (B) an annual grant of shares of Common
Stock under the Company's 1992 Long-Term Stock Incentive Plan (the "Stock
Incentive Plan"), with the number of shares equal to $22,000 divided by the Fair
Market Value (as defined below) of a share of the Company's Common Stock on the
Grant Date (as defined below), and (ii) an annual grant under the Stock
Incentive Plan of non-qualified options to purchase 1,000 shares of Common
Stock. The options will vest in three equal installments on the first, second
and third anniversaries of the Grant Date, and will be subject to an exercise
price per share equal to the Fair Market Value of a share of Common Stock on the
Grant Date. For purposes of the foregoing, the "Fair Market Value" of a share of
Common Stock is the closing price per share of the Common Stock on the Nasdaq
National Market on the first day prior to the Grant Date on which the Nasdaq
National Market was open for trading. The "Grant Date" is the date of the Annual
Meeting of Stockholders of the Company; provided, however, that if a director is
appointed on a date other than the date of the Annual Meeting of Stockholders,
the "Grant Date" in such year shall be the date of such appointment. Directors
receive no additional compensation for service on committees of the board.
Outside Directors are reimbursed for travel and expenses related to attendance
at meetings of the board of directors or board committees.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the shares
beneficially owned as of April 15, 1997 (except as noted) by: (i) each person or
entity that is known by the Company to own beneficially more than five percent
of the outstanding shares of Common Stock; (ii) each director of the
7
<PAGE>
Company, including the nominees for reelection as directors; (iii) each
Executive Officer named in the Summary Compensation Table herein; and (iv) all
directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER(1) OWNED CLASS
- ------------------------------------------------------------------------------------ ----------------- -----------
<S> <C> <C>
The Morgan Stanley Leveraged Equity Fund II, L.P ................................... 3,102,131 (2) 12.7%
1221 Avenue of the Americas 33rd Floor
New York, NY 10020
Gerald L. Friedman.................................................................. 989,742 (3) 4.0%
Peter H. Gleason.................................................................... 996,195 (4) 4.1%
Alan E. Goldberg.................................................................... 3,102,131 (5) 12.7%
Howard I. Hoffen.................................................................... 3,102,131 (5) 12.7%
Timothy A. Holt..................................................................... 1,016,938 (6) 4.2%
Larry E. Swedroe.................................................................... 1,164 (7) *
James G. Engelhardt................................................................. 49,288 (8) *
Roy J. Kasmar....................................................................... 39,613 (9) *
Jerome J. Selitto................................................................... 126,000 (10) *
John F. Peterson.................................................................... 83,438 (11) *
All directors and executive officers as a group (15 persons)...................... 1,418,495 (12) 5.8%
J. & W. Seligman & Co. Incorporated ................................................ 1,466,288 (13) 6.0%
100 Park Avenue
New York, NY 10017
</TABLE>
- --------------------
* Less than one percent
(1) Unless otherwise indicated in these footnotes, each stockholder has sole
voting and investment power with respect to the shares beneficially owned.
All share amounts reflect beneficial ownership determined pursuant to Rule
13d-3 under the Securities Exchange Act of 1934, as amended. All information
with respect to beneficial ownership has been furnished by the respective
director, executive officer or stockholder, as the case may be.
(2) See note 14 for a description of a certain stockholders agreement to which
the beneficial owner is a party.
(3) Includes 7,500 shares held by the Friedman Family Foundation (the
"Foundation"), a private charitable foundation, 30,000 shares held by the
Gerald. L. Friedman Charitable Remainder Unitrust of 1997 (the "GLF
Unitrust"), a charitable remainder trust, 30,000 shares held by the Sheree
A. Friedman Charitable Remainder Unitrust of 1997 (the "SAF Unitrust") a
charitable remainder trust, 6,875 shares (as to which Mr. Friedman disclaims
beneficial ownership) held by the Sarah Beth Friedman 1989 Trust, a trust
created for the benefit of Mr. Friedman's daughter, 6,875 shares (as to
which Mr. Friedman disclaims beneficial ownership) held by Rachael L.
Friedman (Mr. Friedman's daughter), and 7,000 shares (as to which Mr.
Friedman disclaims beneficial ownership) held by Daniel B. Rand. See note 14
below for a description of a certain stockholders agreement to which the
beneficial owner is a party.
8
<PAGE>
(4) All of the shares shown are held by JPMCC. They include 317,875 shares of
Common Stock and 678,320 shares of Nonvoting Common Stock which are
immediately convertible by JPMCC into Common Stock. Mr. Gleason is an
officer and director of JPMCC. He may be deemed to share the power to vote
and dispose of the shares of Common Stock held by JPMCC and may therefore be
deemed the beneficial owner of such shares. Mr. Gleason disclaims beneficial
ownership of such shares.
(5) All of the shares shown are held by MSLEF. Mr. Goldberg and Mr. Hoffen are
the Vice Chairman, and a Vice President, respectively, of MSLEF, Inc., the
general partner of MSLEF. Share data shown for such individuals reflects
shares shown as held by MSLEF as set forth in the table and note (2) above,
as to which such individuals disclaim beneficial ownership.
(6) All of the shares shown are held by Aetna. Mr. Holt is an officer and
director of Aetna. He may be deemed to share the power to vote and dispose
of the shares of Common Stock held by Aetna and may therefore be deemed the
beneficial owner of such shares. Mr. Holt disclaims beneficial ownership of
such shares.
(7) Includes 334 shares of Common Stock issuable upon exercise of stock
options.
(8) Includes 37,563 shares of Common Stock issuable upon exercise of stock
options.
(9) Includes 17,778 shares of Common Stock issuable upon exercise of stock
options.
(10) Includes 91,250 shares of Common Stock issuable upon exercise of stock
options.
(11) Includes 59,313 shares of Common Stock issuable upon exercise of stock
options.
(12) Includes 306,979 shares of Common Stock issuable upon exercise of stock
options, 996,195 shares for Mr. Gleason, 3,102,131 shares in the aggregate
for Messrs. Goldberg and Hoffen and 1,016,938 shares for Mr. Holt. Messrs.
Gleason, Goldberg, Hoffen and Holt have disclaimed beneficial ownership of
such shares as described in Notes (4), (5) and (6) above.
(13) Share ownership number and percentage are as of December 31, 1996, the last
date at which J. & W. Seligman & Co. Incorporated was required to report
such ownership.
(14) The beneficial owner is a party to the Amended and Restated Shareholders
Agreement, dated as of November 1, 1995, which sets forth certain rights and
obligations of the parties with respect to the Common Stock of the Company
and the ownership and corporate governance of the Company, as more fully
described under "Certain Relationships and Related Transactions --
Stockholders Agreement" herein.
SECTION 16(a) COMPLIANCE
Section 16 (a) of the Securities Exchange Act of 1934 requires that the
Company's officers, directors and persons who beneficially own more than 10% of
a registered class of the Company's equity securities file with the Securities
and Exchange Commission and the Nasdaq Stock Market, Inc. certain reports with
respect to beneficial ownership of the Company's equity securities.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and on written representations provided to the
Company by each executive officer, director and 10% beneficial owner, the
Company believes each such person filed on a timely basis the reports required
by Section 16 (a) with respect to the beneficial ownership of equity securities
of the Company during the fiscal year ended December 31, 1996 except as follows.
Mr. Brafman, who retired from the Company effective December 31, 1996 and is no
longer subject to Section 16, inadvertently
9
<PAGE>
reported late three events involving the acquisition and exercise of employee
stock options covering 34 shares of Common Stock. Mr. Friedman inadvertently
reported late one bona fide gift. Each of Messrs. Friedman and Brafman filed
late information to finalize the estimate in his initial report of beneficial
ownership on Form 3 to reflect the final number of shares of Common Stock to
which he became entitled as a result of the consummation of the Company's
initial public offering. In each case, however, the correct number of shares was
included in all filings subsequent to the estimate in the initial Form 3. Mr.
Kasmar reported two transactions on a Form 5 that was filed late.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table provides information
relating to compensation for the year ended December 31, 1996 for the Chairman
and the other four most highly compensated executive officers of the Company
plus one additional officer who joined the Company in 1996, (collectively, the
"Named Executive Officers").
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------- ---------------------------------------
AWARDS PAYOUTS
-------------------------- -----------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND COMPENSATION AWARDS OPTIONS/SARS PAYOUTS COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($) ($) (#) ($) ($)
- --------------------- --------- ----------- ----------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gerald L. 1996 $ 215,000 $ 101,000 -- -- -- -- --
Friedman ........... 1995 $ 200,000 $ 100,000 -- -- -- -- --
Chairman, President 1994 $ 175,000 $ 100,000 -- -- -- -- --
and
Chief Executive
Officer
Roy J. Kasmar(1) .... 1996 $ 143,013 $ 74,000 -- $ 514,400 178,345 -- $ 105,509
Executive Vice
President
and Chief Operating
Officer
Stuart M. 1996 $ 260,000 $ 79,000 -- -- -- -- --
Brafman(2) ......... 1995 $ 250,000 $ 75,000 -- -- -- -- --
Former President and 1994 $ 225,000 $ 75,000 -- -- -- -- --
Chief Operating
Officer
Jerome J. Selitto ... 1996 $ 245,000 $ 66,000 -- -- -- -- --
Executive Vice 1995 $ 240,000 $ 45,000 -- -- -- -- --
President 1994 $ 235,000 $ 10,000 -- $ 34,164 25,750 -- $ 26,357
John F. Peterson .... 1996 $ 205,000 $ 68,109 -- -- -- -- --
Senior Vice 1995 $ 200,000 $ 93,600 -- -- -- -- --
President 1994 $ 175,000 $ 65,000 -- $ 34,164 25,750 -- $ 26,357
James G. 1996 $ 195,000 $ 66,000 -- -- -- -- --
Engelhardt ......... 1995 $ 185,000 $ 40,000 -- -- -- -- --
Executive Vice 1994 $ 158,000 $ 38,000 -- $ 25,623 19,250 -- $ 19,768
President
</TABLE>
- -------------------------
(1) Mr. Kasmar joined Amerin Guaranty in May 1996 at an annual salary of
$245,000. Of the amount set forth for Mr. Kasmar under "All Other
Compensation," $105,190 represents payment to Mr. Kasmar with respect to
relocation expenses.
(2) Mr. Brafman retired as President and Chief Operating Officer of the Company
and Amerin Guaranty in December 1996.
10
<PAGE>
STOCK OPTION/SAR GRANTS IN LAST FISCAL YEAR. The following table sets forth
certain information regarding grants of stock options made during 1996 to the
Named Executive Officers pursuant to the Company's 1992 Long-Term Stock
Incentive Plan (the "Stock Incentive Plan"). No grants of stock appreciation
rights were made during 1996 to any of the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
OF ASSUMED ANNUAL RATES OF
NUMBER OF
SECURITIES % OF TOTAL STOCK PRICE ANNUAL
UNDERLYING OPTIONS GRANTED EXERCISE APPRECIATION FOR OPTION TERM
OPTIONS TO EMPLOYEES PRICE EXPIRATION ----------------------------
NAME GRANTED IN FISCAL YEAR ($/SH.)(1) DATE 5%($) 10%($)
- ----------------------------- ----------- ----------------- ----------- ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
G. Friedman(2)............... 0 0.0% 0 0
88,890(3) 27.0% 24.00 5/20/06 $ 1,342,239 $ 3,400,043
R. Kasmar(2) ................ 89,275(3) 27.6% 23.13 12/19/06 $ 1,322,653 $ 3,351,630
S. Brafman................... 0 0.0% 0 0
J. Selitto(2)................ 0 0.0% 0 0
J. Peterson(2)............... 0 0.0% 0 0
J. Engelhardt................ 0 0.0% 0 0
</TABLE>
- --------------------
(1) Based on the last reported sale price of the Common Stock on the Nasdaq
National Market on the business day immediately preceding the grant date.
(2) On April 21, 1997, Messrs. Friedman, Kasmar, Selitto, Peterson and
Engelhardt were granted options to purchase, respectively, 278,000, 38,500,
278,000, 28,000 and 55,500 shares of Common Stock at an exercise price of
$17.75 per share. Twenty percent of each of the options awards vests on each
of the first five anniversaries of the award, beginning April 21, 1998. In
the event that the proposed amendment to the Stock Incentive Plan set forth
in Proposal 2 herein is not approved by stockholders at the 1997 Annual
Meeting, the option grants to Messrs. Friedman, Kasmar and Selitto will be
reduced to the extent required to comply with the Stock Incentive Plan's
current limitation as to the maximum total number of shares of Common Stock
with respect to which awards may be granted to any participant in the Stock
Incentive Plan over any four year period beginning on or after September 19,
1995.
(3) Twenty percent of each of the options awards vests on each of the first five
anniversaries of the award, beginning May 20, 1997 and December 19, 1997,
respectively.
STOCK OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTIONS/SAR VALUES. The following table sets forth information regarding the
number and value of securities resulting from the exercise of stock options by
the Named Executive Officers and the underlying unexercised stock options held
by the Named Executive Officers as of December 31, 1996.
11
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
UNDERLYING UNEXERCISED THE-MONEY OPTIONS/SARS AT
OPTIONS/ SARS AT FISCAL FISCAL YEAR END
SHARES YEAR END (#) ($) (1)
ACQUIRED ON VALUE ----------------------- ---------------------------
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- -------------------------------- ------------- ----------- ----------------------- ---------------------------
<S> <C> <C> <C> <C>
Gerald L. Friedman.............. 0 0 0/0 $0/$0
Roy J. Kasmar................... 0 0 0/178,165 $0/$389,458
Stuart M. Brafman............... 34 $766 0/0 $0/$0
Jerome J. Selitto............... 0 0 91,250/47,750 $1,956,158/$1,007,213
John F. Peterson................ 0 0 59,313/36,937 $1,269,256/$680,710
James G. Engelhardt............. 7,000 $ 133,000 37,563/34,687 $863,071/$580,822
</TABLE>
- --------------------
(1) The last reported sale price of the Common Stock on the Nasdaq National
Market on December 31, 1996 ($25.75 per share) was used to determine the
value of the in-the-money options. The dollar amounts shown represent the
amount by which the product of such last reported sale price and the number
of shares purchasable upon the exercise of such in-the-money options exceeds
the aggregate exercise price payable upon such exercise.
EMPLOYMENT AGREEMENT
Amerin Guaranty had an employment agreement with Mr. Friedman providing for
his continued employment as Chairman and Chief Executive Officer of Amerin
Guaranty for a term expiring on May 1, 1997. Under his agreement, Mr. Friedman
was obligated to devote the equivalent of at least two business days a week to
Amerin Guaranty's affairs or such lesser or greater amount of time as he
reasonably and in good faith determined and was not permitted to accept any
other responsibilities, with or without compensation, that would be inconsistent
with the services to be rendered by him under his employment agreement. He was
entitled to an annual salary of $215,000, with salary increases subject to the
discretion of the Compensation Committee, provided that Mr. Friedman's salary in
any year would not be less than his annual salary for the preceding year. Mr.
Friedman agreed in his employment agreement not to compete with the Company,
Amerin Guaranty or any affiliate of either of them for 10 years following the
termination of his employment, except for certain passive investments. Mr.
Friedman has informed the Company that, notwithstanding the expiration of his
employment agreement on May 1, 1997, he intends to maintain the level of
involvement in the Company for the foreseeable future.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the board of directors of Amerin Corporation
is comprised of Alan E. Goldberg (Chairman) and Peter H. Gleason, who replaced
Mr. Friedman as a member on April 21, 1997. Actions of the Compensation
Committee require a unanimous vote, except that Mr. Friedman did not participate
in consideration of his own compensation. During Mr. Friedman's tenure on the
Compensation Committee, the compensation of Mr. Friedman was determined by the
members of the board of directors of Amerin Corporation, none of whom (other
than Mr. Friedman) is an officer or employee of Amerin Corporation. Mr. Friedman
does not participate in the board's approval of his own compensation.
12
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Company's Board of Directors and the
Compensation Committee of the board of directors of Amerin Guaranty Corporation,
the Company's operating subsidiary (collectively, the "Compensation Committee")
have furnished the following report on executive compensation. The current
members of both committees are Alan E. Goldberg (Chairman) and Peter H. Gleason.
Until April 21, 1997, the Compensation Committee was comprised of Mr. Goldberg
and Gerald L. Friedman. A unanimous vote of both members is required for any
action or recommendation by the Compensation Committee, except that all actions
or recommendations relating to Mr. Friedman's compensation while he was a member
of the Compensation Committee were determined solely by Mr. Goldberg.
COMPENSATION POLICY
The goal of the Company's compensation policy is to attract and retain
professionals of the highest quality who will help the Company achieve its
business and financial objectives. In order to meet this goal, the Company must
offer compensation which is competitive within the mortgage insurance industry.
Because the Company is now publicly traded, executive compensation is now linked
to both individual performance and the creation and maintenance of stockholder
value. The compensation structure is designed to provide the opportunity for
superior compensation for outstanding personal and corporate performance, as
well as the possibility of significant reductions in total compensation due to
poor performance. Currently, the two basic components of executive compensation
are base salary and bonus.
BASE SALARY
The Compensation Committee will review base salary levels for executive
officers each year in order to continue to meet the Company's goal of attracting
and retaining executives of the highest quality. The Compensation Committee may
utilize salary surveys comparing Company salary levels to those of executives
who hold positions of similar overall responsibility. Salary adjustments will be
based on general movement in external salary levels, individual performance,
potential and changes in duties and responsibilities.
ANNUAL BONUS COMPENSATION
The relationship of base salary to bonus is intended to provide strong
motivation for each executive officer to reach both personal and corporate
goals. This relationship may vary depending on the nature and extent of the
officer's responsibilities, as well as the ability of such officer to influence
overall corporate performance. For bonuses paid in January 1997 with respect to
1996, half of each executive officer's annual bonus was based on the Company's
attainment of pre-determined financial objectives, all of which were attained in
1996. The other half of the annual bonus was based on operating objectives and
other performance goals specific to each executive officer.
The composition of bonuses to be paid with respect to the 1997 year will
vary for each executive officer. Depending on the officer, between 25% and 80%
of the bonus will be based on corporate performance and between 20% and 75% will
be based on attainment of performance goals specific to that officer. Officers
with direct responsibility for, and greater ability to affect, Company revenues
and/or expenses, have a significant effect on the ability of the Company to meet
its overall operating and financial goals. As a result, the percentage of bonus
based on corporate performance is higher for such
13
<PAGE>
officers than for officers without direct control over and responsibility for
revenues and/or expenses. Annual bonuses are subject to upward adjustment at the
Compensation's Committee's discretion based on significant events or
achievements which took place during the course of the year which were not
considered at the time the corporate and/or personal performance goals were
established.
STOCK OPTIONS
In order to increase the likelihood of retaining the services of the most
senior officers of the Company over time, the Compensation Committee and the
Board of Directors recently granted stock options to Gerald L. Friedman,
President and Chief Executive Officer of the Company, Roy J. Kasmar, Executive
Vice President and Chief Operating Officer of Amerin Guaranty, and Jerome J.
Selitto, Executive Vice President and National Director of Sales and Marketing
of Amerin Guaranty. See "Executive Compensation--Option Grants in Last Fiscal
Year." The Compensation Committee does not otherwise currently expect to utilize
stock options as a regular component of annual executive compensation, however
it may do so in the future. The Compensation Committee does currently expect
that, in the event of future grants under the Stock Incentive Plan to
executives, it will generally recommend grants of options to purchase shares
rather than grants of shares of stock. However, the Compensation Committee may
recommend grants of shares of Common Stock under the Stock Incentive Plan in
connection with the recruitment of senior executives.
SECTION 162(m) OF THE INTERNAL REVENUE CODE
Under Section 162(m) of the Internal Revenue Code of 1986, as amended, a
public company will be denied deductions in certain circumstances for
compensation to the chief executive officer and the other four most highly
compensated executive officers to the extent that compensation for any of such
individuals exceeds one million dollars for a taxable year. Awards under the
Company's Stock Incentive Plan are not subject to the loss of deduction rules
under Section 162(m), but the other taxable components of executive compensation
provided by the Company (e.g., base salary and bonus) are subject to such rules.
In general the Company intends to avoid the loss of deduction under Section
162(m). In this regard, the Company generally intends to administer the Stock
Incentive Plan in a manner that will cause the awards thereunder to remain
deductible. Nevertheless, the Company reserves discretion to determine executive
compensation in a manner which could result in the loss of deduction when doing
so is in the best interests of the Company and its stockholders.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Friedman recused himself from consideration of all matters relating to
his own compensation. The annual compensation awarded to the Company's chief
executive officer in 1996 reflects the Company philosophy generally discussed
above that compensation for executive officers should be based on Company and
individual performance. Because the chief executive officer bears primary
responsibility for the overall performance of the Company and the creation and
maintenance of shareholder value, decisions regarding Mr. Friedman's annual
compensation are based primarily on Company performance. The Compensation
Committee, acting without input from Mr. Friedman, considered that the Company
has made substantial progress toward its strategic objectives for 1996 under Mr.
Friedman's leadership, which objectives included the continuing expansion of its
business and attainment of specified earnings goals. Mr. Friedman contributed to
the attainment of these objectives through his overall leadership, his role in
initiating and developing the Company's relationships with important clients,
and his participation in the development and marketing of new products and
approaches.
14
<PAGE>
In recognition of these accomplishments, the Compensation Committee
increased Mr. Friedman's salary approximately 11.9% percent in 1997 over his
1996 base salary. With respect to bonus compensation, Mr. Friedman received the
maximum targeted bonus for 1996 (paid in January 1997), and the Compensation
Committee increased his 1997 maximum target bonus approximately 18.8% percent
over his 1996 maximum target bonus.
ALAN E. GOLDBERG, CHAIRMAN
GERALD. L. FRIEDMAN
PERFORMANCE GRAPH
The following graph shows the cumulative total stockholder return on the
Common Stock during the period from November 22, 1995, the date on which the
Common Stock began trading on the Nasdaq National Market, and December 31, 1996,
as compared to the returns of the Nasdaq National Market Index and the Nasdaq
Financial Index. The graph assumes $100 was invested on November 22, 1995, in
the Company's Common Stock at its initial offering price of $16.00 per share,
the Nasdaq National Market Index and the Nasdaq Financial Index, and that all
dividends were reinvested. No dividends have been declared or paid on the Common
Stock.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG COMPANY, NASDAQ NATIONAL MARKET INDEX AND NASDAQ FINANCIAL INDEX
(COMPUTED AS OF MONTH END)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AMERIN CORPORATION NASDAQ STOCK MARKET-US NASDAQ FINANCIAL
<S> <C> <C> <C>
11/22/95 $100 $100 $100
12/95 167 103 104
12/31/96 161 127 134
</TABLE>
1992 LONG-TERM STOCK INCENTIVE PLAN
The Company adopted the Stock Incentive Plan in 1992 to attract and retain
exceptional executive personnel and other key employees, to provide
performance-related incentives to achieve longer-range
15
<PAGE>
performance goals and to enable such employees to participate in the long-term
growth and financial success of the Company. The Stock Incentive Plan was
approved by the stockholders of the Company in 1992. Immediately prior to the
Company's initial public offering in November 1995 (the "Offering"), the board
of directors and stockholders of the Company approved an amendment and
restatement of the Stock Incentive Plan that included various technical changes
to such Plan and that reduced the percentage of the outstanding Common Stock
available for awards under the Plan.
The Stock Incentive Plan is administered by, and all grants of shares and
options under the Stock Incentive Plan are made by, the Compensation Committee.
The following awards (collectively, "Awards") may be granted under and in
accordance with the Stock Incentive Plan subject to such terms and conditions as
the Compensation Committee may determine: (i) stock options, (ii) stock
appreciation rights, (iii) restricted stock and restricted stock units, (iv)
performance awards based upon the achievement of such performance goals during
such performance period as the Compensation Committee shall establish and (v)
other stock-based awards (an "Other Stock-Based Awards") consisting of an Award
of shares of Common Stock or an Award based on or related to shares of Common
Stock and (vi) substitute awards granted in assumption of, or in substitution
for, outstanding awards previously granted by an entity acquired by or combined
with the Company ("Substitute Awards"). Each Award has been and will be
evidenced by an award agreement delivered to the participant specifying the
terms and conditions of the Award and any rules applicable thereto.
Subject to adjustments as described below, and taking into account the
grants of options in April 1997, as of the date of this Proxy Statement, the
maximum number of shares of Common Stock with respect to which Awards may be
granted under the Stock Incentive Plan is 1,174,237. Shares of Common Stock
underlying Substitute Awards are not, except in the case of Substitute Awards
granted to participants who are officers or directors of the Company for
purposes of Section 16 of the Exchange Act, counted against the number of shares
of Common Stock available for Awards under the Stock Incentive Plan. The maximum
total number of shares of Common Stock with respect to which Awards may be
granted to any participant is 200,000 (300,000 if the amendment of the Stock
Incentive Plan described in Proposal 2 herein is approved by the Company's
stockholders) with respect to Awards granted during any four-year period
beginning on or after September 19, 1995. No future award under the Stock
Incentive Plan is determinable. If any shares of Common Stock covered by an
Award granted under the Stock Incentive Plan, or to which an Award relates, are
forfeited, or if an Award is settled for cash or otherwise terminates or is
cancelled without the delivery of shares, then the shares of Common Stock
covered by such Award, or to which such Award relates or the number of shares
otherwise counted against the aggregate number of shares with respect to which
Awards may be granted under the Stock Incentive Plan, to the extent of any such
settlement, forfeiture, termination or cancellation, shall again be, or shall
become, shares of Common Stock with respect to which Awards may be granted. In
the event that any option or other Award granted under the Stock Incentive Plan
is exercised through the delivery of shares of Common Stock, the number of
shares available for Awards under the Stock Incentive Plan shall be increased by
the number of shares surrendered, to the extent permissible under applicable
law. Notwithstanding the foregoing, the shares of Common Stock covered by the
options previously granted under the Stock Incentive Plan and the shares of
Common Stock previously issued under the Stock Incentive Plan to Mr. Brafman
before the Offering, which options and shares were cancelled upon the
consummation of the Offering, are not available again for Awards. Any employee
or prospective employee of the Company or any of its affiliates (including any
officer or employee-director) may be designated as a participant in the Stock
Incentive Plan.
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<PAGE>
Subject to the provisions of the Stock Incentive Plan and applicable law,
the Compensation Committee has full power and authority to (i) designate
eligible individuals as participants in the Stock Incentive Plan, (ii) determine
the type or types of Awards to be granted under the Stock Incentive Plan, (iii)
determine the form and substance of grants made under the Stock Incentive Plan
to each participant, and the conditions and restrictions subject to which such
grants are made, (iv) interpret and administer the Stock Incentive Plan, (v)
establish, amend, suspend or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Stock
Incentive Plan and (vi) make any other determination and take any other action
that it deems necessary or desirable for the administration of the Stock
Incentive Plan including antidilution and similar adjustments to the terms and
conditions of Awards and to the number of shares of Common Stock available for
Awards under the Stock Incentive Plan.
Both incentive stock options subject to Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") and non-qualified stock options (together
with incentive stock options, the "Options") may be granted under the Stock
Incentive Plan at such exercise prices as the Compensation Committee shall
establish, provided, that such exercise price is not less than 100% of the fair
market value of the Common Stock on the date the Option is granted. Options
become exercisable at such times and subject to such terms as the Compensation
Committee may determine at the time of grant. Although incentive stock options
generally may not have a term of more than 10 years, there is no limit on the
term of non-qualified stock options under the Stock Incentive Plan. A
participant may pay the exercise price of an Option and any applicable
withholding amounts in cash, by check, in nonforfeitable, unrestricted shares of
Common Stock, pursuant to a cashless exercise arrangement with a broker that is
a member of the NASD, or by a combination of the foregoing.
Stock appreciation rights ("SARs') may be granted in tandem with another
Award, in addition to another Award or freestanding and unrelated to another
Award. SARs shall not be exercisable earlier than six months after the grant
date and shall have an exercise price of not less than 100% of the fair market
value of the Common Stock on the date of the grant, or, in the case of a stock
appreciation right granted in tandem with or in addition to another Award, at
the time of grant of such related Award. An SAR entitles the holder to receive
an amount equal to the excess of the fair market value of a share of Common
Stock on the date of exercise over the exercise price of the SAR.
Restricted stock and restricted stock units are subject to risks of
forfeiture and restrictions on transfer determined by the Compensation Committee
at the time of grant. Without limiting the generality of the foregoing, such a
risk of forfeiture may lapse based upon the performance of services by the
participant, the passage of time or the occurrence of specified events, and such
a restriction on transfer may include rights of repurchase or first refusal in
the Company. Upon the lapse of such risks of forfeiture and restrictions on
transfer, a recipient of a share of restricted stock will hold an unrestricted
share of Common Stock, and a recipient of a restricted stock unit will receive
payment equal to the value of a share of Common Stock (which may be paid in
cash, Common Stock or other property). Dividends paid on shares of restricted
stock may be paid directly to the participant or reinvested in shares of
restricted stock or restricted stock units, as determined by the Compensation
Committee.
Performance awards entitle the participant to an award denominated in cash
or shares of Common Stock and payable upon the attainment of predetermined
performance objectives, as specified by the Compensation Committee. Such awards
are paid at such time and in such manner as the Compensation Committee may
determine.
17
<PAGE>
An Other Stock-Based Award consists of any right that is based on, related
to or payable in shares of Common Stock other than an Option, share of
restricted stock, restricted stock unit or performance award. An Other
Stock-Based Award may be subject to such terms and conditions as the
Compensation Committee may determine. In addition, the Compensation Committee in
its discretion may provide that a participant will receive dividends or dividend
equivalent payments in connection with an Other Stock-Based Award. The price at
which securities may be purchased pursuant to any Other Stock-Based Award
granted by the Company shall not be less than 100% of the fair market value of
the securities to which such Other Stock-Based Award relates on the date of
grant.
An Award may be exercised only by the participant during the participant's
lifetime, or, if permissible under applicable law, by the participant's guardian
or legal representative or by a transferee receiving such Award pursuant to a
qualified domestic relations order (a "QDRO"). In addition, no Award that
constitutes a "derivative security," for purposes of Section 16 of the Exchange
Act, may be assigned, alienated, transferred or encumbered by a participant
other than by will, by the laws of descent and distribution or pursuant to a
QDRO.
No Awards may be granted under the Stock Incentive Plan after December 31,
2005.
Grantees under the Stock Incentive Plan are required to vote their Common
Stock received pursuant to the Stock Incentive Plan as directed by the Company
to effectuate the composition of the Company's board of directors as
contemplated by the Stockholders Agreement.
The Stock Incentive Plan may be amended or terminated by the board of
directors at any time; provided, however, that no such amendment or termination
shall be made without the approval of the Company's stockholders if such
approval is necessary to comply with any tax or regulatory requirement. In
addition, the Compensation Committee may amend, suspend, discontinue, cancel or
terminate any granted Award (including without limitation, by resetting the
exercise price, performance goals or other terms of the Award or by replacing
the Award with an Award of a different form or type relating to the same or a
different number of shares of Common Stock), but no such amendment, suspension,
discontinuance, cancellation or termination that would impair the rights of a
participant in the Stock Incentive Plan or any holder of an Award will be
effective without the consent of such participant or holder.
The following is a brief summary of certain of the U.S. federal income tax
consequences of certain transactions under the Stock Incentive Plan based on
U.S. federal income tax laws in effect on January 1, 1997. This summary is not
intended to be exhaustive and does not describe state or local tax consequences.
TAX CONSEQUENCES TO PARTICIPANTS
NON-QUALIFIED STOCK OPTIONS. In general: (i) no income will be recognized
by an optionee at the time a non-qualified stock option is granted; (ii) at the
time of exercise of a non-qualified stock option, ordinary income will be
recognized by the optionee in an amount equal to the difference between the
option price paid for the shares of Common Stock and the fair market value of
the shares if they are nonrestricted on the date of exercise; and (iii) at the
time of sale of shares acquired pursuant to the exercise of a non-qualified
stock option, any appreciation (or depreciation) in the value of the shares
after the date of exercise will be treated as either short-term or long-term
capital gain (or loss) depending on how long the shares have been held.
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<PAGE>
INCENTIVE STOCK OPTIONS. No income generally will be recognized by an
optionee upon the grant or exercise of an incentive stock option. If shares of
Common Stock are issued to an optionee pursuant to the exercise of an incentive
stock option and no disqualifying disposition of the shares is made by the
optionee within two years after the date of grant or within one year after the
transfer of the shares to the optionee, then upon the sale of the shares any
amount realized in excess of the option price will be taxed to the optionee as
long-term capital gain and any loss sustained will be a long-term capital loss.
If shares of Common Stock acquired upon the exercise of an incentive stock
option are disposed of prior to the expiration of either holding period
described above, the optionee generally will recognize ordinary income in the
year of disposition in an amount equal to any excess of the fair market value of
the shares at the time of exercise (or, if less, the amount realized on the
disposition of the shares in a sale or exchange) over the option price paid for
the shares. Any further gain (or loss) realized by the optionee generally will
be taxed as short-term or long-term capital gain (or loss) depending on the
holding period.
STOCK APPRECIATION RIGHTS. No income will be recognized by the recipient of
a stock appreciation right in connection with the grant of such stock
appreciation right. When a stock appreciation right is exercised, the recipient
thereof normally will be required to include as taxable ordinary income in the
year of exercise an amount equal to the amount of any cash, and the fair market
value of any other nonrestricted property, received pursuant to such exercise.
RESTRICTED STOCK AND RESTRICTED STOCK UNITS. The recipient of restricted
stock or restricted stock units generally will be subject to tax at ordinary
income rates on the fair market value of such stock or units reduced by any
amount paid by the participant at such time as the shares or units are no longer
subject to forfeiture or restrictions on transfer for purposes of Section 83 of
the Code. However, a recipient who so elects under Section 83(b) of the Code
within 30 days of the date of transfer of such shares or units will have taxable
ordinary income on the date of transfer of the shares or units equal to the
excess of the fair market value thereof (determined without regard to the
restrictions) over the purchase price, if any, of the shares or units (an "83(b)
election"). If an 83(b) election has not been made, any dividends received with
respect to restricted stock subject to restrictions generally will be treated as
compensation that is taxable as ordinary income to the participant.
PERFORMANCE AWARDS. No income generally will be recognized upon the grant
of performance awards. Upon payment in respect of the earn-out of performance
awards, the recipient generally will be required to include as taxable ordinary
income in the year of receipt an amount equal to the amount of cash received and
the fair market value of any other nonrestricted property received.
SPECIAL RULES APPLICABLE TO OFFICERS AND DIRECTORS. In limited
circumstances where the sale of stock that is received as the result of a grant
of an Award could subject an officer or director to suit under Section 16(b) of
the Exchange Act, the tax consequences to the officer or director may differ
from the tax consequences described above.
TAX CONSEQUENCES TO THE COMPANY OR A SUBSIDIARY
To the extent and at the time that a participant recognizes ordinary income
in the circumstances described above, the Company or the subsidiary for which
the participant performs services generally will be entitled to a corresponding
deduction, provided that, among other things, (i) the income meets the test of
reasonableness, is an ordinary and necessary business expense and is not an
"excess parachute payment" within the meaning of Section 280G of the Code, (ii)
the deduction of the income is
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<PAGE>
not disallowed in whole or in part by the $1 million deduction limitation
applicable to certain compensation paid to executives of publicly-held
corporations, and (iii) any applicable withholding obligations are satisfied. As
a consequence of the foregoing, the Company or the subsidiary for which a
participant performs services will not be entitled to a deduction corresponding
to the timely exercise of an incentive stock option granted to such participant.
With respect to the $1 million deduction limitation, the Company and the
Compensation Committee will seek to maximize the deductibility of the
compensation paid by the Company to the extent that doing so is consistent with
their other compensation policies and objectives.
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STOCK INCENTIVE PLAN BENEFITS
Grants or awards under the Stock Incentive Plan from the inception of the
Stock Incentive Plan through April 21, 1997 were made to the named executive
officers, other officers, key employees and directors, as indicated in the table
below.
<TABLE>
<CAPTION>
STOCK
OPTIONS RESTRICTED SHARES
GRANTED AWARDED
GRANT/AWARD ----------- -----------------------
NAME AND POSITION YEAR NUMBER NUMBER VALUE ($)(1)
- ------------------------------------------------------------ --------------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Gerald L. Friedman.......................................... 1992 -- -- --
Chairman, President 1993 -- -- --
and Chief Executive 1994 -- -- --
Officer 1995 -- -- --
1996 -- -- --
1997 278,000 -- --
Roy J. Kasmar (2)........................................... 1996 178,165 21,835 $ 514,400
Executive Vice President 1997 38,500 -- --
and Chief Operating Officer
Stuart M. Brafman (3)....................................... 1992 4,375,000 750,000 $ 210,000
Former President and Chief 1993 -- -- --
Operating Officer 1994 -- -- --
1995 -- -- --
1996 -- -- --
1997 -- -- --
Jerome J. Selitto........................................... 1992 113,000 28,250 $ 119,780
Executive Vice President 1993 -- -- --
1994 26,000 6,500 $ 34,190
1995 -- -- --
1996 -- -- --
1997 278,000 -- --
John F. Peterson............................................ 1992 70,500 17,625 $ 74,730
Senior Vice President 1993 -- -- --
1994 26,000 6,500 $ 34,190
1995 -- -- --
1996 -- -- --
1997 28,000 -- --
James G. Engelhardt......................................... 1992 53,000 13,250 $ 56,180
Executive Vice President 1993 -- -- --
1994 19,250 4,875 $ 25,643
1995 -- -- --
1996 -- -- --
1997 55,500 -- --
Executive Group............................................. 1992 395,000 848,875 $ 629,230
1993 35,500 8,875 $ 37,630
1994 151,750 38,125 $ 200,538
1995 31,000 2,250 $ 11,925
</TABLE>
21
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<TABLE>
<S> <C> <C> <C> <C>
Executive Group (continued) 1996 237,130 21,835 $ 514,400
1997 794,000 -- --
Non-Executive Director Group................................ 1992 -- -- --
1993 -- -- --
1994 -- -- --
1995 -- -- --
1996 1,000 830 $ 21,995
1997 -- -- --
Non-Executive Officer....................................... 1992 35,000 8,875 $ 37,630
Employee Group 1993 35,500 8,875 $ 37,630
1994 51,500 13,000 $ 68,380
1995 38,900 -- --
1996 18,612 -- --
1997 14,000 -- --
</TABLE>
- --------------------
(1) Reflects value on date of award.
(2) Mr. Kasmar joined Amerin Guaranty on date of award.
(3) Pursuant to the provisions of an Amended and Restated Management Stock and
Voting Agreement entered into among the Company, Mr. Friedman and Mr.
Brafman as a condition of their employment, which agreement was further
amended prior to consummation of the Offering, upon consummation of the
Offering Mr. Brafman became entitled to all of the 750,000 previously
restricted shares of Common Stock and 34 of the previously issued options.
The remaining 4,374,966 options were cancelled.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
STOCKHOLDERS AGREEMENT
The Company, MSLEF, JPMCC, Aetna, First Plaza Group Trust (a trust organized
for the benefit of certain employee benefit plans of General Motors Corporation
and its subsidiaries) and Leeway & Co. (a nominee for the Long Term Investment
Trust, formerly known as the AT&T Master Pension Trust) (collectively, the
"Principal Stockholders") and Mr. Friedman and Stuart M. Brafman and certain
"Permitted Transferees" (as defined in the Stockholders Agreement) are parties
to the Amended and Restated Shareholders Agreement, dated as of November 1, 1995
(the "Stockholders Agreement"), which sets forth certain rights and obligations
of the parties with respect to the Common Stock of the Company and the ownership
and corporate governance of the Company, as described below.
DESIGNATION AND ELECTION OF DIRECTORS.
Each party to the Stockholders Agreement other than JPMCC and each grantee
under the Stock Incentive Plan (each, a "Plan Grantee") is required to vote its
shares of Common Stock and each party to the Stockholders Agreement is required
to take such other action necessary to elect to the board persons designated for
election in accordance with the following procedures: (i) MSLEF may designate
one member of the board so long as it and its Permitted Transferees hold at
least 2.5% of the aggregate outstanding Common Stock and Nonvoting Common Stock
(collectively, "Common Equity") and an additional member of the board so long as
they hold at least 5% of the aggregate outstanding Common Equity; (ii) Aetna may
designate one member of the board so long as it and its Permitted Transferees
22
<PAGE>
hold at least 2.5% of the aggregate outstanding Common Equity; and (iii) a
majority in number of the Principal Stockholders (other than JPMCC and MSLEF),
acting together with their Permitted Transferees, may designate a representative
or employee of any of the Principal Stockholders as an additional member of the
board, provided that not more than two members of the board may be
representatives, employees or affiliates of the same Principal Stockholder or
its Permitted Transferees. In addition, each party to the Stockholders Agreement
other than JPMCC and each Plan Grantee is required to vote its shares of Common
Stock and each party to the Stockholders Agreement is required to take such
other action necessary such that, so long as Mr. Friedman is an employee of the
Company, Amerin Guaranty or Amerin Re, Mr. Friedman will be a member of the
board. The foregoing provisions of the Stockholders Agreement terminate if the
Principal Stockholders and Messrs. Brafman and Friedman, together with their
Permitted Transferees and the Plan Grantees, collectively own less than 20% of
the outstanding Common Equity.
Notwithstanding the foregoing, any party to the Stockholders Agreement that
holds (together with its Permitted Transferees) two-thirds of the outstanding
shares of Common Equity held by the Principal Stockholders and Messrs. Brafman
and Friedman and Permitted Transferees is entitled to designate at least
two-thirds of the members of the board. As of April 15, 1997, the Company's
single largest shareholder owned 38.6% of the outstanding Common Equity held by
the Principal Stockholders and Messrs. Brafman and Friedman and Permitted
Transferees and, therefore, no party to the Stockholders Agreement has the right
to designate at least two-thirds of the board.
Upon the request of a party to the Stockholders Agreement designating a
director, each party to the Stockholders Agreement other than JPMCC and each
Plan Grantee is required to vote its shares of Common Stock and each party to
the Stockholders Agreement is required to take such other action necessary to
remove and designate a replacement for such director.
REGISTRATION RIGHTS.
The stockholders party to the Stockholders Agreement have demand
registration rights with respect to "Registrable Stock" (as defined therein)
held by them. One or more of such stockholders may demand registration so long
as (i) the Registrable Stock sought to be registered constitutes at least 10% of
the outstanding Common Equity, or (ii) if such group includes Mr. Friedman or
Mr. Brafman, the Registrable Stock sought to be registered by Mr. Friedman and
Mr.Brafman, in the aggregate, constitutes at least 1% of the outstanding Common
Equity, provided that any demand pursuant to the foregoing clause (ii) may only
be made once in any 12 month period. In addition, if at any time prior to the
tenth anniversary of the consummation of the Company's initial public offering
the Company proposes to file a registration statement under the Securities Act
of 1933, as amended ("Securities Act"), either for its own account or the
account of others (other than a registration statement relating to employee
benefit or compensation plans, business combinations, exchange offers with
existing security holders or certain other types of registrations), then each
other party to the Stockholders Agreement has the opportunity, subject to
certain procedures, restrictions and priorities, to register such number of
shares of Registrable Stock as such stockholder may request, in which case the
Company is obligated to use its best efforts to permit the inclusion in the
registration statement of the Registrable Stock so requested to be included on
the same terms and conditions as any similar securities of the Company included
therein.
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<PAGE>
The Company has agreed to pay all expenses associated with the exercise of
registration rights under the Stockholders Agreement other than underwriting
fees, discounts or commissions attributable to the sale of Registrable Stock or
any out-of-pocket expenses of the selling stockholders. Under the Stockholders
Agreement, the Company on the one hand and each stockholder selling Registrable
Stock on the other hand have agreed to indemnify each other for certain
liabilities, including liabilities under the Securities Act. The foregoing
registration rights were exercised with respect to a secondary public offering
of 4,025,000 shares (including 525,000 shares sold pursuant to an over-allotment
option) of Common Stock consummated on February 20, 1997. Pursuant to the
limitations on registration rights discussed above, such registration rights
cannot be exercised again until February 20, 1998.
AFFILIATE TRANSACTIONS.
The Stockholders Agreement requires that any transactions between the
Company, Amerin Guaranty or Amerin Re on the one hand and any other party
thereto or any of their affiliates on the other hand must be on an arm's length
basis and requires the approval of the majority of the disinterested members of
the board.
OTHER PROVISIONS.
The Stockholders Agreement provides certain "tag along" rights, allowing
stockholders party thereto to participate in private and open market sales of
Common Stock proposed by other stockholders party thereto, and certain "drag
along" rights, allowing three (but not including JPMCC) of the five Principal
Stockholders holding at least 55% of the Common Equity then held by the
Principal Stockholders, Messrs. Friedman and Brafman, Permitted Transferees and
the Plan Grantees (but not including Common Equity held by JPMCC and its
Permitted Transferees) to require the other stockholders party thereto to sell
all or a portion of their shares of Common Equity, to the same purchaser and on
the same terms as the stockholders originally proposing such sales. The "tag
along" rights terminate at such time as less than 20% of the outstanding Common
Equity is held by stockholders party to the Stockholders Agreement and the Plan
Grantees.
The Stockholders Agreement places a variety of other requirements and
restrictions on transfers of Common Equity held by the stockholders party
thereto. Any sales must be made in accordance with applicable securities laws.
Any transfer other than to a permitted transferee must generally be a sale for
cash unless each other stockholder party to the Stockholders Agreement consents.
Transfers may not be made if the board has determined in its sole discretion and
good faith judgment that the proposed transferee is or is potentially adverse to
certain interests of the Company or a competitor of the Company.
Messrs. Friedman and Brafman have agreed in the Stockholders Agreement not
to compete with the Company, Amerin Guaranty, Amerin Re or any of their
respective affiliates for, in the case of Mr. Friedman, 10 years following the
termination of employment, and in the case of Mr. Brafman, 3 years following the
termination of employment, except for certain passive investments. Mr. Brafman
retired from the Company and Amerin Guaranty in December 1996.
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<PAGE>
LOANS
Pursuant to an employment agreement between Mr. Friedman and Amerin
Guaranty, in order to provide assistance with the tax liability, if any,
associated with the grant to Mr. Friedman of shares pursuant to the Management
Agreement (the "Friedman Shares"), Mr. Friedman has the right to borrow from
Amerin Guaranty an amount equal to such tax liability. Such loan would have a
term of five years and bear interest (payable at maturity) at the prime rate at
the time the loan is made, would be prepayable in whole or in part by Mr.
Friedman at any time or from time to time and would be accelerated to the extent
of any cash proceeds from sales by Mr. Friedman of the Friedman Shares. No loans
have been made by Amerin Guaranty to Mr. Friedman and no amounts are
outstanding.
Pursuant to an employment agreement between Amerin Guaranty and Stuart M.
Brafman, in April 1992 Amerin Guaranty lent Mr. Brafman $80,000 to provide
assistance with the tax liability associated with the grant to Mr. Brafman of
shares pursuant to the Management Agreement (the "Brafman Shares"). The loan has
a term of five years and bears interest (payable at maturity) at the rate of 6%
(the prime rate at the time the loan was made), is prepayable in whole or in
part by Mr. Brafman at any time or from time to time and will be accelerated to
the extent of any cash proceeds from sales by Mr. Brafman of the Brafman Shares.
The terms of the loan provided that, if Mr. Brafman is employed by Amerin
Guaranty or any affiliate on April 30, 1997, the amount of such loan plus
accrued interest shall be forgiven and treated as a bonus. Notwithstanding Mr.
Brafman's retirement in December 1996, pursuant to action of the Board of
Directors of the Company, the amount of such loan plus accrued interest will be
forgiven and treated as a bonus.
The Company also agreed to loan to Mr. Brafman, at Mr. Brafman's election,
the amount of the exercise price of options to purchase Common Stock granted to
Mr. Brafman under the Stock Incentive Plan in April 1992 (the "Brafman
Options"). Such loans were to be for a term of five years, with full recourse,
secured by the shares issued upon exercise of such options (the "Option Stock"),
and to bear interest (payable at maturity) at the prime rate at the time of the
loan. None of such option exercise loans have been made to date. Upon
consummation of the Offering in November, 1995, all options to purchase shares
of Common Stock then held by Mr. Brafman were cancelled (except for options
covering 34 shares). Mr. Brafman exercised such 34 options in December 1996
without electing to borrow the exercise price from the Company.
In addition, in the event that Mr. Brafman (or his estate or legal
representative) is determined to be liable for income tax (i) following an audit
(at which time Mr. Brafman shall be obligated to promptly notify Amerin and keep
Amerin fully informed as to the progress thereof) related to the Brafman Shares
or the 83(b) election made by Mr. Brafman with respect to the Brafman Shares (an
"Audit Circumstance"), or (ii) upon the exercises of the Brafman Options, Amerin
agreed to loan to Mr. Brafman the amount of the associated tax liability (and,
in the case of an Audit Circumstance, reasonable attorney's fees). Such loan
would have a term of five years and bear interest (payable at maturity) at the
prime rate of interest at the time of the loan, will be prepayable in whole or
in part by Mr. Brafman at any time or from time to time and will be accelerated
to the extent of any cash proceeds from sales by Mr. Brafman of Brafman Shares
or Common Stock realized from the exercise of the Brafman Options or any
principal payments made on any notes delivered in payment for any Brafman Shares
or Common Stock realized from the exercise of the Brafman Options. Such loan
would be secured by the Brafman Shares and Common Stock realized from the
exercise of the Brafman Options and all other assets of Mr. Brafman.
25
<PAGE>
TRAVEL AGENCY RELATIONSHIP
Since April 1992, the Company has utilized the services of two travel
agencies for substantially all of the Company's business travel needs. The
spouse of Stuart M. Brafman, who retired as President and Chief Operating
Officer of the Company and Amerin Guaranty in December 1996 has been an employee
of each such agency. Because the Company typically uses travel services provided
by national airlines, hotel and car rental companies, the Company believes that
its travel expenses are not materially different from those it would incur from
a different vendor of travel services. As is customary, the Company is not
charged directly for the services provided by its travel agencies; travel
agencies earn commissions based upon prevailing practice in the airline, hotel,
car rental and other travel related businesses. The Company cannot estimate the
amount of commissions it has generated in favor of its travel agencies. The
Company spent $1,073,334 on travel expense in 1996.
PRINCIPAL STOCKHOLDERS
The Company has invested and may in the future continue to invest short-term
funds with an affiliate of MSLEF, one of the Principal Stockholders. As of
December 31, 1996, the balance of such invested funds was $0. An affiliate of
MS&Co has provided, and may in the future provide, advisory services to the
Company.
2. APPROVAL OF AMENDMENT OF THE 1992 LONG-TERM STOCK INCENTIVE PLAN
Under Section 162(m) of the Internal Revenue Code of 1986, as amended, and
the regulations thereunder, a public company will be denied deductions in
certain circumstances for compensation to the chief executive officer and the
four other most highly compensated executive officers to the extent that
compensation for any of such individuals exceeds one million dollars for a
taxable year. Under special transition rules in the Section 162(m) regulations
for newly-public companies, Awards under the Company's 1992 Long-Term Stock
Incentive Plan (the "Stock Incentive Plan") were not subject to the loss of
deduction rules under Section 162(m). However, the Board of Directors has
unanimously adopted an amendment to the Stock Incentive Plan. This amendment
will increase from 200,000 to 300,000 the number of shares of the Company's
Common Stock with respect to which awards may be granted to any participant
under the Stock Incentive Plan in any four-year period beginning on or after
September 19, 1995. The amendment was adopted by the Board of Directors in order
to increase the ability of the Company to retain the services of its most senior
executives over time.
Upon the adoption of this amendment, Awards under the Stock Incentive Plan
are no longer eligible for the special transition rules for newly-public
companies and are subject to the loss of deduction rules under Section 162(m).
The loss of deduction rules under Section 162(m), however, contain exceptions
for certain awards under stock-based compensation plans, provided that the plans
are approved by the stockholders of the plan's sponsor. The stock-based awards
under the Stock Incentive Plan generally are intended to qualify for these
exceptions. Thus, if the Stock Incentive Plan, as amended, is approved by the
Company's stockholders, the Awards under such plan which otherwise satisfy the
requirements of the exceptions to the Section 162(m) rules will not be taken
into account in determining whether any portion of a grantee's compensation
exceeds one million dollars or is non-deductible by the Company. A description
of the Stock Incentive Plan is set forth herein under the caption "1992
Long-Term Stock Incentive Plan."
The stockholders are being asked to approve the Stock Incentive Plan as
amended by the Board in the manner described above. In order to be approved,
this proposal must receive the affirmative vote of a
26
<PAGE>
majority of the shares entitled to vote at the 1997 Annual Meeting. If the
stockholders do not approve the Stock Incentive Plan as amended, the amendment
will be void and the Stock Incentive Plan will remain subject to the special
transition rules for newly-public companies until the earliest of the date on
which all shares available under the Stock Incentive Plan have been granted, the
date of a material amendment to the Stock Incentive Plan or the 1999 Annual
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE STOCK
INCENTIVE PLAN, AS AMENDED, AND DULY SIGNED AND RETURNED PROXIES WILL BE SO
VOTED UNLESS YOU INDICATE OTHERWISE.
3. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors proposes that the stockholders ratify the
recommendation of the Audit Committee of Ernst & Young LLP to serve as the
Company's independent auditors for the 1997 fiscal year. The board of directors
anticipates that representatives of Ernst & Young LLP will be present at the
1997 Annual Meeting to respond to appropriate questions, and will have an
opportunity, if they so desire, to make a statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE SELECTION OF ERNST & YOUNG
AS THE COMPANY'S INDEPENDENT AUDITORS AND DULY SIGNED AND RETURNED PROXIES WILL
BE SO VOTED UNLESS YOU INDICATE OTHERWISE.
OTHER INFORMATION
The Company has no reason to believe that any other business will be
presented at the 1997 Annual Meeting of Stockholders, but if any other business
shall be presented, votes pursuant to the proxy will be cast thereon in
accordance with the discretion of the persons named in the accompanying proxy.
Stockholder proposals to be presented at the 1998 Annual Meeting must be
received by the Company on or before December 31, 1997, for inclusion in the
proxy statement relating to that meeting. Proposals should be sent to the
attention of the Secretary of the Company. In addition, the Company's By-Laws
contain certain requirements with respect to the submission of proposals and the
nomination of directors at any stockholder meeting.
The Company will furnish, without charge, to each person whose proxy is
being solicited, upon request of such person, one copy of the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, as filed with the
Securities and Exchange Commission. Requests for copies of such report should be
directed to the Investor Relations Department, 200 East Randolph Drive, 49th
Floor, Chicago, Illinois 60601-7125.
AMERIN CORPORATION
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<PAGE>
Appendix A
Proxy Card
<PAGE>
PROXY
1997 ANNUAL MEETING OF SHAREHOLDERS OF AMERIN CORPORATION
Gerald L. Friedman and Randolph C. Sailer II, and each of them, are hereby
appointed proxies, with full power of substitution, to vote all shares of
stock the undersigned is entitled to vote at the annual meeting of
shareholders of Amerin Corporation to be held at the offices of Amerin
Corporation, 200 East Randolph Drive, 49th Floor, Chicago, Illinois, on June
4, 1997 at 10:30 a.m., Local Time, and at any adjournments thereof, as
follows, hereby revoking any proxy heretofore given.
1. ELECTION OF TWO DIRECTORS:
PETER H. GLEASON AND HOWARD I. HOFFEN
/ / FOR all nominees listed above / / WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all nominees
listed above
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
--------------------------------------------------------------------------
2. Amendment to the Amerin Corporation 1992 Long-Term Stock Incentive Plan
to increase the maximum number of shares that may be awarded to a
participant.
/ / FOR / / AGAINST / / ABSTAIN
(CONTINUED, AND TO BE SIGNED AND DATED ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
3. Selection of Ernst & Young LLP as independent auditors for the 1997
fiscal year.
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion on such matters as may properly come before the
meeting, all set out in the Notice and Proxy Statement relating to the
meeting, receipt of which are hereby acknowledged.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CHOICE IS INDICATED,
WILL BE VOTED FOR ITEMS 1, 2 & 3.
Dated: __________________________________, 19____
_________________________________________________
_________________________________________________
(Please sign exactly as name appears hereon. If
stock is owned by more than one person, all
owners should sign. If signing as attorney,
administrator, executor, guardian or trustee,
please indicate such capacity. A proxy given by
a corporation should be signed by an authorized
officer.)
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THIS CORPORATION
<PAGE>
Appendix B
Stock Incentive Plan
<PAGE>
AMERIN CORPORATION
Amendment and Restatement of
1992 Long-Term Stock Incentive Plan
As of April 21, 1997
SECTION 1. PURPOSE. The purposes of this Amerin Corporation 1992
Long-Term Stock Incentive Plan are to promote the interests of Amerin
Corporation and its stockholders by (i) attracting and retaining exceptional
executive personnel and other key employees of the Company and its Affiliates,
as defined below; (ii) motivating such employees by means of performance-related
incentives to achieve longer-range performance goals; and (iii) enabling such
employees to participate in the long-term growth and financial success of the
Company.
SECTION 2. DEFINITIONS. As used in the Plan, the following terms
shall have the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or indirectly, is
controlled by the Company and (ii) any entity in which the Company has a
significant equity interest, in either case as determined by the Committee.
"Award" shall mean any Option, Stock Appreciation Right, Restricted Stock
Award, Performance Award or other Stock-Based Award.
"Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" shall mean (i) a committee of the Board designated by the Board
to administer the Plan and composed of not less than the minimum number of
persons from time to time required by Rule 16b-3 and Section 162(m), each of
whom, to the extent necessary to comply with Rule 16b-3 and Section 162(m) only,
is a "disinterested person" or "outside director" within the meaning of Rule
16b-3 or Section 162(m) respectively, or (ii) if at any time such a committee
has not been so designated by the Board, the Board.
"Company" shall mean Amerin Corporation, together with any successor
thereto.
"Employee" shall mean an employee or prospective employee of the Company or
of any Affiliate.
"Exchange Act" shall mean the Securities Act of 1934, as amended.
"Fair Market Value" shall mean the fair market value of the property or
other item being valued, as determined by the Committee in its sole discretion.
"Incentive Stock Option" shall mean a right to purchase Shares from the
Company that is granted under Section 6 of the Plan and that is intended to meet
the requirements of Section 422 of the Code or any successor provision thereto.
"Non-Qualified Stock Option" shall mean a right to purchase shares from the
Company that is granted under Section 6 of the Plan and that is not intended to
be an Incentive Stock Option.
<PAGE>
"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
"Other Stock-Based Award" shall mean any right granted under Section 10 of
the Plan.
"Participant" shall mean any Employee selected by the Committee to receive
an Award under the Plan.
"Performance Award" shall mean any right granted under Section 9 of the
Plan.
"Person" shall mean any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or political
subdivision thereof or other entity.
"Plan" shall mean this Amerin Corporation 1992 Long-Term Stock Incentive
Plan.
"Restricted Stock" shall mean any Share granted under Section 8 of the
Plan.
"Restricted Stock Unit" shall mean any unit granted under Section 8 of the
Plan.
"Rule 16b-3" shall mean Rule 16b-3 as promulgated and interpreted by the
SEC under the Exchange Act, or any successor rule or regulation thereto as in
effect from time to time.
"SEC" shall mean the Securities and Exchange Commission or any other
successor thereto and shall include the Staff thereof.
"Section 162(m)" shall mean Section 162(m) of the Code or any successor
provision thereto.
"Shares" shall mean the common shares of the Company, $.01 par value, or
such other securities of the Company as may be designated by the Committee from
time to time.
"Stock Appreciation Right" shall mean any right granted under Section 7 of
the Plan.
"Substitute Awards" shall mean Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company acquired by
the Company or with which the Company combines.
SECTION 3. ADMINISTRATION. (a) The Plan shall be administered by
the Committee. Subject to the terms of the Plan and applicable law, and in
addition to other express powers and authorizations conferred on the Committee
by the Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to an
eligible Employee; (iii) determine the number of Shares to be covered by, or
with respect to which payments, rights, or other matters are to be calculated in
connection with, Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, Shares, other securities, other Awards or other
property, or cancelled, forfeited, or suspended and the method or methods by
which Awards may be settled, exercised, cancelled, forfeited, or suspended; (vi)
determine whether, to what extent, and under what circumstances cash, Shares,
other securities, other Awards, other property, and other amounts payable with
respect to an Award shall be deferred either automatically or at the election of
the holder thereof or of the Committee; (vii) interpret and administer the Plan
and any instrument or agreement relating to, or Award made under, the Plan;
(viii) establish, amend, suspend, or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (ix) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of the
Plan.
(b) Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive, and binding
upon all Persons, including the Company, any Affiliate, any Participant, any
holder or beneficiary of any Award, any shareholder and any Employee.
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<PAGE>
SECTION 4. SHARES AVAILABLE FOR AWARDS.
(a) SHARES AVAILABLE. Subject to adjustment as provided in Section
4(b), the aggregate number of Shares with respect to which Awards may be granted
under the Plan shall be 8,300,000, and the maximum number of Shares with respect
to which Awards may be granted under the Plan to any Participant shall be
5,125,000 with respect to Awards granted before September 19, 1995, and 300,000
with respect to Awards granted during any four-year period beginning on or after
September 19, 1995. If, after the effective date of the Plan, any Shares
covered by an Award granted under the Plan, or to which such an Award relates,
are forfeited, or if an Award is settled for cash or otherwise terminates or is
cancelled without the delivery of Shares, then the Shares covered by such Award,
or to which such Award relates, or the number of Shares otherwise counted
against the aggregate number of Shares with respect to which Awards may be
granted under the Plan, to the extent of any such settlement, forfeiture,
termination or cancellation, shall again be, or shall become, Shares with
respect to which Awards may be granted. In the event that any Option or other
Award granted hereunder is exercised through the delivery of Shares, the number
of Shares available for Awards under the Plan shall be increased by the number
of Shares surrendered, to the extent permissible under Rule 16b-3.
Notwithstanding the foregoing, upon the consummation of the initial public
offering of the common stock, par value $.01 per share, of the Company, the
Option previously granted hereunder to Stuart M. Brafman shall be cancelled
without the delivery of Shares, and the Shares covered by such Option shall not
again be Shares with respect to which Awards may be granted.
(b) ADJUSTMENTS. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Committee shall, in such manner as
it may deem equitable, adjust any or all of (i) the number of Shares or other
securities of the Company (or number and kind of other securities or property)
with respect to which Awards may be granted, (ii) the number of Shares or other
securities of the Company (or number and kind of other securities or property)
subject to outstanding Awards, and (iii) the grant or exercise price with
respect to any Award or, if deemed appropriate, make provision for a cash
payment to the holder of an outstanding Award; provided, in each case, that with
respect to Awards of Incentive Stock Options no such adjustment shall be
authorized to the extent that such authority would cause the Plan to violate
Section 422(b)(1) of the Code, as from time to time amended.
(c) SUBSTITUTE AWARDS. Any Shares underlying Substitute Awards shall
not, except in the case of Shares with respect to which Substitute Awards are
granted to Employees who are officers or directors of the Company for purposes
of Section 16 of the Exchange Act or any successor section thereto, be counted
against the Shares available for Awards under the Plan.
(d) SOURCES OF SHARES DELIVERABLE UNDER AWARDS. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.
SECTION 5. ELIGIBILITY. Any Employee, including any officer or
employee-director (or prospective officer or employee-director) of the Company
or any Affiliate, who is not a member of the Committee, shall be eligible to be
designated a Participant.
SECTION 6. STOCK OPTIONS.
(a) GRANT. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to determine the Employees to whom
Options shall be granted, the number of Shares to be covered by each Option, the
option price therefor and the conditions and limitations applicable to the
exercise of the Option. The Committee shall have the authority to grant
Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant
both types of options. In the case of Incentive Stock Options, the terms and
conditions of
- 3 -
<PAGE>
such grants shall be subject to and comply with such rules as may be prescribed
by Section 422 of the Code, as from time to time amended, and any regulations
implementing such statute.
(b) EXERCISE PRICE. The Committee shall establish the exercise price
at the time each Option is granted, which price, except in the case of Options
that are Substitute Awards, shall not be less than 100% of the per Share Fair
Market Value on the date of grant.
(c) EXERCISE. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Award Agreement or thereafter. The
Committee may impose such conditions with respect to the exercise of Options,
including without limitation, any relating to the application of federal or
state securities laws, as it may deem necessary or advisable.
(d) PAYMENT. No Shares shall be delivered pursuant to any exercise
of an Option until payment in full of the option price therefor is received by
the Company. Such payment may be made in cash, or its equivalent, by exchanging
Shares owned by the optionee (which are not the subject of any pledge or other
security interest), by deferred payment from the proceeds of sale on the date of
exercise (through a cashless exercise arrangement acceptable to the Committee
with a broker that is a member of the National Association of Securities
Dealers, Inc.) of some or all of the Shares to which the exercise relates, or by
a combination of the foregoing, provided that the combined value of all cash and
cash equivalents and the Fair Market Value of any such Shares so tendered to the
Company as of the date of such tender is at least equal to such option price.
SECTION 7. STOCK APPRECIATION RIGHTS.
(a) GRANT. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to determine the Employees to whom Stock
Appreciation Rights shall be granted, the number of Shares to be covered by each
Stock Appreciation Right Award, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. Stock Appreciation Rights may
be granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to another Award. Stock Appreciation Rights granted
in tandem with or in addition to an Award may be granted either at the same time
as the Award or at a later time. Stock Appreciation Rights shall not be
exercisable earlier than six months after grant, and except for Stock
Appreciation Rights which are Substitute Awards, shall have an exercise price of
not less than 100% of the Fair Market Value of the Shares on the date of grant
or, in the case of a Stock Appreciation Right granted in tandem with or in
addition to another Award, at the time of grant of such related Award.
(b) EXERCISE AND PAYMENT. A Stock Appreciation Right shall entitle
the Participant to receive an amount equal to the excess of the Fair Market
Value of a Share on the date of exercise of the Stock Appreciation Right over
the grant price thereof, provided that the Committee may for administrative
convenience determine that, with respect to any Stock Appreciation Right which
is not related to an Incentive Stock Option and which can only be exercised for
cash during limited periods of time in order to satisfy the conditions of Rule
16b-3, the exercise of such Stock Appreciation Right for cash during such
limited period shall be deemed to occur for all purposes hereunder on the day
during such limited period on which the Fair Market Value of the Shares is the
highest. Any such determination by the Committee may be changed by the
Committee from time to time and may govern the exercise of Stock Appreciation
Rights granted prior to such determination as well as Stock Appreciation Rights
thereafter granted. The Committee shall determine whether a Stock Appreciation
Right shall be settled in cash, Shares or a combination of cash and Shares.
(c) OTHER TERMS AND CONDITIONS. Subject to the terms of the Plan and
any applicable Award Agreement, the Committee shall determine, at or after the
grant of a Stock Appreciation Right, the term, methods of exercise, methods and
form of settlement, and any other terms and conditions of any Stock Appreciation
Right. Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights
granted or exercised prior to such determination as well as Stock Appreciation
Rights granted or exercised thereafter. The Committee may impose such
conditions or restrictions on the exercise of any Stock Appreciation Right as it
shall deem appropriate.
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SECTION 8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS.
(a) GRANT. Subject to the provisions of the Plan, the Committee
shall have sole and complete authority to determine the Employees to whom Shares
of Restricted Stock and Restricted Stock Units shall be granted, the number of
Shares of Restricted Stock and/or the number of Restricted Stock Units to be
granted to each Participant, the duration of the period during which, and the
conditions under which, the Restricted Stock and Restricted Stock Units may be
forfeited to the Company, and the other terms and conditions of such Awards.
(b) TRANSFER RESTRICTIONS. Shares of Restricted Stock and Restricted
Stock Units may not be sold, assigned, transferred, pledged or otherwise
encumbered, except, in the case of Restricted Stock, as provided in the Plan or
the applicable Award Agreements. Certificates issued in respect of Shares of
Restricted Stock shall be registered in the name of the Participant and
deposited by such Participant, together with a stock power endorsed in blank,
with the Company. Upon the lapse of the restrictions -applicable to such Shares
of Restricted Stock, the Company shall deliver such certificates to the
Participant or the Participant's legal representative.
(c) PAYMENT. Each Restricted Stock Unit shall have a value equal to
the Fair Market Value of a Share. Restricted Stock Units shall be paid in cash,
Shares, other securities or other property, as determined in the sole discretion
of the Committee, upon the lapse of the restrictions applicable thereto, or
otherwise in accordance with the applicable Award Agreement. Dividends paid on
any Shares of Restricted Stock may be paid directly to the Participant, or may
be reinvested in additional Shares of Restricted Stock or in additional
Restricted Stock Units, as determined by the Committee in its sole discretion.
SECTION 9. PERFORMANCE AWARDS.
(a) GRANT. The Committee shall have sole and complete authority to
determine the Employees who shall receive a "Performance Award", which shall
consist of a right which is (i) denominated in cash or Shares, (ii) valued, as
determined by the Committee, in accordance with the achievement of such
performance goals during such performance periods as the Committee shall
establish, and (iii) payable at such time and in such form as the Committee
shall determine.
(b) TERMS AND CONDITIONS. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the performance goals
to be achieved during any performance period, the length of any performance
period, the amount of any Performance Award and the amount and kind of any
payment or transfer to be made pursuant to any Performance Award.
(c) PAYMENT OF PERFORMANCE AWARDS. Performance Awards may be paid in
a lump sum or in installments following the close of the performance period or,
in accordance with procedures established by the Committee, on a deferred basis.
SECTION 10. OTHER STOCK-BASED AWARDS.
(a) GENERAL. The Committee shall have authority to grant to eligible
Employees an "Other Stock-Based Award", which shall consist of any right which
is (i) not an Award described in Sections 6 through 9 above and (ii) an Award of
Shares or an Award denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares (including, without
limitation, securities convertible into Shares), as deemed by the Committee to
be consistent with the purposes of the Plan; provided that any such rights must
comply, to the extent deemed desirable by the Committee, with Rule 16b-3 and
applicable law. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine the terms and conditions of any such
Other Stock-Based Award. Except in the case of an Other Stock-Based Award that
is a Substitute Award, the price at which securities may be purchased pursuant
to any Other Stock-Based Award granted under this Plan, or the provision, if
any, of any such Award that is analogous to the purchase or exercise price,
shall not be less than 100% of the Fair Market Value of the securities to which
such Award relates on the date of grant.
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(b) DIVIDEND EQUIVALENTS. In the sole and complete discretion of the
Committee, an Award, whether made as an Other Stock-Based Award under this
Section 10 or as an Award granted pursuant to Sections 6 through 9 hereof, may
provide the Participant with dividends or dividend equivalents, payable in cash,
Shares, other securities or other property on a current or deferred basis.
SECTION 11. AMENDMENT AND TERMINATION.
(a) AMENDMENTS TO THE PLAN. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without shareholder approval if such approval is necessary to
comply with any tax or regulatory requirement, including for these purposes any
approval requirement which is a prerequisite for exemptive relief from Section
16(b) of the Exchange Act. Notwithstanding anything to the contrary herein, the
Committee may amend the Plan in such manner as may be necessary so as to have
the Plan conform with local rules and regulations in any jurisdiction outside
the United States.
(b) AMENDMENTS TO AWARDS. The Committee may waive any conditions or
rights under, amend any terms (including, without limitation, terms regarding
exercise price and performance goals) of, or alter, suspend, discontinue,
cancel, terminate or replace (including, without limitation, with an Award of a
different form or type relating to the same or a different number of Shares),
any Award theretofore granted, prospectively or retroactively; provided that any
such waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would impair the rights of any Participant or any holder or
beneficiary of any Award theretofore granted shall not to that extent be
effective without the consent of the affected Participant, holder or
beneficiary.
(c) ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR
NONRECURRING EVENTS. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Awards in recognition
of unusual or nonrecurring events (including, without limitation, the events
described in Section 4(b) hereof) affecting the Company, any Affiliate, or the
financial statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan.
(d) CANCELLATION. Any provision of this Plan or any Award Agreement
to the contrary notwithstanding, the Committee may cause any Award granted
hereunder to be cancelled in consideration of a cash payment or alternative
Award made to the holder of such cancelled Award equal in value to the Fair
Market Value of such cancelled Award.
SECTION 12. GENERAL PROVISIONS.
(a) NONTRANSFERABILITY.
(i) Each Award, and each right under any Award, shall be exercisable
only by the Participant during the Participant's lifetime, or, if
permissible under applicable law, by the Participant's guardian or legal
representative or by a transferee receiving such Award pursuant to a
qualified domestic relations order ("QDRO"), as determined by the
Committee.
(ii) No Award that constitutes a "derivative security", for purposes
of Section 16 of the Exchange Act, may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a Participant
otherwise than by will or by the laws of descent and distribution or
pursuant to a QDRO, and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable
against the Company or any Affiliate; provided that the
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designation of a beneficiary shall not constitute an assignment,
alienation, pledge, attachment, sale, transfer or encumbrance.
(b) NO RIGHTS TO AWARDS. No Employee, Participant or other Person
shall have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or beneficiaries
of Awards. The terms and conditions of Awards need not be the same with respect
to each recipient.
(c) SHARE CERTIFICATES. All certificates for Shares or other
securities of the Company or any Affiliate delivered under the Plan pursuant to
any Award or the exercise thereof shall be subject to such stop transfer orders
and other restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities are
then listed, and any applicable Federal or state laws, and the Committee may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
(d) DELEGATION. Subject to the terms of the Plan and applicable law,
the Committee may delegate to one or more officers or managers of the Company or
any Affiliate, or to a committee of such officers or managers, the authority,
subject to such terms and limitations as the Committee shall determine, to grant
Awards to, or to cancel, modify or waive rights with respect to, or to alter,
discontinue, suspend, or terminate Awards held by, Employees who are not
officers or directors of the Company for purposes of Section 16 of the Exchange
Act, or any successor section thereto, or who are otherwise not subject to such
Section.
(e) WITHHOLDING. To the extent that the Company or any Affiliate is
required to withhold federal, state, local or foreign taxes in connection with
any payment made or benefit realized by a Participant or other person under this
Plan, and the amounts available to the Company or such Affiliate for such
withholding are insufficient, it shall be a condition to the receipt of such
payment or the realization of such benefit that the Participant or such other
person make arrangements satisfactory to the Company or such Affiliate for
payment of the balance of such taxes required to be withheld. At the discretion
of the Committee, such arrangements may include relinquishment of a portion of
such benefit. The Company or such Affiliate and the Participant or such other
person may also make similar arrangements with respect to the payment of any
taxes with respect to which withholding is not required.
(f) AWARD AGREEMENTS. Each Award hereunder shall be evidenced by an
Award Agreement which shall be delivered to the Participant and shall specify
the terms and conditions of the Award and any rules applicable thereto,
including but not limited to the effect on such Award of the death, retirement
or other termination of employment of a Participant and the effect, if any, of a
change in control of the Company.
(g) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained
in the Plan shall prevent the Company or any Affiliate from adopting or
continuing in effect other compensation arrangements, which may, but need not,
provide for the grant of options, restricted stock, Shares and other types of
Awards provided for hereunder (subject to shareholder approval if such approval
is required), and such arrangements may be either generally applicable or
applicable only in specific cases.
(h) NO RIGHT TO EMPLOYMENT. The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of the
Company or any Affiliate. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement.
(i) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Award, no Participant or holder or beneficiary of any Award shall
have any rights as a stockholder with respect to any Shares to be distributed
under the Plan until he or she has become the holder of such Shares.
Notwithstanding the foregoing, in connection with each grant of Restricted Stock
hereunder, the applicable Award shall specify if and to what extent the
Participant shall not be entitled to the rights of a stockholder in respect of
such Restricted Stock.
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(j) GOVERNING LAW. The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan and any Award Agreement
shall be determined in accordance with the laws of the State of Illinois.
(k) SEVERABILITY. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Award, or would disqualify the Plan or any
Award under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform the applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, Person or Award and the remainder of the Plan
and any such Award shall remain in full force and effect.
(l) OTHER LAWS. The Committee may refuse to issue or transfer any
Shares or other consideration under an Award if, acting in its sole discretion,
it determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant, other holder or beneficiary in
connection with the exercise of such Award shall be promptly refunded to the
relevant Participant, holder or beneficiary. Without limiting the generality of
the foregoing, no Award granted hereunder shall be construed as an offer to sell
securities of the Company, and no such offer shall be outstanding, unless and
until the Committee in its sole discretion has determined that any such offer,
if made, would be in compliance with all applicable requirements of the U.S.
federal securities laws.
(m) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(n) NO FRACTIONAL SHARES. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any rights
thereto shall be cancelled, terminated, or otherwise eliminated.
(o) HEADINGS. Headings are given to the Sections and subsections of
the Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
SECTION 13. TERM OF THE PLAN.
(a) EFFECTIVE DATE. The Plan shall be effective as of the date of
its approval by the shareholders of the Company.
(b) EXPIRATION DATE. No Award shall be granted under the Plan after
December 31, 2005. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder may, and the authority
of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Award or to waive any conditions or rights under any such
Award shall, continue after December 31, 2005.
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