<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 Rule 14a-11 or Rule 14a-12.
FPIC INSURANCE GROUP, INC.
(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)(l) 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> 2
FPIC INSURANCE GROUP, INC.
1000 RIVERSIDE AVENUE, SUITE 800
JACKSONVILLE, FLORIDA 32204
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 8, 1999
TO THE SHAREHOLDERS OF FPIC INSURANCE GROUP, INC.:
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders
(the "Annual Meeting") of FPIC Insurance Group, Inc., a Florida corporation
(the "Company"), will be held at the executive offices of the Company, 1000
Riverside Avenue, Suite 800, Jacksonville, Florida 32204, on June 8, 1999, at
10:00 a.m., local time, for the following purposes:
1. To elect five Directors to serve until their terms expire.
2. To approve an amendment to the Company's Restated Articles of
Incorporation.
3. To approve amendments to the Director Stock Option Plan.
4. To approve amendments to the Omnibus Incentive Plan.
5. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The close of business on April 15, 1999, has been fixed by the Board
of Directors of the Company as the record date for determining the shareholders
entitled to notice of, and to vote at, the Annual Meeting.
You are cordially invited to attend the Annual Meeting. Whether or
not you plan to attend the Annual Meeting, you may insure your representation
by completing, signing, dating and promptly returning the enclosed proxy card.
A return envelope, which requires no postage if mailed in the United States,
has been provided for your use. If you attend the Annual Meeting and inform
the Secretary of the Company in writing that you wish to vote your shares in
person, your proxy will not be used.
<TABLE>
<S> <C>
By Order of the Board of Directors
/s/ Charles W. Emanuel
------------------------------------------
Charles W. Emanuel
Vice President and Secretary
May 7, 1999
</TABLE>
<PAGE> 3
FPIC INSURANCE GROUP, INC.
1000 RIVERSIDE AVENUE, SUITE 800
JACKSONVILLE, FLORIDA 32204
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
JUNE 8, 1999
GENERAL INFORMATION
The Board of Directors of FPIC Insurance Group, Inc. (the "Company")
solicits your proxy for use at the 1999 Annual Meeting of Shareholders to be
held on Wednesday, June 8, 1999 at 10:00 a.m., local time, and any adjournments
thereof, at the Company's principal offices, 1000 Riverside Avenue, Suite 800,
Jacksonville, Florida 32204. A form of proxy is enclosed.
The Annual Report of the Company to its shareholders for the 1998
fiscal year and this proxy statement are being distributed on or about May 7,
1999 to shareholders entitled to vote.
VOTING PROCEDURES
Record Date. Only holders of record of the Company's issued and
outstanding shares of common stock at the close of business on April 15, 1999
(the "Record Date") are entitled to vote at the Annual Meeting. Each
shareholder is entitled to one vote, in person or by proxy, for each share held
on the Record Date. At the close of business on the Record Date, there were
9,807,197 shares of common stock of the Company outstanding.
Voting of Proxies. All properly executed proxies delivered pursuant to
this solicitation and not revoked will be voted at the Annual Meeting in
accordance with the directions given. Regarding the election of Directors to
serve until the 2002 Annual Meeting of Shareholders, in voting by proxy,
shareholders may vote in favor of all nominees or withhold their votes as to
all nominees or withhold their votes as to specific nominees. With regard to
the amendments to the Restated Articles of Incorporation, the Director Stock
Option Plan and the Omnibus Incentive Plan, shareholders may vote for, against
or abstain from voting on such proposals. Shareholders should specify their
choices on the enclosed form of proxy. If no specific instructions are given
with respect to the matters to be acted upon, the shares represented by a
signed proxy will be voted FOR the election of all nominees, FOR the amendments
to the Restated Articles of Incorporation, FOR the amendments to the Director
Stock Option Plan and FOR the amendments to the Omnibus Incentive Plan.
Revocation of Proxies. Any shareholder who executes and delivers a
proxy may revoke the authority granted thereunder at any time prior to its use
by giving written notice of such revocation to the Secretary of the Company, or
by executing and delivering a proxy bearing a later date. A shareholder may
also revoke a proxy by attending and voting in person at the Annual Meeting.
<PAGE> 4
Vote Required for Approval. Directors will be elected by a plurality
of the votes cast by the shareholders voting in person or by proxy at the
Annual Meeting. A majority of the Company's outstanding shares of common stock
will be necessary to approve the amendments to the Restated Articles of
Incorporation. A majority of the votes cast by the shareholders voting in
person or by proxy at the Annual Meeting will be necessary to approve the
amendments to the Director Stock Option Plan and the Omnibus Incentive Plan.
Abstentions and broker non-votes will have the same effect as negative votes on
the amendments to the Restated Articles of Incorporation. Abstentions and
broker non-votes will have no effect on the outcome of the other votes. A
broker non-vote generally occurs when a broker who holds shares in street-name
for a customer does not have authority to vote on certain non-routine matters
because its customer has not provided any voting instructions on the matter.
With respect to any further business of a routine nature that is properly
presented, abstentions and broker non-votes will have no effect.
ELECTION OF DIRECTORS
The Company has a staggered Board of Directors with three classes of
directors that serve for terms of three years. The Board of Directors
currently consists of 14 persons. The Company's articles of incorporation
provide that the number of directors may be determined from time to time by
resolution adopted by the affirmative vote of at least 75% of the entire Board
of Directors. This number and its determination is exclusive of directors to
be elected by the holders of any one or more series of Preferred Stock voting
separately as a class or classes. No such Preferred Stock is outstanding. The
Company's bylaws provide that the Company's President will always be nominated
by the Board of Directors for election to the Board of Directors whenever the
President's term as a director expires or whenever the President is not a
director.
Members of the Board of Directors are required to be between 18 and 70
years of age; provided that (i) any director who is elected prior to becoming
70 years of age may complete his then current term as a director and (ii) any
director serving as of January 10, 1998 who as of such date was older than 70
years of age or who has or will become older than 70 years of age during his
then current term as a director will be eligible to serve one additional term
as a director for the term commencing upon the termination of his then current
term.
At the Annual Meeting, five directors are to be elected to hold office
until the 2002 Annual Meeting of Shareholders or until their successors are
elected and qualified. The persons designated as nominees for election as
directors are Gaston J. Acosta-Rua, M.D., Curtis E. Gause, D.D.S., Guy T.
Selander, M.D., David M. Shapiro, M.D., and James G. White, M.D. Each of such
nominees is currently a director of the Company.
If, for any reason, any of the nominees is not a candidate when the
election occurs, the enclosed Proxy may be voted for a substitute nominee. The
Board of Directors does not anticipate that any nominee will not be a
candidate. Further information regarding the nominees and the other directors
is set forth below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES.
-2-
<PAGE> 5
BOARD OF DIRECTORS OF FPIC INSURANCE GROUP, INC.
NOMINEES FOR TERMS EXPIRING IN 2002
GASTON J. ACOSTA-RUA, M.D., 61, is a neurosurgeon engaged in private
practice in Jacksonville, Florida. Dr. Acosta-Rua has practiced medicine since
1971. Dr. Acosta-Rua has served as a director of the Company since its
formation in 1996 and as Chairman of the Board from 1996 to 1997. Dr.
Acosta-Rua has served as a director of the Company's subsidiary, Florida
Physicians Insurance Company, Inc. ("FPIC"), since 1986 and served as Chairman
of FPIC's Board of Directors from 1994 to 1997.
CURTIS E. GAUSE, D.D.S., 74, is a retired dentist who is
President-Emeritus and a consultant for a dental center in St. Petersburg,
Florida. Dr. Gause practiced dentistry from 1954 to 1992. Dr. Gause, a
Past-President of the Florida Dental Association (the "FDA"), has served as a
director of the Company since its formation in 1996 and as a director of FPIC
since 1993.
GUY T. SELANDER, M.D., 63, is a family physician engaged in private
practice in Jacksonville, Florida. Dr. Selander has practiced medicine since
1964. Dr. Selander is a Past-President of the Florida Medical Association
("FMA") and has served as a director of the Company since its formation in 1996
and as a director of FPIC since 1989. Dr. Selander is currently Vice-Chairman
of the Board of Directors for both the Company and FPIC.
DAVID M. SHAPIRO, M.D., 45, is engaged in the private practice of
anesthesiology in Ft. Myers, Florida. Dr. Shapiro has practiced medicine since
1986. Dr. Shapiro has served as a director of the Company and FPIC since 1996.
JAMES G. WHITE, M.D., 66, is engaged in the private practice of
pediatric medicine in Ormond Beach, Florida. Dr. White has practiced medicine
since 1966. Dr. White is a Past-President of the FMA and has served as a
director of the Company since its formation in 1996 and as a director of FPIC
since 1986. Dr. White is currently Chairman of the Board of Directors for both
the Company and FPIC.
INCUMBENT DIRECTORS WHOSE TERMS EXPIRE IN 2000
RICHARD J. BAGBY, M.D., 58, is engaged in the private practice of
diagnostic radiology in Orlando, Florida. Dr. Bagby has practiced medicine
since 1972. Dr. Bagby is a Past-President of the FMA and has served as a
director of the Company since its formation in 1996 and as a director of FPIC
since 1993.
ROBERT O. BARATTA, M.D., 58, is engaged in the private practice of
ophthalmology in Stuart, Florida. Dr. Baratta has practiced medicine since
1973. He has served as a director of the Company since its formation in 1996
and as a director of FPIC since 1993.
LOUIS C. MURRAY, M.D., 74, is a family physician engaged in private
practice in Orlando, Florida. Dr. Murray has practiced medicine since 1954.
Dr. Murray is a Past-President of the FMA and has served as a director of the
Company since its formation in 1996 and as a director of FPIC since 1988.
WILLIAM R. RUSSELL, 52, is the President and Chief Executive Officer
of the Company. Mr. Russell has served as President, Chief Executive Officer
and as a director of the Company since its formation in 1996. He has served as
a director of FPIC since 1990. Mr. Russell also served as President and Chief
Executive Officer of FPIC from 1990 to 1999.
-3-
<PAGE> 6
INCUMBENT DIRECTORS WHOSE TERMS EXPIRE IN 2001
JAMES W. BRIDGES, M.D., 64, is engaged in the private practice of
obstetrics and gynecology in Miami, Florida. Dr. Bridges has practiced
medicine since 1967. Dr. Bridges has served as a director of the Company since
its formation in 1996 and as a director of FPIC since 1985.
D. L. VAN ELDIK, M.D., 70, is a retired family physician who formerly
practiced in Lake Worth, Florida. Dr. Van Eldik practiced medicine from 1957
to 1998. Dr. Van Eldik is a Past-President of the FMA and has served as a
director of the Company since its formation in 1996 and as a director of FPIC
since 1988.
J. STEWART HAGEN, M.D., 67, is a retired general surgeon who formerly
practiced in Ft. Myers, Florida. Dr. Hagen practiced medicine from 1965 to
1996. Dr. Hagen has served as a director of the Company since its formation in
1996 and as a director of FPIC since 1988.
FRANK MOYA, M.D., 70 is a retired anesthesiologist who formerly
practiced in Miami, Florida. Dr. Moya practiced medicine from 1953 to 1997.
Dr. Moya is a Co-Founder, Chairman of the Board of Directors and Chief
Executive Officer of Anesthesiologists' Professional Assurance Company, a
wholly owned subsidiary of the Company. Dr. Moya is a former Dean of the
University of Miami School of Medicine and Chairman of the Department of
Anesthesiology. Dr. Moya has served as a director of the Company and FPIC
since 1998.
HENRY M. YONGE, M.D., 78, is a retired physician who specialized in
internal medicine and formerly practiced in Pensacola, Florida. Dr. Yonge
practiced medicine from 1952 to 1999. Dr. Yonge has served as a director of
the Company since its formation in 1996 and as a director of FPIC since 1985.
Dr. Yonge served as Chairman of FPIC's Board of Directors from 1988 to 1991.
PRINCIPAL SHAREHOLDERS AND SECURITIES OWNERSHIP
OF MANAGEMENT
According to the Company's stock transfer records, as of March 31,
1999, no shareholder owns five percent (5%) or more of the Company's
outstanding shares of common stock.
The following table sets forth the beneficial ownership of the
Company's common stock, including stock options that have vested or are
exercisable within 60 days of March 31, 1999, by each of the directors and
nominees, each of the executive officers named in the Summary Compensation
Table and all of the Company's directors and executive officers as a group as
of March 31, 1999.
-4-
<PAGE> 7
<TABLE>
<CAPTION>
SHARES PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED OWNERSHIP(1)
------------------------ ------------------ ------------
<S> <C> <C>
Gaston J. Acosta-Rua, M.D. 26,233(2) *
Richard J. Bagby, M.D. 46,583(3) *
Robert O. Baratta, M.D. 38,699 *
James W. Bridges, M.D. 22,333 *
Ray A. Carey 30,627(4) *
Robert B. Finch 163,208(5) 1.7
Curtis E. Gause, D.D.S. 5,333 *
J. Stewart Hagen, M.D. 24,000 *
Frank Moya, M.D. 288,816(6) 2.9
Louis C. Murray, M.D. 26,033 *
Steven M. Rosenbloom 110,238(7) 1.1
William R. Russell 152,834(8) 1.6
Guy T. Selander, M.D. 20,633 *
David M. Shapiro, M.D. 20,833 *
Steven R. Smith 144,537(9) 1.5
D.L. Van Eldik, M.D. 5,333 *
James G. White, M.D. 20,383 *
Henry M. Yonge, M.D. 6,767 *
Directors and Executive 1,281,105(10) 13.1
Officers as a Group (24
Persons)
</TABLE>
* Less than 1.0% of the Company's outstanding common stock.
(1) Based on an aggregate of (i) the number of shares of the Company's
common stock outstanding at March 31, 1999 and (ii) options vested
as of March 31, 1999 or that are exercisable within 60 days as of
March 31, 1999.
(2) Dr. Acosta-Rua disclaims beneficial ownership of 1,000 of these
shares, which are owned by his wife.
(3) Includes 23,250 shares owned by Morgan, Hiatt, Hines, Culbert and
March P.A., of which Dr. Bagby is a member.
(4) Includes 627 shares held by the Company's 401(k) plan, which are
voted by the trustees of the plan.
(5) Includes 77,552 shares held by all employees in the Company's
401(k) plan, which are voted by Mr. Finch as a trustee of the plan
and of which 15,467 shares are held in the plan in Mr. Finch's
name.
(6) Includes 263,816 shares held by APAA Liquidating Trust, of which
Dr. Moya is a trustee and 3,000 shares held by American
Professional Assurance Ltd. of which Dr. Moya is Chairman of the
Board of Directors.
(7) Includes 4,718 shares held in the Company's 401(k) plan, which are
voted by the trustees of the plan. Mr. Rosenbloom also disclaims
beneficial ownership of 1,855 of these shares, which are owned by
his wife.
(8) Includes 10,262 shares held in the Company's 401(k) plan, which are
voted by the trustees of the plan.
(9) Includes 22,913 shares held in the Company's 401(k) plan, which are
voted by the trustees. Mr. Smith disclaims beneficial ownership of
600 of these shares, which are owned by his wife.
(10) Includes 77,552 shares held by all employees in the Company's
401(k) plan, which are voted by the trustees of the plan and of
which an aggregate of 68,143 shares are held in the plan in the
name of certain of the Company's executive officers. Also includes
disclaimed beneficial ownership of 3,481 of these shares, which are
owned by relatives of directors and executive officers.
-5-
<PAGE> 8
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who own more than ten percent of the Company's common stock, to file
reports of ownership and changes in ownership with the SEC and the NASDAQ
National Market. Officers, directors and greater than ten percent shareholders
are required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on representations from certain
reporting persons, the Company believes that three individuals did not file all
reports timely. Mr. Rosenbloom did not timely file a report on Form 4 with
regard to the sale of shares in his individual retirement account. Each of
Drs. Acosta-Rua and Selander did not file a timely report on Form 5 with regard
to a gift of shares.
MEETINGS OF THE BOARD OF DIRECTORS
During 1998, the Board of Directors held six meetings. All current
Directors attended at least 75% of the meetings of the Board of Directors and
of the committees on which they served.
The Executive Committee of the Board of Directors is composed of Mr.
Russell and Drs. Bagby, Baratta, Selander and White. This committee may
exercise the powers of the Board of Directors whenever the Chairman of the
Company's Board of Directors has determined that it is not practical for the
full Board of Directors to meet and action is required to be taken on matters
that the Chairman determines to be of an urgent nature. The Executive
Committee met two times during 1998.
The Nominating Committee of the Board of Directors is composed of Drs.
Baratta, Murray, Selander, White and Yonge. This committee recommends
qualified candidates to fill vacancies on the Board of Directors. Pursuant to
the Company's Bylaws, the Nominating Committee is not required to consider
nominees recommended by shareholders. The Nominating Committee met one time
during 1998.
The Compensation Committee of the Board of Directors is composed of
Drs. Selander, Bagby, Moya, Shapiro and White. This committee determines and
reviews the compensation of the Company's executive officers and directors and
administers the Company's stock option and benefit plans. The Compensation
Committee met one time during 1998.
The Audit Committee of the Board of Directors is composed of Drs.
Acosta-Rua, Bridges, Gause, Hagen and Van Eldik. This committee recommends
selection of the Company's independent accountants to audit the Company's
consolidated financial statements and to perform professional services related
to the audit. The committee reviews the scope and results of such audit and
reviews the scope of internal audits, systems of internal controls and
accounting policies and procedures. The Audit Committee met one time during
1998.
-6-
<PAGE> 9
DIRECTORS' COMPENSATION
Members of the Board of Directors received annual compensation in 1998
in two components - a quarterly fee, and a fee for each meeting attended. The
Chairman received a quarterly fee of $7,500, the Vice Chairman a quarterly fee
of $6,000, and the other members a quarterly fee of $4,500. Each director
received a fee of $800 for each day they attended Committee or Board meetings.
Mr. Russell, an employee of the Company, received no directors' fees. Dr.
Moya, an employee of Anesthesiologists' Professional Assurance Company, a
wholly owned subsidiary of the Company, received only the daily fee for each
Committee and Board meeting attended. In addition to the above fees, each
director was reimbursed for his reasonable expenses incurred for attendance at
meetings.
The Company has a Director Stock Option Plan that provides each member
of the Board of Directors who is not an employee of the Company with an option
to purchase 5,000 shares of the Company's common stock. Such option is granted
on the date the person first becomes a director of the Company and has an
exercise price equal to the fair market value of such shares on the date of
grant. The Director Stock Option Plan gives the Board of Directors the ability
to make additional grants to members of the Board of Directors from time to
time at its discretion.
The Company also offers directors a nonqualified deferred compensation
plan. Under this plan, directors may defer into the plan all or a portion of
their directors' fees. Deferred fees generally will be paid, as adjusted for
investment gains or losses, following termination of service as a director.
-7-
<PAGE> 10
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation
of the principal Executive Officer and the four other most highly compensated
executive officers during 1998.
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
------------------------------------------------------
Securities
Name and Principal Position Fiscal Salary Bonus Other Annual Underlying All Other
Year (1) ($) ($) Compensation Options (#) Compensation ($)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William R. Russell, 1998 269,555 225,000 -- 0 29,712(2)
President and Chief 1997 245,050 110,272 -- 60,000 29,629
Executive Officer 1996 235,625 106,031 -- 120,000 29,868
Steven R. Smith, President 1998 207,304 77,739 -- 0 27,410(3)
and Chief Executive Officer 1997 191,948 71,980 -- 50,000 27,410
of Florida Physicians 1996 184,565 69,212 -- 100,000 28,068
Insurance Company, Inc
Steven M. Rosenbloom, 1998 179,399 53,820 -- 0 26,378(4)
Senior Vice President and 1997 174,174 52,252 -- 40,000 26,615
Chief Investment Officer of 1996 167,475 50,243 -- 80,000 24,904
Florida Physicians
Insurance Company, Inc.
Robert B. Finch, Executive 1998 159,000 105,000 -- 0 24,900(5)
Vice President and Chief 1997 150,000 45,000 -- 40,000 23,587
Financial Officer 1996 118,631 39,000 -- 60,000 15,945
Ray A. Carey, Vice 1998 103,249 18,585 -- 0 15,161(6)
President of Florida 1997 100,242 18,044 -- 10,000 14,720
Physicians Insurance 1996 97,323 17,518 -- 30,000 13,178
Company, Inc.
</TABLE>
- ---------------------
(1) Includes compensation amounts earned during the fiscal year but deferred
under the Company's 401(k) plan and benefits set aside pursuant to the
Company's nonqualified deferred compensation plan (Mr. Russell $1,875, Mr.
Smith $1,875, Mr. Rosenbloom $1,791 and Mr. Finch $1,100).
(2) Includes the Company's contributions to the profit sharing plan of
$16,000, the Company's matching contributions for the 401(k) plan of
$4,000, contributions from the Company pursuant to the Company's
nonqualified deferred compensation plan of $4,125, and $5,587 for the cost
of an excess disability insurance policy.
(3) Includes the Company's contributions to the profit sharing plan of
$16,000, the Company's matching contributions for the 401(k) plan of
$4,000, contributions from the Company pursuant to the Company's
nonqualified deferred compensation plan of $4,125, and $3,285 for the cost
of an excess disability insurance policy. Mr. Smith, age 49, has served
as an employee or an officer of FPIC or its predecessors for the past 16
years and was an officer of the Company from its inception until March
1999.
(4) Includes the Company's contributions to the profit sharing plan of
$16,000, the Company's matching contributions for the 401(k) plan of
$3,944, contributions from the Company pursuant to the Company's
nonqualified deferred compensation plan of $4,290, and $2,225 for the cost
of an excess disability insurance policy. Mr. Rosenbloom, age 48, has
served as an officer of FPIC for 4 years and was an officer of the Company
from its inception until March 1999.
(5) Includes the Company's contributions to the profit sharing plan of
$16,000, the Company's matching contributions for the 401(k) plan of
$4,000 and contributions from the Company pursuant to the Company's
nonqualified deferred compensation plan of $4,900. Mr. Finch, age 40, has
served as an officer of FPIC for 11 years and has served as an officer of
the Company since its inception.
(6) Includes the Company's contributions to the profit sharing plan of $12,129
and the Company's matching contributions for the 401(k) plan of $3,032.
Mr. Carey, age 60, has served as an officer of FPIC for 14 years and was
an officer of the Company from its inception until March 1999.
-8-
<PAGE> 11
Option Grants in the Last Fiscal Year. There were no stock options
granted during 1998 to those individuals included in the Summary Compensation
Table.
Options Exercised. The following table shows stock options exercised
by the named executive officers during fiscal 1998, including the aggregate net
value realized upon exercise of an option. In addition, this table includes
the number of shares covered by unexercised stock options (both exercisable and
unexercisable) as of fiscal year-end, and the value of unexercised in-the-money
options (both exercisable and unexercisable) based on the year-end price of the
Company's common stock.
Aggregated Option Exercises in Fiscal 1998 and
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities Value-of-Unexercised
Underlying Unexercised In-The-Money
Options at 12/31/98 Options at 12/31/98(1)
--------------------------------------------------------------
Shares
Acquired
Name Upon Exercise Value Realized Exercisable Unexercisable Exerciseable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
William R. Russell 0 0 160,000 20,000 $5,339,000 $756,250
Steven R. Smith 10,000 $247,488 118,333 16,667 $3,855,279 $630,208
Steven M. Rosenbloom 15,000 $467,325 91,667 13,333 $2,965,446 $504,167
Robert B. Finch 5,000 $148,275 85,000 10,000 $2,713,363 $378,125
Ray A. Carey 0 0 30,000 5,000 $1,015,875 $189,063
</TABLE>
- -------------------------------
(1) The amounts in this column represent the difference between the exercise
price and the closing market price of $47.813 on December 31, 1998, for the
Company's common stock. The actual value of unexercised options fluctuates
with market activity.
RETIREMENT PLANS
PENSION PLAN TABLE
<TABLE>
<CAPTION>
Years of Service
--------------------------------------
Average 5 10 15
Compensation
-----------------------------------------------------------
<S> <C> <C> <C>
$125,000 $6,703 $13,405 $20,108
150,000 8,453 16,905 25,358
200,000 11,953 23,905 35,858
250,000 15,453 30,905 46,358
300,000 18,953 37,905 56,858
350,000 22,453 44,905 67,358
400,000 25,953 51,905 77,858
450,000 29,453 58,905 88,358
500,000 32,953 65,905 98,858
550,000 36,453 72,905 109,358
600,000 39,953 79,905 119,858
</TABLE>
This table sets forth the maximum annual benefits payable in the form
of a straight life annuity under the Company's qualified defined benefit plan
(the "Retirement Plan") and, if eligible, the Company's Excess Benefit Plan
(the "Excess Benefit Plan") to an officer or employee retiring at age 65 with
the specified combination of final average compensation (the average of the
five consecutive years of compensation which give the highest average out of
the ten latest years) and years of credited service. The benefit accrual rate
is higher for compensation in excess of the compensation covered by Social
Security than for compensation covered by Social Security. The amounts shown
on the Pension
-9-
<PAGE> 12
Plan Table attributable to the Retirement Plan and Excess Benefit Plan, if
applicable, were calculated using Social Security covered compensation levels
based upon the average age of 5 executives and have been calculated without
reflection of the current limit of $160,000 on includible compensation.
Messrs. Russell, Smith and Carey are covered by the Retirement Plan and Messrs.
Finch and Rosenbloom are covered by both the Retirement Plan and the Excess
Benefit Plan. As of December 31, 1998, the credited full Years of Service
under the Retirement Plan and, if applicable, the Excess Benefit Plan of the
following officers were as follows: Mr. Russell -- ten years; Mr. Smith --
fifteen years; Mr. Rosenbloom -- four years; Mr. Finch -- eleven years; and Mr.
Carey - fifteen years. Generally, compensation for purposes of the Retirement
Plan and the Excess Benefit Plan includes salary and annual bonus, as reported
in the Summary Compensation Table, as well as compensation which is contributed
by the Company pursuant to a salary reduction agreement and which is not
currently includible in the individual's gross income by reason of the
application of certain provisions of the Internal Revenue Code. Benefits
listed on the Pension Plan Table attributable to the Retirement Plan and the
Excess Benefit Plan are reduced by the amount of any accrued benefits an
individual has under the Physicians Insurance Company of Ohio Defined Benefit
Plan and/or the Professional Insurance Management Company Pension Plan.
The Retirement Plan is a funded, tax-qualified, non-contributory plan
that covers substantially all of the Company's employees including executive
officers. For the year ending December 31, 1999, the annual retirement benefit
payable under the Retirement Plan is limited by Federal Law to $130,000 and the
maximum covered compensation is limited to $160,000. The total number of years
of service that may be taken into consideration under the Retirement Plan is
limited to 15. Optional forms of payment available under the Retirement Plan
or a benefit commencement date prior to age 65 may result in substantially
reduced payments to any employee electing such an option.
The Excess Benefit Plan provides a means of equalizing the benefits of
those employees participating in the Retirement Plan, other than those
individuals covered under the SERP, whose funded benefits under that Retirement
Plan are or will be limited by the application of ERISA, the Code, or any
applicable law or regulation. The Excess Benefit Plan is a nonqualified plan
and benefits payable under the Excess Benefit Plan are not funded and are
payable out of the Company's general funds.
The SERP is an unfunded nonqualified plan. The SERP provides Messrs.
Russell and Smith, who have been selected by the Compensation Committee, with
income at retirement. A participant in the SERP is eligible to retire and
receive a retirement benefit beginning on the earlier of such participant's (i)
early retirement date, (ii) disability retirement date or (iii) normal
retirement date. The retirement benefit at the normal retirement date equals
60% of pre-retirement compensation (averaged over the highest three consecutive
years of service), less Retirement Plan and all predecessor plans' benefits and
Social Security benefits. Compensation for purposes of the SERP includes the
salary of a participant as reported in the Summary Compensation Table, but does
not include bonuses. The early retirement benefit equals the retirement
benefit at the normal retirement date times the percentage of benefits vested,
reduced by an early retirement factor for each month a participant's early
retirement date occurs prior to such participant's normal retirement date. A
participant terminating employment due to a permanent and total disability will
be eligible for a disability retirement benefit equal to 60% of pre-retirement
compensation, less Retirement Plan and all predecessor plans' benefits and
Social Security benefits. In the event of the participant's death prior to
retirement, such participant's surviving spouse will be eligible to receive a
death benefit equal to 50% of the retirement benefit the participant would
otherwise have been eligible to receive. Benefits attributable to the SERP are
subject to reduction for Social Security benefits received by participants.
The estimated annual retirement benefits for Messrs. Russell and Smith were
calculated using 1998 base salary, Social Security benefits were based on the
maximum benefits payable for an individual retiring at age 65 in 1998, and
Retirement Plan benefits were based on 1998 base salary, including
-10-
<PAGE> 13
bonuses, assuming 15 years of service. The estimated annual retirement benefit
from the SERP on December 31, 1998 is $41,210 for Mr. Russell and $36,550 for
Mr. Smith.
The Company's qualified defined contribution plan has two parts. In
the first part, the Company contributes 10% of each participant's compensation
for the plan year. In the second part, the Company allows employees to
contribute up to 5% of their compensation earned during the plan year, of which
up to 2.5% is matched 100% by the Company.
The Company also offers certain key employees selected by the Board of
Directors a nonqualified deferred compensation plan. In this plan, key
employees may defer into the plan all or a portion of their compensation. In
addition, the Company, at the discretion of the Board of Directors, may match
the contributions made by key employees and may also make discretionary
incentive contributions for key employees. Participants' account balances
generally will be paid, as adjusted for investment gains or losses, following
termination of employment. Contributions amounted to $17,359 in 1998.
EMPLOYMENT AGREEMENTS AND SEVERANCE AGREEMENTS
The Company has entered into employment agreements (the "Employment
Agreements") with Messrs. Russell, Smith and Finch. The Employment Agreements
provide for a minimum annual salary and the opportunity for annual salary
increases, incentive compensation and other compensation and perquisites as
approved by the Board of Directors. The Employment Agreements are for a term
of three years and may be extended for an additional year by the Board of
Directors prior to the end of each year. If the Board of Directors does not
extend the Employment Agreements by the end of any year, Messrs. Russell, Smith
and Finch may terminate their respective employment by providing at least 90
days' written notice of such termination. Upon such termination, Messrs.
Russell, Smith and Finch would continue to receive their respective annual
salary and benefits for the remaining term of their respective Employment
Agreements, or until commencing work for a competing company. Under the
Employment Agreements, Mr. Russell's minimum annual salary for 1999 is
$500,000, Mr. Smith's minimum annual salary for 1999 is $360,000, and Mr.
Finch's minimum annual salary for 1999 is $350,000. Each of Messrs. Russell,
Smith or Finch may also terminate their respective employment in the event of a
constructive discharge and continue to receive their respective annual salary
and benefits for the remaining term of their Employment Agreements. Payments
under the Employment Agreements are not limited to the maximum amount that
would avoid the excise tax imposed by Code Section 4999.
The Company has entered into severance agreements (the "Severance
Agreements") with Messrs. Russell, Smith, Rosenbloom and Finch. The Severance
Agreements, which apply in the case of a change of control of the Company,
provide that if at any time during the coverage period, as defined under the
Severance Agreements, the employment of an individual covered under the
Severance Agreements is terminated by the Company for any reason other than
cause, death or disability, or by such individual in the event of a
constructive discharge, the Company will pay severance pay in a lump sum cash
amount equal to three times the sum of such individual's (i) annual salary and
(ii) the greater of the target bonus opportunity for the current calendar year
or the average of the annual bonuses for the three prior calendar years.
Payments under the Severance Agreements are limited to the maximum amount that
would not trigger the excise tax imposed by Code Section 4999.
If Messrs. Russell, Smith and Finch are entitled to receive benefits
under both their Employment Agreements and their Severance Agreements, then
each will be permitted to select and receive benefits under either his
Employment Agreement or his Severance Agreement, but not benefits from both the
Employment Agreement and the Severance Agreement.
-11-
<PAGE> 14
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal year 1998, no executive officer of the Company has
served as a director of or as a member of the compensation or equivalent
committee of any other entity, one of whose executive officers served on the
Board of Directors' Compensation Committee or otherwise as a member of the
Board of Directors.
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that incorporated future filings,
including this Proxy Statement, in whole or in part, the following sections
titled "Report on Executive Compensation" and "Stock Performance" shall not be
incorporated by reference into any such filings.
REPORT ON EXECUTIVE COMPENSATION
General. The Board of Directors believes the Company has implemented
an executive compensation policy that serves to retain, motivate and reward
management while aligning management's interests closely with those of the
Company and its shareholders. The Company's compensation policies reflect the
advice of an independent executive compensation consultant who is retained from
time to time to review the Company's compensation practices.
The Company's executive compensation policy has the following
components: base salary, annual bonus, long-term compensation and retirement
and disability benefits. Each component is designed in relation with the other
components to offer management competitive remuneration and incentives to
enhance shareholder values.
Each year the Compensation Committee reviews executive compensation to
ensure that such compensation programs are aligned with the Company's long and
short-term performance goals and objectives. The Compensation Committee will
also consider, as part of this review, any changes in laws and regulations
governing compensation programs and will often seek advice from counsel and
other independent third parties.
The base salary for executives is established at a level that the
Compensation Committee believes is both appropriate and consistent within the
industry and relative to other peer companies. For 1998 the base salaries of
executive officers named in the Summary Compensation Table ranged from 55% to
85% of their total annual cash compensation (base salary plus bonus). There
are many criteria used in determining the appropriate executive salary level
including, but not limited to, contribution to performance, scope of
responsibility, productivity, expense and risk control, management development
and strategic planning.
The Company's bonus program provides for the establishment of a bonus
pool as a direct incentive for all employees to improve financial results of
the Company. This bonus program is assessed through a formal evaluation of
overall Company performance which includes, but is not limited to, meeting
specific targets for increases in 1) operating profit, 2) return on equity and,
3) premium growth, as well as a subjective evaluation of each employee in the
areas of, among others, quality of work, reliability, initiative and
creativity. The maximum formula bonus for all employees was determined as a
percentage, ranging from 6% to 45%, of base salary. For the President and
Chief Executive Officer, the maximum bonus award, as a percentage of base
salary, is 45%. The Compensation Committee made an exception to the bonus
program for Messrs. Russell and Finch for their exceptional performance in
1998. Messrs. Russell and Finch received bonuses in 1998 that equaled 83% and
66% of their base salaries, respectively.
-12-
<PAGE> 15
Long-term compensation for executives is designed to motivate and
reward the creation of long-term shareholder value by linking executive
compensation with gains realized by shareholders. Through the Company's Omnibus
Incentive Plan, the Company grants from time to time stock options to the
Company's executives and other employees. The Company also offers an Employee
Stock Purchase Plan and an option under its 401(k) plan for the Company's
executives and other employees to purchase the Company's common stock.
Also included in the Company's overall compensation package for its
executive officers are various employee benefits, including retirement and
disability benefits. Generally, the benefits offered to such persons serve a
different purpose than do the other components of compensation. In general,
these benefits provide protection against financial loss that can result from
illness, disability or death. Benefits offered to executive officers are
mainly those that are offered to the Company's other employees, with some
variation primarily to promote tax efficiency and replacement of benefit
opportunities lost due to regulatory limits.
Deductibility of Executive Compensation. Section 162(m) of the
Internal Revenue Code of 1986, as amended, limits the Company's ability to
deduct, for federal income tax purposes, certain compensation in excess of $1
million per year paid to individual officers named in the Summary Compensation
Table unless such compensation is "performance-based." The determination of
whether compensation is performance-based depends upon a number of factors,
including shareholder approval of the plan under which the compensation is
paid, the exercise price at which options or similar awards are granted, the
disclosure to and approval by the shareholders of applicable performance
standards, the composition of the Compensation Committee, and certification by
the Compensation Committee that performance standards were satisfied. The
amount of compensation paid to each of the named officers during fiscal 1998
was less than $1 million. It is possible for the Company to compensate or make
awards under the Omnibus Incentive Plan that may either qualify or not qualify
as performance-based compensation deductible under Section 162(m). The
Compensation Committee, in structuring compensation programs for its top
executive officers, intends to give strong consideration to the deductibility
of awards.
This report is submitted by the members of the Compensation Committee:
Dr. Selander, Chairman, and Drs. Bagby, Moya, Shapiro and White.
STOCK PERFORMANCE
The following graph compares the cumulative total return for the
Company's common stock, the Russell 2000 index and a peer group comprised of
MMI Companies, Inc., Frontier Insurance Group, Inc., Medical Assurance, Inc.,
Professionals Group, Inc. and St. Paul Companies for the period August 1, 1996
(first day of public trading of the Company's common stock on the Nasdaq
National Market) through December 31, 1998. The graph assumes an investment on
August 1, 1996 of $100 in each of the Company's common stock, the stocks
comprising the Russell 2000 index and the common stocks of the peer group
companies. The graph further assumes that all paid dividends were reinvested.
The peer group and the Russell 2000 index are weighted by market
capitalization. The calculations for the information below was prepared by
SNL Securities, LC of Charlottesville, VA.
-13-
<PAGE> 16
[TOTAL RETURN PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
---------------------------------------------
PERIOD ENDING
- ----------------------------------------------------------------------------
INDEX 8/1/96 12/31/96 12/31/97 12/31/98
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FPIC INSURANCE GROUP, INC. 100 129 277 455
RUSSELL 2000 100 114 140 136
COMPANY PEER GROUP 100 114 159 139
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to the bylaws of FPIC, a subsidiary of the Company, the FMA
recommends to FPIC's Board of Directors three nominees for FPIC's Board of
Directors each year. Current directors of the Company that were recommended for
their current terms on FPIC's Board of Directors by the FMA are Terence P.
McCoy, M.D., a physician specializing in Family Practice, and Drs. Bagby and
Shapiro. Dr. McCoy is a voting member of the FMA Board of Governors. Dr.
Shapiro is a non-voting member of the FMA's Board of Governors.
The FMA and FPIC are parties to an Endorsement Agreement pursuant to
which the FMA endorses FPIC and cooperates with FPIC's marketing efforts.
Under such agreement, FPIC pays the FMA a minimum of $750,000 per year with
such amount increasing if certain premium or revenue targets are met by FPIC or
its affiliates. In addition, pursuant to the agreement, FPIC will contribute
$50,000 in 1999 to assist the campaigns of two FMA members for election to
American Medical Association offices.
Pursuant to FPIC's bylaws, the FDA recommends to FPIC's Board of
Directors a nominee for FPIC's Board of Directors each year. Raymond H. Klein,
D.D.S., a practicing pediatric dentist,
-14-
<PAGE> 17
presently serves as the FDA's recommended nominee on FPIC's Board of Directors.
The FDA has an insurance agency that receives commissions from FPIC.
In connection with the acquisition of Anesthesiologists' Professional
Assurance Company ("APAC") by the Company, the Company, APAC and APA
Management, Inc. ("APAM"), an affiliate of Frank Moya, M.D., a director of the
Company, entered into a Management Agreement pursuant to which APAM manages
APAC's business (the "Management Agreement"). Under the APAC acquisition
agreement, the Company agreed to cause Dr. Moya or another person designated by
APAM to be appointed to the Company's and FPIC's Boards of Directors so long as
the Management Agreement remains in effect.
All of the members of the Company's Board of Directors other than Mr.
Russell are also policyholders of FPIC or FPIC's other insurance company
affiliates and as such may experience claims from time to time in the usual
course of business that may require coverage under their policies that FPIC or
FPIC's other insurance company affiliates would provide to any policyholder.
PROPOSAL 2 - AMENDMENT OF THE COMPANY'S
RESTATED ARTICLES OF INCORPORATION TO INCREASE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK
The Company's Board of Directors has adopted a resolution approving
and recommending to the Company's shareholders for their approval an amendment
to the Company's Restated Articles of Incorporation to increase the number of
shares of common stock that the Company is authorized to issue from twenty-five
million (25,000,000) shares to fifty million (50,000,000) shares. As of March
31, 1999, 9,792,197 shares of common stock were issued and outstanding and
1,548,805 shares of common stock were reserved for issuance in connection with
all of the Company's stock plans, employment agreements and other arrangements
leaving 13,658,998 shares of common stock available for future issuance.
The proposed amendment to the Restated Articles of Incorporation will
be effected by deleting Section 6.1 of the Company's Restated Articles of
Incorporation, and substituting a new Section 6.1 that reads in full as
follows:
"Section 6.1 Authorized Capital Stock
The total number of shares of stock that this Corporation shall have
authority to issue is one hundred million (100,000,000) shares, divided into
fifty million (50,000,000) shares of Common Stock, par value $0.10 per share
(the "Common Stock"), and fifty million (50,000,000) shares of Preferred Stock,
par value $0.10 per share (the "Preferred Stock") (Common Stock and Preferred
Stock are hereinafter collectively referred to as "Stock"). Each holder of
Common Stock shall be entitled to one vote for each share of Common Stock held
by such holder."
If Proposal Two is adopted, it will become effective upon filing an
amendment to the Restated Articles of Incorporation with the Florida Department
of State.
REASONS FOR THE PROPOSED AMENDMENT
The Company has no immediate plans to use the additional authorized
shares of common stock. Nonetheless, the Company's Board of Directors believes
that it is prudent to increase the number of authorized shares of common stock
to the proposed level in order to provide a reserve of shares available for
issuance in connection with possible future actions. The Company's Board of
Directors believes that the increased number of shares will provide the
flexibility to effect other possible actions such as stock splits and stock
dividends, the sale of common stock to obtain additional
-15-
<PAGE> 18
capital, corporate mergers, acquisitions of other companies, funding employee
benefit plans and for general corporate purposes. Having such additional
authorized common stock available for issuance in the future would allow the
Board of Directors to issue shares of common stock without the delay and
expense associated with seeking shareholder approval. The Board of Directors
believes that it is important to have the flexibility to act promptly in the
best interests of the shareholders.
DESCRIPTION OF COMMON STOCK
Holders of the Company's common stock are entitled to receive such
dividends as may be legally declared by the Board of Directors. Each
shareholder is entitled to one vote per share on all matters to be voted upon
and is not entitled to cumulate votes for the election of directors. Holders
of the Company's common stock do not have preemptive, redemption or conversion
rights and, upon liquidation, dissolution or winding up of the Company, are
entitled to share ratably in the net assets of the Company available for
distribution to common shareholders. All outstanding shares are validly
issued, fully paid and non-assessable. The additional common stock to be
authorized by adoption of the proposed amendment to the Restated Articles of
Incorporation would have rights identical to the currently outstanding common
stock. Adoption of the proposed amendment and any future issuance of the
common stock would not affect the rights of the holders of the Company's
currently outstanding common stock, except for effects incidental to increasing
the number of shares of the Company's common stock outstanding.
POSSIBLE EFFECTS OF THE AMENDMENT
If the amendment to the Restated Articles of Incorporation proposed
herein is approved, the Board of Directors may cause the issuance of the
additional authorized shares of common stock without further vote of the
Company's shareholders, except as required under Florida law or under the rules
of the Nasdaq National Market or any securities exchange on which shares of
common stock of the Company are then listed. Current holders of common stock
have no preemptive or like rights, which means that current shareholders do not
have a prior right to purchase any new issue of capital stock of the Company in
order to maintain their proportionate ownership of the Company. The effects of
the authorization of additional shares of common stock may also include
dilution on earnings per share, dilution of the voting power of currently
outstanding shares and reduction of the portion of future dividends, if any,
and of future liquidation proceeds, if any, payable to the holders of currently
outstanding common stock.
Although the increase in the number of authorized shares of common
stock is not intended for anti-takeover purposes, the rules of the Securities
and Exchange Commission require disclosure of provisions in the Company's
Restated Articles of Incorporation and Bylaws that could have an anti-takeover
effect. The Board of Directors could use authorized but unissued shares to
create impediments to a takeover or a transfer of control of the Company.
Accordingly, the increase in the number of authorized shares of common stock
may deter future takeover attempts that holders of common stock may deem to be
in their best interest or in which holders of common stock may be offered a
premium for their shares over the market price. The Board of Director's
ability to deter a future takeover attempt may be further enhanced by the
Company's ability to issue its currently authorized but unissued preferred
stock. The Company has fifty million (50,000,000) shares of preferred stock
authorized that could be used for a number of purposes, including to fend off
unsolicited takeover attempts. The Company's Restated Articles of
Incorporation and Bylaws have a number of other provisions that may deter a
future takeover attempt. These other provisions include: (a) a classified
Board of Directors; (b) vacancies on the Board of Directors may only be filled
by the Board of Directors; (c) directors may only be removed for cause and only
by the affirmative vote of 75% or more of the outstanding voting stock; (d)
fair-price payments or shareholder approval requirements for certain business
combinations; and (e) restrictions on special meetings of shareholders.
-16-
<PAGE> 19
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE AMENDMENT TO THE COMPANY'S RESTATED
ARTICLES OF INCORPORATION.
PROPOSAL 3 - AMENDMENTS TO THE DIRECTOR STOCK OPTION PLAN
The Company's Director Stock Option Plan was adopted in 1996 to
provide the Company's non-employee directors an incentive to contribute
materially to expanding and improving the Company's profits, to aid in
attracting and retaining directors of outstanding ability, and to encourage
ownership of shares by directors.
The Director Stock Option Plan currently provides that a non-employee
director will receive an option for 5,000 shares when such director initially
joins the Company's Board of Directors. In addition, the Board of Directors
may grant additional options to directors from time to time at the discretion
of the Board of Directors. Under the Director Stock Option Plan, options vest
at the rate determined by the Board of Directors, provided that no option may
vest prior to six months or after the tenth anniversary of the date of grant.
The Board of Directors of the Company has adopted a resolution
approving and recommending to the Company's shareholders for their approval
three amendments to the Director Stock Option Plan. The first amendment will
increase the number of shares of the Company's common stock issuable under the
Director Stock Option Plan from 300,000 shares to 430,000 shares. The second
amendment will extend from one year to two years the period of time for
directors to exercise options after they cease serving on the Company's Board
of Directors. The third amendment will allow for option holders to transfer
options to their immediate family members or to a trust established for the
exclusive benefit of one or more of their immediate family members or to a
former spouse pursuant to a domestic relations order.
The Director Stock Option Plan as it is proposed to be amended is set
forth in Exhibit A to this Proxy Statement. If the amendments are adopted,
they will become effective immediately.
REASONS FOR THE PROPOSED AMENDMENTS.
The increase in the number of shares authorized for issuance under the
Director Stock Option Plan is necessary because all previously authorized
shares have been issued. The Board of Directors believes that the ability to
grant stock options allows the Company to attract and retain the services of
experienced and knowledgeable independent directors and provides an additional
incentive for such directors to work for the benefit of the Company and its
shareholders. The Company believes that extending the exercise period of
options and allowing for options to be transferred by option holders to their
immediate family members or a trust for the exclusive benefit of one or more of
their immediate family members or to a former spouse pursuant to a domestic
relations order will permit option holders to have greater flexibility with
their financial and estate planning decisions.
The Board of Directors believes that it is desirable to continue
providing incentives to the Company's directors and therefore recommends that
the shareholders approve the amendments to the Director Stock Option Plan.
-17-
<PAGE> 20
THE PLAN
Administration. The Director Stock Option Plan is administered by the
Director Stock Option Plan Committee (the "DSOP Committee"), which is the
Compensation Committee of the Board of Directors.
Awards. A director receives an option to purchase shares on the date
on which such individual first becomes a director. The option granted at such
time is for 5,000 shares with an option price equal to the fair market value of
such shares on the date of grant. Directors also may be granted additional
options from time to time. Each of the Company's directors, other than Mr.
Russell, is eligible to participate in the plan.
Transferability, Term and Vesting. As the Director Stock Option Plan
is currently written, options granted may not be transferred except by will or
the laws of descent and distribution. If the shareholders approve the proposed
amendments to the Director Stock Option Plan, options will also be transferable
by the optionee during his or her lifetime to any member of his or her
immediate family or to a trust established for the exclusive benefit of one or
more members of his or her immediate family or to a former spouse pursuant to a
domestic relations order.
In general, as the Director Stock Option Plan is currently written, an
option will terminate upon the earlier of:
(i) the exercise of the option;
(ii) the expiration date of the option by its terms; or
(iii) no more than one year following the date of termination of
service as a director.
No option may be granted ten years after the effective date of the
Plan. Grants under the Plan may vest anywhere between six months and ten years
as determined by the DSOP Committee at the time of grant.
The exercise period for stock options is currently one year following
the date of termination of service as a director. If the shareholders approve
the proposed amendments to the Director Stock Option Plan, the exercise period
for stock options will be two years following the date of termination of
service as a director.
Amendment and Termination. The Board of Directors may amend the
Director Stock Option Plan, without shareholder approval, at any time in any
respect, unless shareholder approval of the amendment in question is required
under Florida law, the Code, any exemption from Section 16 of the Exchange Act,
any national securities exchange system on which the shares are then listed or
reported, by any regulatory body having jurisdiction with respect to the
Director Stock Option Plan, or any other applicable laws, rules or regulations.
No amendment to the Director Stock Option Plan may alter or impair any option
previously granted under the Plan without the consent of the holders thereof.
The Director Stock Option Plan may be terminated at any time by the
Board of Directors.
Number of Shares. A total of 300,000 shares have previously been
authorized for issuance pursuant to the Director Stock Option Plan. Options
for all 300,000 shares have been previously granted. If the shareholders
approve the proposed amendments to the Director Stock Option Plan, a total of
430,000 shares will be authorized for issuance. The exercise prices for
options granted under
-18-
<PAGE> 21
the Director Stock Option Plan range from $8.22 to $48.0625 per share and with
expiration dates ranging from January 29, 2006 to January 30, 2009. On April
15, 1999, the closing market price for a share of the Company's common stock
was $45.25.
The maximum number of shares that may be sold pursuant to the Director
Stock Option Plan, as well as the number of shares that may be purchased
pursuant to the exercise of any option outstanding thereunder, may be equitably
adjusted by the DSOP Committee in the event of a stock split, stock dividend,
recapitalization, merger, consolidation, combination or such similar events.
Federal Tax Consequences. The stock options granted under the
Director Stock Option Plan are nonqualified stock options. Non-employee
directors recognize no taxable income at the time of grant. Upon the exercise
of nonqualified stock options, non-employee directors recognize ordinary income
and the Company is entitled to a deduction equal to the difference between the
exercise price and the fair market value of the shares on the date of exercise.
Non-employee directors recognize as capital gain or loss any subsequent profit
or loss realized on the sale or exchange of any shares disposed of or sold.
The income, estate and gift tax consequences of options that have been
transferred are described under "Proposal 4 - Amendments to the Omnibus
Incentive Plan - Federal Tax Consequences."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENTS TO THE DIRECTOR STOCK OPTION PLAN.
PROPOSAL 4 - AMENDMENT TO THE OMNIBUS INCENTIVE PLAN
The Company's Omnibus Incentive Plan was adopted in 1996 to provide
incentives to employees whose performance, contributions and skills add to the
value of the Company.
The Board of Directors of the Company has adopted a resolution
approving and recommending to the Company's shareholders for their approval
three amendments to the Omnibus Incentive Plan. The first amendment will
increase the number of shares of the Company's common stock issuable under the
Omnibus Incentive Plan from 1,165,000 shares to 1,665,000 shares. The second
amendment will give the Omnibus Incentive Plan Committee (the "OIP Committee")
discretion to grant options that may be transferred by option holders to their
immediate family members or to a trust established for the exclusive benefit of
one or more of their immediate family members or to a former spouse pursuant or
to a domestic relations order. The third amendment will increase the maximum
number of shares that an individual may receive under the Omnibus Incentive
Plan from 300,000 shares to 600,000 shares.
The Omnibus Incentive Plan as it is proposed to be amended is set
forth in Exhibit B to this Proxy Statement. If the amendments are adopted,
they will become effective immediately.
REASONS FOR THE PROPOSED AMENDMENTS.
The increase in the number of shares authorized for issuance under the
Omnibus Incentive Plan is necessary because all previously authorized shares
have been issued. The Board of Directors believes that the ability to grant
stock options allows the Company to attract and retain the services of
experienced and knowledgeable employees and provides an additional incentive
for such employees to work for the benefit of the Company and its shareholders.
The Company believes that allowing for options to be transferred by option
holders to their immediate family members or a trust for the exclusive benefit
of one or more of their immediate family members or to a former spouse pursuant
to a domestic relations order will permit option holders to have greater
flexibility with their estate
-19-
<PAGE> 22
planning decisions. The Company believes that increasing the maximum number of
shares that an individual may receive will provide additional incentive to the
Company's existing employees.
Messrs. Russell, Smith, Finch, Rosenbloom and Carey have been granted
options for 19,300, 8,685, 15,400, 4,343 and 1,448 shares, respectively, of the
Company's common stock, which grants are subject to the Company's shareholders
approving the above amendments to the Omnibus Incentive Plan. These options
have a three year vesting period and an exercise price equal to the closing
price of the Company's common stock on March 26, 1999.
THE PLAN
Administration. The Omnibus Incentive Plan is administered by the OIP
Committee, which is the Compensation Committee of the Board of Directors. The
OIP Committee will determine, from time to time, the individuals to whom awards
shall be made, the type of awards, and the amount, size and terms of each
award. Each of these types of awards are described below. The OIP Committee
will make all other determinations necessary or advisable for the
administration of the Omnibus Incentive Plan.
Types of Awards. Awards under the Omnibus Incentive Plan may be in
the form of options (both nonqualified stock options and incentive stock
options), contingent stock, restricted stock, and stock appreciation rights, or
such other forms as the OIP Committee in its discretion may deem appropriate.
Number of Shares. A total of 1,165,000 shares have previously been
authorized for issuance pursuant to the Omnibus Incentive Plan. As of March
31, 1999, options for all 1,165,000 shares have been granted under the Omnibus
Incentive Plan and options for an additional 60,000 shares have been granted
subject to shareholder approval as described above. If the Shareholders
approve the proposed amendments to the Omnibus Incentive Plan, a total of
1,665,000 shares will be authorized for issuance. The exercise prices for
options granted under the Omnibus Incentive Plan range from $8.22 to $40.00 per
share and with expiration dates ranging from January 13, 2006 to March 26,
2009. On April 15, 1999, the closing market price for a share of the Company's
common stock was $45.25.
Currently, the maximum number of shares that may be issued pursuant to
options granted to any one individual during the life of the Omnibus Incentive
Plan is 300,000 shares of the Company's common stock. If the Shareholders
approve the proposed amendments to the Omnibus Incentive Plan, the maximum
number of shares that may be issued to one individual during the life of the
Omnibus Incentive Plan will be 600,000.
Currently, options granted pursuant to the Omnibus Incentive Plan may
not be transferred except by will or the laws of descent and distribution. If
the shareholders approve the proposed amendments to the Omnibus Incentive Plan,
the OIP Committee will have the discretion to grant options that are
transferable by the optionee during his or her lifetime to any member of his or
her immediate family or a trust established for the exclusive benefit of one or
more members of his or her immediate family or to a former spouse pursuant to a
domestic relations order.
No options were granted in 1998 under the Omnibus Incentive Plan to
the President and Chief Executive Officer and the four other most highly
compensated executive officers. In 1998, the only options granted under the
Omnibus Incentive Plan were options for 100,000 shares that were granted to one
employee.
Other than as described above, no information can be provided with
respect to awards that may be made in the future under the Omnibus Incentive
Plan. Such awards are within the discretion
-20-
<PAGE> 23
of the OIP Committee. The OIP Committee has not decided future awards or who
might receive them.
The maximum number of shares that may be granted pursuant to options
under the Omnibus Incentive Plan, as well as the number of shares that may be
purchased pursuant to the exercise of any option outstanding thereunder, may be
equitably adjusted by the OIP Committee in the event of a stock split, stock
dividend, recapitalization, merger, consolidation, combination or such similar
events.
Amendment and Termination. The Board of Directors may amend the
Omnibus Incentive Plan, without shareholder approval, at any time in any
respect, unless shareholder approval of the amendment in question is required
under Florida law, the Code, any exemption from Section 16 of the Exchange Act,
any national securities exchange system on which the shares are then listed or
reported, by any regulatory body having jurisdiction with respect to the
Omnibus Incentive Plan, or any other applicable laws, rules or regulations.
No amendment to the Omnibus Incentive Plan may alter or impair any
option granted under such Plan without the consent of the holders thereof.
The Omnibus Incentive Plan may be terminated at any time by the Board
of Directors.
Stock Options. The OIP Committee may grant both an incentive stock
option and a nonqualified stock option to the same individual. When both an
incentive stock option and a nonqualified stock option are awarded at one time,
such options are deemed to have been awarded in separate grants, and in no
event will the exercise of one such option affect the right to exercise the
other such option except to the extent the OIP Committee determines in writing
otherwise.
The option price of an incentive stock option shall not be less than
100% of the fair market value of such share on the day the option is granted,
as determined by the OIP Committee. The option price of a nonqualified stock
option issued under the Omnibus Incentive Plan shall not be less than 50% of
the fair market value of such share on the day the option is granted, as
determined by the OIP Committee.
Each option may be exercised by a participant, in whole or in part,
provided such exercise shall not occur earlier than six months after the grant
of the option and not later than ten years after the grant of the option.
Any option designated by the OIP Committee as an incentive stock
option will be subject to the general provisions applicable to all options
granted under the Omnibus Incentive Plan and will be subject to the following
specific provisions:
(a) At the time the incentive stock option is granted, if a
recipient employee owns, directly or indirectly, stock
representing more than 10% of the total combined voting power
of all classes of the Company's stock then: (i) the option
price must equal at least 110% of the fair market value on the
effective date of grant of the shares subject to the option;
and (ii) the term of the option shall not be greater than five
years from the date such option is granted.
(b) The aggregate fair market value of shares (determined at the
date of grant) with respect to which incentive stock options
granted by the Company, that can be exercised by a participant
employee for the first time in any one calendar year shall not
exceed $100,000.
-21-
<PAGE> 24
If any option is not granted, exercised, or held pursuant to the
provisions applicable to an incentive stock option, it will be considered to be
a nonqualified stock option to the extent that any or all of the grant is in
conflict with these restrictions.
In general, options granted pursuant to the Omnibus Incentive Plan
terminate upon the earlier of: (i) the full exercise of the option; (ii) the
expiration of the option by its terms; or (iii) no more than three years (three
months for incentive stock options) following termination of the option
holder's employment with the Company.
Stock Appreciation Rights. A stock appreciation right ("SAR") may be
granted in connection with an option and entitles the grantee, subject to the
terms and conditions determined by the OIP Committee, to receive, upon
surrender of the option, all or a portion of the excess of (i) the fair market
value of a specified number of shares at the time of the surrender, as
determined by the OIP Committee, over (ii) 100% of the fair market value of
such shares at the time the option was granted plus any dividends paid while
the option was outstanding but unexercised.
SARs may be granted for a period of not less than six months nor more
than ten years, and shall be exercisable in whole or in part, at such time or
times and subject to such other terms and conditions as shall be prescribed by
the OIP Committee at the time of the grant.
SARs will be exercisable only during a grantee's employment by the
Company, except that in the discretion of the OIP Committee an SAR may be made
exercisable for up to three months after a grantee's employment is terminated
for any reason other than death, retirement or disability.
In the event that a grantee's employment is terminated as a result of
death, retirement or disability without having fully exercised such grantee's
SARs, the grantee, or grantee's beneficiary following the grantee's death, may
have the right to exercise the SARs during their term within a period of 24
months after the date of such termination to the extent that the right was
exercisable at the date of such termination, or such other period and subject
to such terms as may be determined by the OIP Committee.
Contingent Stock Awards. The OIP Committee will determine the amount
of a contingent stock award to be granted to an employee based on the expected
impact the employee can have on the financial well-being of the Company and
other factors determined by the OIP Committee to be appropriate. Contingent
stock awards under the Omnibus Incentive Plan shall be subject to such terms,
conditions, and restrictions, if any, including without limitation, substantial
risks of forfeiture and/or attainment of performance objectives, and for such
period or periods (in excess of six months) as will be determined by the OIP
Committee at the time of grant. The OIP Committee in its discretion may permit
an acceleration of the expiration of the applicable restriction period, so long
as the minimum six-month period is retained, with respect to any part or all of
the award to any participant.
In the event of a participant's termination of employment for any
reason prior to lapse of restrictions applicable to a contingent stock award
paid to such participant and unless otherwise provided for by the Omnibus
Incentive Plan or as provided in a contingent stock agreement, all rights to
shares as to which there still remain unlapsed restrictions will be forfeited
by such participant to the Company without payment of any consideration by the
Company.
Restricted Stock Award. The OIP Committee will determine the amount
of a restricted stock award to be granted to an employee based on the past or
expected impact the employee has had or can have on the financial well-being of
the Company and other factors deemed by the OIP Committee to be appropriate.
Restricted stock awards made pursuant to the Omnibus Incentive Plan shall be
subject to such terms, conditions, and restrictions, including attainment of
performance objectives, and for
-22-
<PAGE> 25
such period or periods (in excess of six months) as will be determined by the
OIP Committee at the time of grant. The OIP Committee in its discretion may
permit an acceleration of the expiration of the applicable restriction period,
so long as the minimum six-month period is retained, with respect to any part
or all of the award to any participant.
In the event of a participant's termination of employment for any
reason prior to the lapse of restrictions applicable to a restricted stock
award made to such participant and unless otherwise provided for by the Omnibus
Incentive Plan or as provided in a restricted stock agreement, all rights to
shares as to which there still remain unlapsed restrictions will be forfeited
by such participant to the Company without payment of any consideration by the
Company.
Change in Control. Upon a change in control, all options, contingent
stock awards, restricted stock awards and stock appreciation rights will
automatically vest as of that date of the change in control and all
restrictions or contingencies will be deemed to have been satisfied.
FEDERAL TAX CONSEQUENCES
General. The rules governing the tax treatment of stock options,
contingent stock, restricted stock, and stock appreciation rights are very
technical. Therefore, the description of the federal income tax consequences
set forth below is necessarily general in nature and does not purport to be
complete. Moreover, statutory provisions are subject to change, as are their
interpretations, and their applications may vary in individual circumstances.
Finally, the tax consequences under applicable state and local tax laws may not
be the same as under the federal tax laws.
Incentive Stock Options. The participant recognizes no gain or loss
when an incentive stock option (an "ISO") is granted. In general, an employee
exercising an ISO will not be taxed at the time of exercise if the stock
purchased is held for at least one year after the exercise date and at least
two years after the date of grant (the "Holding Period"); provided, however,
the bargain element of the exercised ISO is treated as an item of adjustment
under the alternative minimum tax rules. If the Holding Period is satisfied,
the difference between the exercise price and the amount realized upon
subsequent disposition of the stock will constitute long-term capital gain or
loss. If the Holding Period is not satisfied, the employee will recognize
ordinary income to the extent of the lesser of the gain realized or the excess
of the fair market value of the stock on the exercise date over the exercise
price and any gain realized in excess of the amount recognized as ordinary
income will be short term or long term capital gain. The Company will not
recognize income, gain, or loss upon the granting or exercise of an ISO, nor
will it be entitled to any deduction upon the disposition of an ISO or the
shares subject thereto, if the Holding Period is satisfied. If the Holding
Period is not satisfied, the Company will be entitled to a deduction equal to
the amount of the ordinary income recognized by the employee.
Nonqualified Stock Options. If any Option granted under the Plan does
not meet the conditions set forth in the Code for ISOs, then the Option is a
non-qualified stock option (an "NSO"). Such an Option is taxable under
Section 83 of the Code. The participant typically recognizes no taxable income
and the Company receives no deduction when an NSO is granted. Upon exercise of
an NSO, however, the participant recognizes ordinary income and the Company is
entitled to a deduction equal to the difference between the exercise price and
the fair market value of the shares on the date of the exercise. When stock
obtained under an NSO is disposed of by the participant, the difference between
the sales price and the tax basis (the amount, if any, paid for the Option,
plus the exercise price) of the stock will be treated as long-term or
short-term capital gain or loss, depending on the holding period of the shares.
Restricted Stock. A participant granted restricted stock is not
required to include the value of such shares in income until the first time
such participant's rights in the shares are transferable or are
-23-
<PAGE> 26
not subject to substantial risk of forfeiture, whichever occurs earlier, unless
such participant timely files an election under Code Section 83(b) to be taxed
on the receipt of the shares. In either case, the amount of such ordinary
income will be equal to the excess of the fair market value of the shares at
the time the income is recognized over the amount (if any) paid for the shares.
The Company is entitled to a deduction in the amount of the ordinary income
recognized by the participant, for the Company's taxable year in which the
participant recognizes such income.
Contingent Stock. A participant granted contingent stock is not
required to include the value of such shares in income until the first time
such participant's rights in the shares are transferable or are not subject to
a substantial risk of forfeiture, whichever occurs earlier, unless such
participant timely files an election under Code Section 83(b) to be taxed on
the receipt of the shares. In either case, the amount of such ordinary income
will be equal to the excess of the fair market value of the shares at the time
the income is recognized over the amount (if any) paid for the shares. The
Company is entitled to a deduction, in the amount of the ordinary income
recognized by the participant, for the Company's taxable year in which the
participant recognizes such income.
Options that Have Been Transferred. Participants who transfer an NSO
will not recognize income at the time of transfer. Instead, at the time of
exercise, the participant will recognize ordinary income in an amount equal to
the excess of the fair market value of the shares of stock received over the
exercise price paid for the stock. If an Option is exercised after the death
of a participant, the participant's estate will recognize ordinary income. The
tax basis for shares of such stock will be the exercise price, plus the amount
of ordinary income recognized by the participant at the time of exercise. If
the stock acquired upon exercise is later sold, any gain or loss recognized
upon the sale or exchange of such stock will be treated as capital gain or loss
and will be long-term or short-term, depending on how long the stock has been
held.
Estate and Gift Tax Effects of Options that Have Been Transferred. If
a participant transfers an Option as a completed gift, the participant may have
gift tax liability. Whether the participant will owe gift tax depends upon
whether the participant has exhausted his or her applicable credit, which
currently effectively exempts from gift tax the first $650,000 of gifts made
during the participant's lifetime, or whether the transfer qualifies for the
annual $10,000-per-donee gift tax exclusion. Once the gift is complete, there
generally is no further estate or gift tax liability for the participant upon
exercise of the Option or upon later disposition of the stock after exercise of
the transferred Option.
The Internal Revenue Service has recently ruled that the transfer of
an Option is not a completed gift until the Option has vested. If the transfer
of an Option is incomplete, the imposition of the gift tax is deferred until
the gift is completed.
Stock Appreciation Rights. Upon the grant of an SAR, the participant
recognizes no taxable income and the Company receives no deduction. The
participant recognizes ordinary income and the Company is entitled to a
deduction at the time of exercise equal to the cash and fair market value of
the shares payable upon such exercise.
Parachute Payments. Under certain circumstances, an accelerated
vesting or cash out of stock options, or accelerated lapse of restrictions on
other awards, in connection with a change in control of the Company might be
deemed an "excess parachute payment" for purposes of the golden parachute tax
provisions of Code Sections 280G and 4999. To the extent it is so considered,
the participant may be subject to a 20% excise tax and the Company may be
denied a tax deduction.
Section 162(m). Code Section 162(m) limits to $1,000,000 per year the
federal income tax deduction available to a public company for compensation
paid to any of its chief executive officer and four other highest paid
executive officers. However Code Section 162(m) provides an exception from its
limitation for certain "performance based" compensation if various requirements
are satisfied.
-24-
<PAGE> 27
The Omnibus Incentive Plan contains provisions that are intended to satisfy
these requirements for awards that are "performance based" compensation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE AMENDMENTS TO THE OMNIBUS INCENTIVE PLAN.
INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP as the Company's
independent auditors for the 1999 fiscal year. KPMG LLP, a certified public
accounting firm, has served as the Company's independent auditors since its
formation in 1996 and as FPIC's independent auditors since 1989.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals by the Company's shareholders intended to be presented at
the Company's 2000 Annual Meeting of Shareholders must be received by the
Company at its principal executive offices on or before January 3, 2000, in
order to be included in the Company's Notice of Meeting, Proxy Statement and
Proxy relating to such Meeting. In accordance with the Company's Bylaws,
shareholders who wish to submit a proposal for consideration at the Company's
2000 Annual Meeting of Shareholders but who do not wish to submit the proposal
for inclusion in the Company's proxy statement must deliver a copy of their
proposal to the Company at its principal executive offices on or before
February 8, 2000.
SOLICITATION OF PROXIES
The cost of solicitation of proxies will be borne by the Company,
including expenses in connection with the preparation and mailing of this proxy
statement. The Company may retain a proxy solicitation firm to assist in the
solicitation of proxies at a cost that will be borne by the Company. In
addition, the Company will reimburse banks, brokers and nominees their
reasonable expenses for sending proxy material to principals and obtaining
their proxies. In addition to solicitation by mail, proxies may be solicited
in person or by telephone by directors, officers and other employees of the
Company.
OTHER BUSINESS
The Board of Directors is not aware of any other matters that will be
presented for action at the meeting. However, if any other matters come before
the meeting, the persons named in the enclosed form of proxy or their
substitutes will vote such proxy in respect of any such matters in accordance
with their best judgment pursuant to the discretionary authority conferred
thereby.
<TABLE>
<S> <C>
BY ORDER OF THE BOARD OF DIRECTORS
May 7, 1999 /s/ Charles W. Emanuel
--------------------------------------------------------
Charles W. Emanuel
Vice President and Secretary
</TABLE>
PLEASE RETURN THE ENCLOSED FORM OF PROXY,
DATED AND SIGNED, IN THE ENCLOSED ADDRESSED
ENVELOPE, WHICH REQUIRES NO POSTAGE.
-25-
<PAGE> 28
Exhibit A
DIRECTOR STOCK OPTION PLAN
1. PURPOSE
1.1 The purpose of the Florida Physicians Insurance Company Director
Stock Option Plan is to provide an incentive to Directors of the Company who
are in a position to contribute materially to expanding and improving the
Company's profits, to aid in attracting and retaining Directors of outstanding
ability, and to encourage ownership of Shares by Directors.
2. DEFINITIONS
2.1 For purposes of the Plan the following terms shall have the
definition which is attributed to them, unless another definition is clearly
indicated by a particular usage and context.
1. "Board" means the Company's Board of Directors.
2. "Book Value" means the value per Share determined for
statutory book purposes by dividing the total equity of the Company on
a given date by all Shares of stock outstanding on such date.
3. "Code" means the Internal Revenue Code of 1986, as
amended.
4. "Committee" means the Director Stock Option Committee
appointed by the Company's Board of Directors pursuant to Section 3.1
hereof.
5. "Company" means Florida Physicians Insurance Company
until the Restructure and on and after the Restructure, FPIC
Insurance Group, Inc.
6. "Directors" means the members of the Board who are
not employees either of the Company or an affiliate thereof.
7. "Effective Date of Exercise" means the later of (i)
the date on which the Company has received a written notice of
exercise of an Option and full payment of the purchase price from the
Optionee, or (ii) the effective date of exercise set forth in the
written notice.
8. "Exchange Act" means the Securities Exchange Act of
1934, as amended.
9. "Fair Market Value" means on, or with respect to,
any given date:
(i) If determined on the date of the IPO, the
initial offering price to the public.
(ii) If not on the date of the IPO and the Shares
are listed on a national stock exchange, the closing market price of
such Shares as reported on the composite tape for issues listed on
such exchange on such date or, if no trades shall have been reported
for such date, on the next preceding date on which there were trades
reported; provided, that if no such quotations shall have been made
within the ten business days preceding such date, Fair Market Value
shall be determined under (iv) below.
A-1
<PAGE> 29
(iii) If not on the date of the IPO and the Shares
are not listed on a national stock exchange but is traded on the
over-the-counter market, the mean between the closing dealer bid and
asked price of such Shares of Common Stock as reported by the National
Association of Securities Dealers through their Automated Quotation
System for such date, or if no quotations shall have been made on such
date, on the next preceding date on which there were quotations;
provided, that, if no such quotations shall have been made within the
ten business days preceding such date, Fair Market Value shall be
determined under (iv) below.
(iv) If (i), (ii), and (iii) do not apply, the Fair
Market Value of a Share without regard to any control premium or
discount for lack of control as determined by the Committee in good
faith consistent with the valuation by the Company as provided by a
third party appraiser for other corporate purposes before adjustments
or any discounts applied due to lack of marketability. The Committee
may rely upon the most recent valuation and there shall be no
requirement to cause a more recent valuation to be made.
10. "IPO" means the initial public offering of the
Company's common stock pursuant to a registration statement on Form
S-1 filed by the Company with the U.S. Securities and Exchange
Commission.
11. "Option" means the right to purchase from the Company
Shares at a specified price and subject to the terms of the Plan, and
such other conditions and restrictions as the Committee deems
appropriate.
12. "Option Price" means the purchase price per Share
subject to an Option.
13. "Optionee" means a Director who has been awarded an
Option under the Plan.
14. "Optioned Shares" means Shares subject to outstanding
Options.
15. "Parent" shall mean any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company
if, at the time of a granting of an Option, each of the corporations
(other than the Company) owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the
other corporations in such chain within the meaning of Section 424(e)
of the Code and any regulations or rulings promulgated thereunder.
16. "Permanent and Total Disability" shall have the same
meaning as given to that term by Section 22(e)(3) of the Code and any
regulations or rulings promulgated thereunder.
17. "Plan" means Florida Physicians Insurance Company
Director Stock Option Plan, as evidenced herein and as amended from
time to time.
18. "Plan Effective Date" means January 13, 1996.
19. "Restructure" means the corporate reorganization
pursuant to which Florida Physicians Insurance Company shall become
the wholly owned subsidiary of FPIC Insurance Group, Inc.
20. "SEC Rule 16b-3" means Rule 16b-3 of the Securities
and Exchange Commission promulgated under the Exchange Act.
21. "Section 16 Person" means a person subject to Section
16(b) of the Exchange Act with respect to transactions involving
equity securities of the Company.
A-2
<PAGE> 30
22. "Share" means one share of the $1.00 par value common
stock of the Company. On and after the Restructure, "Share" means one
share of $0.10 par value common stock of FPIC Insurance Group, Inc.
23. "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Company if, at the
time of the granting of the Option, each of the corporations (other
than the last corporation) in the unbroken chain owns stock possessing
50% or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain, within the meaning of
Section 424(f) of the Code and any regulations or rulings promulgated
thereunder.
3. ADMINISTRATION
3.1 The Plan shall be administered by the Committee. The
Committee shall be comprised of not less than two of the then members of the
Board. The Plan is intended to be a formula plan meeting the conditions of
Rule 16b-3(c)(2)(ii). The members of the Committee shall be appointed by the
Board. The Board may from time to time remove members from or add members to
the Committee. Vacancies on the Committee, howsoever caused, shall be filled
by the Board.
3.2 The action of a majority of the Committee at which a quorum is
present, or acts reduced to or so approved in writing by a majority of the
Committee, shall be the valid acts of the Committee.
3.3 The interpretation and construction by the Committee of any
provisions of the Plan or of any Option granted under it and all actions of the
Committee shall be final and binding on all parties hereto. No member of the
Board or the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Option granted under it.
4. ELIGIBILITY
4.1 Each Optionee shall be a Director of the Company.
5. STOCK
5.1 Prior to the Restructure, the aggregate number of Shares which
may be issued under Options granted pursuant to the Plan shall not exceed
33,000 Shares and on or after the Restructure the aggregate number of Shares
which may be issued under Options granted pursuant to the Plan shall not exceed
165,000 Shares.
5.2 Each eligible individual who is a Director on the Plan
Effective Date, except those Directors who on the Plan Effective Date have not
been nominated for additional service on the Board and whose terms expire in
1996, shall receive an Option to purchase 1,000 Shares with an Option Price
equal to Book Value of such Shares on the Plan Effective Date. In addition,
such individual who is also a Director on the date of the IPO shall receive an
Option to purchase 1,000 additional Shares with an Option Price equal to Fair
Market Value of such Shares on the date of the IPO.
5.3 Each eligible individual who is not a Director on the Plan
Effective Date shall receive an Option to purchase 1,000 Shares with an Option
Price equal to the Fair Market Value of such Shares on the date of grant which
shall be the later of (i) the date of the IPO, or (ii) the date on which such
individual first becomes a Director.
5.4 In the event that any outstanding Option under the Plan
expires or is terminated for any reason, the Optioned Shares subject to that
option may again be subjected to an Option under the Plan.
A-3
<PAGE> 31
5.5 For Options issued prior to the Restructure, any Option still
unexercised and outstanding on the effective date of the Restructure shall be
deemed to be an Option to purchase FPIC Insurance Group, Inc. shares as
adjusted pursuant to Section 6.1(f).
6. TERMS AND CONDITIONS
6.1 Options granted pursuant to the Plan shall be evidenced by
agreements in such form as the Committee shall from time to time approve, which
agreements shall contain or shall be subject to the following terms and
conditions, whether or not such terms and conditions are specifically included
therein:
(a) Number of Shares. Each Option shall state the number
of Shares to which it pertains.
(b) Date. Each Option shall state the effective date of
grant of the Option.
(c) Option Price. Each Option shall state the Option
Price.
(d) Method and Time of Payment. The Option Price shall
be payable on the exercise of the Option and shall be paid in cash, in
Shares, including Shares acquired pursuant to the Plan, or part in
cash and part in Shares. Shares transferred in payment of the Option
Price shall be valued as of date of transfer based on the Fair Market
Value.
(e) Transfer of Option. No Option shall be transferable
by the Optionee, except by will or the laws of descent and
distribution upon the Optionee's death and subject to any other
limitations of the Plan.
(f) Recapitalization. The number of Optioned Shares and
the Option Price shall be correspondingly adjusted in order to give
effect to changes made in the number of outstanding Shares as a result
of a merger, consolidation, recapitalization, reclassification,
combination, stock dividend, stock split, or other relevant change.
(g) Rights as a Shareholder. An Optionee shall have no
rights as a shareholder with respect to any Optioned Shares until the
date of the issuance of a stock certificate to him for such Shares.
No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions or
other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 6.1(f).
(i) Duration of Option. Each Option shall be for a term
of ten years from the effective date of grant, except as provided in
Section 7.1(b).
(j) Vesting. One-third (rounded up to a whole number) of
each grant under this Plan shall vest on the one year anniversary of
the date of grant, with an additional one-third vesting on each of the
next two anniversaries of the date of grant. A Director shall forfeit
the unvested Options upon termination of service as a Director.
(k) Other Provisions. Options authorized under the Plan
may contain any other provisions or restrictions as the Committee in
its sole and absolute discretion shall deem advisable including but
not limited to offering Options in tandem with or reduced by other
options or benefits and reducing one award by the exercise of another
option or benefit. The Company may place such restriction legends on
stock certificates representing the Shares as
A-4
<PAGE> 32
the Company, in its sole discretion, deems necessary or appropriate to
reflect restrictions under the securities laws or this Plan.
6.2 Options granted pursuant to the Plan shall not be exercisable
until such Options are vested as provided in Section 6.1(j). Any person
entitled to exercise an Option may do so in whole or in part by delivering to
the Company, attention Corporate Secretary, at its principal office a written
notice of exercise. The written notice shall specify the number of Shares for
which an Option is being exercised and shall be accompanied by full payment of
the Option Price for the Shares being purchased. During the Optionee's
lifetime, an Option may be exercised only by the Optionee, or on his behalf by
the Optionee's guardian or legal representative.
7. TERMINATION OF OPTIONS
7.1 An Option may be terminated as follows:
(a) During the period of continuous service as a Director
of the Company or Subsidiary, an Option will be terminated only if it
has been fully exercised or it has expired by its terms.
(b) Upon termination of service as a Director for any
reason, the Option will terminate upon the earlier of (i) the full
exercise of the Option, (ii) the expiration of the Option by its
terms, or (iii) one year following the date of termination of service
as a Director.
(c) If an Optionee shall die or becomes subject to a
Permanent and Total Disability prior to the termination of an Option,
such Option may be exercised to the extent that the Optionee shall
have been entitled to exercise it at the time of death or disability,
as the case may be, by the Optionee, the estate of the Optionee or the
person or persons to whom the Option may have been transferred by will
or by the laws of descent and distribution, provided, however, such
right must be exercised, if at all, within one year after the date of
such death or disability.
7.2 Except as otherwise expressly provided in the written
agreement with the Optionee referred to in Section 6 hereof, and except as
provided in this Section, in no event will the continuation of the term of an
Option beyond the date of termination of service allow the Director, or his
beneficiaries or heirs, to accrue additional rights under the Plan, or to
purchase more Shares through the exercise of an Option than could have been
purchased on the day that service as a Director was terminated.
8. AMENDMENT OR DISCONTINUANCE OF PLAN
8.1 The Plan may be amended by the Board, without Shareholder
approval, at any time in any respect unless Shareholder approval of the
amendment in question is required under Florida law, the Code, any exemption
from Section 16 of the Exchange Act (including without limitation SEC Rule
16b-3) for which the Company intends Section 16 persons to qualify, any
national securities exchange system on which the shares are then listed or
reported, by any regulatory body having jurisdiction with respect to the Plan,
or any other applicable laws, rules or regulations.
8.2 The Plan provisions that determine the amount, price and
timing of the option grants to Section 16 persons may not be amended more than
once every six months, other than to comport with changes in the Code, the
Employment Income Retirement Security act of 1974, or rules thereunder, unless
the Company's legal counsel determines that such restriction on amendments is
not necessary to secure or maintain any exemptions from Section 16 of the
Exchange Act for which the Company intends Section 16 persons to qualify.
A-5
<PAGE> 33
8.3 The Plan may be terminated at any time by the Board of
Directors.
8.4 No amendment to the Plan will alter or impair any Option
granted under the Plan without the consent of the holders thereof.
9. NO OBLIGATION TO EXERCISE OPTION
9.1 The granting of an option shall impose no obligation upon the
Optionee to exercise such option.
10. EFFECTIVE DATE; DURATION OF THE PLAN
10.1 The Plan shall be effective as of January 13, 1996.
10.2 No Option may be granted after the tenth anniversary of the
earlier of the date the Plan is adopted or the date the Plan is approved by
shareholders.
11. EFFECT OF PLAN
11.1 The granting of an option pursuant to the Plan shall not give
the Optionee any right to similar grants in future years or any right to be
retained in the employ of the Company, the Parent or a Subsidiary, but an
Optionee shall remain subject to discharge to the same extent as if the Plan
were not in effect.
FIRST AMENDMENT TO THE
FLORIDA PHYSICIANS INSURANCE COMPANY
DIRECTOR STOCK OPTION PLAN
This First Amendment to the Florida Physicians Insurance Company Director
Stock Option Plan (the "Plan") is made effective as of March 16, 1996.
1. Section 2.1(q) of the Plan shall be amended to read as follows:
"(q) 'Plan' means the Director Stock Option Plan, as
evidenced herein and as amended from time to time."
2. Section 6.1(j) of the Plan shall be amended to read as follows:
"(j) Vesting. One-third (rounded up to a whole number) of
the number of shares set forth in paragraph 2 shall vest on
the one year anniversary of this Agreement, with an
additional one-third vesting on each of the next two
anniversaries of this Agreement. Unvested options shall
vest on the death or Permanent and Total Disability of the
Director. The Director shall forfeit any unvested Options
upon termination of service as a Director for any reason
other than death or Permanent and Total Disability of the
Director."
All provisions of the Plan not specifically mentioned in this First
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this First Amendment.
A-6
<PAGE> 34
SECOND AMENDMENT TO THE
DIRECTOR STOCK OPTION PLAN
This Second Amendment to the Florida Physicians Insurance Company Director
Stock Option Plan (the "Plan") is made effective as of September 14, 1997.
1. Section 3.1 of the Plan shall be amended to read as follows:
"3.1 The Plan shall be administered by the Committee. The
Committee shall be comprised of not less than two of the
then members of the Board. The members of the Committee
shall be appointed by the Board. The Board may from time
to time remove members from or add members to the
Committee. Vacancies on the Committee, howsoever caused,
shall be filled by the Board."
2. Section 5.1 of the Plan shall be amended to read as follows:
"5.1 The aggregate number of Shares which may be issued
under Options granted pursuant to the Plan shall not exceed
300,000 Shares."
3. Section 5.6 shall be added to the Plan to read as follows:
"5.6 In addition to the Option grants provided for above,
the Board may, in its sole discretion, grant from time to
time additional Options to eligible Directors."
4. Section 6.1(j) of the Plan shall be amended to read as follows:
"6.1(j) Vesting. The vesting schedule of an Option
granted under this Plan shall be determined by the Board,
in its sole discretion, upon granting of the Option;
provided, however, that no Option shall vest prior to the
expiration of 6 months from the effective date of the
Option grant or after the tenth anniversary of the
effective date of the Option grant. A director shall
forfeit any unvested Options upon termination of service as
a Director."
All provisions of the Plan not specifically mentioned in this Second
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this Second Amendment.
1999 AMENDMENT TO THE
DIRECTOR STOCK OPTION PLAN
This 1999 Amendment to the Director Stock Option Plan (the "Plan") is made
effective as of June 8, 1999, subject to shareholder approval at the 1999
Annual Meeting of Shareholders.
1. Section 5.1 of the Plan shall be amended to read as follows:
"5.1 The aggregate number of Shares which may be issued
under Options granted pursuant to the Plan shall not exceed
430,000 Shares."
A-7
<PAGE> 35
2. Section 6.1(e) shall be amended to read as follows:
"(e) Transfer of Option. Options may be transferred by the
Optionee during his or her lifetime only to any member of
his or her immediate family or a trust established for the
exclusive benefit of one or more members of his or her
immediate family or to a former spouse pursuant to a
domestic relations order. For purposes of this Section,
the term "immediate family" is defined as an Optionee's
spouse, children, stepchildren, grandchildren (including
relationships arising from legal adoption), and parents.
Upon an Optionee's death, Options are transferrable by will
or the law of descent and distribution."
3. Section 7.1(b) of the Plan shall be amended to read as follows:
"(b) Upon termination of service as a Director for any
reason, the Option will terminate upon the earlier of (i)
the full exercise of the Option, (ii) the expiration of the
Option by its terms, or (iii) two years following the date
of termination of service as a Director."
All provisions of the Plan not specifically mentioned in this 1999
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this Amendment.
A-8
<PAGE> 36
EXHIBIT B
OMNIBUS INCENTIVE PLAN
1. PURPOSE
1.1 The purpose of the Florida Physicians Insurance Company
Omnibus Incentive Plan is to provide incentives to specified individuals whose
performance, contributions and skills add to the value of Florida Physicians
Insurance Company. The Company also believes that the Plan will facilitate
attracting, retaining and motivating Employees of high caliber and potential.
1.2 Plan participants shall include those officers and key
employees of the Company and subsidiaries who, in the opinion of the Committee,
are making or are in a position to make substantial contributions to the
Company by their ability and efforts.
2. DEFINITIONS
2.1 For purposes of the Plan, the following terms shall have the
definition which is attributed to them, unless the context clearly indicates to
the contrary.
(a) "Award" shall mean a grant of Restricted Stock,
Contingent Stock, an Option, or an SAR.
(b) "Board" means the Company's Board of Directors.
(c) "Book Value" means the value per Share determined for
statutory book purposes by dividing the total equity
of the Company on a given date by all Shares of stock
outstanding on such date.
(d) "Change in Control" shall not mean the Restructure
but shall mean the earlier of the following events
which are not connected to the Restructure:
(i) either (A) receipt by the Company of a report
on Schedule 13D, or an amendment to such a
report, filed with the SEC pursuant to
Section 13(d) of the Exchange Act, disclosing
that any person (as such term is used in
Section 13(d) of the Exchange Act)
("Person"), is the beneficial owner, directly
or indirectly, of twenty (20) percent or more
of the outstanding stock of the Company, or
(B) actual knowledge by the Company of facts
on the basis of which any Person is required
to file such a report on Schedule 13D, or to
file an amendment to such a report, with the
SEC (or would be required to file such a
report or amendment upon the lapse of the
applicable period of time specified in
Section 13(d) of the Exchange Act) disclosing
that such Person is the beneficial owner,
directly or indirectly, of twenty (20)
percent or more of the outstanding stock of
the Company;
(ii) purchase by any Person, other than the
Company or a wholly owned subsidiary of the
Company, of shares pursuant to a tender or
exchange offer to acquire any stock of the
Company (or securities convertible into
stock) for cash, securities or any other
consideration provided that, after
consummation of the offer, such Person is the
beneficial owner (as defined in Rule 13d-3
under the Exchange Act regardless of whether
the Company or such Person would otherwise be
subject to
B-1
<PAGE> 37
the Exchange Act), directly or indirectly, of
twenty (20) percent or more of the
outstanding stock of the Company (calculated
as provided in paragraph (d) of Rule 13d-3
under the Exchange Act in the case of rights
to acquire stock regardless of whether the
Company or such Person would otherwise be
subject to the Exchange Act);
(iii) either (A) the filing by any Person
acquiring, directly or indirectly, twenty
percent (20%) or more of the outstanding
stock of the Company of a statement with the
Florida Department of Insurance pursuant to
Section 628.461 of the Florida Statutes, or
(B) actual knowledge by the Company of facts
on the basis of which any Person acquiring,
directly or indirectly, twenty percent (20%)
or more of the outstanding stock of the
Company or a controlling company is required
to file such a statement pursuant to Section
628.461.
(iv) approval by the shareholders of the Company
of (A) any consolidation or merger of the
Company in which the Company is not the
continuing or surviving corporation or
pursuant to which shares of stock of the
Company would be converted into cash,
securities or other property, other than a
consolidation or merger of the Company in
which holders of its stock immediately prior
to the consolidation or merger have
substantially the same proportionate
ownership of common stock of the surviving
corporation immediately after the
consolidation or merger as immediately
before, or (B) any consolidation or merger in
which the Company is the continuing or
surviving corporation but in which the common
shareholders of the Company immediately prior
to the consolidation or merger do not hold at
least a majority of the outstanding common
stock of the continuing or surviving
corporation (except where such holders of
common stock hold at least a majority of the
common stock of the corporation that owns all
of the common stock of the Company), or (C)
any sale, lease, exchange or other transfer
(in one transaction or a series of related
transactions) of all or substantially all the
assets of the Company, or (D) any merger or
consolidation of the Company where, after the
merger or consolidation, one Person owns 100%
of the shares of stock of the Company (except
where the holders of the Company's common
stock immediately prior to such merger or
consolidation own at least 90% of the
outstanding stock of such Person immediately
after such merger or consolidation); or
(v) a change in the majority of the members of
the Board within a 24-month period unless the
election or nomination for election by the
Company's shareholders of each new director
was approved by the vote of at least
two-thirds of the directors then still in
office who were in office at the beginning of
the 24-month period.
(e) "Code" means the Internal Revenue Code of 1986, as
amended.
(f) "Committee" means the members of the Compensation
Committee of the Board who are "outside directors"
(within the meaning of Code Section 162(m)) and
"disinterested persons" (within the meaning of Rule
16b-3 of the Exchange Act).
B-2
<PAGE> 38
(g) "Company" means Florida Physicians Insurance Company
until the Restructure and on and after the
Restructure, FPIC Insurance Group, Inc.
(h) "Contingent Stock" means stock issued, subject to
certain conditions, to a Grantee pursuant to Section
9 hereof.
(i) "Directors" means the members of the Board.
(j) "Effective Date" means January 13, 1996.
(k) "Employee" means any individual who performs services
for the Company, a Parent or Subsidiary, and is
included on the regular payroll of the Company, a
parent or subsidiary.
(l) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(m) "Fair Market Value" means on, or with respect to, any
given date:
(i) If determined on the date of the IPO, the
initial offering price to the public.
(ii) If not on the date of the IPO and the Shares
are listed on a national stock exchange, the
closing market price of such Shares as
reported on the composite tape for issues
listed on such exchange on such date or, if
no trade shall have been reported for such
date, on the next preceding date on which
there were trades reported; provided, that if
no such quotation shall have been made within
the ten business days preceding such date,
Fair Market Value shall be determined under
(iv) below.
(iii) If not on the date of the IPO and the Shares
are not listed on a national stock exchange
but are traded on the over-the-counter
market, the mean between the closing dealer
bid and asked price of such Shares as
reported by the National Association of
Securities Dealers through their Automated
Quotation System for such date, or if no
quotations shall have been made on such date,
on the next preceding date on which there
were quotations; provided, that, if such
quotations shall have been made within the
ten business days preceding such date, Fair
Market Value shall be determined under (iv)
below.
(iv) If (i), (ii), and (iii) do not apply, the
Fair Market Value of a Share without regard
to any control premium or discount for lack
of control (except as otherwise required by
Section 422 of the Code) as determined by the
Committee in good faith consistent with the
valuation of the Company as provided by a
third party appraiser for other corporate
purposes before adjustments or any discounts
applied due to lack of marketability. The
Committee may rely upon the most recent
valuation and there shall be no requirement
to cause a more recent valuation to be made.
(n) "Grantee" means an Employee who is an Optionee or an
Employee who has received an Award.
B-3
<PAGE> 39
(o) "Incentive Stock Option" shall have the same meaning
as given to the term by Section 422 of the Code and
any regulations or rulings promulgated thereunder.
(p) "IPO" means the initial public offering of the
Company's common stock pursuant to a registration
statement on Form S-1 filed by the Company with the
U.S. Securities and Exchange Commission.
(q) "Nonqualified Stock Option" means any option granted
under the Plan which is not considered an Incentive
Stock Option.
(r) "Option" means the right to purchase from the Company
a stated number of Shares at a specified price. The
Option may be granted to an Employee subject to the
terms of this Plan, and such other conditions and
restrictions as the Committee deems appropriate.
Each Option shall be designated by the Committee to
be either an Incentive Stock Option or a Nonqualified
Stock Option.
(s) "Option Price" means the purchase price per Share
subject to an Option, as described in Section 7.2(a).
(t) "Optionee" means an Employee who has been awarded an
Option under the Plan.
(u) "Parent" shall mean any corporation (other than the
Company) in an unbroken chain of corporations ending
with the Company if, at the time of a granting of an
Option, each of the corporations (other than the
Company) owns stock possessing 50% or more of the
total combined voting power of all classes of stock
in one of the other corporations in such chain within
the meaning of Section 424(e) of the Code and any
regulations or rulings promulgated thereunder.
(v) "Plan" means Florida Physicians Insurance Company
Omnibus Incentive Plan, as evidenced herein and as
amended from time to time.
(w) "Restricted Stock" shall mean stock issued, subject
to restrictions, to a Grantee pursuant to Section 10
hereof.
(x) "Restructure" means the corporate reorganization
pursuant to which Florida Physicians Insurance
Company shall become the wholly owned subsidiary of
FPIC Insurance Group, Inc.
(y) "SAR" means a stock appreciation right.
(z) "SEC" means the U.S. Securities and Exchange
Commission.
(aa) "Section 16 Person" means a person subject to Section
16(b) of the Exchange Act with respect to
transactions involving equity securities of the
Company.
(bb) "Share" means one share of the $1.00 par value common
stock of the Company. On and after the Restructure,
"Share" means one share of $.10 par value common
stock of FPIC Insurance Group, Inc.
B-4
<PAGE> 40
(cc) "Subsidiary" means any corporation in an unbroken
chain of corporations beginning with the Company if,
at the time of the granting of the Option, each of
the corporations (other than the last corporation) in
the unbroken chain owns stock possessing 50% or more
of the total combined voting power of all classes of
stock in one of the other corporations in such chain,
within the meaning of Section 424(f) of the Code and
any regulations or rulings promulgated thereunder.
3. ADMINISTRATION
3.1 The Plan shall be administered by the Committee. As applied to
Employees, the Committee shall have full and final authority in its discretion
to:
(a) conclusively interpret the provisions of the Plan and
to decide all questions of fact arising in its
application;
(b) determine the individuals to whom awards shall be
made under the Plan;
(c) determine the type of award to be made to such
Employees and the amount, size and terms of each
award;
(d) determine the time when awards will be granted to
Employees; and
(e) make all other determinations necessary or advisable
for the administration of the Plan.
4. SHARES SUBJECT TO THE PLAN
4.1 Prior to the Restructure the Shares subject to Awards under
the Plan shall not exceed in the aggregate 183,000 Shares and on and after the
Restructure the Shares subject to Awards under the Plan shall not exceed in the
aggregate 915,000 Shares.
4.2 Shares may be authorized and unissued Shares or treasury
Shares.
4.3 The maximum number of Shares that may be awarded pursuant to
the Contingent or Restricted Stock Award provisions of Sections 9 and 10 shall
be 25% of the total Shares authorized for issuance under the Plan.
4.4 Except as provided herein, any Shares subject to an Option or
right for which any reason expires or is terminated unexercised as to such
Shares shall again be available under the Plan.
5. PARTICIPANTS
5.1 Awards permitted pursuant to the Plan may only be made to
Employees.
6. AWARDS UNDER THE PLAN
6.1 Awards under the Plan may be in the form of Options (both
Nonqualified Stock Options and Incentive Stock Options), Contingent Stock,
Restricted Stock, and SARs, or such other forms as the Committee may in its
discretion deem appropriate but in any event which are consistent with the
Plan's purpose, including any combination of the above.
B-5
<PAGE> 41
6.2 Prior to the Restructure the maximum number of Awards that may
be awarded to any one person during the life of the Plan shall be 60,000 Shares
and on and after the Restructure the maximum number of Awards that may be
awarded to any one person during the life of the Plan shall be 300,000 Shares.
Prior to the Restructure the maximum number of Shares with respect to which
Options or rights may be granted during a calendar year to any Employee is
60,000 Shares and on and after the Restructure the maximum number of Shares
with respect to which Options or rights may be granted during a calendar year
to any Employee is 300,000 Shares.
7. STOCK OPTIONS
7.1 The Committee in its sole discretion may designate whether an
Option is to be considered an Incentive Stock Option or a Nonqualified Stock
Option. The Committee may grant both an Incentive Stock Option and a
Nonqualified Stock Option to the same individual. However, where both an
Incentive Stock Option and a Nonqualified Stock Option are awarded at one time,
such Options shall be deemed to have been awarded in separate grants, shall be
clearly identified, and in no event will the exercise of one such Option affect
the right to exercise the other such Option except to the extent the Committee
determines in writing otherwise.
7.2 Options granted pursuant to the Plan shall be authorized by
the Committee under terms and conditions approved by the Committee, not
inconsistent with this Plan or Exchange Act Rule 16b-3(c), and shall be
evidenced by agreements in such form as the Committee shall from time to time
approve, which agreements shall contain or shall be subject to the following
terms and conditions, whether or not such terms and conditions are specifically
included therein:
(a) The Option Price of an Incentive Stock Option shall
not be less than 100% of the Fair Market Value of
such Share on the day the Option is granted, as
determined by the Committee. The Option Price of a
Nonqualified Stock Option issued prior to the IPO
shall not be less than 100% of Book Value of such
Share on the day the Option is granted, as determined
by the Committee. The Option Price of a Nonqualified
Stock Option issued on or after the IPO shall not be
less than 50% of the Fair Market Value of such Share
on the day the Option is granted, as determined by
the Committee. The option agreement for a
Nonqualified Stock Option at the Committee's sole
discretion, may, but need not, provide for a
reduction of the purchase price by dividends paid on
a Share as long as the Option is outstanding and not
exercised, but in no event shall this price be less
than the par value of such Share.
(b) Each option agreement shall state the period or
periods of time, as may be determined by the
Committee, within which the Option may be exercised
by the participant, in whole or in part, provided
such period shall not commence earlier than six
months after the date of grant of the Option and not
later than ten years after the date of the grant of
the Option. The Committee shall have the power to
permit in its discretion an acceleration of
previously determined exercise terms, subject to the
terms of this Plan, to the extent permitted by
Exchange Act Rule 16b-3(c), and under such
circumstances and upon such terms and conditions as
deemed appropriate and which are not inconsistent
with Exchange Act Rule 16b-3(c)(1).
(c) Shares purchased pursuant to an option agreement
shall be paid for in full at the time of purchase,
either in the form of cash, common stock of the
Company at Fair Market Value, or a combination
thereof, as the Committee may determine.
B-6
<PAGE> 42
(d) Notwithstanding anything herein to the contrary, the
aggregate Fair Market Value (determined as of the
time the Option is granted) of Incentive Stock
Options for any Employee which may become first
exercisable in any calendar year shall not exceed
$100,000.
(e) Notwithstanding anything herein to the contrary, no
Incentive Stock Option shall be granted to any
individual if, at the time the Option is to be
granted, the individual owns stock possessing more
than 10% of the total combined voting power of all
classes of stock of the Company unless at the time
such Option is granted the Option Price is at least
110% of the Fair Market Value of the stock subject to
Option and such Option by its terms is not
exercisable after the expiration of five years from
the date such Option is granted.
(f) Each Incentive Stock Option agreement shall contain
such other terms, conditions and provisions as the
Committee may determine to be necessary or desirable
in order to qualify such Option as a tax-favored
option within the meaning of Section 422 of the Code,
or any amendment thereof, substitute therefor, or
regulation thereunder. Subject to the limitations of
Section 19, and without limiting any provisions
hereof, the Committee shall have the power without
further approval to amend the terms of any Option for
Employees.
7.3 If any Option is not granted, exercised, or held pursuant to
the provisions applicable to an Incentive Stock Option, it will be considered
to be a Nonqualified Stock Option to the extent that any or all of the grant is
in conflict with such provisions.
7.4 An Option may be terminated (subject to any shorter periods
set forth in an individual option agreement by the Committee, in its sole
discretion) as follows:
(a) During the period of continuous employment with the
Company or Subsidiary, an Option will be terminated
only if it has been fully exercised or it has expired
by its terms.
(b) In the event of termination of employment for any
reason, the Option will terminate upon the earlier of
(i) the full exercise of the Option, (ii) the
expiration of the Option by its terms, or (iii)
except as provided in 7.4(c), no more than three
years (three months for Incentive Stock Options)
following the date of employment termination. For
purposes of the Plan, a leave of absence approved by
the Company shall not be deemed to be termination of
employment except with respect to an Incentive Stock
Option as required to comply with Code ' 422 and the
regulations issued thereunder.
(c) If an Optionee's employment terminates by reason of
death or Permanent and Total Disability prior to the
termination of an Option, such Option may be
exercised to the extent that the Optionee shall have
been entitled to exercise it at the time of death or
disability, as the case may be, by the Optionee, the
estate of the Optionee or the person or persons to
whom the Option may have been transferred by will or
by the laws of descent and distribution for the
period set forth in the Option, but no more than
three years following the date of such death or
disability, provided, however, with respect to an
Incentive Stock Option, such right must be exercised,
if at all, within one year after the date of such
death or disability.
B-7
<PAGE> 43
8. STOCK APPRECIATION RIGHTS
8.1 SARs shall be evidenced by SAR agreements in such form, and not
inconsistent with this Plan or Exchange Act Rule 16b-3(c)(1), as the Committee
shall approve from time to time, which agreements shall contain in substance
the following terms and conditions as discussed in Sections 8.2 through 8.4.
8.2 An SAR may be granted in connection with an Option and shall
entitle the Grantee, subject to such terms and conditions determined by the
Committee, to receive, upon surrender of the Option, all or a portion of the
excess of (i) the Fair Market Value of a specified number of Shares at the time
of the surrender, as determined by the Committee, over (ii) 100% of the Fair
Market Value of such Shares at the time the Option was granted less any
dividends paid while the Option was outstanding but unexercised.
8.3 SARs shall be granted for a period of not less than six months
nor more than ten years, and shall be exercisable in whole or in part, at such
time or times and subject to such other terms and conditions as shall be
prescribed by the Committee at the time of grant, subject to the following:
(a) No SAR shall be exercisable, in whole or in part,
during the six-month period starting with the date of
grant; and
(b) SARs will be exercisable only during a Grantee's
employment by the Company or a Subsidiary, except
that in the discretion of the Committee an SAR may be
made exercisable for up to three months after the
Grantee's employment is terminated for any reason
other than death, retirement or disability. In the
event that a Grantee's employment is terminated as a
result of death, retirement or disability without
having fully exercised such Grantee's SARs, the
Grantee or such Grantee's beneficiary may have the
right to exercise the SARs during their term within a
period of 24 months after the date of such
termination to the extent that the right was
exercisable at the date of such termination, or
during such other period and subject to such terms as
may be determined by the Committee. The Committee in
its sole discretion may reserve the right to
accelerate previously determined exercised terms,
within the terms of the Plan, under such
circumstances and upon such terms and conditions as
it deems appropriate.
(c) The Committee shall establish such additional terms
and conditions, without limiting the foregoing, as it
determines to be necessary or desirable to avoid
"short-swing" trading liability in connection with an
SAR within the meaning of Section 16(b) of the
Exchange Act.
8.4 Upon exercise of an SAR, payment shall be made in the form of
common stock of the Company (at Fair Market Value on the date of exercise),
cash, or a combination thereof, as the Committee may determine.
9. CONTINGENT STOCK AWARDS
9.1 Contingent Stock Awards under the Plan shall be evidenced by
Contingent Stock agreements in such form and not inconsistent with this Plan as
the Committee shall approve from time to time, which agreements shall contain
in substance the terms and conditions described in Sections 9.2 through 9.5.
B-8
<PAGE> 44
9.2 The Committee shall determine the amount of Contingent Stock
Award to be granted to an Employee based on the expected impact the Employee
can have, or actually has had, on the financial well-being of the Company and
other factors deemed by the Committee to be appropriate.
9.3 Contingent Stock Awards made pursuant to this Plan shall be
subject to such terms, conditions, and restrictions, including without
limitation, substantial risks of forfeiture and/or attainment of performance
objectives, and for such period or periods (in excess of six months) as shall
be determined by the Committee at the time of grant. The Committee shall have
the power to permit, in its discretion, an acceleration of the expiration of
the applicable restriction period (so long as the minimum six-month period is
retained) with respect to any part or all of the Award to any participant. The
Committee shall have the power to make a Contingent Stock Award that is not
subject to vesting or any other contingencies in recognition of an Employee's
prior service and financial impact on the Company.
9.4 The agreement shall specify the terms and conditions upon
which any restrictions on the right to receive Shares representing Contingent
Stock Awards under the Plan shall lapse, as determined by the Committee. Upon
the lapse of such restrictions, Shares shall be issued to the participant or
such Participant's legal representative.
9.5 In the event of a participant's termination of employment for
any reason prior to the lapse of restrictions applicable to a Contingent Stock
Award made to such participant and unless otherwise provided for herein by this
Plan or as provided for in the Contingent Stock agreement, all rights to Shares
as to which there still remain unlapsed restrictions shall be forfeited by such
participant to the Company without payment or any consideration by the Company,
and neither the participant nor any successors, heirs, assigns or personal
representatives of such participants shall thereafter have any further rights
or interest in such Shares.
10. RESTRICTED STOCK AWARD
10.1 Restricted Stock Awards under the Plan shall be evidenced by
Restricted Stock agreements in such form, and not inconsistent with this Plan,
as the Committee shall approve from time to time, which agreements shall
contain in substance the terms and conditions described in Sections 10.2
through 10.6.
10.2 The Committee shall determine the amount of a Restricted Stock
Award to be granted to an Employee based on the past or expected impact the
Employee has had or can have on the financial well-being of the Company and
other factors deemed by the Committee to be appropriate.
10.3 Restricted Stock Awards made pursuant to this Plan shall be
subject to such terms, conditions, and restrictions, including without
limitation, substantial risks of forfeiture and/or attainment of performance
objectives, and for such period or periods (in excess of six months) as shall
be determined by the Committee at the time of grant. The Committee shall have
the power to permit, in its discretion, an acceleration of the expiration of
the applicable restriction period (so long as the minimum six-month period is
retained) with respect to any part or all of the Award to any participant.
Upon issuance of a Restricted Stock Award, Shares will be issued in the name of
the recipient. During the restriction period, recipient shall have the rights
of a shareholder for all such Shares of Restricted Stock, including the right
to vote and the right to receive dividends thereon as paid.
10.4 Each certificate evidencing stock subject to Restricted Stock
Awards shall bear an appropriate legend referring to the terms, conditions and
restrictions applicable to such Award. Any attempt to dispose of stock in
contravention of such terms, conditions and restrictions shall be ineffective.
The Committee may adopt rules which provide that the certificates evidencing
such Shares may be held in custody by a bank or other institution, or that the
Company may itself hold
B-9
<PAGE> 45
such Shares in custody, until the restrictions thereon shall have lapsed and
may require as a condition of any Award that the recipient shall have delivered
a stock power endorsed in blank relating to the stock covered by such Award.
10.5 The Restricted Stock agreement shall specify the terms and
conditions upon which any restrictions on the right to receive shares
representing Restricted Stock awarded under the Plan shall lapse as determined
by the Committee. Upon the lapse of such restrictions, Shares which have not
been delivered to the recipient or such recipient's legal representative shall
be delivered to such participant or such participant's legal representative.
10.6 In the event of a participant's termination of employment for
any reason prior to the lapse of restrictions applicable to a Restricted Stock
Award made to such participant and unless otherwise provided for herein by this
Plan or as provided for in the Restricted Stock agreement, all rights to Shares
as to which there remain unlapsed restrictions shall be forfeited by such
participant to the Company without payment or any consideration by the Company,
and neither the participant nor any successors, heirs, assigns or personal
representatives of such participant shall thereafter have any further rights or
interest in such Shares.
11. OTHER PROVISIONS RELATING TO CONTINGENT AND RESTRICTED STOCK AWARDS
AND STOCK OPTIONS
11.1 Notwithstanding any other provisions to the contrary in
Sections 7, 9, or 10 or elsewhere in this Plan, the additional provisions
described in Sections 11.1 and 11.2 shall apply to Contingent and Restricted
Stock Awards and to stock option Awards (except that Section 11.2 shall only
apply to Contingent and Restricted Stock Awards).
11.2 If a recipient of a Contingent or Restricted Stock Award has
his or her employment terminated and his or her salary continued through an
employment agreement, severance program or other comparable arrangement, then
any contingencies and restrictions which are satisfied or which would have been
satisfied during the period for which the recipient's salary is to be
continued, irrespective of form, will be deemed to have been satisfied, and
such Shares of Contingent and/or Restricted Stock shall be issued and delivered
to the recipient or such recipient's legal representative no later than the
expiration of the salaries continuation program.
11.3 Upon a Change in Control, all Options, Contingent Stock
Awards, Restricted Stock Awards, and SARs will automatically vest as of that
date and all restrictions or contingencies will be deemed to have been
satisfied.
11.4 The Committee may provide in any individual agreement in
connection with an Award that upon a Change in Control the Executive may have a
period of time to exercise such Award which period does not exceed its original
term.
12. GENERAL RESTRICTIONS
12.1 The Plan and each Award under the Plan shall be subject to the
requirement that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of the Shares subject or related thereto
upon any securities exchange or under any state or federal law, (ii) the
consent or approval of any government regulatory body, or (iii) an agreement by
the recipient of an Award with respect to the disposition of Shares, is
necessary or desirable as a condition of, or in connection with the Plan or the
granting of such Award or the issue or purchase of Shares of common stock
thereunder, the Plan will not be effective and/or the Award may not be
consummated in whole or in part unless such listing, registration,
qualification, consent, approval or agreement shall have been effected or
obtained free of any conditions not acceptable to the Committee.
B-10
<PAGE> 46
13. RIGHTS OF A SHAREHOLDER
13.1 The recipient of any Award under the Plan shall have no rights
as a shareholder with respect thereto unless and until certificates for Shares
of common stock are issued to such recipient, except for the rights provided in
Section 11 of this Plan as it pertains to Restricted Stock Awards.
14. RIGHTS TO TERMINATE EMPLOYMENT
14.1 Nothing in the Plan or in any agreement entered into pursuant
to the Plan shall confer upon any participant the right to continue in the
employment of the Company or its subsidiary or affect any right which the
Company or its subsidiary may have to terminate the employment of such
participant.
15. WITHHOLDING OF TAXES
15.1 Whenever the Company proposes, or is required, to issue or
transfer Shares under the Plan, the Company shall have the right to require the
recipient to remit to the Company an amount, or a number of shares, sufficient
to satisfy any federal, state and/or local withholding tax requirements prior
to the delivery of any certificate or certificates for such Shares. Whenever
under the Plan payments are to be made in cash, such payments shall be net of
an amount sufficient to satisfy any federal, state and/or local withholding tax
requirements.
16. NONASSIGNABILITY
16.1 No Award or benefit under the Plan shall be assignable or
transferable by the recipient thereof except by will or by the laws of descent
and distribution. During the life of the recipient, such Award shall be
exercisable only by such person or by such person's guardian or legal
representative.
17. NON-UNIFORM DETERMINATIONS
17.1 The Committee's determination under the Plan (including,
without limitation, determinations of the persons to receive Awards, the form,
amount and timing of such Awards, the terms and conditions of such Awards and
the agreements evidencing same, and the establishment of values and performance
targets) need not be uniform and may be made by the Committee selectively among
persons who receive, or are eligible to receive, Awards under the Plan, whether
or not such persons are similarly situated.
18. ADJUSTMENTS
18.1 In the event of any change in the outstanding common stock of
the Company by reason of the Restructure, a stock dividend, recapitalization,
merger, consolidation, split-up, combination, exchange of Shares or the like,
the Committee shall adjust the number of Shares of common stock which may be
issued under the Plan and shall provide for an equitable adjustment of any
outstanding Award or Shares issuable pursuant to an outstanding Award under
this Plan.
19. AMENDMENT
19.1 The Plan may be amended by the Board, without Shareholder
approval, at any time in any respect, unless Shareholder approval of the
amendment in question is required under Florida law, the Code, any exemption
from Section 16 of the Exchange Act (including without limitation SEC Rule
16b-3) for which the Company intends Section 16 Persons to qualify, any
national securities exchange
B-11
<PAGE> 47
system on which the Shares are then listed or reported, by any regulatory body
having jurisdiction with respect to the Plan, or any other applicable laws,
rules or regulations.
19.2 The termination or modification or amendment of the Plan shall
not, without the consent of a participant, affect a participant's rights under
an Award previously granted. Notwithstanding the foregoing, however, the
corporation reserves the right to terminate the Plan in whole or in part, at
any time and for any reason, provided that full and equitable compensation is
made to participants with respect to Awards previously granted.
20. EFFECT ON OTHER PLAN
20.1 Participation in this Plan shall not affect a participant's
eligibility to participate in any other benefit or incentive plan of the
Company, and any Awards made pursuant to this Plan shall not be used in
determining the benefits provided under any other plan of the Company unless
specifically provided.
21. DURATION OF PLAN
21.1 The Plan shall remain in effect until all Awards under the
Plan have been satisfied by the issuance of Shares or the payment of cash, but
no Awards shall be granted more than ten years after the date the Plan is
adopted by the Company.
22. FUNDING OF THE PLAN
22.1 This Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Award under this Plan, and
payment of Awards shall be on the same basis as the claims of the Company's
general creditors. In no event shall interest be paid or accrued on any Award
including unpaid installments of Awards.
23. GOVERNING LAW
23.1 The laws of the State of Florida shall govern, control and
determine all questions arising with respect to the Plan and the interpretation
and validity of its respective provisions
FIRST AMENDMENT TO THE
FLORIDA PHYSICIANS INSURANCE COMPANY
OMNIBUS INCENTIVE PLAN
This First Amendment to the Florida Physicians Insurance Company Omnibus
Incentive Plan (the "Plan") is made effective as of March 16, 1996.
1. Section 2.1(v) of the Plan shall be amended to read as follows:
"(v) 'Plan' means Omnibus Incentive Plan, as evidenced
herein and as amended from time to time."
All provisions of the Plan not specifically mentioned in this
First Amendment shall be considered modified to the extent necessary to be
consistent with the changes made in this First Amendment.
B-12
<PAGE> 48
SECOND AMENDMENT TO THE
OMNIBUS INCENTIVE PLAN
This Second Amendment to the Omnibus Incentive Plan (the "Plan") is made
effective as of September 14, 1997.
1. Section 4.1 of the Plan shall be amended to read as follows:
"4.1 The aggregate number of Shares which may be issued
under Options granted pursuant to the Plan shall not exceed
in the aggregate 1,165,000 Shares."
All provisions of the Plan not specifically mentioned in this Second
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this Second Amendment.
1999 AMENDMENT TO THE
OMNIBUS INCENTIVE PLAN
This 1999 Amendment to the Omnibus Incentive Plan (the "Plan") is made
effective as of June 8, 1999, subject to shareholder approval at the 1999
Annual Meeting of Shareholders.
1. Section 4.1 of the Plan shall be amended to read as follows:
"4.1 The aggregate number of Shares which may be issued
under Options granted pursuant to the Plan shall not exceed
1,665,000 Shares."
2. Section 6.2 of the Plan shall be amended to read as follows:
"6.2 The maximum number of Awards that may be awarded to
any one person during the life of the Plan shall be 600,000
Shares."
3. Section 16.1 shall be amended by the addition of the following
sentence at the end of such Section:
"Notwithstanding the foregoing, under certain circumstances
the Committee may grant (or sanction by amending an
existing grant) Nonqualified Stock Options which may be
transferred by the Optionee during his or her lifetime to
any member of his or her immediate family or a trust
established for the exclusive benefit of one or more
members of his or her immediate family or to a former
spouse pursuant to a domestic relations order. For
purposes of this Section, the term "immediate family" is
defined as an Optionee's spouse, children, stepchildren,
grandchildren (including relationships arising from legal
adoption), and parents."
All provisions of the Plan not specifically mentioned in this 1999
Amendment shall be considered modified to the extent necessary to be consistent
with the changes made in this Amendment.
B-13
<PAGE> 49
<TABLE>
<S> <C>
PROXY/VOTING INSTRUCTION CARD THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FPIC INSURANCE GROUP, INC. ANNUAL MEETING OF SHAREHOLDERS JUNE 8, 1999
</TABLE>
The undersigned shareholder hereby appoints Charles W. Emanuel, John R. Byers
and Robert B. Finch or any of them, as proxies, with full power of substitution,
to vote all shares of Common Stock that the undersigned would be entitled to
vote if personally present at the Annual Meeting of Shareholders of the Company
on June 8, 1999, and at any adjournment thereof, upon all subjects that may
properly come before the meeting, including the matters described in the proxy
statement furnished herewith, subject to any directions indicated on the other
side of this card.
If no directions are given, the proxies will vote for (1) the election of all
nominees for director listed on the other side of this card, (2) the approval of
an amendment to the Restated Articles of Incorporation as described in the proxy
statement furnished herewith, (3) the approval of amendments to the Director
Stock Option Plan as described in the proxy statement furnished herewith, (4)
the approval of amendments to the Omnibus Incentive Plan as described in the
proxy statement furnished herewith and (5) at their discretion, on any other
matters that may properly come before the meeting. The undersigned hereby
revokes any proxy heretofore given to any person or persons whomsoever (other
than the proxies named above) to vote such Common Stock and ratifies and
confirms all that such proxies may or shall do by virtue hereof.
Your vote is important! Please sign and date on the reverse and return promptly
in the enclosed postage-paid envelope or otherwise to the Company's Secretary,
Charles W. Emanuel, so that your shares can be represented at the meeting.
(Continued and to be dated and signed on reverse side.)
<PAGE> 50
(continued from other side)
<TABLE>
<S> <C> <C>
Please mark votes [X] This Proxy will be voted as directed. If no direction is
as in this made, it will be voted "FOR" the proposals set forth below.
example: The Board of Directors recommends a vote "FOR" all nominees,
a vote "FOR" amending the Restated Articles of
Incorporation, a vote "FOR" amending the Director Stock
Option Plan, and a vote "FOR" amending the Omnibus Incentive
Plan.
</TABLE>
<TABLE>
<S> <C>
1. Election of Directors: Gaston J. Acosta-Rua, M.D., Curtis E. Gause, D.D.S., Guy T. Selander, M.D., David M. Shapiro, M.D.,
James G. White, M.D.
[ ] FOR all nominees listed above. [ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
(except as marked to the contrary)
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike out that nominee's name on the list above)
2. Approval of Amendment to Restated Articles of Incorporation [ ] FOR Approval [ ] AGAINST Approval [ ] ABSTAIN
3. Approval of Amendments to Director Stock Option Plan [ ] FOR Approval [ ] AGAINST Approval [ ] ABSTAIN
4. Approval of Amendments to Omnibus Incentive Plan [ ] FOR Approval [ ] AGAINST Approval [ ] ABSTAIN
- -------------------------------------------------------------------------------------------------------------------------------
Account No.
Date: __________________________, 1999
--------------------------------------
</TABLE>
PLEASE DATE THIS PROXY AND SIGN EXACTLY AS YOUR NAME OR NAMES APPEAR HEREON.
WHERE MORE THAN ONE OWNER IS SHOWN, EACH SHOULD SIGN. WHEN SIGNING IN A
FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE GIVE FULL TITLE. IF ANY PROXY IS
SUBMITTED BY A CORPORATION, IT SHOULD BE EXECUTED IN FULL CORPORATE NAME BY A
DULY AUTHORIZED OFFICER. IF ANY PROXY IS SUBMITTED BY A PARTNERSHIP, IT SHOULD
BE EXECUTED IN THE PARTNERSHIP NAME BY AN AUTHORIZED PERSON.
