<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Schedule 14(a)
of the Securities Exchange Act of 1934
File by the Registrant /X/
Filed by a Party other than 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(c) or Rule 14a-12
THE SEIBELS BRUCE GROUP, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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>
THE SEIBELS BRUCE GROUP, INC.
COLUMBIA, SOUTH CAROLINA
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1998
TO THE SHAREHOLDERS OF THE SEIBELS BRUCE GROUP, INC.:
Notice is hereby given that the Annual Meeting of Shareholders (the
"Meeting") of The Seibels Bruce Group, Inc. ("SBIG" or the "Company"), will be
held at the offices of the Company at 1501 Lady Street, Columbia, South Carolina
29201, at 11:00 a.m., on Wednesday, May 20, 1998 for the purpose of considering
and acting upon the following:
1) The election of five (5) directors to hold office until the
2001 Annual Meeting of Shareholders or until his/her successor
shall be elected and shall qualify (Proposal 1);
2) The ratification of the Board's appointment of Arthur Andersen
LLP as auditors of the Company's books and records for the
fiscal year ending December 31, 1998 (Proposal 2);
3) The proposal to fix the number of directors at 13
(Proposal 3);
4) The proposal to adopt an amendment to the Company's Articles
of Incorporation to increase the authorized common stock of
the Company, par value $1.00 per share (the "Common Stock"),
from 12,500,000 to 20,000,000 shares (Proposal 4);
5) The proposal to amend the 1996 Stock Option Plan for Employees
(the "Incentive Plan") to increase the aggregate number of
shares available for issuance under the Incentive Plan from
1,250,000 to 2,500,000 shares of Common Stock (Proposal 5);
and
6) The transaction of such other business as may properly and
lawfully come before the Meeting or any adjournment thereof.
All of the foregoing is more fully set forth in the Proxy Statement
accompanying this Notice.
The transfer books of the Company will close as of the end of business on
March 23, 1998 (the "Record Date") for purposes of determining shareholders who
are entitled to notice of and to vote at the Meeting, but will not be closed for
any other purpose.
All shareholders are cordially invited to attend the Meeting in person. If
you cannot attend the Meeting, please take the time to promptly sign, date and
mail the enclosed proxy in the envelope we have provided. If you attend the
Meeting and decide that you want to vote in person, you may revoke your proxy.
The Board of Directors recommends that you vote in favor of the nominees for
directors and the described proposals to be considered at the Meeting.
By Order of the Board of Directors
/s/ Priscilla C. Brooks
-------------------------
Priscilla C. Brooks
Corporate Secretary
April 13, 1998
<PAGE>
THE ACCOMPANYING PROXY FORM IS SOLICITED BY THE BOARD OF DIRECTORS AND IS
REVOCABLE AT ANY TIME PRIOR TO BEING EXERCISED. THE PROXY WILL BE VOTED IN
ACCORDANCE WITH THE SPECIFICATIONS THEREON. IF A CHOICE IS NOT INDICATED,
HOWEVER, THE PROXY WILL BE VOTED IN FAVOR OF THE NOMINEES FOR DIRECTORS, IN
FAVOR OF THE DESCRIBED PROPOSALS TO BE CONSIDERED AT THE MEETING, AND IN THE
BEST JUDGMENT OF THE PROXIES CONCERNING ALL OTHER PROPOSALS CONSIDERED AT THE
MEETING.
THE SEIBELS BRUCE GROUP, INC.
1501 Lady Street
Columbia, South Carolina 29201
PROXY STATEMENT FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 20, 1998
General
This Proxy Statement is furnished to the holders of common stock, par value
$1.00 per share (the "Common Stock"), of The Seibels Bruce Group, Inc. ("SBIG"
or the "Company"), in connection with the solicitation of proxies by the Board
of Directors of the Company to be voted at the Annual Meeting of Shareholders
(the "Meeting") to be held at the time and place and for the purposes specified
in the accompanying Notice of Annual Meeting of Shareholders and at any
adjournments thereof. It is anticipated that this Proxy Statement will be mailed
to shareholders commencing on or about April 13, 1998.
When the enclosed proxy is properly executed and returned, the shares which
it represents will be voted at the Meeting in accordance with the instructions
thereon. In the absence of any such instructions, the shares represented thereby
will be voted in favor of the nominees for directors and the described proposals
to be considered at the Meeting and in the best judgment of the proxies
concerning all other proposals considered at the Meeting.
Any shareholder who executes and delivers a proxy may revoke it prior to
its use by (i) giving written notice of such revocation to the Corporate
Secretary of SBIG at Post Office Box One, Columbia, South Carolina 29202, the
Company's mailing address; or (ii) executing and delivering to the Corporate
Secretary of SBIG (by mail at Post Office Box One, Columbia, South Carolina
29202, or by delivery at 1501 Lady Street, Columbia, South Carolina 29201) a
proxy bearing a later date; or (iii) appearing at the Meeting and voting in
person.
Annual Report
The Company's 1997 Annual Report, including Financial Statements, is
enclosed with this Proxy Statement. The Form 10-K Annual Report to the
Securities and Exchange Commission provides certain additional information.
Shareholders may obtain a copy of this Form 10-K Annual Report without charge
upon written request addressed to Corporate Secretary, The Seibels Bruce Group,
Inc., Post Office Box One, Columbia, South Carolina 29202. If the person
requesting a copy is not a shareholder of record, the request must include a
representation that he or she is a beneficial owner of the Company's Common
Stock.
Expenses of Solicitation
The cost of soliciting proxies will be borne by the Company. Officers,
directors, employees and agents of the Company may solicit proxies by telephone,
telegram or personal interview, without additional compensation.
Voting
Only holders of record of issued and outstanding shares of Common Stock, as
of March 23, 1998 (the "Record Date") will be entitled to notice of and to vote
at the Meeting. On the Record Date, there were 7,729,489 shares of Common Stock
outstanding. Each share of Common Stock is entitled to one vote, except with
respect to Proposal 1, as described below.
In accordance with applicable state law and the Company's Articles of
Incorporation and Bylaws,
<PAGE>
abstentions and "broker non-votes" will be counted for purposes of determining
whether a quorum is present. "Broker non-votes" occur when a broker or other
nominee holding shares for a beneficial owner does not vote on a proposal
because the beneficial owner has not checked the applicable box on the proxy
card. With respect to Proposal 1, abstentions and "broker non-votes" will not
count as either a vote "FOR" or "AGAINST" such Proposal. With respect to
Proposals 2, 3 and 5, abstentions will be considered entitled to vote and thus
will have the effect of a vote "AGAINST" such Proposals while "broker non-votes"
will not be considered entitled to vote and thus will not be counted as a vote
"FOR" or "AGAINST" such Proposals. With respect to Proposal 4, abstentions and
"broker non-votes" will have the effect of a vote "AGAINST" such Proposal.
In connection with Proposal 1, the election of directors, each shareholder
is allowed to cumulate his or her votes and cast as many votes as the number of
shares he or she holds multiplied by the number of directors to be elected, the
same to be cast for any one candidate or distributed among any two or more
candidates. For shares to be voted cumulatively, a shareholder who has the right
to cumulate his or her votes shall either (1) give written notice of his or her
intention to the President or another officer of the Company not less than 48
hours before the time fixed for the Meeting, which notice must be announced in
the Meeting before the voting, or (2) announce his or her intention in the
Meeting before the voting for directors commences; and all shareholders entitled
to vote at the Meeting shall without further notice be entitled to cumulate
their votes. Directors will be elected by a plurality of the votes cast.
If a quorum is present: (i) those five nominees who receive the greatest
number of votes cast for the election of directors at the Meeting will become
directors of the Company at the conclusion of the tabulation of the votes; (ii)
the affirmative vote of the holders of a majority of the shares of Common Stock
present in person or by proxy at the Meeting will be required to approve
Proposals 2, 3 and 5, and (iii) the affirmative vote of two-thirds of the shares
of Common Stock outstanding on the Record Date will be required to approve
Proposal 4. Also, in order for Proposal 5 to be approved, Proposal 4 must be
approved. If Proposal 4 is not approved by the shareholders, then Proposal 5
will not be approved.
Participants in the Company's Dividend Reinvestment and Shareholder
Purchase Plan (the "DRSP Plan") who have shares of Common Stock registered in
their names and who vote those shares on any matter submitted to the Meeting
will have all shares credited to their accounts under the DRSP Plan
automatically added to that number and voted in the same manner. If such
participants do not vote shares registered in their own names, the shares
credited to their account in the DRSP Plan will not be voted. An executed proxy
will be deemed to include any DRSP shares and will be voted with respect to
those shares credited to the participant's account. If a participant desires to
vote DRSP Plan shares in person at the Meeting, a proxy for the shares credited
to his or her account will be furnished upon written request received by the
Company, at the address set forth on the cover of this Proxy Statement, at least
fifteen (15) days prior to the date of the Meeting.
1. ELECTION OF DIRECTORS (PROPOSAL 1)
One of the purposes of the Meeting is to elect five (5) directors to serve
until the 2001 Annual Meeting of Shareholders.
Under the Company's Articles of Incorporation, as amended, and Article 3,
Section 2 of the Company's Bylaws, the Board of Directors is divided into three
classes which shall be as nearly equal in number as possible, with the members
of each class serving for three year terms or until their successors are elected
or qualified.
The shares represented by the proxies solicited hereby will be voted in
favor of the election of the persons named below unless authorization to do so
is withheld in the proxy. In the event any of the nominees should be unavailable
to serve as a director, which contingency is not presently anticipated, it is
the intention of the persons named in the proxies to select and cast their votes
for the election of such other person or persons as the Board of Directors may
designate.
Pursuant to the terms of the Stock Purchase Agreement dated as of
December 22, 1993 (the "Alissa Purchase Agreement") between the Company and
Abdullatif Ali Alissa Est. and Saad A. Alissa (the "Alissa Group"), the Alissa
Group requested the resignation of their designees to the Board, due to the fact
that the number of shares held by the Alissa Group decreased below 25% of the
outstanding shares of the Company. On July 1,
2
<PAGE>
1997, Albert H. Cox, Jr. resigned from the Board, and William M. Barilka and
Fred S. Clark resigned as of July 24, 1997. On July 24, 1997, A. Crawford
Clarkson, Jr. and Susie H. VanHuss, PhD. were appointed by the Board to fill
two (2) of the vacancies and James L. Zech was elected on December 9, 1997,
by unanimous written consent of the Company's Board, to fill another vacancy
on the Board. Mr. Clarkson, Dr. VanHuss and Mr. Zech are being recommended to
the shareholders to be elected to a three (3) year term expiring in 2001.
Claude E. McCain and Kenneth W. Pavia, whose terms each expire at the
Meeting, are being recommended to the shareholders to be elected to a three
(3) year term expiring in 2001.
All nominees for election to the Board of Directors are considered and
recommended by a Nominating Committee of the Board of Directors. (See
"Committees of the Board of Directors.") The full Board of Directors
considers the recommendations of that Committee and recommends the nominees
to the shareholders. The Company has no procedure whereby nominations are
solicited or accepted from shareholders, but the Nominating Committee will
consider nominees whose names and business experience are submitted in
writing by shareholders to the Corporate Secretary of the Company.
Vote Required and Board Recommendation
The affirmative vote of a plurality of votes cast is required to elect
directors. The Board of Directors recommends a vote FOR each of the nominees
listed below.
The following information is set forth with respect to the five (5)
nominees for election to be directors as well as the other members of the Board
of Directors.
<TABLE>
<CAPTION>
Name, Age and Principal Employment for Past Five Years Director
Since
<S> <C>
Nominees for Election to Hold Office until the 2001
Annual Meeting of Shareholders:
A. Crawford Clarkson, Jr., 78, is currently a director of the Company. He 1997
is a Certified Public Accountant and attorney. Mr. Clarkson served as
Commissioner of the South Carolina Tax Commission from 1987 until 1995, of which
he was appointed Chairman in 1992. Prior to 1987, he was a senior partner of the
CPA firm of Clarkson, Harden & Gantt, which eventually combined with other firms
to become Ernst & Young.
Claude E. McCain, 73, is currently a director of the Company. He is also 1995
Chairman of H.C. McCain Agency, Inc., President of McCain Realty, Inc. and
President of Insurance Finance Company, Inc. He was formerly a member of the
South Carolina State Insurance Commission for 15 years, 10 of which he served as
Chairman. Mr. McCain has been in the insurance business since 1946.
Kenneth W. Pavia, 55, is currently a director of 1995
the Company. He is General Partner of Bolero Investment Group, a position he has
held since 1994. He also holds the office of Chairman of FHI, Inc., a securities
holding company and Fiduciary Leasco, Inc., a leasing company, a position held
since 1985.
Susie H. VanHuss, PhD., 58, is currently a director of the Company. She 1997
currently serves as Executive Director of the USC Foundations at the University
of South Carolina. From 1974 through 1997, Dr. VanHuss served as a Professor and
as Program Director of management at the University of South Carolina. Prior to
serving as Program Director, she served as Interim Dean of the School of
Business Administration, also at the University of South Carolina.
James L. Zech, 40, is currently a director of the Company. He currently 1997
holds the office of President of the High Ridge Capital LLC, a position he has
held since August 1995. From 1992 through 1995, Mr. Zech was Managing Director
of S. G. Warburg & Co., Inc. He also is a director of Front Royal Group, Inc. a
privately held company based in Raleigh, N.C., and Acoridia, Inc., based in
Indianapolis Indiana.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Name, Age and Principal Employment for Past Five Years Director Since
<S> <C>
Directors Continuing in Office until the 1999 Annual Meeting of Shareholders:
Walker S. Powers, 43, is currently a director of the Company and has been a 1997
member of the management of SADISCO Corporation, an automobile salvage company
based in Florence, South Carolina ("SADISCO") since 1975. Mr. Powers served as
SADISCO's President from 1993 through 1994. Mr. Powers was designated by the
Powers Group to serve on the Board of Directors. Walker S. Powers is the son of
Charles H. Powers.
Ernst N. Csiszar, 47, is currently a director and since June 1995 has held 1995
the office of President and since January 1996 has held the office of Chief
Executive Officer of the Company and all of its subsidiaries. From 1988 until
1997, He served as a visiting professor at the School of Business, University of
South Carolina. Prior to 1988, he served as Managing Director of Holborn
Holdings Limited, an international merchant banking firm based in Geneva,
Switzerland.
John P. Seibels, 56, is currently a director of the Company. He also holds 19691
a directorship with Policy Management Systems Corporation. Mr. Seibels has been
an investor based in Columbia, South Carolina since March 1963. George R.P.
Walker, Jr. and John P. Seibels are cousins.
John A. Weitzel, 52, is currently a director and since September 1995 has 1995
held the office of Chief Financial Officer of the Company and all of its
subsidiaries. From April 1985 to November 1994, he served as Chief Financial
Officer of Milwaukee Insurance Group, Inc. From March through August 1995, Mr.
Weitzel acted as a consultant to the Company.
Directors Continuing in Office until the 2000 Annual
Meeting of Shareholders:
Charles H. Powers, 71, is currently a director of the Company and is the 1997
owner and operator of SADISCO, a position he has held since 1964. He is also a
Vice President and Treasurer of Holland Grills, in Apex, North Carolina, and
President of PC Inc., in Myrtle Beach, South Carolina. Walker S. Powers is the
son of Charles H. Powers. Mr. Powers was designated by the Powers Group to serve
on the Board of Directors.
Frank H. Avent, 56, is currently a director of the Company. He is a 1997
director, President and General Manager of Pepsi Cola Bottling Company of
Florence, South Carolina, a position he has held since 1963. Mr. Avent also
serves as a member of the Board of Directors of Atlantic Broadcasting Company,
Carolina Canners, Carotex, and Quality Financial Services. Mr. Avent was
designated to serve on the Board of Directors by the Avent Group.
George R.P. Walker, Jr., 65, is currently a director of the Company and has 19691
been the owner and operator of Middlefield Farm (Hanoverian horse farm),
Blythewood, South Carolina, for more than the past five years. George R.P.
Walker, Jr. and John P. Seibels are cousins.
John C. West, 75, is currently Chairman of the Board of Directors of the 1994
Company. He was the Governor of the State of South Carolina from 1971 to 1975,
and currently serves as Professor at the University of South Carolina and as a
practicing attorney. Mr. West also serves as a member of the Board of Directors
of Donaldson, Lufkin & Jenrette, Inc.
</TABLE>
- -----------------
1 Each present director of the Company with election dates prior to October
1978 (when the Company became the parent of the South Carolina Insurance
Company ("SCIC"), the Company's principal subsidiary) was formerly a Director
of SCIC and the information set forth as to periods prior to 1978 reflects
positions with SCIC and the year such Director was first elected to the SCIC
Board of Directors.
4
<PAGE>
Committees of the Board of Directors
The Board of Directors of the Company has five standing committees:
Executive, Audit, Compensation, Investment and Nominating.
The Executive Committee is currently composed of John C. West
(Chairman), Ernst N. Csiszar, Claude E. McCain, Charles H. Powers, John P.
Seibels, George R.P. Walker, Jr., and James L. Zech. The Executive Committee
exercises the same powers as the Board of Directors, except as otherwise
limited by specific prohibitions in South Carolina statutes. The Committee's
function is to act in the place of the Board on any matters which require
Board action and occur between meetings of the Board. The Executive Committee
did not meet during 1997.
The Audit Committee is currently composed of John P. Seibels (Chairman),
A. Crawford Clarkson, Jr., Claude E. McCain and James L. Zech, none of whom
is an officer or employee of the Company. The Committee's functions include
recommending independent public accountants to be employed by the Company,
reviewing with the independent public accountants their reports and audits,
and reporting to the full Board of Directors on their findings. The Audit
Committee met two (2) times during 1997.
The Compensation Committee is currently composed of Kenneth W. Pavia
(Chairman), Frank H. Avent, A. Crawford Clarkson, Jr. and Charles H. Powers,
none of whom is an officer or employee of the Company. The Committee's
functions are to recommend to the full Board the remuneration arrangements
for senior executive officers and for members of the Board of Directors, the
adoption of compensation plans in which officers and directors are eligible
to participate and the granting of stock options or other benefits under such
plan. The Compensation Committee met four (4) times in 1997.
The Investment Committee is currently composed of Claude E. McCain
(Chairman), Ernst N. Csiszar and Walker S. Powers. The Committee's functions
are to advise the Board of Directors and officers of the Company with respect
to investment of the Company's assets and to periodically review, evaluate
and report on the performance of the investments of the Company and its
subsidiaries. The Investment Committee met five (5) times in 1997.
The Nominating Committee is currently composed of George R.P. Walker,
Jr. (Chairman), Susie H. VanHuss, PhD. and John C. West. The Committee's
functions include selecting and recommending nominees for election as new,
additional, and replacement directors and reviewing the performance of
incumbent directors for nomination for re-election. The Nominating Committee
met two (2) times in 1997.
The Board of Directors met seven (7) times in 1997. In 1997, each of the
incumbent directors attended at least 75% of the meetings of the Board and of
the Committee(s) of which he or she was a member held during the period for
which he or she served.
Security Ownership of the Company
The following table sets forth, as of January 31, 1998, information
regarding the beneficial ownership of the Company's Common Stock by the
directors of the Company, nominees for election, each executive officer named
in the Summary Compensation Table that appears under "Executive Compensation
- --Summary Compensation Table," all directors and executive officers as a
group and each person known to the Company to own 5% or more of its Common
Stock.
5
<PAGE>
<TABLE>
<CAPTION>
Name of Beneficial Owner (and address, with Amount and Nature of Percent of Shares of
respect to non-directors or non-officers) Beneficial Ownership Common Stock 1
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Frank H. Avent 521,250 2 6.52
A. Crawford Clarkson, Jr. 5,025 0.07
Ernst N. Csiszar 91,669 3 1.17
Claude E. McCain 5,016 4 0.06
Kenneth W. Pavia 2,500 5 0.03
Charles H. Powers 1,890,801 6,7 22.80
Walker S. Powers 363,750 6,8 4.64
John P. Seibels 154,227 4,9 1.99
Susie H. VanHuss, PhD. 1,775 0.02
George R.P. Walker, Jr. 129,214 4,10 1.67
John A. Weitzel 33,333 11 0.43
John C. West 95,194 12 1.22
James L. Zech 703,124 6,13 8.34
</TABLE>
- --------
1 The numbers shown include the shares which are not currently outstanding
but which certain shareholders are entitled to acquire or will be
entitled to acquire within 60 days.
2 Includes 10,000 shares of Common Stock and 11,250 shares of Common Stock
underlying certain options for which Mr. Avent has sole voting power and
250,000 shares of Common Stock and 250,000 shares of Common Stock underlying
certain options as to which he has shared voting power beneficially owned
(shared voting and disposition power) by Pepsi Cola Bottling Company of
Florence, South Carolina ("PepsiCo"). Mr. Avent has informed the Company
that he is the President and General Manager of PepsiCo. Mr. Avent's address
is Post Office Box 3886, Florence, South Carolina 29502. Excludes an
aggregate of 30,000 shares of Common Stock and 30,000 shares of Common Stock
underlying certain options owned by Mr. Avent's three daughters, of which
shares he holds neither sole nor shares voting or dispositive power and,
therefore, disclaims beneficial ownership.
3 Includes 91,669 shares of Common Stock underlying certain options.
4 Includes 3,750 shares of Common Stock underlying certain options.
5 Includes 2,500 shares of Common Stock underlying certain options.
6 The Powers Group, in a Stock Option Purchase Agreement dated November 20,
1997 by and among The Seibels Bruce Group, Inc., Charles H. Powers,
Walker S. Powers, Rex Huggins, Jane Huggins and High Ridge Capital Partners
LLC, High Ridge Capital Partnership (the "Agreement") sold rights to certain
options pursuant to the Stock Option Agreement dated January 30, 1996, by
and among The Seibels Bruce Group, Inc., Charles H. Powers, Walker S.
Powers, Rex Huggins and Jane Huggins. Under the Agreement, the Powers Group
sold rights to 1,406,248 stock options under the same terms as set out in
the Agreement dated January 30, 1996, and issuable upon the exercise of
said options. Of the 1,406,248 stock options, 703,124 are pending approval
of certain regulatory authorities. Once approval is received, the remainder
of the Agreement will be consummated and the options will be transferred to
High Ridge Partnership, in accordance with the Agreement. In addition, the
Powers Group also sold certain rights under a similar Agreement dated
November 20, 1997, by and among The Seibels Bruce Group, Inc., Charles H.
Powers, Walker S. Powers, Rex and Jane Huggins and IBS Consulting LLC, of
certain option rights issuable upon the exercise of options pertaining to
156,250 stock options. This transaction has been consummated.
7 Includes 1,327,051 shares of Common Stock and 562,500 shares of Common Stock
underlying certain options pending regulatory approval as to certain
Agreements, and 1,250 shares of Common Stock underlying certain options.
Excludes 62,500 shares of Common stock and 28,124 shares of Common Stock
underlying certain options pending regulatory approval, held by Mr. Powers'
daughter and son-in-law, of which shares, he holds neither sole nor shares
voting or dispositive power and, therefore, disclaims beneficial ownership.
8 Includes 250,000 shares of Common Stock and 112,500 shares of Common Stock
underlying certain options pending regulatory approval, and 1,250 shares of
Common Stock underlying certain options.
9 Excludes 2,253 shares of Common Stock held by Mr. Seibels' wife, of which
shares he holds neither sole nor shared voting or dispositive power and,
therefore, disclaims beneficial ownership.
10 Excludes 11,389 shares of Common Stock held by Mr. Walkers's wife, of which
shares he holds neither sole nor shared voting or dispositive power and,
therefore, disclaims beneficial ownership.
11 Includes 28,333 shares of Common Stock underlying certain options.
12 Includes 86,669 shares of Common Stock underlying certain options.
13 The share ownership for (i) High Ridge LLC is jointly filed with (ii) High
Ridge Capital Partnership, (iii) HRC General Partner Limited Partnership,
(iv) James L. Zech and (v) Steven J. Tynan. The information was reported
on Form 13D dated November 26, 1997 and filed with the Securities and
Exchange Commission. Excludes
6
<PAGE>
<TABLE>
<CAPTION>
Name of Beneficial Owner (and address, with Amount and Nature of Percent of Shares of
respect to non-directors or non-officers) Beneficial Ownership Common Stock 14
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Steven M. Armato 24,999 15 0.32
Michael A. Culbertson 22,449 16 0.29
James P. Donnelly 12,793 17 0.17
Robert L. Lippert 20,842 18 0.27
All Directors, Nominees for 4,077,961 19 42.27
Director and Executive
Officers as a Group
Principal Holders
Avent Group 818,750 20 10.06
Franklin Resources, Inc. 587,500 21 7.60
Goldman Sachs & Co. 520,500 22 6.73
High Ridge Capital, LLC 703,124 8.34
Powers Group 2,345,175 23 27.80
Wellington Management Company LLP 430,000 24 5.56
</TABLE>
*All numbers reflect a one for four reverse stock split effected April 10, 1997.
- ------------------------------------------------------------------------------
703,124 shares of Common Stock underlying certain options which are
subject to regulatory approval. Once regulatory approval is received the
transaction will be consummated. The principal address for (i), (ii),
(iii), (iv), and (v) is 107 Elm Street, Four Stamford Plaza, Post Office
Box 120043, Stamford, Connecticut 06912-0043.
14 The numbers shown include the shares which are not currently outstanding
but which certain shareholders are entitled to acquire or will be
entitled to acquire within 60 days.
15 Excludes 2,500 shares held by Mr. Armato's wife, of which shares he holds
neither sole nor shared voting or dispositive power and, therefore,
disclaims beneficial ownership and includes 16,198 shares of Common Stock
underlying certain options.
16 Includes 16,198 shares of Common Stock underlying certain options.
17 Includes 9,499 shares of Common Stock underlying certain options.
18 Includes 13,948 shares of Common Stock underlying certain options.
19 Includes 1,918,138 shares of Common Stock underlying certain options as
held by the above individuals.
20 Includes 260,000 shares of Common Stock and 261,250 shares of Common
Stock underlying certain options for which Mr. Frank Avent, a director of
the Company, either owns individually or shares voting and dispositive
power and (ii) 148,750 shares of Common Stock and 148,750 shares of
Common Stock underlying certain options which are owned by other members
of the Avent Group. The address for the Avent Group is Post Office Box
3886, Florence, South Carolina 29502.
21 The share ownership for Franklin Resources, Inc. is based on a Form 13G
dated February 9, 1998 and filed with the Securities and Exchange
Commission. The shares owned by (i) Franklin are beneficially owned by
(ii) Charles B. Johnson, a principal shareholder of Franklin, and (iii)
Rupert H. Johnson, Jr., a principal shareholder of Franklin, and (iv)
Franklin Advisers, Inc., investment advisor for Franklin. The principal
address for (i), (ii) and (iii) is 777 Mariners Island Boulevard, San
Mateo, California 94404, and the principal address for (iv) is One Parker
Plaza, Sixteenth Floor Fort Lee, New Jersey 07024.
22 The share ownership for (i) Goldman, Sachs & Co. is jointly filed with
the (ii) Goldman Sachs Group, LP and (iii) Goldman Sachs Trust on behalf
of GS Small Cap Value Fund based on a Form 13G dated February 17, 1998
and filed with the Securities and Exchange Commission. The principal
address for (i) and (ii) is 85 Broad Street, New York, New York 10004 and
he principal address for (iii) is 1 New York Plaza, New York, New York
10004.
23 Includes (i) 1,327,051 shares of Common Stock and 563,750 shares of
Common Stock underlying certain options which are owned by Mr. Charles H.
Powers, a director of the Company, (ii) 250,000 shares of Common Stock
and 113,750 shares of Common Stock underlying certain options which are
owned by Walker S. Powers, a director of the Company, and (iii) 62,500
shares of Common Stock and 28,124 shares of Common Stock underlying
certain options owned by Mr. Charles Powers' daughter and son-in-law. The
address for the Powers Group is Post Office Box 6525, Florence, South
Carolina 29502.
24 The share ownership for Wellington Management Company, LLP is based on
information provided in a 13G dated February 10, 1998 and filed with the
Securities and Exchange Commission. Amount beneficially owned is 430,000
with shared voting power of 280,000 and shared power to dispose or to
direct the disposition of 430,000. The principal address is 75 State
Street, Boston Massachusetts 02109
7
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Compensation of Directors
In 1997, the Company paid quarterly to each director who was not a
full-time employee of the Company a retainer fee of $500 per month plus $750
for each meeting of the Board at which the director was present, and a fee of
$500 for each meeting of a Board Committee which he attended. A fee of $1,000
is paid to a director who serves as a Chairman of a Board Committee for
attendance at such meeting. Pursuant to the Company's 1995 Stock Option Plan
for Non-Employee Directors, on June 16, 1997, each non-employee director
serving on that date was granted a non-statutory stock option with a right to
buy 1,250 shares of Common Stock. The exercise price of each option is
$7.1875, which was 100% of the fair market value per share of Common Stock on
the date the option was granted. Employee directors receive no compensation
for Board services. The Chairman of the Board, John C. West, does not receive
any additional director compensation in connection with his position as
Chairman of the Board of Directors but does receive a salary as an employee
of the Company.
Compensation of Executive Officers
The following table sets forth, for the years ended December 31, 1997,
1996 and 1995, the cash compensation paid by the Company and its
subsidiaries, as well as certain other compensation paid or accrued for those
years, to each of the Chief Executive Officers and the four most highly
compensated executive officers of the Company and such subsidiaries, other
than the Chief Executive Officer, whose compensation was in excess of
$100,000 (the "Executive Group"), in all capacities in which they serve.
Summary Compensation Table
---------------------------
<TABLE>
<CAPTION>
Long-Term Compensation
---------------------------------
Annual Compensation Awards Payouts
-------------------------------- ----------------------- -------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Principal Salary Bonus Compensations Award Option Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John C. West ............ 1997 108,000 0 0 0 0 0 0
Chairman of the Board ... 1996 86,954 25,000 0 0 50,001 0 0
1995 141,785 0 15,625 1 0 70,001 0 0
Ernst N. Csiszar ........ 1997 225,000 0 0 0 0 0 0
President and Chief ..... 1996 144,000 50,000 0 0 50,001 0 0
Executive Officer ....... 1995 119,154 0 0 0 75,001 0 0
John A. Weitzel ......... 1997 165,600 0 20,000 0 0 0 0
Chief Financial Officer 1996 144,000 25,000 0 0 25,000 0 0
1995 33,231 0 0 0 25,000 0 0
James P. Donnelly ....... 1997 107,477 0 0 10,500 25,147 0 0
Chief Information Officer
Michael A. Culbertson ... 1997 103,505 0 5,308 11,495 34,104 0 0
Senior Vice President
Steven M. Armato ........ 1997 103,505 0 2,289 11,495 34,103 0 0
Vice President-Adm
Robert L. Lippert ....... 1997 103,505 7,500 0 11,495 34,005 0 0
Vice President
</TABLE>
- -------
1 The amount shown represents the dollar value of the difference between the
price paid by the executive officer for shares upon the exercise of stock
options and the fair market value at the date of exercise.
8
<PAGE>
Option Grants
During the year ended December 31, 1997, the Company granted a total of
75,250 stock options to certain members of the Executive Group pursuant to
the Company's 1996 Stock Option Plan for Employees. The following table sets
forth the grants during the year ended December 31, 1997.
Options/SAR Grants During the Year Ended December 31, 1997
----------------------------------------------------------
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Potential Realizable Value at
Underlying Options/ Exercise Assumed Rates of Stock Price
Options/ SARs or Base Appreciation for Option Term
SARs Granted to Price Expiration ($)
Name Granted (#) Employees ($/Share) Date 5% 1 10%
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John C. West 0 0% N/A N/A N/A N/A
Ernst N. Csiszar 0 0% N/A N/A N/A N/A
John A. Weitzel 0 0% N/A N/A N/A N/A
James P. Donnelly 2,500 1.01% $8.25 1/02/2002 $5,699 $12,592
7,000 2.82% $10.00 4/28/2002 $0 $1,869
7,000 2.82% $16.00 4/28/2002 $0 $0
7,000 2.82% $22.00 4/28/2002 $0 $0
Michael A. Culbertson 5,750 2.32% $10.00 4/28/2002 $0 $1,536
5,750 2.32% $16.00 4/28/2002 $0 $0
5,750 2.32% $22.00 4/28/2002 $0 $0
Steven M. Armato 5,750 2.32% $10.00 4/28/2002 $0 $1,536
5,750 2.32% $16.00 4/28/2002 $0 $0
5,750 2.32% $22.00 4/28/2002 $0 $0
Robert L. Lippert 5,750 2.32% $10.00 4/28/2002 $0 $1,536
5,750 2.32% $16.00 4/28/2002 $0 $0
5,750 2.32% $22.00 4/28/2002 $0 $0
</TABLE>
- --------
1 Assumed for illustrative purposes only.
9
<PAGE>
Option Exercises and Year-End Holdings
During the year ended December 31, 1997, members of the Executive Group
exercised a total of 5,000 stock options. The following table sets forth certain
information with respect to unexercised stock options held by the Executive
Group as of December 31, 1997.
Aggregated Option/SAR Exercises During the Year
Ended December 31, 1997 and 1997 Year-End Option/SAR Values
-----------------------------------------------------------
<TABLE>
<CAPTION>
Shares
Acquired Number of Securities Value of Unexercised
On Value Underlying Unexercised In-The-Money Options/SARs
Exercise Realized Options/SARs at Year-End at Fiscal Year- End
Name (#) ($) (#) Exercisable/Unexercisable Exercisable/Unexercisable
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John C. West 0 N/A 86,669/33,333 $105,001/$0
Ernst N. Csiszar 0 N/A 91,669/33,333 $125,001/$0
John A. Weitzel 5,000 $20,000 28,333/16,667 $85,000/$0
James P. Donnelly 0 N/A 9,499/14,001 $0/$0
Michael A. Culbertson 0 N/A 16,198/16,102 $3,484/$0
Steven M. Armato 0 N/A 16,198/16,102 $3,484/$0
Robert L. Lippert 0 N/A 13,948/15,602 $0/$0
</TABLE>
Employment Agreements
During 1997, there were no formal employment contracts between any
Executive Officer and the Company. Any issue relating to executive
compensation would be reviewed by the Compensation Committee, which would
recommend a course of action to the Board of Directors.
Report of the Compensation Committee on Executive Compensation
The Compensation Committee of the Company's Board of Directors is
responsible for recommending to the full Board the remuneration arrangements
for senior executive officers and for members of the Board of Directors, the
adoption of compensation plans in which officers and directors are eligible
to participate and the granting of stock options or other benefits under such
plan. The primary elements of the Company's executive compensation program
have historically consisted of a base salary, a bonus opportunity and stock
options. Base salaries are determined, and have at times been increased, by
evaluating the responsibilities of the position held and the experience of
the executive officer. Overall compensation is based on the Compensation
Committee's assessment of prevailing market compensation levels.
Base Salary. The Compensation Committee reviewed the salaries of John C.
West, Ernst N. Csiszar and John A. Weitzel (the "Named Executive Officers").
The Compensation Committee recommended to the Board of Directors that the
base salaries as approved for 1997 should remain in place and that the
compensation of the Named Executive Officers be reviewed on a six-month
basis. The next review should occur on or about June 30, 1998. The Board
approved the recommendation.
Bonus Opportunity. A bonus, if any, is based upon the operations of the
Company and recommendations by the Compensation Committee. No bonuses have
been paid to the Named Executive Officers based on their performances during
1997.
10
<PAGE>
Stock Options. The Compensation Committee recommended and the Board
approved a grant of options to each of the Named Executive Officers. The
Compensation Committee believes stock option grants to these officers (and
other employees) promote success by aligning employee financial interests
with long-term shareholder value. Stock option grants are based on various
subjective factors primarily relating to the responsibilities of the
individual Named Executive Officers, their expected future contributions and
prior option grants.
The compensation paid to other executive officers was not determined by
this Compensation Committee. Currently, compensation for executive officers
other than the Named Executive Officers noted above, is determined by the
Chief Executive Officer based on the performance of each individual.
The foregoing has been provided by the Company's Compensation Committee.
Kenneth W. Pavia (Chairman) A. Crawford Clarkson, Jr.
Frank H. Avent Charles H. Powers
The report of the Compensation Committee shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as amended (together,
the "Acts"), except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed filed under
such Acts.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is or was formerly an
officer or employee of the Company or any of its subsidiaries.
11
<PAGE>
Stock Performance Chart
The following chart compares the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock during the
five years through December 1997 with the cumulative total return on the
NASDAQ Stock Market (U.S. companies) Index and the NASDAQ Fire, Marine and
Casualty Insurance Stock Index.
Comparison of Five Year-Cumulative Total Returns
Performance Graph for
The Seibels Bruce Group Inc.
Prepared by the Center for Research in Security Prices
Produced on 02/20/98 including data to 12/31/97
[GRAPHIC OMITTED]
<TABLE>
<CAPTION>
Legend
Symbol CRSP Total Returns Index for: 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
- ------ ----------------------------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
o The Seibels Bruce Group Inc. ....... 100.0 93.3 133.3 80.0 110.0 100.0
e NASDAQ Stock Market (US Companies) . 100.0 114.8 112.2 158.7 195.2 239.5
_ NASDAQ Stocks (SIC 6330-6339 US Companies 100.0 103.0 99.1 139.0 150.7 228.9
Fire, Marine, and Casualty Insurance
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on
the previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 12/31/92.
The stock price performance graph shall not be deemed incorporated by
reference by any general statement incorporating by reference this proxy
statement into any filing under the Acts, except to the extent that the
Company specifically incorporates this information by reference, and shall
not otherwise be deemed filed under such Acts.
12
<PAGE>
Certain Transactions
In February 1997, the Company received a promissory note by Michael D.
Faoro and Jeanne L. Faoro in exchange for $125,100. At that time, Mr. Faoro
was the Company's Group Vice President of Risk Operations. The Promissory
Note was paid in full in March, 1997, including interest at a rate of 7.5%.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who own more than ten
percent of the Company's equity securities to file initial reports of
ownership and changes in ownership with the Securities and Exchange
Commission and to furnish the Company with all such forms they file. Based
solely on the Company's review of the forms it has received and on written
representations from certain reporting persons that no such forms were
required for them, the Company believes that for the fiscal year ended
December 31, 1997, the Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent beneficial owners were in
compliance, with the exception of Charles H. Powers who filed a late Form 4
relating to certain shares transferred.
2. RATIFICATION OF SELECTION OF ARTHUR ANDERSEN LLP TO BE INDEPENDENT
ACCOUNTANTS FOR THE COMPANY (PROPOSAL 2)
One of the purposes of the Meeting is to ratify the selection of
independent accountants to audit the books, records, and accounts of the
Company and its subsidiaries for the year ending December 31, 1998. Arthur
Andersen LLP has served as the Company's independent accountants since
December 28, 1992. On January 29, 1998, acting on the recommendation of the
Audit Committee, the Board of Directors adopted resolutions directing the
employment of Arthur Andersen LLP to audit the books, records, and accounts
of the Company for 1998 and the submission of the selection to the
shareholders for ratification. Accordingly, the Board recommends the adoption
of the following resolution:
RESOLVED, that the selection by the Board of Directors of the firm of
Arthur Andersen LLP to audit the books, records, and accounts of the
Company and its subsidiaries for the year ending December 31, 1998, be
ratified.
A representative of Arthur Andersen LLP is expected to be present at the
Meeting and will have the opportunity to make a statement, and will be
available to answer questions from Shareholders. Approval by the Shareholders
of the appointment of independent auditors is not required but the Board
deems it desirable to submit this matter to the Shareholders. If holders of a
majority of the Shares of Common Stock present and entitled to vote at the
Meeting should not approve the selection of Arthur Andersen LLP, the Board
will consider the selection of another accounting firm.
Vote Required and Board Recommendation
The affirmative vote by the holders of a majority of the votes cast in
person or by proxy at the Meeting is required for approval of Proposal 2. The
Board of Directors recommends a vote FOR ratification of the appointment of
independent accountants.
3. APPROVAL TO FIX THE NUMBER OF DIRECTORS AT THIRTEEN (13).
The business corporation laws of South Carolina generally provide that
if a board of directors has the power under a company's articles of
incorporation or bylaws to fix or change the number of directors, the board
may increase or decrease by 30% or less the number of directors last approved
by the company's shareholders, but only the Company's shareholders may
increase or decrease by more than 30% the number of directors last approved by
the shareholders.
The number of directors was fixed by the Shareholders at the annual
meeting held December 12, 1996 at eighteen (18) to accommodate certain stock
purchase agreements involving the Company. Since that time, the
13
<PAGE>
Board, in accordance with the Company's Articles of Incorporation, fixed the
number of directors at thirteen (13). Acting on the recommendation of its
nominating committee, the Board recommends that the Shareholders at the
Meeting decrease the approved size of the Board from eighteen (18) to
thirteen (13). Accordingly, the Board recommends adoption by the Shareholders
of the following resolution:
RESOLVED, that the number of directors of the Company be decreased from
eighteen (18) to thirteen (13).
Vote Required and Board Recommendation
The affirmative vote by the holders of a majority of the outstanding
shares of Common Stock of the Company is needed for the adoption of the
decrease in directors to thirteen (13). The Board of Directors recommends a
vote FOR this proposal.
4. APPROVAL OF INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
(PROPOSAL 4)
The Board has determined that an amendment (the "Common Stock Increase
Amendment") to the Company's Articles of Incorporation to increase the
authorized number of shares of Common Stock from 12,500,000 to 20,000,000 is
in the best interests of the Company. At the close of business on the Record
Date, 7,729,489 shares of Common Stock were outstanding. Pursuant to certain
Stock Option Purchase Agreements by and among the Company and certain Groups,
there are options outstanding to be purchased totaling 1,562,498. Pursuant to
the Avent Purchase Agreement, the Avent Group has options to purchase 408,750
shares. In addition, the Company has adopted a number of stock option plans
(the "Option Plans"), which contemplate the issuance of up to 1,625,000
shares currently, or 2,875,000 if Proposal 5 is approved by shareholders,
upon the exercise of the options covered thereby or upon the award of shares
to employees. Also, pursuant to the acquisition of The Innovative Company,
which included Universal Insurance Company, in December 1997, special stock
was issued in the amount of 220,000 shares, which is convertible into 275,000
shares of Common Stock of the Company. The Company recently concluded an
acquisition, whereby 50,000 shares of special stock was issued, which is
convertible into 62,500 shares of Common Stock. Therefore, 610,461 shares
remain available for future issuance as of the close of business on the
Record Date.
If the Common Stock Increase Amendment is adopted, the Board will have
authority, without further shareholder approval, to determine the exact timing
of and to effect the Common Stock Increase Amendment. The Company expects to
implement the Common Stock Increase Amendment promptly following the Meeting. If
approved, the increased number of authorized shares of Common Stock will be
available for issuance from time to time for such purposes and consideration as
the Board may approve. No further vote of the Shareholders of the Company will
be required, except as provided under South Carolina law or the rules of any
exchange on which the shares may in the future be traded. The availability of
additional shares for issuance, without the delay and expense of obtaining the
approval of Shareholders at a special meeting, shall provide the Company
additional shares of Common Stock for issuance in any future merger or
acquisition as well as providing the Company with the means of raising
additional capital if future circumstances so require.
The additional shares of Common Stock for which authorization is sought
would be identical to the shares of Common Stock currently authorized. Holders
of Common Stock do not have preemptive rights to subscribe to additional shares
of Common Stock, which may be issued by the Company.
While this proposal is not designed to deter or prevent a change in
control, under certain circumstances, the Company could use the additional
shares of Common Stock (as it could use the currently authorized, but unissued
shares of Common Stock or Preferred Stock) to create voting impediments or to
frustrate persons seeking to effect a takeover or otherwise gain control of the
Company or to dilute the public ownership of the Company and thereby to protect
the continuity of the Company's management. The Company could also privately
place any such shares with purchasers who might favor the Board in opposing a
hostile takeover bid, although the Company has no present intention to do so and
has no present knowledge of any such takeover efforts.
14
<PAGE>
Vote Required and Board Recommendation
The affirmative vote by the holders of two-thirds of the outstanding shares
of Common Stock of the Company is needed for the adoption of the Common Stock
Increase Amendment. The Board of Directors recommends a vote FOR this proposal.
5. APPROVAL OF INCREASE IN NUMBER OF AGGREGATE SHARES OF COMMON STOCK
PURSUANT TO THE 1996 STOCK OPTION PLAN FOR EMPLOYEES (PROPOSAL 5)
The Board has approved and recommends for approval a proposal to amend the
Company's 1996 Stock Option Plan for Employees (the "Incentive Plan") to
increase by 1,250,000 the number of shares of Common Stock available for grant
under such plan such that the total number of shares of Common Stock available
for grant under such plan is 2,500,000. The full text of the Incentive Plan, as
amended, is set forth as Annex A to this Proxy Statement.
As of December 31, 1997, options to purchase a total of 731,358 shares of
Common Stock with exercise prices ranging from $3.25 to $22.00 per share were
outstanding under the Incentive Plan.
The Board has determined that the amendment to the Incentive Plan are in
the best interests of the Company and its Shareholders. The proposed
amendment to increase the number of shares of Common Stock available for
grant under the Incentive Plan would provide additional shares for grant to
employees of the Company. The Board believes that grants of incentive awards
pursuant to the Incentive Plan are an effective method to attract and retain
employees and that the availability of shares for future grants under the
Incentive Plan is important to the Company's business prospects and
operations. Except for this amendment, if approved by the affirmative vote of
the holders of a majority of the shares of Common Stock present in person or
by proxy at the Meeting, the Incentive Plan will remain unchanged.
Description of the Incentive Plan
The following description of the Incentive Plan, giving effect to the
proposed amendment, is a summary and is qualified in its entirety by
reference to the text of the Incentive Plan. The Incentive Plan was approved
by the Company's shareholders on June 15, 1996. If not sooner terminated by
the Board of the Company, the Incentive Plan will terminate at the close of
business on December 31, 2005. The Board may, however, terminate the
Incentive Plan or may amend the Plan in such respects as it deems advisable
(subject to certain qualifications set forth in the Incentive Plan).
Stock Subject to the Incentive Plan. The Incentive Plan provides for the
issuance of either stock options, restricted stock or incentive stock. Upon
amendment of the Incentive Plan, the maximum number of shares of Common Stock
that may be issued pursuant to the Incentive Plan is 2,500,000. Prior to
amendment, the maximum number of shares of Common Stock that may granted
pursuant to the Incentive Plan is 1,250,000.
Administration. The Incentive Plan is administered by a committee (the
"Committee") comprised of at least three directors of the Company who are not
eligible to participate in the 1996 Plan or any similar plan of the Company
(other than the Company's 1995 Directors' Plan). The Committee is the
Compensation Committee of the Company's Board unless another committee is
appointed by the Board. The Committee has the power to interpret and construe
the Incentive Plan and to determine the terms and provisions of each
agreement evidencing an incentive award and to make all other determinations
the Committee deems necessary or advisable in administering the Incentive
Plan.
Eligibility. Awards can be made to all present and future employees of
the Company or its subsidiaries and any consultant to the Company. The
Committee has the power and complete discretion to select eligible employees
to receive incentive awards and to determine for each employee the terms and
conditions, the nature of the award and the number of shares to be allocated
to each employee as part of each Incentive Award.
Options. Options to purchase shares of Common Stock granted under the
Incentive Plan may be "incentive stock options" or "non-statutory stock
options." Incentive stock options qualify for favorable income tax treatment
15
<PAGE>
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), while non-statutory stock options do not. Only employees are
eligible for the grant of incentive stock options. The option price of Common
Stock covered by an incentive stock option may not be less than 100% (or, in
the case of an incentive stock option granted to a 10% shareholder, 110%) of
the fair market value of the Common Stock on the day of the option grant. The
option price of Common Stock covered by a non-statutory option may not be
less than 100% of the fair market value of the Common Stock on the date of
the grant. The value (determined at the date of grant) of Common Stock
covered by incentive stock options exercisable by a participant for the first
time in any calendar year under the Incentive Plan or any other similar plan
maintained by the Company is limited to $100,000. Options may only be
exercised at such times as may be specified by the Committee, provided that
incentive stock options may not be exercised after the first to occur of (i)
ten years (or, in the case of an incentive stock option granted to a 10%
shareholder, five years), (ii) three months from the optionee's termination
of employment with the Company for reasons other than death or disability, or
(iii) one year from the optionee's termination of employment on account of
death or disability.
Exercise of Options. A recipient employee may exercise options received
pursuant to the Incentive Plan by the giving of written notice of such
exercise to the Company. Such notice must state the number of shares the
employee has elected to purchase and will be effective only if accompanied by
the exercise price in full in cash. Options must always be granted and
exercised in such a manner as to conform to the provisions of Rule 16b-3 of
the Securities Exchange Act of 1934, as amended ("Rule 16b-3"). Options are
exercisable only by the employee, during his or her lifetime, subject to
certain exceptions set forth in the Incentive Plan.
Transferability of Options. Options, by their terms, shall not be
transferable except by will or by the laws of descent and distribution or, in
the case of non-statutory stock options and if permitted by Rule 16b-3,
pursuant to a qualified domestic relations order as defined in Section 414(p)
of the Code.
Restricted Stock. Restricted stock issued pursuant to the Incentive Plan
is subject to the following restrictions: (i) none of such shares may be
sold, transferred, pledged or otherwise encumbered or disposed of until the
restrictions on such shares have lapsed or been removed under the provisions
of the Incentive Plan; and (ii) if a holder of restricted stock ceases to be
employed by the Company, he or she will forfeit any shares of restricted
stock on which the restrictions have not lapsed or been otherwise removed.
The Committee will establish as to each share of restricted stock issued
under the Incentive Plan the terms and conditions upon which the restrictions
on such shares shall lapse.
Incentive Stock. The Committee may establish performance programs with
fixed goals and designate employees as eligible to receive incentive stock if
the goals are achieved. Incentive shares will only be issued in accordance
with the program established by the Committee. More than one performance
program may be established by the Committee and they may operate concurrently
or for varied periods of time and a participant may participate in more than
one program at the same time. A participant who is eligible to receive
incentive stock has no rights as a shareholder until the shares are received.
Additional Provisions. Adjustments will be made in the number of shares
which may be issued under the Incentive Plan if a future stock split, stock
dividend, stock combination, recapitalization, merger, consolidation or other
similar transaction which affects the character or amount of the outstanding
Common Stock occurs.
Change in Control. The Committee may, in its discretion, grant options
that by their terms become fully exercisable upon the occurrence of one of
the following events: (i) the acquisition, subject to certain exceptions as
set forth in the plan, by a group (as defined under the Securities Exchange
Act of 1934, as amended) of beneficial ownership of 45% or more of the Common
Stock or voting power of the Company; (ii) an election of new directors if
immediately following such election a majority of the Company's Board of
Directors consists of persons who were not nominated by the Board or the
nominating committee thereof to stand for election as directors in such
election; (iii) approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, in which the owners of
more than 50% of the Common Stock or the voting power of the Company do not,
following such event, beneficially own (directly or indirectly) more than 50%
of the Common Stock or voting power of the Company resulting from such event;
or (iv) a complete liquidation or dissolution of the Company or of its sale
or other disposition of all or substantially all of the Company's assets. If
the Company is a party to a merger in which it is not the surviving
corporation, a transaction that results in the acquisition of substantially
all of the
16
<PAGE>
Company's outstanding stock by a single person or entity, or a sale or
transfer of substantially all of the Company's assets, the Committee may take
such actions with respect to outstanding incentive awards as it deems
appropriate.
Estimate of Benefits
The Incentive Plan is not subject to any of the requirements of the
Employee Retirement Income Security Act of 1974 ("ERISA"). The Incentive Plan
is not, nor is it intended to be, "qualified" under Section 401(a) of the
Code.
The number of incentive awards that will be awarded under the Plan is
not currently determinable.
1997 Grants Under The Incentive Plan
There were no awards granted under the Incentive Plan to the Named
Executive Officers. The following table sets forth the awards granted under
the Incentive Plan to the executive officers and other employees,
respectively, as a group during the year ended December 31, 1997:
<TABLE>
<CAPTION>
Number of Options
Name & Position Granted in 1997
- --------------- ------------------
<S> <C>
John C. West, Chairman of the Board ............................... 0
Ernst N. Csiszar, President and Chief Executive Officer ........... 0
John A. Weitzel, Chief Financial Officer .......................... 0
James P. Donnelly, Chief Information Officer ...................... 23,500
Michael A. Culbertson, Senior Vice President ...................... 17,250
Steven M. Armato, Vice President-Adm .............................. 17,250
Robert L. Lippert, Vice President ................................. 17,250
All executive officers (7) and other employees as a Group.......... 247,844
</TABLE>
On March 23, 1998, the closing sales price of the Common Stock on the
Nasdaq Stock Market was $8.25 per share.
Federal Income Tax
The rules concerning the federal income tax consequences with respect to
the non-statutory stock option, incentive stock option and restricted stock
granted and to be granted pursuant to the Incentive Plan are technical, and
reasonable persons may differ on the proper interpretation of such rules.
Moreover, the applicable statutory and regulatory provisions are subject to
change, as are their interpretations and applications, which may vary in
individual circumstances. Therefore, the following discussion is designed to
provide only a brief, general summary description of the federal income tax
consequences associated with such incentive awards, based on a good faith
interpretation of the current federal income tax laws, regulations (including
certain proposed regulations) and judicial and administrative
interpretations. The following discussion does not set forth (i) any federal
tax consequences other than income tax consequences or (ii) any state, local
or foreign tax consequences that may apply.
Incentive Stock Options. In general, an employee will not recognize
taxable income upon the grant or the exercise of an incentive stock option,
unless he or she is subject to the alternative minimum tax rules under the
Code. Under the alternative minimum tax rules, an employee may be required to
treat an amount equal to the difference between the fair market value of the
Common Stock on the date of exercise over the option price as an item of
adjustment in computing the employee's alternative minimum taxable income.
The Company normally will not be entitled to take an income tax deduction at
either the grant or the exercise of an incentive stock option.
If the employee does not dispose of the Common Stock received pursuant
to the exercise of the incentive stock option within either (i) two years
after the date of the grant of the incentive stock option or (ii) one year
after the date of exercise of the incentive stock option, a subsequent
disposition of the Common Stock will result in long-term capital gain or loss
to the employee with respect to the difference between the amount realized on
the
17
<PAGE>
disposition and the option price. The Company will not be entitled to any
income tax deduction as a result of such disposition.
If the employee disposes of the Common Stock acquired upon exercise of
the incentive stock option within either of the above-mentioned time periods,
then in the year of such disposition, the employee generally will recognize
ordinary income, and the Company will be entitled to an income tax deduction
(provided the Company satisfies applicable federal income tax reporting
requirements), in an amount equal to the lesser of (i) the excess of the fair
market value of the Common Stock on the date of exercise over the option
price or (ii) the amount realized upon disposition over the option price. Any
gain in excess of such amount recognized by the employee as ordinary income
would be taxed to the employee as short-term or long-term capital gain
(depending on the applicable holding period).
Non-Statutory Stock Options. An employee will not recognize any taxable
income upon the grant of a non-statutory stock option, and the Company will
not be entitled to take an income tax deduction at the time of such grant.
Upon the exercise of a non-statutory stock option, the employee generally
will recognize ordinary income and the Company will be entitled to take an
income tax deduction (provided the Company satisfies applicable federal
income tax reporting requirements) in an amount equal to the excess of the
fair market value of the Common Stock on the date of exercise over the option
price. Upon a subsequent sale of the Common Stock by the employee, the
employee will recognize short-term or long-term capital gain or loss.
Restricted and Incentive Stock. In most cases and depending upon the
restrictions imposed, an employee will not recognize any taxable income upon
the grant of restricted stock, and the Company will not be entitled to take
an income tax deduction at the time of such grant. In general, an employee
who has received shares of restricted stock will recognize ordinary income in
an amount equal to the fair market value of the shares of stock at the time
the restrictions lapse or are removed. An employee who receives shares of
incentive stock upon meeting performance criteria established by the
Committee will recognize ordinary income in an amount equal to the fair
market value of the shares of stock on the date of transfer to the employee.
The Company generally will be entitled to an income tax deduction equal to
the amount of ordinary income recognized by an employee when such ordinary
income is recognized by the employee, provided the Company satisfies
applicable federal income tax reporting requirements.
Vote Required and Board Recommendation
The proposed amendment to the Incentive Plan must be approved by the
affirmative vote of a majority of the shares of Common Stock present in
person or by proxy at the Meeting. The Board of Directors recommends a vote
FOR this proposal.
SHAREHOLDER PROPOSALS
For a shareholder proposal to be presented at the next annual meeting,
it must be received by the Company at its principal executive offices not
later than December 11, 1998, in order to be included in the proxy statement
and proxy form for the 1999 annual meeting. Any such proposal should be
addressed to the Company's Corporate Secretary and delivered to the Company's
principal executive offices at 1501 Lady Street, Columbia, South Carolina
29201 or mailed to P.O. Box 1, Columbia, South Carolina 29202.
OTHER BUSINESS
There is no reason to believe that any other business will be presented
at this Meeting; however, if any other business should properly and lawfully
come before the Meeting, the proxies will vote in accordance with their best
judgment.
/s/ Priscilla C. Brooks
Priscilla C. Brooks
Corporate Secretary
18
<PAGE>
ANNEX A
THE SEIBELS BRUCE GROUP, INC.
1996 STOCK OPTION PLAN FOR EMPLOYEES
1. Purpose. The purpose of The Seibels Bruce Group, Inc. 1996 Stock
Option Plan For Employees (the "Plan"), is to further the long term stability
and financial success of The Seibels Bruce Group, Inc. (the "Company"), by
attracting and retaining employees through the use of stock incentives. It is
also believed that ownership of Company Stock will stimulate the efforts of
all employees upon whose efforts the Company is and will be largely dependent
for the successful conduct of its business. It is also believed that
Incentive Awards granted to such employees under this Plan will strengthen
their desire to remain with the Company and will further the identification
of those employee's interest with those of the Company's shareholders. The
Plan is intended to conform to the provisions of Securities and Exchange
Commission Rule 16b-3.
2. Definitions. As used in the Plan, the following terms have the
meanings indicated:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Applicable Withholding Taxes" means the aggregate amount of federal,
state and local income and payroll taxes that the Company is required
to withhold in connection with any exercise of a Nonstatutory Stock
Option, any lapse of restrictions on Restricted Stock, or any grant
of Incentive Stock.
(c) "Board" means the board of directors of the Company.
(d) "Change of Control" means an event described in (i), (ii), (iii),
or (iv):
(i) The acquisition by a Group of Beneficial Ownership of 45% or more
of the Stock or the Voting Power of the Company, but excluding for
this purpose: (A) any acquisition by the Company (or a subsidiary),
or an employee benefit plan of the Company; (B) any acquisition of
Common Stock of the Company by management employees of the Company;
or (C) any acquisition by a Group that owns 10% or more of the Stock
or Voting Power of the Company on the date of approval of the Plan by
shareholders. "Group" means any individual, entity or group within
the meaning of Section 13(d)(3) or 14(d)(2) of the Act, "Beneficial
Ownership" has the meaning in Rule 13d-3 promulgated under the Act,
"Stock" means the then outstanding shares of common stock, and
"Voting Power" means the combined voting power of the outstanding
voting securities entitled to vote generally in the election of
directors.
(ii) Individuals who constitute the Board on the day after the
meeting at which the Plan is approved (the "Incumbent Board"), cease
to constitute at least a majority of the Board, provided that any
director whose nomination was approved by a majority of the Incumbent
Board shall be considered a member of the Incumbent Board unless such
individual's initial assumption of office is in connection with an
actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Act).
(iii) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, in each case, in which the owners of more
than 50% of the Stock or Voting Power of the Company do not, following
such reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of the Stock or Voting Power of
the corporation resulting from such reorganization, merger or
consolidation.
(iv) A complete liquidation or dissolution of the Company or of its
sale or other disposition of all or substantially all of the assets
of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
A-1
<PAGE>
(f) "Committee" means the committee appointed by the Board as described
under Section 14.
(g) "Company" means The Seibels Bruce Group, Inc., a South Carolina
corporation.
(h) "Company Stock" means Common Stock, $1.00 par value, of the Company.
If the par value of the Company Stock is changed, or in the event of
a change in the capital structure of the Company (as provided in
Section 13), the shares resulting from such a change shall be deemed
to be Company Stock within the meaning of the Plan.
(i) "Covered Employee" means the Chief Executive Officer of the Company
(or an individual acting in such capacity), as of the close of the
Taxable Year or an employee whose total compensation is required to
be reported for the Taxable Year under the disclosure rules
promulgated by the Securities and Exchange Commission under the Act.
(j) "Date of Grant" means the date on which an Incentive Award is granted
by the Committee.
(k) "Disability" or "Disabled" means, as to an Incentive Stock Option, a
Disability within the meaning of Code section 22(e)(3). As to all
other Incentive Awards, the Committee shall determine whether a
Disability exists and such determination shall be conclusive.
(l) "Fair Market Value" means as of the Date of Grant (or, if there were
no trades on the Date of Grant, the last preceding day on which
Company Stock is traded), (i) if the Company Stock is traded on an
exchange, the average of the highest and lowest registered sales
prices of the Company Stock at which it is traded on such day on the
exchange on which it generally has the greatest trading volume, or
(ii) if the Company Stock is traded on the over-the-counter market,
the closing price as reported by NASDAQ.
(m) "Incentive Award" means, collectively, the award of an Option,
Incentive Stock, or Restricted Stock under the Plan.
(n) "Incentive Stock" means Company Stock awarded when performance goals
are achieved pursuant to an incentive program as provided in Section 7.
(o) "Incentive Stock Option" means an Option intended to meet the
requirements of and qualify for favorable federal income tax
treatment under Code section 422.
(p) "Insider" means a person subject to Section 16(b) of the Act.
(q) "Nonstatutory Stock Option" means an Option that does not meet the
requirements of Code section 422, or, even if meeting the requirements
of Code section 422, is not intended to be an Incentive Stock Option
and is so designated.
(r) "Option" means a right to purchase Company Stock granted under the
Plan, at a price determined in accordance with the Plan and may be a
Nonstatutory Stock Option or Incentive Stock Option.
(s) "Parent" means, with respect to any corporation, a parent of that
corporation within the meaning of Code section 424(e).
(t) "Participant" means any employee who receives an Incentive Award
under the Plan.
(u) "Performance Plan" means a plan established by the Committee that
precludes discretion and is based on an objective performance
standard that may be applied to the Participant, a business unit
(e.g., a division or a line of business), or the Company as a whole,
and may include goals based on increases in the price of Company
Stock, market share, sales or earnings per share.
A-2
<PAGE>
(v) "Restricted Stock" means Company Stock awarded upon the terms and
subject to the restrictions set forth in Section 6.
(w) "Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Act. A reference in the Plan to Rule
16b-3 shall include a reference to any corresponding rule (or number
redesignation), of any amendments to Rule 16b-3 enacted after the
effective date of the Plan's adoption.
(x) "Subsidiary" means, with respect to any corporation, a subsidiary of
that corporation within the meaning of Code section 424(f).
(y) "Taxable Year" means the fiscal period used by the Company for
reporting taxes on income under the Code.
(z) "10% Shareholder" means a person who owns, directly or indirectly,
stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary of
the Company. Indirect ownership of stock shall be determined in
accordance with Code section 424(d).
3. General. The following types of Incentive Awards may be granted
under the Plan: Options, Incentive Stock and Restricted Stock. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options.
4. Stock. Subject to Section 13 of the Plan, there shall be reserved
for issuance under the Plan, up to an aggregate of 2,500,000 shares of
Company Stock, which shall be authorized, but unissued shares. Shares
allocable to Options or portions thereof granted under the Plan that expire
or otherwise terminate unexercised, may again be subjected to an Incentive
Award under the Plan. The Committee is expressly authorized to make an
Incentive Award to a Participant conditioned upon the surrender for
cancellation of an Option granted under an existing Incentive Award. For
purposes of determining the number of shares that are available for Incentive
Awards under the Plan, such number shall, to the extent permissible under
Rule 16b-3, include the number of shares surrendered by an optionee or
retained by the Company in payment of Applicable Withholding Taxes.
5. Eligibility.
(a) All present and future employees of the Company (or any Parent or
Subsidiary of the Company, whether now existing or hereafter created or
acquired), and any consultant to the Company shall be eligible to receive
Incentive Awards under the Plan. The Committee shall have the power and
complete discretion, as provided in Section 14, to select eligible employees
to receive Incentive Awards and to determine for each employee the terms and
conditions, the nature of the award and the number of shares to be allocated
to each employee as part of each Incentive Award.
(b) The grant of an Incentive Award shall not obligate the Company or
any Parent or Subsidiary of the Company to pay an employee any particular
amount of remuneration, to continue the employment of the employee after the
grant or to make further grants to the employee at any time thereafter.
6. Restricted Stock Award.
(a) Whenever the Committee deems it appropriate to grant Restricted
Stock, notice shall be given to the Participant stating the number of shares
of Restricted Stock granted and the terms and conditions to which the
Restricted Stock is subject. This notice, when accepted in writing by the
Participant, shall become an award agreement between the Company and the
Participant and certificates representing the shares shall be issued and
delivered to the Participant. Restricted Stock may be awarded by the
Committee in its discretion without cash consideration.
(b) Restricted Stock issued, pursuant to the Plan, shall be subject to
the following restrictions:
A-3
<PAGE>
(i) No shares of Restricted Stock may be sold, assigned, transferred
or disposed of by an Insider within a six-month period beginning on
the Date of Grant, and Restricted Stock may not be pledged,
hypothecated or otherwise encumbered within a six-month period
beginning on the Date of Grant if such action would be treated as a
sale or disposition under Rule 16b-3.
(ii) No shares of Restricted Stock may be sold, assigned, transferred,
pledged, hypothecated, or otherwise encumbered or disposed of until
the restrictions on such shares as set forth in the Participant's
award agreement have lapsed or been removed pursuant to paragraph (d)
or (e) below.
(iii) If a Participant ceases to be employed by the Company or a
Parent or Subsidiary of the Company, the Participant shall forfeit to
the Company any shares of Restricted Stock on which the restrictions
have not lapsed or been removed pursuant to paragraph (d) or (e) below
on the date such Participant shall cease to be so employed.
(c) Upon the acceptance by a Participant of an award of Restricted
Stock, such Participant shall, subject to the restrictions set forth in
paragraph (b) above, have all the rights of a shareholder with respect to
such shares of Restricted Stock, including, but not limited to, the right to
vote such shares of Restricted Stock and the right to receive all dividends
and other distributions paid thereon. Certificates representing Restricted
Stock shall bear a legend referring to the restrictions set forth in the Plan
and the Participant's award agreement.
(d) The Committee shall establish, as to each award of Restricted Stock,
the terms and conditions upon which the restrictions set forth in paragraph
(b) above shall lapse. Such terms and conditions may include, without
limitation, the lapsing of such restrictions as a result of the Disability
death or retirement of the Participant or the occurrence of a Change of
Control.
(e) Notwithstanding the provisions of paragraphs (b)(ii) and (iii)
above, the Committee may at any time, in its sole discretion, accelerate the
time at which any or all restrictions will lapse or remove any and all such
restrictions.
(f) Each Participant shall agree at the time his or her Restricted Stock
is granted, and as a condition thereof, to pay to the Company, or make
arrangements satisfactory to the Company regarding the payment to the
Company, of Applicable Withholding Taxes. Until such amount has been paid or
arrangements satisfactory to the Company have been made, no stock certificate
free of a legend reflecting the restrictions set forth in paragraph (b) above
shall be issued to such Participant.
7. Incentive Stock Awards.
(a) Incentive Stock may be issued pursuant to the Plan in connection
with Performance Plans established from time to time by the Committee when
performance criteria established by the Committee have been achieved and
certified by the Committee.
(b) Whenever the Committee deems it appropriate, the Committee may
establish a Performance Plan and notify Participants of their participation
in and the terms of the Performance Plan. More than one Performance Plan may
be established by the Committee and they may operate concurrently or for
varied periods of time. A Participant may be permitted to participate in more
than one Performance Plan at the same time. Incentive Stock will be issued
only subject to the Performance Plan and the Plan and consistent with meeting
the goal or goals set by the Committee in the Performance Plan. A Participant
in a Performance Plan shall have no rights as a shareholder until the
committee has certified that the performance objectives of the Performance
Plan have been met and Incentive Stock is issued. Incentive Stock may be
issued without cash consideration.
(c) A Participant's interest in a Performance Plan may not be sold,
assigned, transferred, pledged, hypothecated, or otherwise encumbered.
(d) Each Participant shall agree, as a condition of his or her
participation in a Performance Plan and the
A-4
<PAGE>
receipt of Incentive Stock, to pay to the Company, or make arrangements
satisfactory to the Company, regarding the payment to the Company of
Applicable Withholding Taxes. Until such amount has been paid or arrangements
satisfactory to the Company have been made, no stock certificate shall be
issued to such Participant.
8. Stock Options.
(a) Whenever the Committee deems it appropriate to grant Options, notice
shall be given to the Participant stating the number of shares for which
Options are granted, the Option price per share, whether the Options are
Incentive Stock Options or Nonstatutory Stock Options, and the conditions to
which the grant and exercise of the Options are subject. This notice, when
duly accepted in writing by the Participant, shall become a stock option
agreement between the Company and the Participant.
(b) The Committee shall not grant to a Covered Employee Nonstatutory
Stock Options (i) covering more than 200,000 shares in one Taxable Year, or
(ii) that have an exercise price of less than 100% of the Fair Market Value
of such shares on the Date of Grant.
(c) The exercise price of shares of Company Stock covered by an
Incentive Stock Option shall be not less than 100% of the Fair Market Value
of such shares on the Date of Grant; provided that if an Incentive Stock
Option is granted to a Participant who, at the time of the grant, is a 10%
Shareholder, then the exercise price of the shares covered by the Incentive
Stock Option shall be not less than 110% of the Fair Market Value of such
shares on the Date of Grant.
(d) The exercise price of shares covered by a Nonstatutory Stock Option
shall be not less than 100% of the Fair Market Value of such shares on the
Date of Grant.
(e) Options may be exercised in whole or in part at such times as may be
specified by the Committee in the Participant's stock option agreement;
provided that, the exercise provisions for Incentive Stock Options shall, in
all events, not be more liberal than the following provisions:
(i) No Incentive Stock Option may be exercised after the first to
occur of (x) ten years (or, in the case of an Incentive Stock Option
granted to a 10% Shareholder, five years), from the Date of Grant, (y)
three months following the date of the Participant's retirement or
termination of employment with the Company and its Parent and
Subsidiary corporations for reasons other than Disability or death, or
(z) one year following the date of the Participant's termination of
employment on account of Disability or death.
(ii) Except as otherwise provided in this paragraph, no Incentive
Stock Option may be exercised unless the Participant is employed by
the Company or a Parent or Subsidiary of the Company at the time of
the exercise and has been employed by the Company or a Parent or
Subsidiary of the Company at all times since the Date of Grant. If a
Participant's employment is terminated other than by reason of his or
her Disability or death at a time when the Participant holds an
Incentive Stock Option that is exercisable (in whole or in part), the
Participant may exercise any or all of the exercisable portion of the
Incentive Stock Option (to the extent exercisable on the date of
termination), within three months after the Participant's termination
of employment if his or her option agreement so provides. If a
Participant's employment is terminated by reason of his or her
Disability at a time when the Participant holds an Incentive Stock
Option that is exercisable (in whole or in part), the Participant may
exercise any or all of the exercisable portion of the Incentive Stock
Option (to the extent exercisable on the date of Disability), within
one year after the Participant's termination of employment if his or
her option agreement so provides. If a Participant's employment is
terminated by reason of his or her death at a time when the
Participant holds an Incentive Stock Option that is exercisable (in
whole or in part), the Incentive Stock Option may be exercised (to the
extent exercisable on the date of death), within one year after the
Participant's death, if his or her option agreement so provides, by
the person to whom the Participant's rights under the Incentive Stock
Option shall have passed by will or by the laws of descent and
distribution.
A-5
<PAGE>
(iii) An Incentive Stock Option by its terms, shall be exercisable in
any calendar year only to the extent that the aggregate Fair Market
Value (determined at the Date of Grant), of the Company Stock with
respect to which Incentive Stock Options are exercisable for the first
time during the calendar year does not exceed $100,000 (the
"Limitation Amount"). Incentive Stock Options granted under the Plan
and all other plans of the Company and any Parent or Subsidiary of the
Company shall be aggregated for purposes of determining whether the
Limitation Amount has been exceeded. The Board may impose such
conditions as it deems appropriate on an Incentive Stock Option to
ensure that the foregoing requirement is met. If Incentive Stock
Options that first become exercisable in a calendar year exceed the
Limitation Amount, the excess Options will be treated as Nonstatutory
Stock Options to the extent permitted by law.
(f) Notwithstanding the foregoing, no Option granted to an Insider shall
be exercisable within the first six months after it is granted; provided,
however, that this restriction shall not apply if the Participant becomes
disabled or dies during the six-month period.
(g) The Committee may, in its discretion, grant Options that by their
terms become fully exercisable upon a Change of Control, notwithstanding
other conditions on Exercisability in the Stock Option Agreement. The
Committee may at any time, in its sole discretion, accelerate the time at
which any or all Options shall be fully vested.
9. Method of Exercise of Options.
(a) Options may be exercised by the Participant giving written notice of
the exercise to the Company, stating the number of shares the Participant has
elected to purchase under the Option. In the case of the purchase of shares
under an Option, such notice shall be effective only if accompanied by the
exercise price in full in cash.
(b) The Company may place on any certificate representing Company Stock
issued upon the exercise of an Option, any legend deemed desirable by the
Company's counsel to comply with federal or state securities laws and the
Company may require a customary written indication of the Participant's
investment intent. Until the Participant has made any required payment,
including any Applicable Withholding Taxes, and has had issued a certificate
for the shares of Company Stock acquired, he or she shall possess no
shareholder rights with respect to the shares.
(c) Each Participant shall agree, as a condition of the exercise of an
Option, to pay to the Company, or make arrangements satisfactory to the
Company regarding the payment to the Company, of Applicable Withholding
Taxes. Until such amount has been paid or arrangements satisfactory to the
Company have been made, no stock certificate shall be issued upon the
exercise of an Option.
(d) Notwithstanding anything herein to the contrary, Options shall
always be granted and exercised in such a manner as to conform to the
provisions of Rule 16b-3.
10. Nontransferability of Options. Options, by their terms, shall not be
transferable except by will or by the laws of descent and distribution or, if
permitted by Rule 16b-3, pursuant to a qualified domestic relations order (as
defined in Code section 414(p)) ("QDRO"), and shall be exercisable, during
the Participant's lifetime, only by the Participant or, if permitted by Rule
16b-3, an alternative payee under a QDRO, or by his or her guardian, duly
authorized attorney-in-fact or other legal representative.
11. Effective Date of the Plan. The effective date of the Plan is
November 1, 1995. The Plan shall be submitted to the shareholders of the
Company for approval. Until, (i) the Plan has been approved by the Company's
shareholders, and (ii) the requirements of any applicable Federal or State
securities laws have been met, no Restricted Stock shall become unrestricted,
no Incentive Stock shall be issued and no Option shall be exercisable.
12. Termination, Modification, Change. If not sooner terminated by the
Board, this Plan shall terminate at the close of business on December 31,
2005. No Incentive Awards shall be made under the Plan after its termination.
The Board may terminate the Plan or may amend the Plan in such respects as it
shall deem advisable; provided that, if and to the extent required by the
Code or Rule 16b-3, no change shall be made that increases the total number
of shares of Company Stock reserved for issuance pursuant to Incentive Awards
granted under the Plan (except pursuant to Section 13), materially modifies
the requirements as to eligibility for participation in the Plan, or
materially increases the benefits accruing to Participants
A-6
<PAGE>
under the Plan, unless such change is authorized by the shareholders of the
Company. Notwithstanding the foregoing, the Board may unilaterally amend the
Plan and Incentive Awards as it deems appropriate to ensure compliance with
Rule 16b-3 and to cause Incentive Stock Options to meet the requirements of
the Code and regulations thereunder. Except as provided in the preceding
sentence, a termination or amendment of the Plan shall not, without the
consent of the Participant, adversely affect a Participant's rights under an
Incentive Award previously granted to him or her.
13. Change in Capital Structure.
(a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or merger in which the Company is the surviving
corporation or other change in the Company's capital stock (including, but
not limited to, the creation or issuance to shareholders generally of rights,
options or warrants for the purchase of common stock or preferred stock of
the Company), the number and kind of shares of stock or securities of the
Company to be subject to the Plan and to Options then outstanding or to be
granted thereunder, the maximum number of shares or securities which may be
delivered under the Plan, the exercise price and other relevant provisions
shall be appropriately adjusted by the Committee, whose determination shall
be binding on all persons. If the adjustment would produce fractional shares
with respect to any unexercised Option, the Committee may adjust
appropriately the number of shares covered by the Option so as to eliminate
the fractional shares.
(b) If the Company is a party to a consolidation or a merger in which
the Company is not the surviving corporation, a transaction that results in
the acquisition of substantially all of the Company's outstanding stock by a
single person or entity, or a sale or transfer of substantially all of the
Company's assets, the Committee may take such actions with respect to
outstanding Incentive Awards as the Committee deems appropriate.
(c) Notwithstanding anything in the Plan to the contrary, the Committee
may take the foregoing actions without the consent of any Participant, and
the Committee's determination shall be conclusive and binding on all persons
for all purposes.
14. Administration of the Plan. The Plan shall be administered by the
Committee, which shall consist of not less than three members of the Board,
who shall be appointed by the Board. Subject to paragraph (d) below, the
Committee shall be the Compensation Committee unless the Board shall appoint
another Committee to administer the Plan. The Committee shall have general
authority to impose any limitation or condition upon an Incentive Award the
Committee deems appropriate to achieve the objectives of the Incentive Award
and the Plan and, without limitation and in addition to powers set forth
elsewhere in the Plan, shall have the following specific authority:
(a) The Committee shall have the power and complete discretion to
determine, (i) which eligible employees shall receive Incentive Awards and
the nature of each Incentive Award, (ii) the number of shares of Company
Stock to be covered by each Incentive Award, (iii) whether Options shall be
Incentive Stock Options or Nonstatutory Stock Options, (iv) the Fair Market
Value of Company Stock, (v) the time or times when an Incentive Award shall
be granted, (vi) whether an Incentive Award shall become vested over a period
of time and when it shall be fully vested, (vii) when Options may be
exercised, (viii) whether a Disability exists, (ix) the manner in which
payment will be made upon the exercise of Options, (x) conditions relating to
the length of time before disposition of Company Stock received upon the
exercise of Options is permitted, (xi) the terms and conditions applicable to
Restricted Stock Awards, (xii) the terms and conditions on which restrictions
upon Restricted Stock shall lapse, (xiii) whether to accelerate the time at
which any or all restrictions with respect to Restricted Stock will lapse or
be removed, (xiv) notice provisions relating to the sale of Company Stock
acquired under the Plan, (xv) the terms of Performance Plans, performance
criteria and other factors relevant to the issuance of Incentive Stock, and
(xvi) any additional requirements relating to Incentive Awards that the
Committee deems appropriate. Notwithstanding the foregoing, no "tandem stock
options" (where two stock options are issued together and the exercise of one
Option affects the right to exercise the other Option), may be issued in
connection with Incentive Stock Options. The Committee shall have the power
to amend the terms of previously granted Incentive Awards so long as the
terms as amended are consistent with the terms of the Plan and provided that
the consent of the Participant is obtained with respect to any amendment that
would be detrimental to him or her, except that such consent will not be
required if such amendment is for the purpose of complying with Rule 16b-3 or
any requirement
A-7
<PAGE>
of the Code applicable to the Incentive Award.
(b) The Committee may adopt rules and regulations for carrying out the
Plan. The interpretation and construction of any provision of the Plan by the
Committee shall be final and conclusive. The Committee may consult with
counsel, who may be counsel to the Company and shall not incur any liability
for any action taken in good faith in reliance upon the advice of counsel.
(c) A majority of the members of the Committee shall constitute a quorum
and all actions of the Committee shall be taken by a majority of the members
present. Any action may be taken by a written instrument signed by all of the
members and any action so taken shall be fully effective as if it had been
taken at a meeting.
(d) The Board, from time to time, may appoint members previously
appointed and may fill vacancies, however caused, in the Committee. Insofar
as it is necessary to satisfy the requirements of Section 16(b) of the Act,
no member of the Committee shall be eligible to participate in the Plan or in
any other plan of the Company or any Parent or Subsidiary of the Company that
entitles participants to acquire stock, stock options or stock appreciation
rights of the Company or any Parent or Subsidiary of the Company, and no
person shall become a member of the Committee if, within the preceding
one-year period, the person shall have been eligible to participate in such a
plan (other than a "safe harbor plan" permitted under Rule 16b- 3(C)(2)(i)
and (ii)).
15. Notice. All notices and other communications required or permitted
to be given under this Plan shall be in writing and shall be deemed to have
been duly given if delivered personally or mailed first class, postage
prepaid, as follows; (a) if to the Company - at its principal business
address to the attention of the Treasurer; (b) if to any Participant - at the
last address of the Participant known to the sender at the time the notice or
other communication is sent.
16. Interpretation. The terms of this Plan are subject to all present
and future regulations and rulings of the Secretary of the Treasury or his or
her delegate relating to the qualification of Incentive Stock Options under
the Code. If any provision of the Plan conflicts with any such regulation or
ruling, then that provision of the Plan shall be void and of no effect. The
terms of this Plan shall be governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed this
15th day of April, 1996.
THE SEIBELS BRUCE GROUP, INC.
By: /s/ Ernst N. Csiszar
--------------------------
A-8
<PAGE>
[FRONT OF CARD]
THE SEIBELS BRUCE GROUP, INC.
P. O. Box One
Columbia, South Carolina 29202
Proxy Solicitation for Common Stock on Behalf of the Board of Directors of the
Company for the Annual Meeting of Shareholders on May 20, 1998
The undersigned hereby appoints Ernst N. Csiszar and John A. Weitzel and each or
either of them, as proxies, with full power of substitution and resubstitution,
to vote all shares of the Common Stock of The Seibels Bruce Group, Inc. which
the undersigned is entitled to vote at the Annual Meeting of Shareholders to be
held on May 20, 1998, and at any adjournment thereof, upon the items described
in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement
and upon any other business that may properly come before the annual meeting or
any adjournment thereof. The undersigned acknowledges receipt of Notice of the
Annual Meeting of Shareholders and of the Proxy Statement.
Proxies will be voted in accordance with any Instructions indicated above, if no
specification is made the Proxy will be voted FOR the Proposal. This Proxy is
revocable any time prior to its use. The Board of Directors recommends a vote
FOR all proposals.
(continued and to be signed on other side)
<PAGE>
[REVERSE SIDE OF CARD]
X Please mark your votes as in the example.
1. ELECTION OF DIRECTORS
NOMINEES: A. Crawford Clarkson, Jr, Claude E. McCain, Kenneth W. Pavia,
Susie H. VanHuss, James L. Zech
/ / VOTE FOR all nominees listed above; except vote withheld from following
nominee(s) (if any).
------------------------------ ------------------------------------
/ / VOTE WITHHELD from all nominees.
2) To ratify the appointment of Arthur FOR AGAINST ABSTAIN
Andersen LLP to audit the Company's
books and records for the fiscal year
ending December 31, 1998 / / / / / /
3) To fix the number of directors at 13. FOR AGAINST ABSTAIN
/ / / / / /
4) To amend the Articles of Incorporation FOR AGAINST ABSTAIN
to increase the authorized Common Stock
from 12,500,000 to 20,000,000 shares. / / / / / /
5) To amend the 1996 Stock Option Plan for FOR AGAINST ABSTAIN
Employees (the "Incentive Plan") to
increase the aggregate number of shares / / / / / /
available for issuance under the Incentive
Plan from 1,250,000 to 2,500,000 shares.
Signature Date
----------------------------------------- ------------------------
Signature Date
----------------------------------------- ------------------------
Please complete, date and sign this proxy and return it promptly in the
enclosed envelope, whether or not you plan to attend the annual meeting on
May 20, 1998. If you attend the Annual Meeting, you may vote in person if you
wish, even if you have previously returned your proxy.
NOTE: Signature should agree with name on stock, as shown hereon, Officers,
fiduciaries, etc., should so indicate. When shares are held in the names of
more than one person, each person should sign the proxy.
