<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1996
Registration No. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________
AMERICAN PHYSICIANS SERVICE GROUP, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-1458323
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1301 CAPITAL OF TEXAS HIGHWAY
AUSTIN, TEXAS 78746
(512) 328-0888
(Address of principal executive offices, including zip code)
____________________
AMERICAN PHYSICIANS SERVICE GROUP, INC.
1995 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
(Full title of the plans)
W. H. HAYES
SENIOR VICE PRESIDENT-FINANCE AND SECRETARY
1301 CAPITAL OF TEXAS HIGHWAY
AUSTIN, TEXAS 78746
(512) 328-0888
(Name, address and telephone number of agent for service)
copy to:
JIM A. WATSON
HAROLD J. HERMAN II
VINSON & ELKINS L.L.P.
3700 TRAMMELL CROW CENTER
2001 ROSS AVENUE
DALLAS, TEXAS 75201-2975
(214) 220-7700
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
TITLE OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER SHARE* OFFERING PRICE* REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.10 par value
per share................... 800,000 shares $9.75 $7,800,000 $2,690
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(h) under the Securities Act of 1933, as amended, and
based on the average of the high and low prices of the Common Stock reported on
The Nasdaq National Market on June 27, 1996.
================================================================================
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
---------------------------------------
The following documents have been filed with the Securities and Exchange
Commission (the "Commission") by American Physicians Service Group, Inc., a
Texas corporation (the "Company'), and are incorporated herein by reference and
made a part hereof:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1995;
(b) The Company's Quarterly Report on Form 10-QSB for the quarter ended March
31, 1996;
(c) The description of the Common Stock contained in the Company's Form 8-A,
dated January 6, 1984, for registration of the Common Stock pursuant to
Section 12(g) of the Exchange Act, including any amendment or report filed
for the purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"), subsequent to
the effective date hereof and prior to the filing of a post-effective amendment
hereto that indicates that all securities offered hereby have been sold or that
deregisters all such securities then remaining unsold, shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of filing
of such documents. Any statement contained herein or in any document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part of this Registration
Statement, except as so modified or superseded.
ITEM 4. DESCRIPTION OF SECURITIES.
-------------------------
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
--------------------------------------
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
-----------------------------------------
Article 2.02-1 of the Texas Business Corporation Act (the "TBCA") provides
that a Texas corporation shall have the power to indemnify anyone who was, is,
or is threatened to be made a named defendant or respondent to any threatened,
pending, or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative, or any appeal in such an action,
suit or proceeding, and any inquiry or investigation that could lead to such an
action, suit, or proceeding, because such person is or was a director of the
corporation, provided that (i) such person conducted himself in good faith, (ii)
such person reasonably believed (A) that in the case of conduct in his official
capacity as a director of the corporation that his conduct was in the
corporation's best interests, and (B) in all other cases, that his conduct was
at least not opposed to the corporation's best interests, and (iii) in the case
of a criminal proceeding, such person has no reasonable cause to believe his
conduct was unlawful. The termination of a proceeding by judgment, order,
settlement, or conviction, or on a plea of nolo contendere or its equivalent, is
not of itself determinative that a director is not eligible for indemnification
by a corporation. Instead, a person shall be deemed to have been found liable
in respect of any claim, issue or matter only after the person shall have been
so adjudged by a court of competent jurisdiction after exhaustion of all appeals
therefrom. A director may not be indemnified as described above for obligations
resulting from a proceeding: (i) in which such person is found liable on the
basis that he improperly received personal benefit, whether or not the benefit
resulted from an action taken in his official capacity, or (ii) in which such
person is found liable to the corporation (except that in such cases such
director may be indemnified against reasonable expenses actually incurred by the
director in connection with the proceeding unless the director's misconduct was
willful, in which case no such indemnification shall be paid).
2
<PAGE>
A corporation may provide indemnification as described above only if a
determination of indemnification is made by (a) a majority vote of a quorum of
directors who at the time of voting are not named defendants or respondents in
such proceeding; (b) if such quorum cannot be obtained, by majority vote of a
committee of directors, consisting solely of two or more directors who are not
named as defendants or respondents in the relevant proceeding, and designated to
act in the matter by a majority vote of all directors; (c) by special legal
counsel selected by the board acting as described in (a), or selected by a
committee established as described in (b), or, if such quorum cannot be obtained
and such committee is not established, by a majority vote of all named
defendants or respondents in the proceeding; or (d) by the shareholders in a
vote that excludes the shares held by directors who are named defendants or
respondents in the proceeding. A court may order indemnification even though
certain of these conditions are not met if the court deems indemnification
proper and equitable; provided, however, that the court-ordered indemnification
shall be limited to reasonable expenses actually incurred by such person in
connection with the proceeding if the person is found to be liable to the
corporation or on the basis that he improperly received a personal benefit.
A person may be indemnified by a corporation as previously described against
judgments, penalties (including excise and similar taxes), fines, settlements,
and reasonable expenses actually incurred by the person in connection with the
proceeding, provided, that if such a person is found liable to the corporation
or is liable on the basis that personal benefit was improperly received by the
person, the indemnification shall be limited to reasonable expenses actually
incurred by the person in connection with the proceeding and shall not be made
in respect of any proceeding in which the person shall have been found liable
for willful or intentional misconduct in the performance of his duty to the
corporation.
A corporation shall indemnify a director against reasonable expenses incurred
by him in connection with the proceeding in which he is a named defendant or
respondent because he is or was a director if he has been wholly successful, on
the merits or otherwise, in the defense of the proceeding. In addition, if a
director sues a corporation to recover indemnification in such a case, the
court, upon ordering the corporation to pay indemnification, shall also award
the director his expenses incurred in securing the indemnification.
A corporation may pay, or reimburse a director for, the director's reasonable
expenses incurred because he was, is, or is threatened to be made a named
defendant or respondent in a proceeding, in advance of any final disposition of
the proceeding and without any determination that the director is entitled to
such payment or reimbursement under the above-described standards if the
director gives the corporation a written affirmation by the director that in
good faith he believes that he is eligible for indemnification under Article
2.02-1 of the TBCA and a written undertaking by or on behalf of the director
(which must be an unlimited general obligation but that need not be secured, and
that may be accepted without reference to the director's financial ability to
pay) to repay the amount paid or reimbursed if it is ultimately determined that
indemnification for such expenses is prohibited under the standards enumerated
above.
Notwithstanding the above, a corporation may pay or reimburse a director for
expenses incurred in connection with the director's appearance as a witness or
other participation in a proceeding at a time when the director is not a named
defendant or respondent in the proceeding.
Article 2.02-1 of the TBCA permits the purchase and maintenance of insurance
or another arrangement on behalf of directors, officers, employees and agents of
the corporation against any liability asserted against or incurred by them in
any such capacity or arising out of the person's status as such, whether or not
the corporation itself would have the power to indemnify any such officer or
director against such liability; provided, that if the insurance or other
arrangement is with a person or entity that is not regularly engaged in the
business of providing insurance coverage, the insurance or arrangement may
provide for payment of a liability with respect to which the corporation would
not have the power to indemnify the person only if including coverage for the
additional liability has been approved by the shareholders of the corporation.
Any indemnification of, or advance of expenses to, a director must be reported
in writing to shareholders prior to the notice or waiver of notice of the next
shareholders' meeting or other action, and, in any case, within the 12-month
period immediately following such indemnification or advance.
A corporation may indemnify officers and others who are not officers,
employees, or agents of the corporation, but who are serving at the
corporation's request as a director, officer, partner, venturer, proprietor,
trustee, employee, agent, or similar functionary for another entity, to the same
extent that the corporation indemnifies
3
<PAGE>
directors. A corporation may indemnify and advance expenses to such officers
and other persons to the same extent that it may indemnify, or advance expenses
to, directors.
Article IX of the Registrant's Restated Articles of Incorporation (the
"Articles") provides that, to the extent permitted by applicable law and by
resolution or other proper action of the Board of Directors of the Registrant,
the Registrant will indemnify its present and former directors and officers, its
employees and agents and any other person serving at the request of the
Registrant as a director, trustee, officer, employee or agent of another
corporation, partnership, joint venture, association, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with any
threatened, pending or completed action, suit or proceeding to which any such
person is, or is threatened to be made, a party and which may arise by reason of
the fact he is or was a person occupying any such office or position. In
addition, the Registrant currently maintains directors and officers liability
insurance.
Article XVI of the Articles provides that the Registrant's directors shall not
be liable to the Registrants or its shareholders for monetary damages for an act
or omission in the director's capacity as a director except for liability based
upon (i) a breach of duty of loyalty to the Registrant or its shareholders, (ii)
an act or omission not in good faith or that involves intentional misconduct or
a knowing violation of law, (iii) a transaction from which a director received
an improper benefit, whether or not the benefit resulted from an action taken
within the scope of the director's office, or (iv) an act related to an unlawful
stock repurchase or payment of a dividend.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
-----------------------------------
Not applicable.
ITEM 8. EXHIBITS.
--------
Unless otherwise indicated below as being incorporated by reference to another
filing of the Company with the Commission, each of the following exhibits is
filed herewith:
4.1* -- American Physicians Service Group, Inc. 1995 Incentive and Non-
Qualified Stock Option Plan
4.2* -- Stock Option Agreement (ISO)
4.3* -- Stock Option Agreement (non-qualified)
4.4 -- Specimen of Common Stock Certificate (incorporated by reference to
the Company's Registration Statement on Form S-1, File No. 2-85321)
5* -- Opinion of Vinson & Elkins L.L.P.
23.1* Consent of KPMG Peat Marwick LLP
23.2* -- Consent of Vinson & Elkins L.L.P. (included in its opinion filed as
Exhibit 5 hereto)
24.1* -- Power of Attorney (see signature pages hereto)
- ----------------
*Filed Herewith
ITEM 9. UNDERTAKINGS.
------------
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act;
4
<PAGE>
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) ((S) 230.424(b) of this chapter) if, in the aggregate, the changes
in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3 ((S) 239.13 of this chapter) or Form S-8
((S) 239.16b of this chapter), and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purposes of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act,
each filing of the Company's annual report pursuant to section 13(a) or section
15(d) of the Exchange Act (and, where applicable, each filing on an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange Act)that
is incorporated by reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Austin, State of Texas, on the 28th day of June,
1996.
AMERICAN PHYSICIANS SERVICE GROUP, INC.
By: /s/ W. H. Hayes
--------------------------------------
W. H. Hayes,
Senior Vice President-Finance,
Secretary and Chief Financial Officer
Each person whose signature appears below authorizes W. H. Hayes and Kenneth
S. Shifrin, and each of them, each of whom may act without joinder of the other,
to execute in the name of each such person who is then an officer or director of
the Company and to file any amendments to this Registration Statement necessary
or advisable to enable the Company to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the Securities and
Exchange Commission in respect thereof, in connection with the registration of
the securities which are the subject of this Registration Statement, which
amendments may make such changes in the Registration Statement as such attorney
may deem appropriate. Pursuant to the requirements of the Securities Act of
1933, this registration statement has been signed by the following person in the
capacities and on the date indicated.
Signature Capacity Date
/s/ Kenneth S. Shifrin Chairman of the Board June 28, 1996
- ----------------------------- and Chief Executive Officer
Kenneth S. Shifrin (Principal Executive Officer)
/s/ W. H. Hayes Senior Vice President - Finance, June 28, 1996
- ----------------------------- Secretary and Chief Chief
W. H. Hayes Officer
(Principal Financial Officer)
/s/ Thomas R. Solimine Controller June 28, 1996
- ----------------------------- (Principal Accounting Officer)
Thomas R. Solimine
/s/ Jack R. Chandler Vice Chairman of the Board and June 29, 1996
- ----------------------------- Director
Jack R. Chandler, M.D.
/s/ Richard J. Clark Director June 29, 1996
- -----------------------------
Richard J. Clark
Director June __, 1996
- -----------------------------
Jack Murphy
/s/ William A. Searles Director June 28, 1996
- -----------------------------
William A. Searles
/s/ Robert L. Myer Director June 28, 1996
- -----------------------------
Robert L. Myer
6
<PAGE>
EXHIBIT INDEX
SEQUENTIAL
EXHIBIT DESCRIPTION OF EXHIBIT PAGE NO.
- ------- ---------------------- ----------
4.1* -- American Physicians Service Group, Inc. 1995 Incentive
and Non-Qualified Stock Option Plan
4.2* -- Stock Option Agreement (ISO)
4.3* -- Stock Option Agreement (non-qualified)
4.4 -- Specimen of Common Stock Certificate (incorporated by
reference to the Company's Registration Statement on
Form S-1, File No. 2-85321)
5* -- Opinion of Vinson & Elkins L.L.P.
23.1* Consent of KPMG Peat Marwick LLP
23.2* -- Consent of Vinson & Elkins L.L.P. (included in its
opinion filed as Exhibit 5 hereto)
24.1* -- Power of Attorney (see signature pages hereto)
- ------------------------------
*Filed Herewith
7
<PAGE>
EXHIBIT 4.1
1995 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
OF
AMERICAN PHYSICIANS SERVICE GROUP, INC.
A Texas Corporation
I. Purpose of Plan
The purpose of this 1995 Incentive Stock Option Plan (this "Plan") is to
strengthen American Physicians Service Group, Inc. a Texas corporation (the
"Corporation"), and its subsidiaries, by providing stock options as a means to
attract, retain and motivate corporate personnel.
II. Administration
This Plan shall be administered by a committee (the "Committee") composed
of members selected by, and serving at the pleasure of, the Board of Directors
of the Company (the "Board"). The Committee shall be constituted so as to permit
the Plan to comply with Rule 16b-3, as currently in effect or as hereinafter
modified or amended ("Rule 16b-3"), promulgated under the Securities Exchange
Act of 1934, as amended (the "1934 Act"). Consistent with Rule 16b-3 each
committee member shall be a disinterested person, i.e., a person who has not
been granted any equity security pursuant to a plan of the corporation or any of
its affiliates during the one year prior to his becoming a committee member or
during the period he serves as a committee member. The Committee shall have the
sole authority to select the persons entitled to receive Options (as defined
below) from among those eligible hereunder (the "Optionees") and to establish
the number of shares that may be issued under each Option to such persons;
provided, however, that, notwithstanding any provision in this Plan to the
contrary, the maximum number of shares of common stock, $.10 par value per share
of the Company (the "Common Stock") that may be subject to Options granted under
the Plan to an individual Optionee during any calendar year may not exceed
150,000 (subject to adjustment in the same manner as provided in Article IX
hereof to prevent dilution.) The limitation set forth in the preceding sentence
shall be applied in a manner which will permit compensation generated under the
Plan to constitute "performance-based" compensation for purposes of section
162(m) of the Internal Revenue Code of 1986, as amended ( the "Code"),
including, without limitation, counting against such maximum number of shares,
to the extent required under section 162(m) of the Code and applicable
interpretive authority thereunder, any shares subject to Options that are
cancelled or repriced. The Committee shall have the power to make all
determinations necessary for the administration of the Plan, subject to the
restrictions on committee power set forth in Texas law.
1
<PAGE>
III. Grant of Options
The Corporation is authorized to grant incentive stock options
("Incentive Stock Options") as defined in section 422 of the Code and options
that are not intended to be Incentive Stock Options (hereafter "Non-Qualified
Stock Options" and, together with Incentive Stock Options, the "Options"). Any
Option granted under this Plan shall be granted within 10 years form the date
this Plan is adopted, or the date this Plan is approved by the stockholders
pursuant to Article X, whichever is earlier. No option granted under this Plan
shall be exercisable by its terms after the expiration of 10 years from the
grant of the Option. Options may be granted only to individuals, (a) who are
employees (including officers and directors who are also employees) of the
Company or any parent or subsidiary corporation (as defined in section 424 of
the Code) of the Company or (b) who are directors of the Company who are not
members of the Committee, at the time the Option is granted. Options may be
granted to the same individual on more than one occasion.
Incentive Stock Options may not be granted to persons who own stock
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Corporation, or of its parent or subsidiary, if any,
within the meaning of section 422(b)(6) of the Code, unless (i) at the time such
Option is granted the option price is at least 110% of the fair market value of
the Common Stock subject to such Option and (ii) such Option by its terms is not
exercisable after the expiration of five years from the date of the grant.
To the extent that the aggregate fair market value of Common Stock (as
determined in good faith by the Committee at the time the Incentive Stock Option
is granted), with respect to which Incentive Stock Options are exercisable for
the first time by an individual during any calendar year (under all incentive
stock option plans of the Corporation and any parent or subsidiary corporation)
exceeds $100,000, such excess Incentive Stock Options shall be treated as Non-
Qualified Stock Options. The Committee shall determine, in accordance with
applicable provisions of the Code, Treasury Regulations and other administrative
pronouncements which of an Optionee's Incentive Stock Options will not
constitute Incentive Stock Options because of such limitation and shall notify
the Optionee of such determination as soon as practicable after such
determination.
IV. Stock Subject to Plan
The aggregate number of shares of Common Stock that may be issued
pursuant to Options granted under this Plan shall not exceed 800,000 shares of
Common Stock (subject to adjustment as provided in article VIII). Such shares
may consist of authorized but unissued shares of Common Stock or previously
issued shares of Common stock reacquired by the Company. Any of such shares
which remain unissued and which are not subject to outstanding Options at the
termination of this Plan shall cease to be subject to this Plan, but, until
termination of this Plan, the Company shall at all times make available a
sufficient number of shares to meet the requirements of this Plan. Should any
Option hereunder expire or terminate prior to its exercise in full, the shares
of Common Stock theretofore subject to such Option may again be subject to an
Option granted under this Plan to the extent permitted under Rule 16b-3. The
aggregate number of shares which may be issued under this
2
<PAGE>
Plan shall be subject to adjustment as provided in Article VIII hereof.
Exercise of an Option in any manner shall result in a decrease in the number of
shares of Common Stock which may thereafter be available, both for purposes of
the Plan and for sale to any one individual, by the number of shares as to which
the Option is exercised. Separate stock certificates shall be issued by the
Company for those shares acquired pursuant to the exercise of an Incentive Stock
Option and for those shares acquired pursuant to the exercise of any Non-
Qualified Stock Options.
V. Option Agreements
Each Option shall be evidenced by a written agreement between the
Company and the Optionee ("Option Agreement") which shall contain such terms and
conditions as the Committee deems necessary, including, without limitation,
terms and conditions relating to the termination of Options. The terms and
conditions of the respective Option Agreements need not be identical. Moreover,
an Option Agreement may provide for the payment of the option price, in whole or
in part, by the delivery of a number of shares of Common Stock (plus cash if
necessary) having a fair market value equal to such option price.
VI. Option Price
The purchase price for a share of Common Stock subject to an Incentive
Stock Option granted pursuant to this Plan shall not be less than the fair
market value of the Common Stock subject to such Incentive Stock Option at the
time such Option is granted. The purchase price for a share of the Common
Stock subject to a Non-Qualifying Stock Option granted pursuant to this Plan
shall be not less than 100% of the fair market value of the Common Stock subject
to such Non-Qualifying Stock Option on the date such Option is granted.
For all purposes under the Plan, the fair market value of a share of
Common Stock on a particular date shall be equal to the average of the high and
low sales prices of the Common Stock (i) reported by the National Market System
of NASDAQ on that date or (ii) if the Common Stock is listed on a national stock
exchange, reported on the stock exchange composite tape on that date; or, in
either case, if no prices are reported on that date, on the last preceding date
on which such prices of the Common Stock are so reported. If the Common Stock
is traded over the counter at the time a determination of its fair market value
is required to be made hereunder, its fair market value shall be deemed to be
equal to the average between the reported high and low or closing bid and ask
prices of the Common Stock on the most recent date on which the Common Stock was
publicly traded. In the event the Common Stock is not publicly traded at the
time a determination of its value is required to be made hereunder, the
determination of its fair market value shall be made by the Committee in such
manner as it deems appropriate.
3
<PAGE>
VII. Options Nontransferable
Each Option and all rights granted thereunder shall not be transferable
other than by will or the laws of descent and distribution, and shall be
exercisable during the Optionee's lifetime only by the Optionee or the
Optionee's guardian or legal representative; provided, however, that on and
after the date the Corporation elects to have this Plan governed under the
amendments to Rule 16b-3 effective on or after May 1, 1991, this Plan shall be
deemed to be amended to limit the transferability of Options, including any
exceptions thereto, to the same extent provided by Rule 16b-3 as so amended.
VIII. Recapitalization or Reorganization
In the event of a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, an appropriate and
proportionate adjustment shall be made in the number of shares of Common Stock
for which Options may be granted pursuant to Article Iv hereof. A corresponding
change shall be made to the number and kind of shares, and the exercise price
per share, of unexercised Options.
IX. Merger, Consolidation or Dissolution of Corporation
Following the merger of one or more corporations into the Corporation, or
any consolidation of the Corporation and one or more corporations in which the
Corporation is the surviving corporation, the exercise of Options under this
Plan shall apply to the shares of the surviving corporation.
Not withstanding any other provision of this Plan, all Options under
this plan shall terminate on the dissolution or liquidation of the Corporation,
or on any merger or consolidation in which the Corporation is not the surviving
corporation.
X. Effective Date of Plan
This Plan shall be effective on approval by the affirmative vote of
the holders of a majority of the outstanding shares of capital stock of the
Company present or represented and entitled to vote thereon at a duly held
shareholder meeting or by unanimous written consent of the stockholders of the
Corporation in the manner required by Rule 16b-3.
XI. Amendment or Termination of Plan
The Board in its discretion may terminate this Plan at any time with
respect to any shares of Common Stock for which Options have not theretofore
been granted. The Board shall have the right to alter or amend this Plan or any
part hereof from time to time; provided, that no change in any Option heretofore
granted may be made which would impair the rights of the Optionee without the
consent of such Optionee; and provided, further, that (i) the Board may not make
any alteration or
4
<PAGE>
amendment which would decrease any authority granted to the Committee hereunder
in contravention of Rule 16b-3 and (ii) the Board may not make any alteration or
amendment which would materially increase the benefits accruing to participants
under the Plan, increase the aggregate number of shares which may be issued
pursuant to the provisions of the Plan, change the class of individuals eligible
to receive Options under the Plan or extend the term of the Plan, without the
approval of the Stockholders of the Company.
XII. Compliance with Section 16
With respect to persons subject to Section 16 of the 1934 Act, transactions
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the 1934 Act. To the extent any provision of the
Plan or action by the Committee fails to so comply, it shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee.
By: _________________________________________
Kenneth S. Shifrin, Chairman of the Board
5
<PAGE>
STOCK OPTION AGREEMENT (ISO)
----------------------------
THIS STOCK OPTION AGREEMENT (the "Agreement") is made effective as of
__________________, by and between American Physicians Service Group, Inc., (the
"Company"), and ___________________ (the "Employee").
Whereas Employee is a valued and trusted employee of the Company, and the
Company considers it desirable and in its best interests that Employee be given
an inducement to acquire a further proprietary interest in the Company and an
added incentive to advance the interests of the Company by possessing an option
to purchase shares of the Company's common stock, par value $0.01 (the "Common
Stock"), in accordance with the 1995 Incentive and Non-qualified Stock Option
Plan of the Company (the "Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
1. Grant of Incentive Stock Option. The Company hereby grants to Employee the
--------------------------------
right, privilege and option (the "Option") to purchase _____________ shares
of Common Stock (the "Option Shares") at the purchase price of $______ per
share (the "Option Price"), as in Incentive Stock Option ("ISO"), in the
manner and subject to the conditions hereinafter provided.
2. Time of Exercise of Option. Subject to the limitations contained herein,
---------------------------
the aforesaid option may be exercised at any time, and from time to time, in
whole or in part, during the period five (5) years from the date of this
agreement or until the termination thereof as provided in Section 4 below.
3. Method of Exercise. The Option shall be exercised by written notice
-------------------
directed to the Board of Directors of the Company, at the Company's
principal place of business, specifying the number of shares of Common Stock
purchased and accompanied by payment of the option price in a form suitable
to the Company. With the consent of the Option Committee, such payment may
be in the form of shares of Company stock owned by the Optionee immediately
prior to the exercise of the Option.
(a) This option is exercisable with respect to the shares in cumulative
annual installments as indicated below:
Date Number of Shares
---- ----------------
1
<PAGE>
(b) The Company shall make immediate delivery of such shares, provided that
if any law or regulation requires the Company to take any action with
respect to the shares specified in such notice before the issuance thereof,
then the date of delivery of such shares shall be extended for the period
necessary to take such action.
(c) The Option may be exercised within the above limitations and subject to
the limitations contained within this section, as to any part of all of the
shares covered thereby.
4. Termination of Option. Except as herein otherwise stated, the Option to the
----------------------
extent not heretofore exercised shall terminate upon the first to occur of
the following dates:
(a) The expiration of the option period as set out in Section 2 above.
(b) The expiration of three (3) months after the date on which an Employee's
employment by the Company is terminated for any reason other than death or
permanent and total disability;
(c) The expiration of twelve (12) months after the date on which Employee's
employment by the Company is terminated by reason of Employee's permanent
and total disability;
(d) In the event of Employee's death while in the employ of the Company,
his/her executors or administrators may exercise, within twelve (12) months
following the date of death, the Option as to any of the Option Shares not
theretofore exercised during the lifetime of Employee; or
(e) The expiration of ten (10) years following the grant of this Option,
commencing the effective date set forth above.
5. Reclassification, Consolidation or Merger. If all or any portion of the
------------------------------------------
Option shall be exercised subsequent to any share dividend, split-up,
recapitalization, merger, consolidation, combination or exchange of shares,
separation, reorganization or liquidation occurring after the date hereof,
as a result of which shares of any class of the capital stock of the Company
shall be issued in respect of the then issued and outstanding Common Stock,
or Common Stock shall be changed into the same or a different number of
shares of the same or another class or classes of the capital stock of the
Company, the person or persons so exercising the Option shall receive, for
the aggregate price paid upon such exercise, the aggregate number and class
of shares of the capital stock of the Company which, if Common Stock (as
authorized at the date hereof) had been purchased immediately prior to such
event at the price per share set forth in Section 1 hereof, such person or
persons would be holding at the time of such exercise; provided, however,
that no fractional share shall be issued upon any such exercise, and the
aggregate price paid shall be appropriately reduced on account of any
fractional share not issued. No
2
<PAGE>
adjustment shall be made in the minimum number of shares which may be
purchased at any one time, as fixed by subsection 3(c) hereof.
6. Withholding of Tax. To the extent that the exercise of this Option or the
-------------------
disposition of shares of Common Stock acquired by exercise of this Option
results in compensation income to Employee for federal or state income tax
purpose, Employee shall deliver to the Company at the time of such exercise
or disposition such amount of money or shares of Common Stock as the Company
may require to meet its obligation under applicable tax laws or regulations,
and, if Employee fails to do so, the Company is authorized to withhold from
any cash or Common Stock remuneration then or thereafter payable to Employee
any tax required to be withheld by reason of such resulting compensation
income. Upon an exercise of this Option, the Company is further authorized
in its discretion to satisfy any such withholding requirement out of any
cash or shares of Common Stock distributable to Employee upon such exercise.
7. Rights Prior to Exercise of Option. This Option is not transferable by
-----------------------------------
Employee, except in the event of his/her death as provided in Subsection
4(c) above, and during his/her lifetime is exercisable only by him/her.
Employee shall have no rights as a shareholder with respect to the Option
Shares until payment of the Option Price and delivery to him of such shares
as herein provided.
8. Modification and Waiver. Except for the Plan, this Agreement constitutes
------------------------
the entire Agreement between the parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous agreements,
representations and understandings of the parties. No supplement,
modification or amendment of this Agreement shall be binding unless executed
in writing by the party to be charged therewith. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute a
continuing waiver.
9. Applicable Law and Venue. This Agreement has been executed by the Company
-------------------------
at, and shall be deemed to be performable in, Travis County, Texas. For
these and other reasons, the parties agree that this Agreement shall be
governed by and construed in accordance with the laws of the State of Texas.
10. Jurisdiction. The parties agree that the courts of the State of Texas, and
-------------
any courts whose jurisdiction is derivative on the jurisdiction of the
courts of the State of Texas, shall have exclusive personal jurisdiction
over all parties to this Agreement.
11. Headings. The subject headings of the sections of this Agreement are
---------
included for purposes of convenience only, and shall not affect the
construction or interpretation of any of its provisions.
12. Counterparts. This Agreement may be executed simultaneously in one or more
-------------
identical
3
<PAGE>
counterparts, each of which for all purposes shall be deemed an original,
and all of which shall constitute, collectively, one instrument; but in
making proof of this Agreement, it shall not be necessary to produce or
account for more than one executed counterpart.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on
the dates indicated below, to be effective, however, as of the date first
hereinabove written.
Date: __________________________ By: _______________________________
Kenneth S. Shifrin, Chairman of
the Board
Employee:
Date: _________________________ By: _______________________________
Name
_______________________________
Address
_______________________________
Address
_______________________________
Social Security Number
4
<PAGE>
STOCK OPTION AGREEMENT (NON-QUALIFIED)
--------------------------------------
This STOCK OPTION AGREEMENT (the "Agreement") is made effective as of
__________________, by and between American Physicians Service Group, Inc., (the
"Company"), and ___________________ (the "Optionee").
Whereas Optionee is a valuable and trusted employee and or director of the
Company, and the Company considers it desirable and in its best interests that
Optionee be given an inducement to acquire a further proprietary interest in the
Company and an added incentive to advance the interests of the Company by
possessing an option to purchase shares of the Company's common stock, par value
$0.01 (the "Common Stock"), in accordance with the 1995 Incentive and Non-
qualified Stock Option Plan of the Company (the "Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
1. Grant of Non-Qualified Stock Option. The Company hereby grants to Optionee
------------------------------------
the right, privilege and option (the "Option") to purchase _____________
shares of Common Stock (the "Option Shares") at the purchase price of
$______ per share (the "Option Price"), as a Non-Qualified Stock Option, in
the manner and subject to the conditions hereinafter provided.
2. Time of Exercise of Option. Subject to the limitations contained herein,
---------------------------
the aforesaid option may be exercised at any time, and from time to time, in
whole or in part, during the period ending five (5) years from the date of
this agreement or until the termination thereof as provided in Section 4
below.
3. Method of Exercise. The Option shall be exercised by written notice
-------------------
directed to the Board of Directors of the Company, at the Company's
principal place of business, specifying the number of shares of Common Stock
purchased and accompanied by payment of the option price in a form suitable
to the Company. With the consent of the Option Committee, such payment may
be in the form of shares of Company stock owned by the Optionee immediately
prior to the exercise of the Option.
(a) This option is exercisable with respect to the shares in cumulative
annual installments as indicated below:
Date Number of Shares
---- ----------------
1
<PAGE>
(b) The Company shall make immediate delivery of such shares, provided that
if any law or regulation requires the Company to take any action with
respect to the shares specified in such notice before the issuance thereof,
then the date of delivery of such shares shall be extended for the period
necessary to take such action.
(c) The Option may be exercised within the above limitations and subject to
the limitations contained within this section, as to any part of all of the
shares covered thereby.
4. Termination of Option. Except as herein otherwise stated, the Option to the
----------------------
extent not heretofore exercised shall terminate upon the first to occur of
the following dates:
(a) The expiration of the option period as set out in Section 2 above.
(b) The expiration of three (3) months after the date on which an
Optionee's employment by the Company or director relationship with the
Company is terminated for any reason other than death or permanent and
total disability;
(c) The expiration of twelve (12) months after the date on which Optionee's
employment by the Company or director relationship with the Company is
terminated by reason of Optionee's permanent and total disability;
(d) In the event of Optionee's death while serving as director of, or in
the employ of, the Company, his/her executors or administrators may
exercise, within twelve (12) months following the date of death, the Option
as to any of the Option Shares not theretofore exercised during the
lifetime of Optionee; or
(e) The expiration of ten (10) years following the grant of this Option,
commencing the effective date set forth above.
5. Reclassification, Consolidation or Merger. If all or any portion of the
------------------------------------------
Option shall be exercised subsequent to any share dividend, split-up,
recapitalization, merger, consolidation, combination or exchange of shares,
separation, reorganization or liquidation occurring after the date hereof,
as a result of which shares of any class of the capital stock of the Company
shall be issued in respect of the then issued and outstanding Common Stock,
or Common Stock shall be changed into the same or a different number of
shares of the same or another class or classes of the capital stock of the
Company, the person or persons so exercising the Option shall receive, for
the aggregate price paid upon such exercise, the aggregate number and class
of shares of the capital stock of the Company which, if Common Stock (as
authorized at the date hereof) had been purchased immediately prior to such
event at the price per share set forth in Section 1 hereof, such person or
persons would be holding at the time of such exercise; provided, however,
that no fractional share shall be issued upon any such exercise, and the
aggregate price paid
2
<PAGE>
shall be appropriately reduced on account of any fractional share not
issued. No adjustment shall be made in the minimum number of shares which
may be purchased at any one time, as fixed by subsection 3(c) hereof.
6. Withholding of Tax. To the extent that the exercise of this Option or the
-------------------
disposition of shares of Common Stock acquired by exercise of this Option
results in compensation income to Optionee for federal or state income tax
purpose, Optionee shall deliver to the Company at the time of such exercise
or disposition such amount of money or shares of Common Stock as the Company
may require to meet its obligation under applicable tax laws or regulations,
and, if Optionee fails to do so, the Company is authorized to withhold from
any cash or Common Stock remuneration then or thereafter payable to Optionee
any tax required to be withheld by reason of such resulting compensation
income. Upon an exercise of this Option, the Company is further authorized
in its discretion to satisfy any such withholding requirement out of any
cash or shares of Common Stock distributable to Optionee upon such exercise.
7. Rights Prior to Exercise of Option. This Option is not transferable by
-----------------------------------
Optionee, except in the event of his/her death as provided in Subsection
4(c) above, and during his/her lifetime is exercisable only by him/her.
Optionee shall have no rights as a shareholder with respect to the Option
Shares until payment of the Option Price and delivery to him of such shares
as herein provided.
8. Modification and Waiver. Except for the Plan, this Agreement constitutes
------------------------
the entire Agreement between the parties pertaining to the subject matter
contained in it and supersedes all prior and contemporaneous agreements,
representations and understandings of the parties. No supplement,
modification or amendment of this Agreement shall be binding unless executed
in writing by the party to be charged therewith. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute a
continuing waiver.
9. Applicable Law and Venue. This Agreement has been executed by the Company
-------------------------
at, and shall be deemed to be performable in, Travis County, Texas. For
these and other reasons, the parties agree that this Agreement shall be
governed by and construed in accordance with the laws of the State of Texas.
10. Jurisdiction. The parties agree that the courts of the State of Texas, and
-------------
any courts whose jurisdiction is derivative on the jurisdiction of the
courts of the State of Texas, shall have exclusive personal jurisdiction
over all parties to this Agreement.
11. Headings. The subject headings of the sections of this Agreement are
---------
included for purposes of convenience only, and shall not affect the
construction or interpretation of any of its provisions.
3
<PAGE>
12. Counterparts. This Agreement may be executed simultaneously in one or more
-------------
identical counterparts, each of which for all purposes shall be deemed an
original, and all of which shall constitute, collectively, one instrument;
but in making proof of this Agreement, it shall not be necessary to produce
or account for more than one executed counterpart.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on
the dates indicated below, to be effective, however, as of the date first
hereinabove written.
Date: __________________________ By: ____________________________________
Kenneth S. Shifrin, Chairman of
the Board
Optionee:
Date: _________________________ By: ____________________________________
Name
____________________________________
Address
____________________________________
Address
____________________________________
Social Security Number
4
<PAGE>
VINSON & ELKINS
ATTORNEYS AT LAW
VINSON & ELKINS L.L.P.
3700 TRAMMELL CROW CENTER
2001 ROSS AVENUE
DALLAS, TEXAS 75201-2975
TELEPHONE (214) 220-7700
VOICE MAIL (214) 220-7999
FAX (214) 220-7716
June 28, 1996
American Physicians Service Group, Inc.
1301 Capitol of Texas Highway
Austin, TX 78746
Ladies and Gentlemen:
We have acted as counsel for American Physicians Service Group, Inc., a
Texas corporation (the "Company"), in connection with the Company's registration
under the Securities Act of 1933, as amended (the "Act"), of 800,000 shares of
common stock, par value $.10 per share (the "Shares"), of the Company pursuant
to the Company's Registration Statement on Form S-8 (the "Registration
Statement") to be filed with the Securities and Exchange Commission (the
"Commission") on July 2, 1996.
In reaching the opinions set forth herein, we have examined and are
familiar with originals or copies, certified or otherwise identified to our
satisfaction, of such documents and records of the Company and such statutes,
regulations and other instruments as we deemed necessary or advisable for
purposes of this opinion, including (i) the Registration Statement, (ii) the
Amended and Restated Articles of Incorporation of the Company, as filed with the
Secretary of State of the State of Texas, (iii) the Amended and Restated By-Laws
of the Company, and (iv) certain minutes of meetings of, and resolutions adopted
by, the Board of Directors of the Company.
We have assumed that (i) all information contained in all documents we
reviewed is true, correct and complete, (ii) all signatures on all documents we
reviewed are genuine, (iii) all documents submitted to us as originals are true
and complete, (iv) all documents submitted to us as copies are true and complete
copies of the originals thereof, and (v) all persons executing and delivering
the documents we examined were competent to execute and deliver such documents.
In addition, we have assumed that, upon exercise of the stock options pursuant
to which the Shares will be issued (the "Options"), (i) the Shares will be
issued in accordance with the Company's 1995 Incentive and Non-Qualified Stock
Option Plan, (ii) the full consideration for each Share shall be paid to the
Company and in no event will be less than the par value for each Share, and
(iii) certificates evidencing the Shares will be properly executed and delivered
by the Company in accordance with the Texas Business Corporation Act (the
"TBCA").
<PAGE>
American Physicians Service Group, Inc.
Page 2
June 28, 1996
Based on the foregoing and having due regard for the legal considerations
we deem relevant, we are of the opinion that the Shares, when issued by the
Company upon exercise of the Options in accordance with the 1995 Incentive and
Non-Qualified Stock Option Plan, will be legally issued, fully paid and non-
assessable.
This opinion is limited in all respects to the laws of the State of Texas,
the TBCA and the federal laws of the United States of America.
This opinion letter may be filed as an exhibit to the Registration
Statement. In giving this consent, we do not thereby admit that we come within
the category of persons whose consent is required under Section 7 of the Act or
the rules and regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ Vinson & Elkins L.L.P.
<PAGE>
EXHIBIT 23.1
------------
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
American Physicians Service Group, Inc.:
We consent to the use of our report incorporated herein by reference.
/s/ KPMG Peat Marwick LLP
Austin, Texas
July 1, 1996
