As filed with the Securities and Exchange Commission on
December 20, 1995
Registration No. 33-_______
_________________________________________________________________
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
__________________________________
AMERICAN TRAVELLERS CORPORATION
(Exact name of registrant as specified in charter)
Pennsylvania 23-1738097
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3220 Tillman Drive
Bensalem, Pennsylvania 19020
(Address of Principal Executive Offices)
AMERICAN TRAVELLERS CORPORATION 1995 STOCK OPTION PLAN
(Full title of the plan)
John A. Powell
Chairman of the Board and President
American Travellers Corporation
3220 Tillman Drive
Bensalem, PA 19020
(Name and address of agent for service)
[215] 244-1600
(Telephone number, including area code, of agent for service)
Copies to:
Ramon R. Obod, Esquire
Fox Rothschild O'Brien & Frankel
2000 Market Street, 10th Floor
Philadelphia, PA 19103
_________________Calculation_of_Registration_Fee______________________
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Securities Amount to be Price Offering Registration
to be Registered Registered(1) Per Share(2) Price Fee
Common Stock, 500,000 $25 1/2 $12,750,000 $4,396.58
$.01 par value Shares
_________________________________________________________________
(1) In accordance with Rule 416 under the Securities Act of
1933, also includes such additional shares as may be issued
to prevent dilution of the shares covered hereby as a result
of stock splits, stock dividends or similar transactions.
(2) Estimated solely for purposes of computing the registration
fee in accordance with Rule 457(h) under the Securities Act
of 1933.
AMERICAN TRAVELLERS CORPORATION
CROSS REFERENCE SHEET
Pursuant to Rule 404 and Item 501 of Regulations S-K
Form S-8 Item No. Heading in Prospectus
1. Plan Information
(a) General Plan Cover Page; Description of the
Information Plan - General, Purposes;
Administration; Term of the Plan and
Amendment, Suspension and
Termination of the Plan
(b) Securities to be Cover Page; Description of the
Offered Plan - General
(c) Employees Who May Description of the Plan -
Participate in the General - Purposes and -
Plan Participants and Grants -
Formula Awards to Eligible
Directors; Reports of the
Company
(d) Purchase of Securities Description of the Plan -
Pursuant to the Plan Participants and Grants -
and Payment for Formula Awards to Eligible
Securities Offered Directors
(e) Resale Restrictions Description of the Plan -
Participants and Grants -
Formula Awards to Eligible
Directors; Resale Restrictions
(f) Tax Effects of Plan Federal Tax Consequences
Participation
(g) Investment of Funds Not Applicable
(h) Withdrawal from the Description of the Plan -
Plan; Assignment of Participants and Grants -
Interest Formula Awards to Eligible
Directors
(i) Forfeitures and Description of the Plan -
Penalties Participants and Grants -
Formula Awards to Eligible
Directors
(j) Charges and Deductions Description of the Plan -
and Liens Therefor Participants and Grants -
Formula Awards to Eligible
Directors
2. Registrant Information and Reports of the Company;
Employee Plan Annual Incorporation of Certain
Information Documents by Reference
AMERICAN TRAVELLERS CORPORATION
500,000 Shares
Common Stock, $.01 Par value
This Prospectus relates to the offering by American
Travellers Corporation (the "Company") of 500,000 shares of the
Company's Common Stock, $.01 par value ("Common Stock"), pursuant
to the Company's 1995 Stock Option Plan (the "Plan") which
provides for the granting of awards covering up to 500,000 shares
of Common Stock subject to adjustment upon the occurrence of
certain events specified in the Plan, including stock dividends,
stock splits and extraordinary cash dividends. The awards which
may be issued pursuant to the Plan include stock options to
"Participants" (as defined) and stock options which may be
granted as "Formula Awards" (as defined) to "Eligible Directors"
(as defined), all as more fully described in this Prospectus.
The Common Stock of the Company is traded on the over the
counter market and quoted on the NASDAQ National Market System.
On December 19, 1995, the last reported sale price of the Common
Stock as reported by NASDAQ was $26 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is December 20, 1995.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement with the
Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended, with respect to the shares
offered hereby. The Company will provide, without charge, to
each person to whom this Prospectus is delivered, a copy of the
Company's annual report to shareholders for its last fiscal year
and, promptly upon the written or oral request of such person, a
copy of any document or part thereof incorporated by reference in
this Prospectus but not delivered herewith (not including
exhibits to such information, unless such exhibits are
specifically incorporated by reference into the information that
this Prospectus incorporates). Requests should be directed to
Susan T. Mankowski, Secretary of the Company, 3220 Tillman Drive,
Bensalem, Pennsylvania 19020 (telephone 215-244-1600).
No person is authorized to give any information or to make
any representations not contained in this Prospectus in
connection with the offer described herein, and any information
or representation not contained herein must not be relied upon as
having been authorized by the Company. This Prospectus does not
constitute an offer to sell these securities in any state to any
person to whom it is unlawful to make such offer in such state.
Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create an implication
that information herein is correct as of any time subsequent to
its date.
DESCRIPTION OF THE PLAN
General
This Prospectus relates to an aggregate of 500,000 shares of
Common Stock which may be issued pursuant to the Company's 1995
Stock Option Plan. The Plan provides for the issuance of up to
470,000 shares of the Company's Common Stock, upon the exercise
of stock options, to employees and persons with managerial,
professional or supervisory responsibilities (other than Eligible
Directors) whom the committee administering the Plan (the
"Committee") determines from time to time have the capacity to
make a substantial contribution to the success of the Company
("Participants").
The Plan also provides for the issuance of up to an
additional 30,000 shares of the Company's Common Stock upon the
exercise of stock options granted as Formula Awards to Eligible
Directors pursuant to the Plan. The Plan, which was originally
adopted by the Company's Board of Directors (the "Board of
Directors") on February 16, 1995, was approved by the Company's
shareholders on May 25, 1995 and became effective on that date.
The Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
The description of the Plan contained herein does not
purport to be complete, and reference is made to the Plan and to
the respective agreements evidencing awards made pursuant to the
Plan for a full statement of the terms and provisions applicable
to such awards.
The principal office of the Company is located at 3220
Tillman Drive, Bensalem, Pennsylvania and its telephone number is
(215) 244-1600.
Purposes
The purposes of the Plan are to enable the Company and its
subsidiaries to attract and retain the services of key employees
and persons with managerial, professional or supervisory
responsibilities, including, but not limited to, members of the
Board of Directors, officers of, and consultants to, the Company,
responsible for the past and continued success of the Company,
and to provide them with increased motivation and incentive to
exert their best efforts on behalf of the Company by enlarging
their personal stake in its success.
Administration
The Plan is administered by the Committee which, according
to the terms of the Plan, must consist of two or more directors
of the Company designated by the Board of Directors. Except to
the extent an Eligible Director is permitted to receive Formula
Awards, members of the Committee are not eligible to participate
in the Plan and no such member may have otherwise participated in
the Plan or any other plan of the Company or its subsidiaries
providing for the acquisition of stock, stock options, or other
types of grants permitted pursuant to the Plan within one year
prior to serving on the Committee. Subject to the limitations of
the Plan, the Committee has the sole and complete authority to:
(i) interpret and administer the Plan and stock options granted
pursuant thereto; (ii) make and interpret rules and regulations
for the administration of the Plan and to make changes in and
revoke such rules and regulations (and in the exercise of this
power, shall generally determine all questions of policy and
expediency that may arise and may correct any defect, omission,
or inconsistency in the Plan or any agreement evidencing the
grant of any stock option in a manner and to the extent it shall
deem necessary to make the Plan fully effective); (iii) determine
those persons to whom stock options other than Formula Awards
shall be granted and the number of stock options other than
Formula Awards to be granted to any such person; (iv) determine
the terms of stock options other than Formula Awards granted
under the Plan, consistent with the provisions of the Plan; and
(v) generally, exercise such powers and perform such acts in
connection with the Plan as are deemed necessary or expedient to
promote the best interests of the Company. The interpretation
and construction by the Committee of any provisions of the Plan
or of any stock option shall be final, binding and conclusive.
The Committee's determinations on matters within its authority
are conclusive and binding upon the Company and all other
persons. There is no set term for the members of the Committee
and they can be removed with or without cause by the Board of
Directors of the Company.
The present Committee members, each of whom is a director of
the Company, are Walter J. Diener and Arnold H. Keehn.
Limitation on Aggregate Shares
The number of shares of Common Stock which may be issued
pursuant to the Plan upon the exercise of stock options granted
to Participants and Formula Awards to Eligible Directors may not
exceed, in the aggregate, 500,000 shares. Of such shares, the
number available for issuance pursuant to Formula Awards granted
to Eligible Directors under the Plan is 30,000. To the extent
any stock options granted to Participants or granted to Eligible
Directors as Formula Awards expire unexercised or unpaid or are
cancelled, terminated or forfeited in any manner without the
issuance of shares of Common Stock thereunder, such shares will
again be available under the Plan. The shares of Common Stock
issued pursuant to the Plan may be either authorized and unissued
shares, treasury shares, or a combination thereof, as the
Committee determines.
Participants and Grants
General. Stock options may be granted by the Committee to
those persons other than Eligible Directors who the Committee
determines have the capacity to make a substantial contribution
to the success of the Company. The Committee may grant stock
options to purchase such number of shares of Common Stock
(subject to the aggregate limitations set forth in the Plan) as
the Committee may, in its sole discretion, determine.
Notwithstanding the foregoing, no Participant shall be granted
stock options in any year (a consecutive twelve (12) month
period) to purchase in excess of 200,000 shares of Common Stock.
In granting stock options other than Formula Awards under the
Plan, the Committee, on an individual basis, may vary the number
of incentive stock options or non-qualified stock options as
between Participants and may grant incentive stock options and/or
non-qualified stock options to a Participant in such amounts as
the Committee may determine in its sole discretion.
Price and Other Terms of Options. Options granted to a
Participant under the Plan may be incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended, and any successor statute (the "Code"), or in such
other form, consistent with the Plan, as the Committee may
determine. The option price per share of Common Stock for an
option granted to a Participant must be fixed by the Committee at
not less than 100% of the "fair market value" of a share of
Common Stock on the date of grant. For purposes of options to
Participants, the term "fair market value" of the Common Stock
means the last reported sale price of the Common Stock as
reported on NASDAQ on the day immediately preceding the date fair
market value is to be determined. Options granted to a
Participant will be exercisable at such time or times as the
Committee determines at or subsequent to grant. Options granted
to a Participant will be exercisable in whole or in part by
written notice to the Company (to the attention of the Company's
Secretary), signed by the Participant exercising the option,
stating the number of shares of Common Stock with respect to
which the option is being exercised and accompanied by payment in
full of the option price. Payment of the option price for an
option granted to a Participant may be made, at the discretion of
the optionee, (A) in cash (including check, bank draft, or money
order), (B) in Common Stock (valued at the "fair market value"
thereof on the date of exercise), or (C) by a combination of cash
and Common Stock. The Committee may, in its discretion, impose
limitations, conditions and prohibitions on the use by a
Participant of shares of Common Stock to pay the purchase price
payable by such Participant upon exercise of a stock option. The
date both such notice and payment are received by the office of
the Secretary of the Company will be the date of exercise for the
option as to the number of shares specified.
Incentive stock options may be granted to purchase Common
Stock under the Plan at not less than the fair market value of
the shares as of the date of grant (or 110% of fair market value
in the case of any officer or employee holding in excess of 10%
of the combined voting power of all classes of the Company's
stock as of the date of grant). To the extent that an optionee
is granted incentive stock options under the Plan to purchase
Common Stock having a fair market value (determined as of the
date of grant) which exceeds $100,000 with respect to incentive
stock options which are exercisable for the first time by such
optionee in any calendar year under all stock option plans of the
Company, such excess stock options will be treated as non-
qualified stock options.
Agreements. Each stock option granted to a Participant
under the Plan shall be evidenced by an agreement in such form
and containing such terms and conditions (not inconsistent with
the Plan) as the Committee shall determine in its sole
discretion.
Non-Transferability. No stock option shall be transferable
except by will or the laws of descent and distribution, nor shall
any stock option be exercisable during the Participant's lifetime
by any person other than the Participant or his guardian or legal
representative.
Tax Withholding. The Company's obligations under the Plan
are subject to applicable Federal, state and local tax
withholding requirements. Federal, state and local withholding
tax due at the time of a grant or upon the exercise of any stock
option may, in the discretion of the Committee, be paid in shares
of Common Stock already owned by the Participant or through the
withholding of shares otherwise issuable to such Participant,
upon such terms and conditions as the Committee shall determine.
If the Participant shall fail to pay, or make arrangements
satisfactory to the Committee for the payment, to the Company of
all such Federal, state and local taxes required to be withheld
by the Company, then the Company shall, to the extent permitted
by law, have the right to deduct from any payment of any kind
otherwise due to such Participant an amount equal to any federal,
state or local taxes of any kind required to be withheld by the
Company.
No Right to Employment. Neither the adoption of the Plan
nor its operation, nor any document describing or referring to
the Plan, or any part thereof, nor the granting of any stock
options thereunder, shall confer upon any Participant under the
Plan any right to continue in the employ of the Company or any
subsidiary of the Company, or shall in any way affect the right
and power of the Company or any subsidiary to terminate the
employment of any such Participant at any time with or without
assigning a reason therefor, to the same extent as might have
been done if the Plan had not been adopted.
Termination. Options expire immediately in the event a
Participant is terminated with or without cause (except due to
death, total disability or retirement as provided below) or
resigns; provided, however, in the event the Company terminates
the employment of a Participant who at the time of such
termination was an officer of the Company and had been
continuously employed by the Company during the five year period
immediately preceding such termination, for any reason except
"good cause" (as defined in the Plan), each stock option held by
such Participant (which had not then previously lapsed or
terminated and which had been held by such Participant for more
than six (6) months prior to such termination) shall become
immediately exercisable as to the total number of shares of
Common Stock and shall remain so exercisable for a period of
three (3) months after such termination unless, in either case,
such option expires earlier by its terms.
In the event of a termination as to a Participant's
employment by the Company or its subsidiaries by reason of
permanent and total disability as determined by the Committee
("Total Disability"), or by retirement in accordance with Company
policies ("Retirement"), any outstanding stock option which shall
not have previously lapsed or terminated shall be, or immediately
become, fully exercisable as to the total number of shares of
Common Stock subject thereto (whether or not exercisable to that
extent prior to termination of employment) and shall remain so
exercisable but only for a period of six (6) months with respect
to Total Disability and three (3) months with respect to
Retirement, unless, in either case, such stock option expires
earlier by its terms.
In the event of the death of a Participant, any outstanding
stock option which shall not have lapsed or terminated prior to
such Participant's death shall be immediately, or become, fully
exercisable by the executors or administrators of such
Participant's estate, or by the person or persons to whom the
deceased Participant's rights thereunder shall have passed by
will or by the laws of descent or distribution, as may be
appropriate, as to the total number of shares of Common Stock
subject thereto (whether or not exercisable to that extent at the
time of death) and shall remain so exercisable for a period of
six (6) months after such Participant's death unless, in either
case, such stock option expires earlier by its terms.
In the event of the termination of a Participant's service
as a director of the Company, who at the time of such termination
was an Eligible Director and had continuously served as a
director of the company during the five (5) year period
immediately preceding such termination, and such termination is
for any reason except for such Participant's death or total
disability or the removal of such Participant as director (by the
shareholders, the Board of Directors or otherwise) for "good
cause" (as defined in Section 3.7(e) of the Plan), each stock
option held by such Participant (which has not previously lapsed
or terminated and which has been held by such Participant for
more than six (6) months prior to such termination) shall
immediately become fully exercisable as to the total number of
shares of Common Stock subject thereto (whether or not
exercisable to that extent at the time of such termination) and
shall remain so exercisable for a period of three (3) months
after such termination unless such stock option expires earlier
by its terms.
All aforementioned exercise periods applicable to stock
options upon a termination of employment, whether on account of
Total Disability, Retirement, death or otherwise, are subject to
the further limitation that no option granted pursuant to the
Plan may, in any case, be exercisable beyond the stated
expiration date of such option.
Formula Awards to Eligible Directors
General. The Plan provides for the grant of Formula Awards
to Eligible Directors in accordance with the terms of the Plan.
As defined in the Plan, the term "Eligible Director" means a
member of the Board of Directors who is not otherwise an employee
of the Company or any subsidiary of the Company. Each Formula
Award granted under the Plan is to be evidenced by an agreement
duly executed on behalf of the Company and by the Eligible
Director to whom such Formula Award is granted and dated as of
the applicable date of grant. Each such agreement must comply
with and is subject to the terms and conditions of the Plan. Any
Formula Award agreement may contain such terms, provisions and
conditions not inconsistent with the Plan as may be determined by
the Committee. All Formula Awards granted under the Plan will be
non-statutory options not intended to qualify as incentive stock
options under Section 422 of the Code.
Formula Awards. Subject to the terms of the Plan, an option
to purchase 1,000 shares of Common Stock shall be granted
automatically each year, immediately following the annual meeting
of the Company's shareholders to each director of the Company who
is an Eligible Director immediately following such annual meeting
beginning with the 1995 Annual Meeting of the Company's
shareholders (each, a "Formula Award").
Formula Award Exercise Price. The exercise price per share
for a Formula Award shall be the average of the "fair market
value" for the fifth (5th) through the ninth (9th) "business
days" (defined in the Plan as those days on which the NASDAQ is
open for trading) following the date of grant. For purposes of
the preceding sentence, "fair market value" means the last
reported sale price of the Common Stock as reported on NASDAQ.
Vesting and Exercisability. Except as otherwise provided in
the Plan, a Formula Award shall immediately vest upon the grant
of the Formula Award. A Formula Award shall become exercisable
immediately upon vesting for all directors who have served as
directors of the Company for a total of five (5) consecutive
years as of the date of the grant. If a director has not served
as a director for such period as of the date of the grant, the
Formula Award shall become exercisable according to the following
schedule:
Period of Optionee's Continuous Service Portion of
Formula as a Director of the Company Award that is
Following the Date of the Grant Exercisable
Twelve months.................................33 1/3%
Eighteen months...............................66 2/3%
Twenty-Four months............................100 %
Except as otherwise provided in the Plan, any Formula Award,
to the extent the same is exercisable in accordance with the
Plan, is exercisable in whole or in part at any time or from time
to time until the expiration or termination in accordance with
the Plan by written notice to the Company, signed by the person
exercising the Formula Award, stating the number of shares with
respect to which the Formula Award is being exercised,
accompanied by payment in full of the exercise price for the
number of shares to be purchased. The date both such notice and
payment are received by the office of the Secretary of the
Company shall be the date of exercise of the Formula Award as to
such number of shares.
Term of Formula Awards. Each Formula Award not earlier
terminated shall have a term of 10 years commencing on its date
of grant. In the event of the termination of a Formula Award
holder's service as a director of the Company, by reason of his
or her removal as Director (by the shareholders, the Board of
Directors, or otherwise) the then-outstanding Formula Awards of
such holder (whether or not then exercisable) shall automatically
expire on (and may not be exercised on) the effective date of
such termination. In the event of the termination of a Formula
Award holder's service as a director of the Company by reason of
retirement or total and permanent disability, the then-
outstanding Formula Awards of such holder not then exercisable
shall become exercisable on the date of such termination, and
each Formula Award then held by such holder shall expire one (1)
year after the date of such termination or on the stated grant
expiration date, whichever is earlier. For purposes of the Plan,
the term "by reason of retirement" means (i) mandatory retirement
pursuant to Board policy or (ii) termination of service on or
after such holder's 65th birthday. In the event of the death of
a Formula Award holder while the holder is a director of the
Company, the then outstanding Formula Awards of such holder not
then exercisable shall become exercisable on the date of such
termination, and each Formula Award then held by such holder
shall expire one (1) year after the date of death of such holder
or on the stated grant expiration date, whichever is earlier. In
the event of the termination of a Formula Award holder's service
as a director for any reason other than as described above,
including without limitation, expiration of the director's term
in office (without renomination or reelection) or by resignation,
the then outstanding Formula Awards of such holder not then
exercisable shall be exercisable to the full extent such Formula
Awards were exercisable immediately prior to such termination,
and each such Formula Award shall expire three (3) months after
the effective date of such termination or on the stated grant
expiration date, whichever is earlier.
Transfer Restrictions. The right of any holder of a Formula
Award to exercise a Formula Award shall, during the lifetime of
such holder, be exercisable only by such holder or pursuant to a
qualified domestic relations order as defined by the Code or
Title 1 of the Employee Retirement Income Security Act, or the
rules thereunder (a "QDRO") and shall not be assignable or
transferable by such holder other than by will or the laws of
descent and distribution or a QDRO.
Limitation of Rights. Neither the recipient of a Formula
Award nor such recipient's successors in interest shall have any
rights as a shareholder on account of such award until the date
of issuance of a stock certificate evidencing shares acquired
upon their purchase pursuant to such Formula Award and then only
to the extent of any rights evidenced by such shares. Neither
the Plan, nor the granting of a Formula Award, nor any other
action taken pursuant to the Plan shall constitute or be evidence
of any agreement or understanding, express or implied, that an
Eligible Director has a right to continue as a director of the
Company for any period of time or at any particular rate of
compensation.
Commencement of Grants of Formula Awards. Notwithstanding
any provision in the Plan to the contrary, no Formula Award shall
be granted pursuant to the Plan unless and until no additional
Formula Awards may be granted pursuant to the Company's 1993
Stock Option Plan.
Capital Adjustments. The aggregate number of shares with
respect to which a Formula Award may be granted to an Eligible
Director under the Plan, the number and class of shares subject
to each outstanding Formula Award, and the exercise price per
share specified in each such Formula Award shall be
proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a split-up
or consolidation of shares or any like capital adjustment or the
payment of any stock dividend, or other increase or decrease in
the number of such shares effected without receipt of
consideration by the Company.
Awards Outstanding
As of the date of this Prospectus, options were awarded
(other than Formula Awards) pursuant to the Plan to Participants
to purchase a total of 368,868 shares of Common Stock. Of that
total, (i) 240,368 options were granted on May 25, 1995 at an
exercise price of $18.00 per share, which options expire on May
24, 2005 and (ii) 128,500 options were granted on November 9,
1995 at an exercise price of $23.625 per share, which options
expire on November 8, 2005. All such options become exercisable
at various times. No Formula Awards have been issued to date.
Term of the Plan
Unless extended by the shareholders of the Company or
earlier terminated by the Board of Directors, the Plan will
expire on February 15, 2005 and, thereafter no awards may be made
pursuant to the Plan. However, the Plan will continue after such
date to govern all awards granted before that date until the
exercise, expiration or cancellation of such awards.
Adjustments Upon Certain Changes
In the event of changes to the outstanding shares of Common
Stock of the Company through reorganization, merger,
consolidation, recapitalization, reclassification, stock split-
up, stock dividend, stock consolidation or otherwise, or in the
event of a sale of all or substantially all of the assets of the
Company, an appropriate and proportionate adjustment shall be
made in the number and kind of shares as to which stock options
may be granted to Participants. A corresponding adjustment
changing the number or kind of shares and/or the purchase price
per share of unexercised stock options or portions thereof which
shall have been granted prior to any such change shall likewise
be made. Notwithstanding the foregoing, in the case of a
reorganization, merger or consolidation, or sale of all or
substantially all of the assets of the Company, in lieu of
adjustments as aforesaid, the Committee may in its discretion
accelerate the date after which a stock option may or may not be
exercised or the stated expiration date thereof. Adjustments or
changes under this Section shall be made by the Committee, whose
determination as to what adjustments or changes shall be made,
and the extent thereof, shall be final, binding and conclusive.
Amendment, Suspension and Termination of Plan
The Board of Directors may amend, terminate or suspend the
Plan at any time, in its sole and absolute discretion. The Board
of Directors may from time to time make such amendments to the
Plan as it may deem advisable, including, with respect to
incentive stock options, amendments deemed necessary or desirable
to comply with Section 422 of the Code and any regulations issued
thereunder; provided, however, that (i) no amendment shall be
made more than once every six (6) months that would change the
amount, price or timing of Formula Awards, and (ii) without the
approval of the Company's shareholders no amendment shall be made
which:
(i) increases the maximum number of shares of Common
Stock which may be subject to Stock Options
granted under the Plan (other than in connection
with a recapitalization or certain other events
pursuant to the terms of the Plan; or
(ii) extends the term of the Plan; or
(iii) increases the period during which a stock option
may be exercised beyond ten years from the date of
the Plan; or
(iv) otherwise materially increases the benefits
accruing to Participants or Eligible Directors
under the Plan; or
(v) materially modifies the requirements as to
eligibility for participation in the Plan; or
(vi) will cause stock options granted under the Plan,
including Formula Awards, to fail to meet the
requirements of Rule 16b-3.
Governing Law
The Plan provides that its validity and construction, and
the validity and construction of its rules and regulations and
any agreements entered into thereunder, shall be governed by the
laws (other than choice of law provisions) of the Commonwealth of
Pennsylvania.
FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a general summary of the Federal income
tax aspects of the Plan. State and local income and other tax
consequences are not discussed and may vary from state to state.
Tax Deductibility Under Code Section 162(m). Section 162(m) of
the Code disallows a public company's deductions for employee
remuneration exceeding $1,000,000 per year for certain
executives, but contains an exception for qualified "performance-
based compensation." In December 1993, the Internal Revenue
Service issued proposed regulations interpreting this provision.
The Plan has been drafted and is intended to be administered to
enable stock options granted under the Plan to qualify as
"performance-based compensation," and the discussion below
assumes that they will. However, until these regulations are
finalized, there can be no assurance that all of their
requirements will be met.
Non-qualified Stock Options and Formula Awards. For Federal
income tax purposes, the recipient of a non-qualified option
(including Formula Awards) granted under the Plan will not
recognize any income for Federal income tax purposes upon the
grant of the option, nor will the Company then be entitled to any
deduction. Generally, upon exercise of a non-qualified option,
the optionee will recognize ordinary income, and the Company will
be entitled to a deduction, in an amount equal to the excess of
the fair market value of the stock at the date of exercise over
the exercise price of the option. An optionee's basis in the
stock acquired pursuant to a non-qualified option, for purposes
of determining his gain or loss on his subsequent disposition of
the shares, will generally be equal to the fair market value of
the stock on the date of exercise of the non-qualified option.
Optionees who are subject to the short-swing profit
restrictions of Section 16(b) of the Securities Exchange Act of
1934, as amended, unless they elect within 30 days of exercising
a non-qualified stock option to be taxed as of the time of such
exercise (on the basis of the fair market value of the stock at
such time), are permitted to defer the calculation and imposition
of the tax on the gain realized from the exercise until the
earlier of (i) the expiration of the six month period under
Section 16(b), or (ii) the first day on which the sale of such
stock at a profit will not subject the optionee to liability to
the Company for the profit.
Incentive Stock Options. An employee generally recognizes no
income when an incentive stock option is granted to him or when
that option is exercised. It should be noted, however, that for
purposes of the alternative minimum tax under Section 55 of the
Code, an incentive stock option is treated as a non-qualified
stock option. As a result, the excess of the fair market value
of the shares subject to an incentive stock option, determined at
the time of exercise, over the exercise price constitutes
ordinary income for purposes of the alternative minimum tax.
Therefore, depending upon his other circumstances, the Optionee
may be subject to the alternative minimum tax with regard to the
exercise of an incentive stock option. For purposes of the
alternative minimum tax, the basis of stock acquired through the
exercise of an incentive stock option is equal to the fair market
value taken into account in determining the amount of ordinary
income recognized with respect to such option.
Upon a disposition of shares acquired pursuant to an
incentive stock option, the optionee will recognize long-term
capital gain and the Company will not be entitled to a deduction
as long as the optionee does not dispose of the shares, either
(i) within two years after the grant of the option, or (ii)
within one year after the exercise of the option. However, if
the optionee does not satisfy these holding periods, the optionee
will recognize ordinary income upon such a disposition equal to
the lesser of (i) the excess of the fair market value of the
shares at the time of exercise over the exercise price paid for
such shares, or (ii) the gain realized upon such disposition.
The Company will be entitled to a deduction only to the extent
the optionee must recognize ordinary income with respect to such
incentive stock option.
The Optionee's basis (for purposes of determining the amount
of gain or loss upon a subsequent disposition of shares that
satisfies the holding period requirements) in shares acquired
upon the exercise of an incentive stock option is equal to the
exercise price of the shares in the event that the entire
exercise price is paid in cash. If all or a portion of the
exercise price is paid in the form of shares already owned by the
optionee, Proposed Treasury Regulations indicate that the basis
in the shares received upon such an exercise will be as follows:
(i) For that number of shares which is equal to the
number of already-owned shares that are delivered to the
Company in part or full payment of the exercise price, the
basis is the same as the basis of such already-owned shares;
and
(ii) For any shares of Common Stock received in excess
of the number of already-owned shares of Common Stock that
are delivered to the Company in part or full payment of the
exercise price, the basis is equal to the amount of cash, if
any paid, in connection with the exercise of the option.
It should also be noted that the delivery of already-owned
shares in part or full payment of the exercise price of a stock
option will constitute a disqualifying disposition of such
already-owned shares if (i) such already-owned shares were
previously acquired by the exercise of an incentive stock option
and (ii) at the time of delivery of the already-owned shares the
Optionee has not satisfied the required holding period with
respect to such already-owned shares.
Taxation of Capital Gains and Ordinary Income. Currently, the
maximum Federal income tax rate for individuals applicable to
long-term capital gains is 28%, whereas the maximum Federal
income tax rate for individuals applicable to ordinary income is
36% (39.6% for individuals with taxable income over $250,000).
Capital losses generally are only deductible against capital
gains and, for individuals, a limited amount ($3,000 per year) of
ordinary income.
The Plan is not qualified under Section 401(a) of the Code.
RESALE RESTRICTIONS
Certain officers and directors of the Company may be deemed
to be "affiliates" of the Company for purposes of the Securities
Act of 1933. Shares acquired under the Plan by an affiliate or,
under certain conditions, by persons who are not employees of the
Company at the time of exercise of the options or not otherwise
deemed to be employees of the Company, may only be reoffered or
resold pursuant to an effective registration statement under the
Securities Act of 1933 or in accordance with Rule 144 thereunder.
An affiliate, or any person who is not an employee of the Company
or not deemed to be an employee of the Company, may not reoffer
or resell shares by means of this Prospectus.
Under Section 16(b) of the Securities Exchange Act of 1934,
as amended, if a director or officer of the Company, or a person
who beneficially owns, directly or indirectly, more than ten
percent of the Common Stock of the Company, purchases and sells,
or sells and then purchases, Common Stock of the Company within a
six-month period, any profit derived from such transactions
within the meaning of Section 16(b) must be paid to the Company.
The provisions of Section 16(b) are generally known as the
"short-swing profit" provisions. However, in certain cases
specific rules exempt certain transactions from the short-swing
profit provisions provided applicable conditions set forth in the
rules are complied with. All directors and officers of the
Company and all persons who beneficially own, directly or
indirectly, more than ten percent of the Common Stock of the
Company, should, therefore, consider the limitations imposed by
Section 16(b) prior to purchasing or selling any Common Stock.
REPORTS OF THE COMPANY
The Company's Quarterly and Annual Reports to Shareholders,
proxy soliciting material and other communications distributed to
the Company's shareholders generally will be provided to all
Participants and Eligible Directors whether or not they are
shareholders of the Company. If a Participant or Eligible
Director does not for some reason receive a copy of any of such
reports, material or other communications, he or she may obtain
copies of the same which the Company will provide promptly
without charge upon written or oral request. Such request should
be directed to Susan T. Mankowski, Secretary, 3220 Tillman Drive,
Bensalem, PA 19020, (215-244-1600).
Participants and Eligible Directors will be provided from
time to time such reports, if any, concerning the amount and
status of stock options and Formula Awards as the Committee deems
appropriate. While the Committee does not have any present
intention of issuing such reports on a regular basis, any
Participant or Eligible Director may obtain information
concerning the amount and status of his or her stock options or
Formula Awards by contacting Susan T. Mankowski at the address or
telephone number indicated in the preceding paragraph.
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference, the following
documents, each of which shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing
thereof with the Securities and Exchange Commission:
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994;
(b) The Company's Quarterly Reports on Form 10-Q for the
three months ended March 31, 1995, June 30, 1995 and
September 30, 1995, respectively;
(c) The Company's Proxy Statement dated April 21, 1995;
(d) The description of the Company's Common Stock, $.01 par
value, set forth on page 25 of Amendment No. 1 to the
Company's Registration Statement on Form S-2, dated
July 18, 1990.
All reports and other documents subsequently filed by the
Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, as amended, prior to the filing
of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such
reports and documents.
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
PART II
Item 3. Incorporation of Documents by Reference
Reference is made to the information appearing under the
heading "Incorporation of Certain Documents by Reference" in the
Prospectus constituting a part of this Registration Statement,
which information is incorporated herein by this reference.
Item 4. Description of Securities
Not Applicable.
Item 5. Interests of Named Experts and Counsel
Legal Matters
Legality of the shares offered hereby has been passed upon
for the Company by Fox, Rothschild, O'Brien & Frankel, 2000
Market Street, 10th Floor, Philadelphia, Pennsylvania 19103.
Ramon R. Obod, a Director of the Company, is a partner in the
firm of Fox, Rothschild, O'Brien & Frankel.
Experts
The consolidated financial statements and schedules of the
Company and its subsidiaries contained in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1994
which have been incorporated herein by reference, have been
audited by Arthur Andersen LLP, independent public accountants,
as indicated in their report with respect thereto, and is
included herein upon the authority of such firm as experts in
accounting and auditing.
Item 6. Indemnification of Directors and Officers
Under Sections 1741 through 1750 of the Pennsylvania
Business Corporation Law of 1988, as amended, and Section 8365 of
the Pennsylvania Directors' Liability Act, the Company has the
power to indemnify directors and officers under certain
prescribed circumstances and subject to certain limitations
against certain costs and expenses, including attorney's fees,
actually and reasonably incurred in connection with any action,
suit or proceeding, whether civil, criminal, administrative or
investigative, to which any of them is a party by reason of his
being a director or officer of the Company if it is determined
that he acted in accordance with the applicable standard of
conduct set forth in such statutory provisions. Such
indemnification may be made whether or not the Company would have
the power to indemnify the director under any other provision of
law and whether or not the indemnified liability arises or arose
from any action by or in the right of the Company.
The Company may also purchase and maintain insurance for the
benefit of any director or officer and which may cover claims for
which the Registrant could not indemnify such person.
Article 8 of the Articles of Incorporation of the Company
provides as follows:
"The Corporation shall indemnify any and all of its present
or former directors and officers and any person who is or was
serving at the request of the Corporation as a director or
officer of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with
respect to employee benefit plans, to the fullest extent
permitted by law. Such right of indemnification shall not be
exclusive of any other right which such officers and directors of
the Corporation and other persons may have or hereafter acquire
and, without limiting the generality of such statement, they
shall be entitled to their respective rights of indemnification
under any By-Law, agreement, vote of shareholders, provision of
law or otherwise, as well as their rights under this Article.
The foregoing indemnification provisions shall be retroactive to
January 27, 1987 to the fullest extent permitted by law."
Article X of the By-Laws of the Company provides as follows:
"1. Right to Indemnification: Each person who was or is
made a party or is threatened to be made a party to or is
involved in any action, suit or proceeding (hereinafter a
"proceeding"), whether civil, criminal, administrative or
investigative, including, without limitation, an action or suit
by or in the right of the Corporation, by reason of the fact that
he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in
an official capacity as director or officer, or in any other
capacity, shall be indemnified and held harmless by the
Corporation to the fullest extent and manner authorized or
permitted by the laws of the Commonwealth of Pennsylvania, as the
same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights then
said law permitted the Corporation to provide prior to such
amendment), against all expense, liability and loss (including
attorneys' fees, judgments, penalties, fines, ERISA excise taxes
or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person
who has ceased to be a director or officer and shall inure to the
benefit of his or her heirs, executors and administrators:
provided, however, that except as provided in subsection 4
hereof, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part
thereof) was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this
Section shall be a contract right and each person to whom this
right to indemnification applies shall be a third party
beneficiary of such right and shall be entitled to enforce
against the Corporation all indemnification and other rights
granted to such person by this such proceeding in advance of the
final disposition of a proceedings shall be made only upon
delivery to the Corporation of an undertaking, by or on behalf of
such director or officer to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is
not entitled to be indemnified under this Section or otherwise.
The Corporation may, by action of its Board of Directors, provide
indemnification to employees, agents or fiduciaries of the
Corporation or to any person who is or was serving at the request
of the Corporation as an employee, agent or fiduciary of another
corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to any employee
benefit plan, with the same or lesser scope and effect as set
forth herein and in the other subsections of this Section. If
and to the extent that the laws of the Commonwealth of
Pennsylvania require that indemnification be provided in a given
instance only if the person acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal
proceeding, had no reasonable cause to believe his or her conduct
was unlawful, then termination of any proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere
or its equivalent, shall not of itself create a presumption that
the person did not act in good faith and in a manner which he or
she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal
proceedings, that he or she had reasonable cause to believe that
his or her conduct was unlawful. Termination of any proceeding
by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not of itself be a
determination by a court that the act or failure to act giving
rise to a claim for indemnification constituted willful
misconduct or recklessness.
2. Denial of Right to Indemnification: Indemnification
under subsection 1 above shall be made by the Corporation unless
a determination is reasonably and promptly made that
indemnification of a director or officer is not proper in the
circumstances because of grounds for denying indemnification
under this Section or under applicable law. Such determination
may be made only (i) by the Board of Directors by a majority vote
of a quorum consisting of directors who were not parties to such
proceeding ("disinterested directors"), or (ii) if such quorum is
not obtainable, or even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel
in a written opinion, or (iii) by the shareholders.
3. Expenses in Successful Defense: Notwithstanding any
other provision of this Section, to the extent that a director or
officer of the Corporation has been successful on the merits or
otherwise in defense of any proceeding referred to in subsection
1 above or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
4. Right of Claimant to Bring Suit: If a claim under
subsection 1 of this Section is not paid in full by the
Corporation within thirty (30) days after a written claim has
been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in
part, the claimant shall be entitled to be paid also the expense
of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its
final disposition where the required undertaking, if any is
required, has been tendered to the Corporation) that the claimant
has not met the standards of conduct which make it permissible
under the laws of the Commonwealth of Pennsylvania for the
Corporation to indemnify the claimant for the amount claimed, but
the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its shareholders) that
the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
5. Non-Exclusivity of Rights: The rights to
indemnification and the payment of expenses incurred in a
proceeding in advance of its final disposition conferred in this
Section shall not be exclusive of any right which any person may
have or hereafter acquire under any statute, provision of the
Articles of Incorporation, by-law, agreement, vote of
shareholders or disinterested directors or otherwise.
6. Insurance: The Corporation may maintain insurance, at
its expense, to protect itself and any director, officer,
employee, agent or fiduciary of the Corporation or another
corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not
the Corporation would have the power to indemnify such person
against such expense, liability or loss under the laws of the
Commonwealth of Pennsylvania.
7. Interpretation: For purposes of this Section:
(a) References to "the Corporation" shall upon written
resolution of the Board of Directors of the Corporation include,
in addition to the Corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had
continued, would have had the power and authority to indemnify
its directors or officers, so that any person who is or was a
director or officer of such constituent corporation, or is or was
serving at the request of such constituent corporation as a
director or officer of another corporation, shall for purposes of
this Section be deemed to hold the same position in the
Corporation as he or she held in such constituent corporation.
(b) A person who acted in good faith and in a manner he or
she reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the
Corporation" as referred to in this Section.
8. Amendment or Repeal: This Section may hereafter be
amended to repealed: provided, however, that no amendment or
repeal shall reduce, terminate or otherwise adversely affect the
right of a person who is or was a director or officer to obtain
indemnification or advancement of expenses with respect to a
proceeding that pertains to or arises out of actions or omissions
that occur prior to the effective date of such amendment or
repeal, which date cannot be retroactive."
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
Regulation S-K Exhibit No. Description
4(a) 1995 Stock Option Plan
4(b) Articles of Incorporation, as
amended - Incorporated by reference
to (i) Exhibit 3(a) of the
Registrant's Registration Statement
on Form S-3 (File No. 33-94614)
4(c) Amended and Restated By-laws -
Incorporated by reference to
Exhibit 3(b) to the Registrant's
Registration Statement on Form S-3
(File No. 33-94615)
5 Opinion of Fox, Rothschild,
O'Brien & Frankel
23(a) Consent of Fox, Rothschild,
O'Brien & Frankel. Reference
is made to item 5.
23(b) Consent of Arthur Andersen LLP
Item 9. Undertakings
The Company hereby undertakes 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 to the registration
statement.
The Company hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of a post-effective amendment to this 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.
The Company hereby undertakes 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 Plan.
The Company hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Company's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and
where applicable, each filing of an employee benefit plan's
annual report pursuant to this Section 15(d) of the Securities
Exchange Act of 1934) 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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the
registrant 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
registrant 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 Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant 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 Bensalem, Commonwealth of Pennsylvania, on December
15, 1995.
AMERICAN TRAVELLERS CORPORATION
By:/s/ John A. Powell
John A. Powell, President,
Chairman of the Board and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints John A. Powell
and Walter J. Diener, and each of the/m, his or her true and
lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this
registration statement, and to file the same with all exhibits
thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done,
as fully to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ John A. Powell President, Chairman of December 15, 1995
John A. Powell the Board, Chief
Executive Officer and
Director
/s/Benedict J. IacovettiTreasurer and Chief December 15, 1995
Benedict J. Iacovetti Financial and Accounting
Officer
/s/ Susan T. Mankowski Vice-President-Internal December 15, 1995
Susan T. Mankowski Business Systems,
Secretary and Director
/s/ Walter E. Conrad Director December 15, 1995
Walter E. Conrad
/s/ Walter J. Diener Director December 15, 1995
Walter J. Diener
/s/ Arnold H. Keehn Director December 15, 1995
Arnold H. Keehn
/s/ Alice E. Powell Director December 15, 1995
Alice E. Powell
/s/ Ramon R. Obod Director December 15, 1995
Ramon R. Obod
/s/ Henry G. Hager Director December 15, 1995
Henry G. Hager
Pursuant to the requirements of the Securities Act of 1933, the
Committee which administers the Plan has duly caused this registration
statement to be signed on its behalf by the undersigned, there unto
duly authorized, in the City of Bensalem, Pennsylvania on December 15,
1995.
/s/ Walter J. Diener December 15, 1995
Walter J. Diener
/s/ Arnold H. Keehn December 15, 1995
Arnold H. Keehn
Index to Exhibits
Number Exhibit
4(a) 1995 Stock Option Plan
AMERICAN TRAVELLERS CORPORATION
1995 STOCK OPTION PLAN
Adopted by Board of Directors: February 16, 1995
Approved by Shareholders: May 25, 1995
TABLE OF CONTENTS
Page
1. PURPOSES OF THE PLAN. . . . . . . . . . . . . . . . . 1
2. GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . 1
2.1 Definitions. . . . . . . . . . . . . . . . . . . 1
2.2 Administration of the Plan . . . . . . . . . . . 2
2.3 Effective Date . . . . . . . . . . . . . . . . . 3
2.4 Duration . . . . . . . . . . . . . . . . . . . . 4
2.5 Shares Subject to the Plan . . . . . . . . . . . 4
2.6 Amendments . . . . . . . . . . . . . . . . . . . 4
2.7 Participants and Grants. . . . . . . . . . . . . 5
3. STOCK OPTIONS . . . . . . . . . . . . . . . . . . . . 6
3.1 General. . . . . . . . . . . . . . . . . . . . . 6
3.2 Price. . . . . . . . . . . . . . . . . . . . . . 6
3.3 Period . . . . . . . . . . . . . . . . . . . . . 6
3.4 Exercise . . . . . . . . . . . . . . . . . . . . 6
3.5 Payment. . . . . . . . . . . . . . . . . . . . . 6
3.6 Special Rules for Incentive Stock Options. . . . 6
3.7 Termination of Employment or Relationship. . . . 7
3.8 Effect of Leaves of Absence. . . . . . . . . . . 9
4. FORMULA AWARDS TO ELIGIBLE DIRECTORS. . . . . . . . . 9
4.1 General. . . . . . . . . . . . . . . . . . . . . 9
4.2 Formula Awards . . . . . . . . . . . . . . . . . 9
4.3 Formula Award Exercise Price . . . . . . . . . . 10
4.4 Vesting and Exercisability . . . . . . . . . . . 10
4.5 Time and Manner of Exercise. . . . . . . . . . . 10
4.6 Payment of Exercise Price. . . . . . . . . . . . 10
4.7 Term of Formula Awards . . . . . . . . . . . . . 11
4.8 Transferability. . . . . . . . . . . . . . . . . 12
4.9 Limitation of Rights . . . . . . . . . . . . . . 12
4.10 Limitation as to Directorship. . . . . . . . . . 12
4.11 Capital Adjustments. . . . . . . . . . . . . . . 12
4.12 Limit on Grants to Eligible Directors. . . . . . 12
4.13 Commencement of Grants of Formula Awards . . . . 12
4.14 Termination of Formula Awards. . . . . . . . . . 13
4.15 Conflicting Provisions . . . . . . . . . . . . . 13
5. MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . 13
5.1 Adjustments Upon Changes in Capitalization . . . 13
5.2 Non-Transferability. . . . . . . . . . . . . . . 13
5.3 Withholding. . . . . . . . . . . . . . . . . . . 13
5.4 Compliance with Law and Approval of Regulatory
Bodies. . . . . . . . . . . . . . . . . . . . . . . . 14
5.5 No Right to Employment . . . . . . . . . . . . . 14
5.6 Exclusion from Pension Computations. . . . . . . 14
5.7 Abandonment of Options . . . . . . . . . . . . . 15
5.8 Severability . . . . . . . . . . . . . . . . . . 15
5.9 Interpretation of the Plan . . . . . . . . . . . 15
5.10 Use of Proceeds. . . . . . . . . . . . . . . . . 15
5.11 Construction of Plan . . . . . . . . . . . . . . 15
Appendix A
AMERICAN TRAVELLERS CORPORATION
1995 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN
The purposes of this 1995 Stock Option Plan are to enable
American Travellers Corporation and its Subsidiaries to
attract and retain the services of key employees and
persons with managerial, professional or supervisory
responsibilities, including, but not limited to, members
of the Board of Directors, officers of, and consultants
to, the Company, responsible for the past and continued
success of the Company, and to provide them with
increased motivation and incentive to exert their best
efforts on behalf of the Company by enlarging their
personal stake in its success.
2. GENERAL PROVISIONS
2.1 Definitions
As used in the Plan:
(a) "Act" means the Securities Exchange Act of
1934, including any and all amendments
thereto.
(b) "Board of Directors" means the Board of
Directors of the Company.
(c) "Code" means the Internal Revenue Code of
1986, including any and all amendments
thereto.
(d) "Committee" means the committee appointed by
the Board of Directors from time to time to
administer the Plan pursuant to Section 2.2.
(e) "Common Stock" means the Company's Common
Stock, $.01 par value.
(f) "Company" means American Travellers
Corporation, a Pennsylvania corporation.
(g) "Eligible Director" means a member of the
Company's Board of Directors who is not
otherwise an employee of the Company or any
Subsidiary.
(h) "Fair Market Value" means, with respect to a
specific date, the last reported sale price
of the Common Stock in the over-the-counter
market, as reported by NASDAQ; however, if
the Common Stock is listed or traded on a
national securities exchange on the date Fair
Market Value is being determined, Fair Market
Value shall mean the last reported sale price
of Common Stock on such exchange, as reported
by a responsible reporting service the
Committee selects; or if there are no
transactions in the Common Stock on such day,
then Fair Market Value shall mean the last
reported sale price of the Common Stock in
the over-the-counter market or on such
exchange, as the case may be, on the last
preceding day on which there was a
transaction in the Common Stock. In the
event the Common Stock is not so listed or
traded on a date Fair Market Value is being
determined, Fair Market Value shall be
determined on the basis of an average of the
fair market values as of such date as
determined by two or more independent and
well-qualified experts in the appraisal of
stock values, or on the basis of such other
method as the Committee shall, in good faith,
determine to be reasonable.
(i) "Formula Award" means an option grant made to
an Eligible Director pursuant to Section 4.2.
(j) "Incentive Stock Option" means an option
granted under the Plan which is intended to
qualify as an incentive stock option under
Section 422 of the Code.
(k) "NASDAQ" means the National Association of
Securities Dealers, Inc. Automated Quotation
System.
(l) "Non-Qualified Stock Option" means an option
granted under the Plan which is not an
Incentive Stock Option.
(m) "Participant" means a person to whom a Stock
Option other than a Formula Award has been
granted under the Plan.
(n) "Plan" means this 1995 Stock Option Plan.
(o) "Rule 16b-3" means Rule 16b-3 promulgated
under the Act or any successor Rule.
(p) "Stock Option" means an Incentive Stock
Option or a Non-Qualified Stock Option
granted under the Plan.
(q) "Subsidiary" means any corporation (other
than the Company) in an unbroken chain of
corporations beginning with the Company if,
at the time of the granting of the Stock
Option, each of the corporations other than
the last corporation in the unbroken chain
owns 50% or more of the total voting power of
all classes of stock in one of the other
corporations in such chain.
2.2 Administration of the Plan
(a) The Plan shall be administered by the
Committee which shall at all times consist of
two (2) or more persons, each of whom shall
be members of the Board of Directors. Each
member of the Committee shall be a
"disinterested person" (as such term is
defined in Rule 16b-3) and is deemed to be an
"outside director" within the meaning of
Section 162(m) of the Code and any
regulations issued thereunder. The Board of
Directors may from time to time remove
members from, or add members to, the
Committee. Vacancies on the Committee,
howsoever caused, shall be filled by the
Board of Directors. The Committee shall
select one of its members as Chairperson, and
shall hold meetings at such times and places
as it may determine.
(b) The Committee shall have the full power,
subject to and within the limits of the Plan,
to: (i) interpret and administer the Plan,
and Stock Options granted under it; (ii) make
and interpret rules and regulations for the
administration of the Plan and to make
changes in and revoke such rules and
regulations (and in the exercise of this
power, shall generally determine all
questions of policy and expediency that may
arise and may correct any defect, omission,
or inconsistency in the Plan or any agreement
evidencing the grant of any Stock Option in a
manner and to the extent it shall deem
necessary to make the Plan fully effective);
(iii) determine those persons to whom Stock
Options other than Formula Awards shall be
granted and the number of Stock Options other
than Formula Awards to be granted to any
person; (iv) determine the terms of Stock
Options granted under the Plan, consistent
with the provisions of the Plan; and (v)
generally, exercise such powers and perform
such acts in connection with the Plan as are
deemed necessary or expedient to promote the
best interests of the Company. The
interpretation and construction by the
Committee of any provision of the Plan or of
any Stock Option shall be final, binding and
conclusive.
(c) The Committee may act only by a majority of
its members then in office; however, the
Committee may authorize any one (1) or more
of its members or any officer of the Company
to execute and deliver documents on behalf of
the Committee.
(d) No member of the Committee shall be liable
for any action taken or omitted to be taken
or for any determination made by him or her
in good faith with respect to the Plan, and
the Company shall indemnify and hold harmless
each member of the Committee against any cost
or expense (including counsel fees) or
liability (including any sum paid in
settlement of a claim with the approval of
the Committee) arising out of any act or
omission in connection with the
administration or interpretation of the Plan,
unless arising out of such person's own fraud
or bad faith.
2.3 Effective Date
The Plan is and shall be effective February 16,
1995, the date of its adoption by the Board of
Directors, and Stock Options may be granted from
time to time thereafter, subject, however, to
approval of the Plan by the affirmative vote of the
holders of a majority of the shares of the Common
Stock present in person or by proxy and entitled to
vote at an annual meeting of the shareholders of the
Company or at a special meeting of the shareholders
of the Company expressly called for such purposes,
or any adjournments thereof, held on or before
February 15, 1996. If the Plan is not approved at
such annual or special meeting or at any
adjournments thereof, the Plan and all Stock Options
previously granted thereunder shall become null and
void.
2.4 Duration
If approved by the shareholders of the Company, as
provided in Section 2.3, unless sooner terminated by
the Board of Directors, the Plan shall remain in
effect until February 15, 2005.
2.5 Shares Subject to the Plan
The maximum number of shares of Common Stock which
may be subject to Stock Options granted under the
Plan shall be 500,000, of which the number of such
shares which shall be available for issuance
pursuant to Formula Awards made to Eligible
Directors under the Plan shall be 30,000. The Stock
Options and Formula Awards shall be subject to
adjustment in accordance with Section 4.11 or 5.1,
as appropriate, and shares to be issued upon
exercise of Stock Options and Formula Awards may be
either authorized and unissued shares of Common
Stock or authorized and issued shares of Common
Stock purchased or acquired by the Company for any
purpose. If a Stock Option or Formula Award or
portion thereof shall expire or is terminated,
cancelled or surrendered for any reason without
being exercised in full, the unpurchased shares of
Common Stock which were subject to such Stock Option
or Formula Award or portion thereof shall be
available for future grants of Stock Options or
Formula Awards, as the case may be, under the Plan.
2.6 Amendments
The Plan may be suspended, terminated or reinstated,
in whole or in part, at any time by the Board of
Directors. The Board of Directors may from time to
time make such amendments to the Plan as it may deem
advisable, including, with respect to Incentive
Stock Options, amendments deemed necessary or
desirable to comply with Section 422 of the Code and
any regulations issued thereunder; provided,
however, that (i) no amendment shall be made more
than once every six (6) months that would change the
amount, price or timing of Formula Awards, and (ii)
without the approval of the Company's shareholders
no amendment shall be made which:
(a) Increases the maximum number of shares of
Common Stock which may be subject to Stock
Options or Formula Awards granted under the
Plan (other than as provided in Section 4.11
or 5.1, as appropriate); or
(b) Extends the term of the Plan; or
(c) Increases the period during which a Stock
Option may be exercised beyond ten (10) years
from the date of grant; or
(d) Otherwise materially increases the benefits
accruing to Participants or Eligible
Directors under the Plan; or
(e) Materially modifies the requirements as to
eligibility for participation in the Plan; or
(f) Changes the maximum number of shares of
Common Stock for which options may be granted
to any Participant during any year (a
consecutive twelve (12) month period) (other
than as provided in Section 5.1); or
(g) Will cause Stock Options granted under the
Plan to fail to meet the requirements of Rule
16b-3.
Except as otherwise provided herein, termination or
amendment of the Plan shall not, without the consent
of a Participant or Eligible Director, affect such
Participant's or Eligible Director's rights under
any Stock Option or Formula Award previously granted
to such Participant or Eligible Director, as the
case may be.
2.7 Participants and Grants
Stock Options may be granted by the Committee to
those persons who the Committee determines have the
capacity to make a substantial contribution to the
success of the Company. The Committee may grant
Stock Options to purchase such number of shares of
Common Stock (subject to the limitations of Section
2.5) as the Committee may, in its sole discretion,
determine. Notwithstanding the foregoing, no
Participant shall be granted Stock Options in any
year (a consecutive twelve (12) month period) to
purchase in excess of 200,000 shares of Common
Stock. In granting Stock Options, the Committee, on
an individual basis, may vary the number of
Incentive Stock Options or Non-Qualified Stock
Options as between Participants and may grant
Incentive Stock Options and/or Non-Qualified Stock
Options to a Participant in such amounts as the
Committee may determine in its sole discretion.
3. STOCK OPTIONS
3.1 General
All Stock Options granted under the Plan shall be
evidenced by written agreements executed by the
Company and the Participant to whom granted and
dated as of the applicable date of grant, which
agreement shall state the number of shares of Common
Stock which may be purchased upon the exercise
thereof and shall contain such investment
representation and other terms and conditions as the
Committee may from time to time determine, or, in
the case of Incentive Stock Options, as may be
required by Section 422 of the Code, or any other
applicable law. Each such grant shall be signed on
behalf of the Company by a member of the Committee
or by an officer delegated such authority by the
Committee.
3.2 Price
Subject to the provisions of Sections 3.6(d), 4.11
and 5.1, the purchase price per share of Common
Stock subject to a Stock Option shall, in no case,
be less than one hundred percent (100%) of the Fair
Market Value of a share of Common Stock on the date
the Stock Option is granted.
3.3 Period
The duration or term of each Stock Option granted
under the Plan shall be for such period as the
Committee shall determine but in no event more than
ten (10) years from the date of grant thereof.
3.4 Exercise
Subject to Sections 2.3 and 5.4, Stock Options may
be exercisable immediately upon the grant of the
Stock Option or at such other time or times as the
Committee shall specify when granting the Stock
Option. Once exercisable, a Stock Option shall be
exercisable, in whole or in part, by delivery of a
written notice of exercise to the Secretary of the
Company at the principal office of the Company
specifying the number of whole shares of Common
Stock as to which the Stock Option is then being
exercised together with payment of the full purchase
price for the shares being purchased upon such
exercise. Until the shares of Common Stock as to
which a Stock Option is exercised are issued, the
Participant shall have none of the rights of a
shareholder of the Company with respect to such
shares.
3.5 Payment
The purchase price for shares of Common Stock as to
which a Stock Option has been exercised and any
amount required to be withheld, as contemplated by
Section 5.3, may be paid:
(a) In United States dollars in cash, or by
check, bank draft or money order payable in
United States dollars to the order of the
Company; or
(b) By the delivery by the Participant to the
Company of whole shares of Common Stock
having an aggregate Fair Market Value on the
date of payment equal to the aggregate of the
purchase price of Common Stock as to which
the Stock Option is then being exercised or
by the withholding of whole shares of Common
Stock having such Fair Market Value upon the
exercise of such Stock Option; or
(c) By a combination of both (a) and (b) above.
The Committee may, in its discretion, impose
limitations. conditions and prohibitions on the use
by a Participant of shares of Common Stock to pay
the purchase price payable by such Participant upon
the exercise of a Stock Option.
3.6 Special Rules for Incentive Stock Options
Notwithstanding any other provision of the Plan, the
following provisions shall apply to Incentive Stock
Options granted under the Plan:
(a) Incentive Stock Options shall only be granted
to Participants who are employees of the
Company or a Subsidiary.
(b) To the extent that the aggregate Fair Market
Value of stock, with respect to which
Incentive Stock Options are exercisable for
the first time by a Participant during any
calendar year under the Plan and any other
Stock Option Plan of the Company or a
Subsidiary, exceeds $100,000, such excess
Stock Options shall be treated as Non-
Qualified Stock Options.
(c) Any Participant who disposes of shares of
Common Stock acquired upon the exercise of an
Incentive Stock Option by sale or exchange
either within two (2) years after the date of
the grant of the Incentive Stock Option under
which the shares were acquired or within one
(1) year of the acquisition of such shares,
shall promptly notify the Secretary of the
Company at the principal office of the
Company of such disposition, the amount
realized, the purchase price per share paid
upon exercise and the date of disposition.
(d) No Incentive Stock Option shall be granted to
a Participant who, at the time of the grant,
owns stock representing more than ten percent
(10%) of the total combined voting power of
all classes of stock either of the Company or
any parent or Subsidiary of the Company,
unless the purchase price of the shares of
Common Stock purchasable upon exercise of
such Incentive Stock Option is at least one
hundred ten percent (110%) of the Fair Market
Value (at the time the Incentive Stock Option
is granted) of the Common Stock and the
Incentive Stock Option is not exercisable
more than five (5) years from the date it is
granted.
3.7 Termination of Employment or Relationship
(a) In the event a Participant's employment by,
or relationship with, the Company or its
Subsidiaries shall terminate for any reason
other than those reasons specified in
Sections 3.7(b), (c), (d), (e) or (f) while
such Participant holds Stock Options granted
under the Plan, then all rights of any kind
under any outstanding Stock Option held by
such Participant which shall not have
previously lapsed or terminated shall expire
immediately.
(b) If a Participant's employment by, or
relationship with, the Company or its
Subsidiaries shall terminate as a result of
such Participant's total disability, each
Stock Option held by such Participant (which
has not previously lapsed or terminated)
shall immediately become fully exercisable as
to the total number of shares of Common Stock
subject thereto (whether or not exercisable
to that extent at the time of such
termination) and shall remain so exercisable
by such Participant for a period of six (6)
months after termination unless such Stock
Option expires earlier by its terms. For
purposes of the Plan, "total disability"
shall mean permanent mental or physical
disability as determined by the Committee.
(c) In the event of the death of a Participant,
each Stock Option held by such Participant
(which has not previously lapsed or
terminated) shall immediately become fully
exercisable as to the total number of shares
of Common Stock subject thereto (whether or
not exercisable to that extent at the time of
death) by the executor or administrator of
the Participant's estate or by the person or
persons to whom the deceased Participant's
rights thereunder shall have passed by will
or by the laws of descent or distribution,
and shall remain so exercisable for a period
of six (6) months after such Participant's
death unless such Stock Option expires
earlier by its terms.
(d) If a Participant's employment by the Company
or a Subsidiary shall terminate by reason of
such Participant's retirement in accordance
with Company policies, each Stock Option held
by such Participant at the date of
termination (which has not previously lapsed
or terminated) shall immediately become fully
exercisable as to the total number of shares
of Common Stock subject hereto (whether or
not exercisable to that extent at the time of
such termination) and shall remain so
exercisable by such Participant for a period
of three (3) months after termination, unless
such Stock Option expires earlier by its
terms.
(e) In the event the Company terminates the
employment of a Participant who at the time
of such termination was an officer of the
Company and had been continuously employed by
the Company during the five (5) year period
immediately preceding such termination, for
any reason except "good cause" (hereafter
defined) and except upon such Participant's
death, total disability or retirement in
accordance with Company policies, each Stock
Option held by such Participant (which has
not previously lapsed or terminated and which
has been held by such Participant for more
than six (6) months prior to such
termination) shall immediately become fully
exercisable as to the total number of shares
of Common Stock subject thereto (whether or
not exercisable to that extent at the time of
such termination) and shall remain so
exercisable for a period of three (3) months
after such termination unless such Stock
Option expires earlier by its terms. A
termination for "good cause" shall have
occurred only if the Participant in question
is terminated, by written notice (i) because
of his or her conviction of a felony for a
crime involving an act of fraud or
dishonesty, (ii) intentional acts or
omissions on such Participant's part causing
material injury to the property or business
of the Company, or (iii) because such
Participant shall have breached any material
term of any employment agreement in place
between such Participant and the Company and
shall have failed to correct such breach
within any grace period provided for in such
agreement. "Good cause" for termination shall
not include bad judgment or any act or
omission reasonably believed by such
Participant, in good faith, to have been in,
or not opposed to, the best interests of the
Company.
(f) In the event of the termination of a
Participant's service as a Director of the
Company, who at the time of such termination
was an Eligible Director and had continuously
served as a Director of the Company during
the five (5) year period immediately
preceding such termination, and such
termination is for any reason except for such
Participant's death or total disability or
the removal of such Participant as Director
(by the shareholders, the Board of Directors
or otherwise) for "good cause" (as defined in
Section 3.7(e)(i) and (ii)), each Stock
Option held by such Participant (which has
not previously lapsed or terminated and which
has been held by such Participant for more
than six (6) months prior to such termina-
tion) shall immediately become fully
exercisable as to the total number of shares
of Common Stock subject thereto (whether or
not exercisable to that extent at the time of
such termination) and shall remain so
exercisable for a period of three (3) months
after such termination unless such Stock
Option expires earlier by its terms.
3.8 Effect of Leaves of Absence
It shall not be considered a termination of
employment when a Participant is on military or sick
leave or such other type of leave of absence which
is considered a continuing intact the employment
relationship of the Participant with the Company or
any of its Subsidiaries. In case of such leave of
absence, the employment relationship shall be deemed
to have continued until the later of (i) the date
when such leave shall have lasted ninety (90) days
in duration, or (ii) the date as of which the
Participant's right to re-employment shall have no
longer been guaranteed either by statute or
contract.
4. FORMULA AWARDS TO ELIGIBLE DIRECTORS
4.1 General
Each Formula Award granted under the Plan shall be
evidenced by a written agreement executed by the
Company and by the Eligible Director to whom such
Formula Award is granted and dated as of the
applicable date of grant. Each Agreement shall be
signed on behalf of the Company by a member of the
Committee or by an officer delegated such authority
by the Committee. Each such agreement shall comply
with and be subject to the terms and conditions of
the Plan. Any such agreement may contain such other
terms, provisions and conditions not inconsistent
with the Plan or this Section 4 as may be determined
by the Committee. All Formula Awards granted under
the Plan shall, except where this Section 4 or the
context clearly indicates to the contrary, be
subject to the provisions of the Plan applicable to
Non-Qualified Stock Options.
4.2 Formula Awards
Subject to the limitations in Sections 4.13 and
4.14, an option to purchase 1,000 shares of Common
Stock (as adjusted pursuant to Section 4.11) shall
be granted automatically each year, immediately
following the annual meeting of the Company's
shareholders, to each member of the Company's Board
of Directors (each, a "Director") who is an Eligible
Director at such time immediately following such
annual meeting beginning with the annual meeting of
the shareholders at which the shareholders approve
the Plan.
4.3 Formula Award Exercise Price
The exercise price per share for a Formula Award
shall be the average of the Fair Market Values for
the fifth (5th) through the ninth (9th) business
days (which, for purposes of this Section 4.3 shall
mean those days on which the NASDAQ is open for
trading) following the date of grant.
4.4 Vesting and Exercisability
Except as otherwise provided in Section 4.7, a
Formula Award shall immediately vest and become non-
forfeitable upon the grant of the Formula Award.
Except as otherwise provided in Section 4.7, a
Formula Award shall become exercisable immediately
upon vesting for all Directors who have served as
Directors of the Company for a total of five (5)
consecutive years as of the date of the grant. If
a Director has not served as a Director for such
period, a Formula Award shall become exercisable
according to the following schedule:
Period of Optionee's Continuous Portion of
Service as a Director of the Formula Award
Company following the Grant That is
Exercisable
Twelve months 33-1/3%
Eighteen months 66-2/3%
Twenty-four months 100%
4.5 Time and Manner of Exercise
Except as otherwise provided in this Section 4.5, any
vested Formula Award, to the extent the same is
exercisable in accordance with Section 4.4, is
exercisable in whole or in part at any time from time
to time until the expiration or termination of its
term in accordance with Section 4.7 by giving written
notice, signed by the person exercising the Formula
Award, to the Company (to the attention of the
Company's Corporate Secretary) stating the number of
whole shares of Common Stock with respect to which the
Formula Award is being exercised, accompanied by
payment in full of the option exercise price for the
number of shares of Common Stock to be purchased. The
date both such notice and payment are received by the
office of the Corporate Secretary of the Company shall
be the date of exercise of the Formula Award as to
such number of shares.
4.6 Payment of Exercise Price
Payment of the exercise price for a Formula Award may
be in cash or by check, bank draft or money order
payable in United States dollars to the order of the
Company or payment may be in whole or in part by
(a) transfer to the Company of shares of Common Stock
having a Fair Market Value (as determined in
Section 4.3) on the date of exercise equal to the
exercise price; or
(b) delivery of instructions to the Company to
withhold from the shares of Common Stock that
would otherwise be issued on exercise of that
number of such shares having a Fair Market Value
(as determined in Section 4.3) equal to the
exercise price.
If the Fair Market Value (as determined in Section
4.3) of the number of whole shares of Common Stock
transferred or the number of whole shares of Common
Stock withheld is less than the total exercise price,
the shortfall must be paid in cash, check, bank draft
or money order, as aforesaid.
4.7 Term of Formula Awards
Each Formula Award shall expire ten (10) years from
its date of grant, but shall be subject to earlier
termination as follows:
(a) In the event of the termination of a Formula
Award holder's service as a Director, by reason
of his or her removal as Director (by the
shareholders, the Board of Directors or
otherwise), the then outstanding Formula Awards
of such holder (whether or not then exercisable)
shall automatically expire on (and may not be
exercised on) the effective date of such
termination.
(b) In the event of the termination of a Formula
Award holder's service as a Director by reason of
retirement or total disability, the then
outstanding Formula Awards of such holder shall
become exercisable, to the full extent of the
number of shares of Common Stock remaining
covered by such Formula Awards, regardless of
whether such Formula Awards were previously
exercisable, and each such Formula Award shall
expire one (1) year after the date of such
termination or on the stated grant expiration
date, whichever is earlier. For purposes of this
Section 4.7, the phrase "by reason of retirement"
means (a) mandatory retirement pursuant to Board
policy or (b) termination of service on or after
the holder's 65th birthday.
(c) In the event of the death of a Formula Award
holder while such holder is a Director, the then
outstanding Formula Awards of such holder shall
become exercisable, to the full extent of the
number of shares of Common Stock remaining
covered by such Formula Awards, regardless of
whether such Formula Awards were previously
exercisable, and each such Formula Award shall
expire one (1) year after the date of death of
such holder or on the stated grant expiration
date, whichever is earlier. Exercise of a
deceased holder's Formula Awards that are still
exercisable shall be by the estate of such holder
or by the person or persons to whom the holder's
rights have passed by will or the laws of descent
and distribution.
(d) In the event of the termination of a Formula
Award holder's service as a Director by reason of
the expiration of the Director's term in office
(without renomination or reelection) or by reason
of resignation, or for any other reason except
those described in Sections 4.7(a), (b) or (c),
the then outstanding Formula Awards of such
holder shall become exercisable, to the full
extent of the number of shares of Common Stock
remaining covered by such Formula Awards,
regardless of whether such Formula Awards were
previously exercisable, and each such Formula
Award shall expire three (3) months after the
effective date of such termination.
4.8 Transferability
The right to exercise a Formula Award shall, during
the lifetime of the Eligible Director to whom such
Formula Award was granted, be exercisable only by such
recipient or pursuant to a qualified domestic
relations order as defined by the Code or Title l of
the Employee Retirement Income Security' Act, or the
rules thereunder (a "QDRO") and shall not be
assignable or transferable by such recipient other
than by will or the laws of descent and distribution
or a QDRO. Any purported transfer contrary to this
provision will be null and void and without effect.
4.9 Limitation of Rights
Neither the recipient of a Formula Award under the
Plan nor the recipient's successor or successors in
interest shall have any rights as a shareholder of the
Company with respect to any shares of Common Stock
subject to a Formula Award granted to such person
until the date of issuance of a stock certificate for
such shares of Common Stock.
4.10 Limitation as to Directorship
Neither the Plan, nor the grant of a Formula Award,
nor any other action taken pursuant to the Plan shall
constitute or be evidence of any agreement or
understanding, express or implied, that an Eligible
Director has a right to continue as a Director for any
period of time or at any particular rate of
compensation.
4.11 Capital Adjustments
The number and class of shares with respect to which
a Formula Award may be granted to an Eligible Director
under the Plan, the number and class of shares subject
to each outstanding Formula Award, and the exercise
price per share specified in each such Formula Award
shall be proportionate adjustment in accordance with
the provisions Section 5.1 For purposes of the
preceding sentence, the Company shall be deemed to
have received consideration for any shares issued
pursuant to this or any other employee benefit plan
meeting the requirements of Rule 16b-3.
4.12 Limit on Grants to Eligible Directors
Notwithstanding any provision to the contrary, the
Committee may, but shall not be obligated to, grant an
Eligible Director Stock Options under the Plan and
such grant, if any, shall not affect the Eligible
Director's entitlement to be granted Formula Awards
pursuant to Section 4.2.
4.13 Commencement of Grants of Formula Awards
Notwithstanding any provision to the contrary, no
Formula Award shall be granted pursuant to the Plan
unless and until no additional Formula Awards may be
granted pursuant to the Company's 1993 Stock Option
Plan.
4.14 Termination of Formula Awards
Notwithstanding any provision to the contrary, no
Formula Award shall be granted pursuant to the Plan on
a date when the number of shares of Common Stock
authorized for issuance pursuant to the Plan and then
available for issuance pursuant to new Formula Awards
is less than the aggregate number of such shares which
would be issuable pursuant to Formula Awards otherwise
required to be granted on such date, assuming the full
vesting and exercise of such Formula Awards. In the
event Formula Awards are not granted as a result of
the application of this Section 4.14, no Formula
Awards shall thereafter be granted pursuant to the
Plan.
4.15 Conflicting Provisions
In the event of any conflict between a provision of
this Section 4 and a provision in any other paragraph
of the Plan with respect to Formula Awards, such
provision of this Section 4 shall be deemed to
control.
5. MISCELLANEOUS PROVISIONS
5.1 Adjustments Upon Changes in Capitalization
In the event of changes to the outstanding shares of
Common Stock of the Company through reorganization,
merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend,
stock consolidation or otherwise, or in the event of
a sale of all or substantially all of the assets of
the Company, an appropriate and proportionate
adjustment shall be made in the number and class of
shares as to which Stock Options and Formula Awards
may be granted. A corresponding adjustment changing
the number or class of shares and/or the exercise
price per share of unexercised Stock Options and
Formula Awards or portions thereof which shall have
been granted prior to any such change shall likewise
be made. Notwithstanding the foregoing, in the case
of a reorganization, merger or consolidation, or sale
of all or substantially all of the assets of the
Company, in lieu of adjustments as aforesaid, the
Committee may in is discretion accelerate the date
after which a Stock Option or Formula Award may or may
not be exercised or the stated expiration date
thereof. Adjustments or changes under this Section 5.1
shall be made by the Committee, whose determination as
to what adjustments or changes shall be made, and the
extent thereof, shall be final, binding and
conclusive.
5.2 Non-Transferability
No Stock Option shall be transferable except by will
or the laws of descent and distribution, nor shall any
Stock Option be exercisable during the Participant's
lifetime by any person other than the Participant or
his guardian or legal representative.
5.3 Withholding
The Company's obligations under the Plan shall be
subject to applicable federal, state and local tax
withholding requirements. Federal, state and local
withholding tax due at the time of a grant or upon the
exercise of any Stock Option may, in the discretion of
the Committee, be paid in shares of Common Stock
already owned by the Participant or through the
withholding of shares otherwise issuable to such
Participant, upon such terms and conditions as the
Committee shall determine. If the Participant shall
fail to pay, or make arrangements satisfactory to the
Committee for the payment, to the Company of all such
federal, state and local taxes required to be withheld
by the Company, then the Company shall, to the extent
permitted by law, have the right to deduct from any
payment of any kind otherwise due to such Participant
an amount equal to any federal, state or local taxes
of any kind required to be withheld by the Company.
5.4 Compliance with Law and Approval of Regulatory Bodies
No Stock Option or Formula Award shall be exercisable
and no shares will be delivered under the Plan except
in compliance with all applicable federal and state
laws and regulations including, without limitation,
compliance with all federal and state securities laws
and withholding tax requirements and with the rules of
NASDAQ and of all domestic stock exchanges on which
the Common Stock may be listed. Any share certificate
issued to evidence shares for which a Stock Option or
Formula Award is exercised may bear legends and
statements the Committee shall deem advisable to
assure compliance with federal and state laws and
regulations. No Stock Option or Formula Award shall
be exercisable and no shares will be delivered under
the Plan, until the Company has obtained the consent
or approval from regulatory bodies, federal or state,
having jurisdiction over such matters as the Committee
may deem advisable. In the case of the exercise of a
Stock Option or Formula Award by a person or estate
acquiring the right to exercise the Stock Option or
Formula Award as a result of the death of the
Participant, the Committee may require reasonable
evidence as to the ownership of the Stock Option or
Formula Award and may require consents and releases of
taxing authorities that it may deem advisable.
5.5 No Right to Employment
Neither the adoption of the Plan nor its operation,
nor any document describing or referring to the Plan,
or any part thereof, nor the granting of any Stock
Options hereunder, shall confer upon any Participant
under the Plan any right to continue in the employ of
the Company or any Subsidiary, or shall in any way
affect the right and power of the Company or any
Subsidiary to terminate the employment of any
Participant at any time with or without assigning a
reason therefor, to the same extent as might have been
done if the Plan had not been adopted.
5.6 Exclusion from Pension Computations
By acceptance of a grant of a Stock Option under the
Plan, the recipient shall be deemed to agree that any
income realized upon the receipt or exercise thereof
or upon the disposition of the shares received upon
exercise will not be taken into account as "base
remuneration", "wages", "salary" or "compensation" in
determining the amount of any contribution to or
payment or any other benefit under any pension,
retirement, incentive, profit-sharing or deferred
compensation plan of the Company or any Subsidiary.
5.7 Abandonment of Options
A Participant or Eligible Director may at any time
abandon a Stock Option or Formula Award prior to its
expiration date. The abandonment shall be evidenced
in writing, in such form as the Committee may from
time to time prescribe. A Participant or Eligible
Director shall have no further rights with respect to
any Stock Option or Formula Award so abandoned.
5.8 Severability
If any of the terms of provisions of the Plan conflict
with the requirements of Rule 16b-3, then such terms
or provisions shall be deemed inoperative to the
extent they so conflict with the requirements of Rule
16b-3.
5.9 Interpretation of the Plan
Headings are given to the Sections of the Plan solely
as a convenience to facilitate reference, such
headings, numbering and paragraphing shall not in any
case be deemed in any way material or relevant to the
construction of the Plan or any provision hereof. The
use of the masculine gender shall also include within
its meaning the feminine. The use of the singular
shall also include within Its meaning the plural and
vice versa.
5.10 Use of Proceeds
Funds received by the Company upon the exercise of
Stock Options and Formula Awards shall be used for the
general corporate purposes of the Company.
5.11 Construction of Plan
The place of administration of the Plan shall be in
the Commonwealth of Pennsylvania, and the validity,
construction, interpretation, administration and
effect of the Plan and of its rules and regulations,
and rights relating to the Plan, shall be determined
solely in accordance with the laws of the Commonwealth
of Pennsylvania.
5 Opinion of Fox, Rothschild,
O'Brien & Frankel
PA DIRECT DIAL (215) 299-2000 December 20, 1995
American Travellers Corporation
3220 Tillman Drive
Bensalem, Pennsylvania 19020
Gentlemen:
We have acted as your counsel in connection with the filing
of a Registration Statement on Form S-8 (the "Registration
Statement") with the Securities and Exchange Commission covering
500,000 shares of Common Stock, $.01 par value (the "Shares"), of
American Travellers Corporation, a Pennsylvania corporation (the
"Company"). Such shares may be issued pursuant to the Company's
1995 Stock Option Plan (the "Plan").
As counsel for the Company, we have examined such corporate
records, certificates and other documents and questions of law as
we have considered necessary or appropriate for purposes of this
opinion. For purposes of this opinion, we have assumed that the
Shares will be issued in accordance with the terms and conditions
of the Plan. Based on the foregoing, we advise you that, in our
opinion, such of the Shares as are issued and paid for in
accordance with the terms and conditions of the Plan, will be
legally issued, fully-paid and non-assessable.
We consent to the filing of this opinion as an exhibit to
the Registration Statement. In giving this consent, we do not
hereby admit that we come within the category of persons whose
consent is required under Section 7 of the Securities Act of
1933. as amended, or the rules and regulations thereunder.
Very truly yours,
/s/ Fox, Rothschild, O'Brien and Frankel
23(b) Consent of Arthur Andersen LLP
Arthur Andersen LLP
As independent public accountants, we hereby consent to the
incorporation in this Registration Statement of our report dated
February 27, 1995 included in American Travellers Corporation 10-
K for the year ended December 31, 1994 and to all references to
our firm included in the Registration Statement.
/s/ Arthur Andersen
Philadelphia, PA
December 20, 1995
