<PAGE 1>
BROWN & BROWN, INC.
PROXY STATEMENT
ANNUAL MEETING AND PROXY SOLICITATION INFORMATION
This Proxy Statement is first being sent to
shareholders on or about March 15, 2000 in connection with the
solicitation of proxies by the Board of Directors of Brown &
Brown, Inc. (the "Company"), to be voted at the Annual Meeting of
Shareholders to be held in the Atlantic Room of the Hilton
Daytona Beach Oceanfront Resort, 2637 S. Atlantic Avenue,
Daytona Beach, Florida at 9:00 a.m. on Friday, April 21, 2000,
and at any adjournment thereof (the "Meeting"). The close of
business on March 3, 2000 has been fixed as the record date for
the determination of shareholders entitled to notice of and to
vote at the Meeting. At the close of business on the record
date, the Company had outstanding 13,677,059 shares of $.10 par
value common stock, entitled to one vote per share.
Shares represented by duly executed proxies in the
accompanying form received by the Company prior to the Meeting
will be voted at the Meeting. If a shareholder specifies in the
proxy a choice with respect to any matter to be acted upon, the
shares represented by such proxy will be voted as specified. If
a proxy card is signed and returned without specifying a vote or
an abstention on any proposal, the shares represented by such
proxy will be voted according to the recommendation of the Board
of Directors on that proposal. The Board of Directors recommends
a vote FOR the election of the directors and the proposal to
approve the Company's 2000 Incentive Stock Option Plan. The
Board of Directors knows of no other matters that may be brought
before the Meeting. However, if any other matters are properly
presented for action, it is the intention of the named proxies to
vote on them according to their best judgment.
Shareholders who hold their shares through an
intermediary must provide instructions on voting as requested by
their bank or broker. A shareholder who returns a proxy may
revoke it at any time before it is voted by taking one of the
following three actions: (i) giving written notice of the
revocation to the Secretary of the Company; (ii) executing and
delivering a proxy with a later date; or (iii) voting in person
at the Meeting. Votes cast by proxy or in person at the Meeting
will be tabulated by the Company's transfer agent, First Union
National Bank, and by one or more inspectors of election
appointed at the Meeting, who will also determine whether a
quorum is present for the transaction of business.
A shareholder who abstains from voting on any proposal
will be included in the number of shareholders present at the
Meeting for the purpose of determining the presence of a quorum.
Abstentions will not be counted either in favor of or against the
election of the nominees for director or any other proposal.
Brokers holding stock for the accounts of their clients who have
not been given specific voting instructions as to a matter by
their clients may vote their clients' proxies in their own
discretion.
Proxies may be solicited by officers, directors, and
regular supervisory and executive employees of the Company, none
of whom will receive any additional compensation for their
<PAGE 2>
services. Also, Corporate Investor Communications, Inc. may
solicit proxies on behalf of the Company at an approximate cost
of $4,000 plus reasonable expenses. Such solicitations may be
made personally, or by mail, facsimile, telephone, telegraph,
messenger, or via the Internet. The Company will pay persons
holding shares of common stock in their names or in the names of
nominees, but not owning such shares beneficially, such as
brokerage houses, banks, and other fiduciaries, for the expense
of forwarding solicitation materials to their principals. All of
the costs of solicitation of proxies will be paid by the Company.
The executive offices of the Company are located at 220
South Ridgewood Avenue, Daytona Beach, Florida 32114 (telephone
number (904) 252-9601) and 401 East Jackson Street, Suite 1700,
Tampa, Florida 33602 (telephone number (813) 222-4100).
<PAGE 3>
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of March 3, 2000,
information as to the Company's common stock beneficially owned
by (i) each director of the Company, (ii) each executive officer
named in the Summary Compensation Table, (iii) all directors and
executive officers of the Company as a group, and (iv) any person
who is known by the Company to be the beneficial owner of more
than 5% of the outstanding shares of the Company's common stock.
<TABLE>
<CAPTION>
<S> <C> <C>
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership(1)(2) Percent
J. Hyatt Brown(3). . . . . . . .2,725,206 19.9%
220 South Ridgewood Avenue
Daytona Beach, Florida 32114
Samuel P. Bell, III(4) . . . . . 1,650 *
Bradley Currey, Jr. . . . . . . 37,500 *
Jim W. Henderson(5). . . . . . . 134,440 *
Theodore J. Hoepner. . . . . . . 1,500 *
David H. Hughes. . . . . . . . . 1,500 *
Toni Jennings. . . . . . . . . . --- *
Jan E. Smith(6). . . . . . . . . 2,850 *
Jeffrey R. Paro (7). . . . . . . 570 *
Laurel L. Grammig. . . . . . . . 9,545 *
James L. Olivier . . . . . . . . 2,629 *
William A. Zimmer(8) . . . . . . 4,176 *
T. Rowe Price
Associates, Inc.(9). . . . . .1,732,950 12.7%
100 E. Pratt Street
Baltimore, MD 21202
All directors and executive
officers as a group
(13 persons) . . . . . . . . .2,944,332 21.5%
________________
*Less than 1%
</TABLE>
(1) Beneficial ownership of shares, as determined in
accordance with applicable Securities and Exchange
Commission rules, includes shares as to which a person has
or shares voting power and/or investment power. The Company
has been informed that all shares shown are held of record
with sole voting and investment power, except as otherwise
indicated.
(2) The number and percentage of shares owned by the
following persons include the indicated number of shares
owned through the Company's 401(k) Plan as of December 31,
1999: Mr. Henderson -- 64,174; Ms. Grammig -- 3,316; Mr.
Zimmer -- 307; all directors and officers as a group -- 71,365.
The number and percentage of shares owned by the
following persons include the indicated number of shares
which such persons have been granted under the Company's
Stock Performance Plan as of December 31, 1999 and which
have satisfied the first condition for vesting: Mr.
Henderson -- 15,000; Ms. Grammig -- 3,000; Mr. Olivier -- 1,365;
Mr. Zimmer -- 2,730; all officers and directors as a
group -- 34,095. These Stock Performance Plan shares have
voting and dividend rights, but the holders thereof have no
power to sell or dispose of the shares, and the shares are
subject to forfeiture. See "Executive Compensation - Long-
Term Incentive Plans - Awards in Last Fiscal Year."
(3) All shares are beneficially owned jointly with Mr.
Brown's spouse, either directly or indirectly, and these
shares have shared voting and investment power.
(4) All shares are held in joint tenancy with Mr. Bell's
spouse, and these shares have shared voting and investment
power.
(5) Mr. Henderson's ownership includes 1,500 shares owned
by a son sharing his household, as to which beneficial
ownership is disclaimed. All other shares not owned
through a Company-sponsored plan are owned jointly with Mr.
Henderson's spouse, and these shares have shared voting and
investment power.
<PAGE 4>
(6) Mr. Smith's ownership includes 350 shares owned by his
spouse, as to which he disclaims beneficial ownership.
(7) Mr. Paro resigned as an executive officer of the Company
effective February 15, 2000, in order to accept a position in the
Company's West Palm Beach office.
(8) Mr. Zimmer resigned as an executive officer of the Company
effective March 1, 1999 to accept a position in the Company's
Jacksonville office.
(9) Based upon information contained in a report filed by
T. Rowe Price Associates, Inc. ("Price Associates") with the
Securities and Exchange Commission, these securities are
owned by various individuals and institutional investors,
including T. Rowe Price Small-Cap Value Fund (which owns
825,000 shares, representing 6.0% of the shares
outstanding), for which Price Associates serves as
investment adviser with power to direct investments and/or
sole power to vote the securities. Under Securities and
Exchange Commission rules, Price Associates is deemed to be
a beneficial owner of such securities; however, Price
Associates disclaims beneficial ownership of such
securities.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is certain information concerning the
Company's executive officers and directors nominated for election
at the Meeting. All directors and officers hold office for one-
year terms or until their successors are elected and qualified.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Year First Became
Name Positions Age a Director
____ _________ ___ _________________
J. Hyatt Brown Chairman of the Board, 62 1993
President and Chief
Executive Officer
Jim W. Henderson Executive Vice President, 53 1993
Assistant Treasurer and
Director
Samuel P. Bell, III Director 60 1993
Bradley Currey, Jr. Director 69 1995
Theodore J. Hoepner Director 58 1994
David H. Hughes Director 56 1997
Toni Jennings Director 50 1999
Jan E. Smith Director 60 1997
Cory T. Walker Vice President, Chief 42 ---
Financial Officer and
Treasurer
Laurel L. Grammig Vice President, Secretary 41 ---
and General Counsel
James L. Olivier Vice President and 38 ---
Assistant General Counsel
</TABLE>
J. HYATT BROWN. Mr. Brown has been the President and
Chief Executive Officer of the Company since 1993, and the
Chairman of the Board of Directors since 1994. Mr. Brown was
President and Chief Executive Officer of the Company's
predecessor corporation from 1961 to 1993. He was a member of
the Florida House of Representatives from 1972 to 1980, and
<PAGE 5>
Speaker of the House from 1978 to 1980. Mr. Brown serves on the
Board of Directors of SunTrust Banks, Inc., SunTrust Bank, East
Central Florida, N.A., International Speedway Corporation, The
FPL Group, Inc., BellSouth Corporation and Rock-Tenn Company.
He also serves on the Board of Trustees of Stetson University.
JIM W. HENDERSON. Mr. Henderson served as Senior Vice
President of the Company from 1993 to 1995, and was elected
Executive Vice President in 1995. He served as Senior Vice
President of the Company's predecessor corporation from 1989 to
1993, and as Chief Financial Officer from 1985 to 1989.
SAMUEL P. BELL, III. Mr. Bell has been a shareholder of
the law firm of Pennington, Moore, Wilkinson, Bell & Dunbar, P.A.
since January 1, 1998 and also serves as Of Counsel to the law
firm of Cobb Cole & Bell. Prior to that, he was a shareholder
and managing partner of Cobb Cole & Bell. He has served as
counsel to the Company and its predecessor corporation since
1964. Mr. Bell was a member of the Florida House of
Representatives from 1974 to 1988.
BRADLEY CURREY, JR. Mr. Currey served as Chief Executive
Officer of Rock-Tenn Company, a manufacturer of packaging and
recycled paperboard products, from 1989 to 1999 and as Chairman
of the Board of Rock-Tenn from 1993 to January 28, 2000, when he
retired. He also previously served as President (1978-1995) and
Chief Operating Officer (1978-1989) of Rock-Tenn. Mr. Currey is
a member of the Board of Directors of Genuine Parts Company and
is the Chairman of the Board of Trustees of Emory University. He
is also a past Chairman of the Federal Reserve Bank of Atlanta.
THEODORE J. HOEPNER. Mr. Hoepner has been the Chairman
of the Board, President and Chief Executive Officer of SunTrust
Banks of Florida, Inc. since 1995. From 1990 through 1995, he
served as Chairman of the Board, President and Chief Executive
Officer of SunBank, N.A. From 1983 through 1990, he was the
Chairman of the Board and Chief Executive Officer of
SunBank/Miami, N.A.
DAVID H. HUGHES. Mr. Hughes has been Chief Executive
Officer of Hughes Supply, Inc., a business-to-business
distributor of construction and industrial supplies, since 1974,
and has been Chairman of the Board since 1986. Mr. Hughes is a
member of the Board of Directors of SunTrust Banks, Inc.,
SunTrust Banks of Florida, Inc., Orlando Regional Healthcare
Systems, Arnold Palmer Children's Hospital, Florida Tax Watch,
Accord Industries, and Lanier Worldwide, Inc.
TONI JENNINGS. Ms. Jennings was elected to the Company's
Board of Directors in 1999. She has been President of Jack
Jennings & Sons, a commercial construction firm based in Orlando,
Florida, since 1982. She has been a Florida State Senator since
1980 and currently serves as President of the Florida Senate.
She previously served in the Florida House of Representatives
from 1976 to 1980. She currently serves on the Salvation Army
Advisory Board and on the Board of Directors of SunTrust Banks of
Florida, Inc.
<PAGE 6>
JAN E. SMITH. Mr. Smith has served as President of Jan
Smith & Company, a commercial real estate and business investment
firm, since 1978. Mr. Smith is also the managing general partner
of Ramblers Rest Resort, Ltd., a recreational vehicle park in
Venice, Florida, and President of Travel Associates, Inc., which
owns and operates Trexler World Travel Service in Charlotte,
North Carolina. Mr. Smith also serves on the Board of Directors
of SunTrust Bank, Gulf Coast.
CORY T. WALKER. Mr. Walker was appointed Vice President,
Treasurer and Chief Financial Officer of the Company effective
February 15, 2000. Mr. Walker previously served as Vice
President and Chief Financial Officer of the Company from 1992 to
1994. Between 1995 and February 15, 2000, Mr. Walker served as
profit center manager for the Company's Oakland, California
retail office. Before joining the Company, he was a Senior Audit
Manager for Ernst & Young.
LAUREL L. GRAMMIG. Ms. Grammig has been Vice President,
Secretary and General Counsel of the Company since 1994. She was
a partner of the law firm of Holland & Knight from 1991 through
1993.
JAMES L. OLIVIER. Mr. Olivier was elected a Vice
President of the Company in 1998 and has served as Assistant
General Counsel since joining the Company in 1996. Prior to
that, Mr. Olivier was a partner of the law firm of Holland &
Knight.
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
During 1999, the Company's Board of Directors held four
meetings. Each incumbent director attended at least 75% of the
total number of Board meetings and meetings of committees of
which he or she is a member.
The Company's Board of Directors has a Compensation
Committee and an Audit Committee. The Compensation Committee
currently consists of Samuel P. Bell, III (Chairman), J. Hyatt
Brown, Bradley Currey, Jr., Theodore J. Hoepner, David H. Hughes,
Toni Jennings and Jan E. Smith. The Compensation Committee
recommends to the Board base salary levels and bonuses for the
Chief Executive Officer and approves the guidelines used to
determine salary levels and bonuses for the other executive
officers of the Company. See "Executive Compensation -- Board
Compensation Committee Report on Executive Compensation." The
Compensation Committee also reviews and makes recommendations
with respect to the Company's existing and proposed compensation
plans, and is responsible for administering the Company's 1990
Employee Stock Purchase Plan and the Stock Performance Plan. The
Compensation Committee met four times in 1999.
The members of the Audit Committee currently are Theodore
J. Hoepner (Chairman), Samuel P. Bell, III, Bradley Currey, Jr.,
David H. Hughes, Toni Jennings and Jan E. Smith. The duties of
the Audit Committee, which met four times during 1999, are to
recommend to the Board of Directors the selection of independent
certified public accountants, to meet with the Company's
independent certified public accountants to review the scope and
results of the annual
<page 7>
audit, and to consider various accounting and auditing matters
related to the Company, including its system of internal controls
and financial management practices.
The Company does not have a nominating committee. This
function is performed by the Board of Directors.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company are paid
$4,000 for each Board meeting attended in person and $2,000 for
each Board meeting attended by telephone. Directors receive
$1,500 for each committee meeting attended if such meetings occur
other than in conjunction with regularly scheduled quarterly
Board meetings. In 1999, Mr. Hughes and Mr. Smith each received
$1,500 for their service on a special committee appointed by the
Board of Directors.
All directors receive reimbursement of reasonable out-of-
pocket expenses incurred in connection with meetings of the Board
of Directors. No director who is an employee of the Company
receives separate compensation for services rendered as a
director.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's executive officers and directors, and
persons who own more than ten percent of the outstanding shares
of common stock of the Company, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission.
Officers, directors and ten percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section
16(a) reports they file.
Based solely on its review of the copies of such reports
received by it, and written representations from certain
reporting persons that no SEC Form 5s were required to be filed
by those persons, the Company believes that during 1999, its
officers, directors and ten percent beneficial owners timely
complied with all applicable filing requirements.
<PAGE 8>
EXECUTIVE COMPENSATION
The following table sets forth the compensation received
by the Company's Chief Executive Officer and the four other
highest paid executive officers in 1999 (the "Named Executive
Officers") for services rendered to the Company for each of the
three years in the period ended December 31, 1999. Compensation
information is also provided with respect to William A. Zimmer,
who served as Vice President, Chief Financial Officer and
Treasurer of the Company through February 28, 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C>
Name and Annual Compensation All Other
Principal Compensation
Position Year Salary($) Bonus($) ($)(1)(2)
J. Hyatt Brown 1999 426,381 292,364 6,400
Chairman of the Board, President 1998 415,990 253,973 6,400
& Chief Executive Officer 1997 396,200 218,942 4,000
Jim W. Henderson 1999 325,350 254,000 6,400
Executive Vice President 1998 296,927 209,000 6,400
1997 271,936 148,000 6,400
Laurel L. Grammig 1999 123,943 69,000 6,400
Vice President, Secretary 1998 125,432 60,000 6,400
& General Counsel 1997 115,000 40,880 5,993
Jeffrey R. Paro(3) 1999 93,147 60,000 4,926
Vice President, Chief Financial 1998 79,998 30,000 3,400
Officer & Treasurer 1997 30,000 5,000 360
James L. Olivier 1999 108,951 15,000 4,887
Vice President & Assistant 1998 91,533 13,230 4,165
General Counsel 1997 83,927 12,600 3,837
William A. Zimmer 1999 123,105 75,000 6,400
Former Vice President, Chief 1998 114,503 60,000 5,580
Financial Officer & Treasurer 1997 84,670 25,000 3,435
</TABLE>
__________
(1) Amounts shown represent the Company's 401(k) plan
profit sharing and matching contributions.
(2) Certain of the Named Executive Officers have been
granted shares of performance stock under the Company's
Stock Performance Plan. For a description of the terms of
such grants, the number of shares granted, and the value of
such shares, see "Executive Compensation -- Long-Term
Incentive Plans -- Awards in Last Fiscal Year."
(3) Mr. Paro resigned as an executive officer effective
February 15, 2000. Compensation information for 1997
reflects the fact that Mr. Paro joined the Company in July, 1997.
<PAGE 9>
OPTION GRANTS IN 1999
No stock options were granted to the Named Executive
Officers in 1999.
AGGREGATE OPTION EXERCISES IN 1999 AND DECEMBER 31, 1999 OPTION VALUES
None of the Named Executive Officers exercised Company
stock options during the year ended December 31, 1999, and none
of the Named Executive Officers held unexercised Company stock
options as of December 31, 1999.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
Grants of stock under the Company's Stock Performance Plan
are intended to provide an incentive for key employees to achieve
long-range performance goals of the Company, generally by
providing incentives to remain with the Company for a long period
after the grant date and by tying the vesting of the grant to
appreciation of the Company's stock price. The table below sets
forth the number of shares of performance stock granted to the
Named Executive Officers in 1999 and the criteria for vesting.
<TABLE>
<CAPTION>
<S> <C> <C>
Performance or Other Period
Name Number of Shares(1)(2) Until Maturation or Payout(3)
J. Hyatt Brown --- ---
Jim W. Henderson --- ---
Laurel L. Grammig --- ---
Jeffrey R. Paro 735 15 years
James L. Olivier 2,000 15 years
William A. Zimmer --- ---
</TABLE>
________________
(1) None of the shares of performance stock granted to the
Named Executive Officers has vested as of the date of this
Proxy Statement. In order for the grants described above to
fully vest, the grantee would have to remain with the
Company for a period of 15 years from the date of grant
(subject to the exceptions set forth in footnote (3) below)
and the Company's stock price would have to appreciate at a
rate of 20% per year for the five-year period beginning on
the grant date in 1999. For each 20% increase in the
Company's stock price within such five-year period,
dividends will be payable to the grantee on 20% of the
shares granted and the grantee will have the power to vote
such shares. The grantee will not have any of the other
indicia of ownership (e.g., the right to sell or transfer
the shares) until such shares are fully vested.
(2) The dollar values of the grants to Mr. Paro and Mr.
Olivier on the dates of grant were $25,770 and $72,000,
respectively. These values represent the number of shares
granted multiplied by the closing market price of the
Company's common stock on the New York Stock Exchange on the
respective dates of grant. The aggregate number of shares
of performance stock granted to the Named Executive Officers
as of December 31, 1999 were 23,825 for Mr. Henderson, 5,940
for Ms. Grammig, 1,470 for Mr. Paro, 4,835 for Mr. Olivier,
and 4,935 for Mr. Zimmer. The dollar values of all shares
of performance stock granted to the Named Executive Officers
as of December 31, 1999 were $912,795 for Mr. Henderson,
$227,576 for Ms. Grammig, $56,319 for Mr. Paro, $185,241 for
Mr. Olivier and $189,072 for Mr. Zimmer.
(3) If the grantee's employment with the Company were to
terminate before the end of the 15-year vesting period, such
grantee's interest in his or her shares would be forfeited unless
(i) the grantee has attained age 64, (ii) the grantee's
employment with the Company terminates as a result of his or her
death or disability,
<PAGE 10>
or (iii) the Compensation Committee, in its sole and absolute
discretion, waives the conditions of the grant of performance stock.
EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS
Effective July 29, 1999, J. Hyatt Brown entered into an
Employment Agreement that superseded Mr. Brown's prior agreement
with the Company. The agreement provides that Mr. Brown will
serve as Chairman of the Board, President and Chief Executive
Officer. The agreement also provides that upon termination of
employment, Mr. Brown will not directly or indirectly solicit any
of the Company's customers for a period of three years.
The agreement requires the Company to make a payment to
an escrow account upon a Change of Control (as defined in the
agreement) of the Company. If, within three years after the date
of such Change of Control, Mr. Brown is terminated or he resigns
as a result of certain Adverse Consequences (as defined in the
agreement), the amount in the escrow account will be released to
Mr. Brown. The amount of the payment will be equal to two times
the following amount: three times the sum of Mr. Brown's annual
base salary and most recent annual bonus, multiplied by a factor
of one plus the percentage representing the percentage increase,
if any, in the price of the common stock of the Company between
the date of the agreement and the close of business on the first
business day following the date the public announcement of the
Change of Control is made. Mr. Brown will also be entitled to
receive all benefits he enjoyed prior to the Change of Control
for a period of three years after the date of termination of his
employment.
A "Change of Control" includes the acquisition by certain
parties of 30% or more of the Company's outstanding voting
securities, certain changes in the composition of the Board of
Directors that are not approved by the incumbent Board, and the
approval by the Company's shareholders of a plan of liquidation,
certain mergers or reorganizations, or the sale of substantially
all of the Company's assets. The "Adverse Consequences"
described above generally involve a breach of the agreement by
the Company, a change in the terms of Mr. Brown's employment, a
reduction in the Company's dividend policy, or a diminution in
Mr. Brown's role or responsibilities.
The Company entered into the agreement with Mr. Brown
after determining that it was in the best interests of the
Company and its shareholders to retain his services in the event
of a threat or occurrence of a Change of Control and thereafter,
without alternation or diminution of his continuing leadership
role in determining and implementing the strategic objectives of
the Company. The Company also recognized that, unlike other key
personnel throughout the Company who participate in the Company's
Stock Performance Plan, Mr. Brown does not participate in that
plan and would not enjoy the benefit of the immediate vesting of
stock interests granted pursuant to that plan in the event of a
Change of Control.
On April 28, 1993, Jim W. Henderson entered into an
employment agreement with the Company. The agreement may be
terminated by either party upon 30 days advance written notice.
Compensation under this agreement is at amounts agreed upon
between the Company and Mr. Henderson from time to time.
Additionally, for a period of three years following the
<PAGE 11>
termination of employment, this agreement prohibits Mr. Henderson
from directly or indirectly soliciting or servicing the Company's
customers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee
during 1999 were Samuel P. Bell, III (Chairman), J. Hyatt Brown,
Bradley Currey, Jr., Theodore J. Hoepner, David H. Hughes, Toni
Jennings and Jan E. Smith. Mr. Brown is the Company's Chairman,
President and Chief Executive Officer.
Samuel P. Bell, III is a partner in the law firm of
Pennington, Moore, Wilkinson, Bell & Dunbar, P.A. and serves as
Of Counsel to the law firm of Cobb Cole & Bell. Cobb Cole & Bell
performed services for the Company in 1999 and is expected to
continue to perform legal services for the Company during 2000.
J. Hyatt Brown is a significant shareholder and a
director of Rock-Tenn Company, which is a customer of the
Company. Rock-Tenn's former Chairman and Chief Executive Officer,
Bradley Currey, Jr., is a director of the Company and a member of
the Company's Compensation Committee.
Theodore J. Hoepner is the Chairman of the Board,
President and Chief Executive Officer of SunTrust Banks of
Florida, Inc., which is the parent company of SunTrust Bank,
Central Florida, N.A. The Company has a $50 million line of
credit with SunTrust Bank, Central Florida, N.A. The Company
expects to continue to use SunTrust Bank, Central Florida, N.A.
during 2000 for some of its cash management requirements. J.
Hyatt Brown and David H. Hughes are directors of SunTrust Banks,
Inc., the parent company of SunTrust Banks of Florida, Inc. Mr.
Brown is also a director of SunTrust Banks, East Central Florida,
N.A. Mr. Hughes and Toni Jennings serve on the Board of
Directors of SunTrust Banks of Florida, Inc., and Jan E. Smith
serves on the Board of Directors of SunTrust Bank, Gulf Coast.
<PAGE 12>
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933 OR
THE SECURITIES EXCHANGE ACT OF 1934 THAT MIGHT INCORPORATE FUTURE
FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE
FOLLOWING BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION AND THE PERFORMANCE GRAPH SHALL NOT BE INCORPORATED
BY REFERENCE INTO ANY SUCH FILINGS.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's overall compensation philosophy is as follows:
- - Attract and retain high-quality people, which is crucial to
both the short-term and long-term success of the Company;
- - Reinforce strategic performance objectives through the use
of incentive compensation programs; and
- - Create a mutuality of interest between the executive
officers and shareholders through compensation structures that
share the rewards and risks of strategic decision-making.
BASE COMPENSATION. Salary levels for officers other than
the Chief Executive Officer are determined by the Chief Executive
Officer each year during the first quarter based upon the
qualitative performance of each officer during the previous year
and guidelines approved by the Compensation Committee. If an
officer has had no change in duties, the percentage of annual
salary increases for such officer generally is expected to be
approximately 3-5% of the officer's base salary. Exceptional
performance or a change in the officer's responsibilities may
merit a larger increase.
ANNUAL BONUSES. Bonuses for managers of the Company's
Retail Division profit centers are established by the profit
center manager from a bonus pool allocated to that manager's
profit center through a pre-determined formula. For 1999, in
each Retail Division profit center, the aggregate annual bonuses
to be allocated among the employees of that profit center ranged
from 3% to 12% of that profit center's operating profit before
interest, amortization and profit center bonus. The highest
bonus percentage level is not met until the profit center's
operating profit percentage is equal to or greater than 28%.
Other divisions of the Company have similar objective measures of
bonus potential based on achievement of targeted operating or pre-
tax goals. The annual bonus for Mr. Henderson, who, in addition
to other duties, served as the profit center manager for the
Daytona Beach retail operation, was established based on a
subjective allocation of the aggregate profit center bonus earned
by the Daytona Beach retail profit center.
The bonuses for the executive officers who are not profit
center managers are determined by the Chief Executive Officer
based primarily on objective criteria, such as a percentage of
the officer's salary, the earnings growth of the Company as a
whole, and a subjective analysis of the officer's duties and
performance.
<PAGE 13>
LONG-TERM COMPENSATION. The Committee may also grant
shares of performance stock to officers and other key employees
based upon salary levels, sales production levels and performance
evaluations. Grants of performance stock were made in 1999 to
certain of the Named Executive Officers, as well as to other non-
executive employees of the Company. See "Executive Compensation
- -- Long-Term Incentive Plans -- Awards in Last Fiscal Year."
CEO COMPENSATION. With respect to the salary and bonus
of J. Hyatt Brown, the Chairman, President and Chief Executive
Officer of the Company, the Compensation Committee annually sets
these amounts by reference to the general operating performance
of the Company. The performance criteria most closely examined by
the Committee are improvements in the Company's earnings per
share and net income, as well as the continuing growth of the
Company's business. The Committee also considers salary levels
of chief executive officers in companies similar to the Company
and makes adjustments believed appropriate based upon the
differences in size of the peer companies as compared to the
Company. The Committee reports the salary and bonus amounts
recommended for the Chief Executive Officer to the full Board of
Directors and responds to questions, if any. At that time, the
Board may change salary levels or bonus amounts.
The $292,364 bonus recommended by the Committee
(excluding Mr. Brown, who did not participate in this
determination) and approved by the Board (excluding Mr. Brown) is
15% higher than Mr. Brown's 1998 bonus. This increase reflects
the 15% increase in the Company's earnings per share over 1998,
as originally reported.
The financial performance of the Company during 1999 was
at the expected budgeted levels, and the Committee took this into
consideration in establishing compensation levels.
COMPENSATION COMMITTEE
Samuel P. Bell, III (Chairman)
J. Hyatt Brown
Bradley Currey, Jr.
Theodore J. Hoepner
David H. Hughes
Toni Jennings
Jan E. Smith
<PAGE 14>
PERFORMANCE GRAPH
The following graph is a comparison of five-year
cumulative total returns for the Company's common stock as
compared with the cumulative total return for the Standard &
Poor's 500 Index, and a group of peer insurance broker and agency
companies (Aon Corporation, Arthur J. Gallagher & Co., Hilb,
Rogal and Hamilton Company, and Marsh & McLennan Companies,
Inc.). The returns of the companies have been weighted according
to their respective stock market capitalizations as of January 1,
1999, for purposes of arriving at a peer group average. The total
return calculations are based upon an assumed $100 investment on
December 31, 1994, with all dividends reinvested.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
1994 1995 1996 1997 1998 1999
Brown & Brown, Inc. 100 116.57 126.34 212.23 250.95 277.60
S&P 500 Index 100 134.12 161.29 211.30 267.65 319.91
Peer Group of Insurance
Agents and Brokers 100 132.24 161.54 230.82 251.48 352.13
</TABLE>
The Company cautions that the stock price performance
shown in the graph should not be considered indicative of
potential future stock price performance.
PROPOSAL 1 - ELECTION OF DIRECTORS
The eight nominees for election as directors at the
Meeting are J. Hyatt Brown, Samuel P. Bell, III, Bradley Currey,
Jr., Jim W. Henderson, Theodore J. Hoepner, David H. Hughes, Toni
Jennings and Jan E. Smith. Information concerning each of the
nominees is set forth under the caption "Management -- Directors
and Executive Officers." All nominees are now members of the
Board of Directors. If elected, each of the nominees will serve
a one-year term until the next Annual Meeting of Shareholders.
Approval of the election of directors will require a
plurality of the votes cast at the Meeting, provided a quorum is
present. Unless otherwise indicated, votes will be cast pursuant
to the accompanying proxy FOR the election of these nominees.
Should any nominee become unable or unwilling to accept
nomination or election for any reason, it is expected that the
resulting vacancy will not immediately be filled. The Board has
no reason to believe that any of the nominees will be unable or
unwilling to serve if elected.
<PAGE 15>
PROPOSAL 2 -- ADOPTION OF THE COMPANY'S 2000 INCENTIVE
STOCK OPTION PLAN
At the Meeting, the shareholders will be requested to
approve the Company's 2000 Incentive Stock Option Plan (the
"Plan"). The Board recommends approval of the Plan to allow the
Company to continue to attract and retain the best available
employees and provide an incentive for such persons to use their
best efforts on the Company's behalf. For these reasons, the
Board of Directors has unanimously adopted resolutions approving
the Plan and recommending its approval to the shareholders. A
copy of the Plan may be obtained upon written request to the
Company's Corporate Secretary at the address listed on page 15.
DESCRIPTION OF THE PLAN
Each employee of the Company or any subsidiary of the
Company is eligible to participate in the Plan. However, the
Company anticipates that grants under the Plan will initially be
made only to top-ranking regional executives. Each of the Named
Executive Officers is also eligible to receive a grant of options
under the Plan. Directors who are not also employees of the
Company are not eligible to participate in the Plan.
An aggregate of 300,000 shares of common stock have been
reserved for issuance under the Plan. The Company cannot now
determine the number of options to be granted in the future under
the Plan to all current employees who are executive officers
either individually or as a group. No options were granted to
employees in 1999. The closing price of the Company's common
stock on March 3, 2000 was $32.94 per share.
The Compensation Committee of the Board of Directors (the
"Committee") has authority to grant options to employees under
the Plan and is responsible for the general administration and
interpretation of the Plan. The Plan provides that members of
the Committee have a right to indemnification with respect to
claims arising against them individually as a result of their
administration of the Plan, except in the case of gross
negligence, bad faith or intentional misconduct. No director may
participate in any decision relating exclusively to an option
granted to that director.
The Committee has authority to establish the terms of
each option grant, including the number of options granted, the
vesting schedule and exercisability. The Committee may
establish performance goals as a prerequisite to exercisability,
and such goals and other terms need not be uniform among various
participants. Each employee granted options under the Plan will
be required to enter into an option agreement with the Company,
setting forth the terms and conditions of the grant, including
any performance goals that are a prerequisite to exercising the
grant.
Options granted under the Plan may be either "incentive
stock options," as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), or non-qualified stock
options. The exercise price for any option designated as an
incentive stock option must be the fair market value of the stock
subject to such option as of the date of grant, unless the
grantee
<PAGE 16>
owns 10% or more of the voting power of the Company, in
which case the exercise price must be at least 110% of the fair
market value of such stock as of the date of grant. Options not
intended to qualify as incentive stock options may be granted at
exercise prices less than the fair market value at the time of
the grant. Moreover, to the extent that the fair market value of
that portion of any grant of incentive stock options that is
exercisable for the first time in any given year exceeds
$100,000, such options will be treated as non-qualified stock
options.
If the Company undergoes certain events or changes
regarding its capital structure, such as a stock dividend, stock
split, reverse stock split, recapitalization, reclassification or
a similar event, appropriate adjustments will be made to the
number and class of shares available for issuance under the Plan
and the number and class of shares relating to any outstanding
options. Appropriate adjustments would also be made if a
majority of the shares which are the same class as the shares
that are subject to outstanding options are exchanged for,
converted into, or otherwise become shares of another
corporation. If such an event occurs, the Committee will amend
the outstanding options to provide that such options are
exercisable for or with respect to such new shares.
No option granted under the Plan will be exercisable
after the expiration of ten years after the effective date of the
grant. In addition, no stock option granted to a beneficial
owner of 10% or more of the Company's outstanding shares will be
exercisable after the expiration of five years after the
effective date of the grant.
Generally, options may be exercised only while the option
holder is an employee of the Company, or within a limited period
after the employee leaves employment with the Company or after
the employee's retirement, disability, or death. During the
option holder's lifetime, an option is exercisable only by the
option holder. Options are not transferable except upon the
death of the option holder, or as the Committee may otherwise
permit. If the option holder's employment is terminated under
certain circumstances following a change of control of the
Company, the option holder will become 100% vested in the grant
and may exercise the option for a period of three months after
the date of termination.
Except as may be required by law, the Committee may
terminate or amend the Plan at any time without further
shareholder or regulatory approval. However, no termination or
amendment of the Plan may adversely affect any then outstanding
option without the consent of the option holder.
On the date of exercise, the option holder may pay the
full option price in cash, in shares of common stock previously
acquired by the option holder valued at fair market value, or in
any other form of consideration approved by the Committee. The
use of previously acquired shares to pay the option price enables
the option holder to avoid the need to fund the entire purchase
with cash. Upon exercise of an option, the number of shares
subject to the option and the number of shares available under
the Plan for future option grants will be reduced by the number
of shares with respect to which the option is exercised.
<PAGE 17>
Unless earlier terminated by the Committee, the Plan will
be in effect until options have been granted and exercised with
respect to all shares available for the Plan. However, no option
can be granted under the Plan more than ten years after the Plan
has been approved by the Company's shareholders.
TAX CONSEQUENCES
The federal income tax consequences of a director's
participation in the Plan are complex and subject to change. The
following discussion is only a summary of the general rules
applicable to the Plan.
Options granted under the Plan may be either incentive
stock options or non-qualified stock options. Options that are
designated as incentive stock options are intended to qualify as
such under Section 422 of the Code. With respect to incentive
stock options, neither the grant Nor the exercise of the option
will subject the employee to taxable income, other than under the
Alternative Minimum Tax (Section 56(b)(3) of the Code), which is
not discussed in detail in this summary. There is no required
tax withholding in connection with the exercise of incentive
stock options. Upon the ultimate disposition of the stock
obtained on an exercise of an incentive stock option, the
employee's entire gain will be taxed at the rates applicable to
long-term capital gains, provided the employee has satisfied the
prescribed holding periods relating to incentive stock options
and the underlying stock. This treatment will apply to the
entire amount of gain recognized on the sale of the stock,
including the portion of gain that reflects the spread on the
date of exercise between the fair market value of the stock at
the time of grant and the fair market value of the stock at the
time of exercise.
The Company does not receive a compensation deduction for
tax purposes with respect to incentive stock options. However,
if the employee disposes of the stock purchased on exercise of
the incentive stock option prior to the applicable holding
periods required by Section 422 of the Code, the Company will be
entitled to a deduction equal to the employee's realization of
ordinary income by virtue of the employee's disqualifying
disposition.
Non-qualified stock options granted under the Plan will not
qualify for any special tax benefits to the option holder. An
option holder generally will not recognize any taxable income at
the time he or she is granted a non-qualified option. However,
upon its exercise, the option holder will recognize ordinary
income for federal tax purposes measured by the excess of the
fair market value of the shares at the time of exercise over the
exercise price. The income realized by the option holder will be
subject to income and other employee withholding taxes.
The option holder's basis for determination of gain or
loss upon the subsequent disposition of shares acquired upon the
exercise of a non-qualified stock option will be the amount paid
for such shares plus any ordinary income recognized as a result
of the exercise of such option. Upon disposition of any shares
acquired pursuant to the exercise of a non-qualified stock
option, the difference between the sale price and the option
holder's basis in the shares will be treated as a capital gain or
loss and generally will be characterized as long-term capital
gain or loss if the shares have been held for more than one year
at the time of their disposition.
<PAGE 18>
In general, there will be no federal income tax deduction
allowed to the Company upon the grant or termination of a non-
qualified stock option or a sale or disposition of the shares
acquired upon the exercise of a non-qualified stock option.
However, upon the exercise of a non-qualified stock option by a
holder, the Company will be entitled to a deduction for federal
income tax purposes equal to the amount of ordinary income that
an option holder is required to recognize as a result of the
exercise, provided that the deduction is not otherwise disallowed
under the Code.
VOTE REQUIRED AND BOARD RECOMMENDATION
Approval of the Plan requires more votes in favor of
adoption of the plan than those against adoption. The Board of
Directors recommends a vote FOR the adoption of the Plan.
INFORMATION CONCERNING INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Representatives of Arthur Andersen LLP, the Company's
independent public auditors, are expected to be present at the
Meeting with the opportunity to make a statement if they desire
to do so and to respond to appropriate questions posed by
shareholders.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at
the 2001 Annual Meeting of Shareholders must be received by the
Company no later than November 17, 2000 to be included in the
Company's proxy statement and form of proxy related to that
meeting. Shareholders who intend to present a proposal at the
2001 Annual Meeting without inclusion of such proposal in the
Company's proxy materials are required to provide notice of such
proposal to the Company no later than January 31, 2001. The
Company reserves the right to reject, rule out of order, or take
other appropriate action with respect to any proposal that does
not comply with these and other applicable requirements.
<PAGE 19>
OTHER MATTERS
THE COMPANY WILL PROVIDE TO ANY SHAREHOLDER, UPON THE
WRITTEN REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND THE
SCHEDULES THERETO, FOR ITS FISCAL YEAR ENDED DECEMBER 31, 1999,
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 13A-1 UNDER THE SECURITIES EXCHANGE ACT OF 1934. ANY SUCH
REQUEST SHOULD BE DIRECTED TO BROWN & BROWN, INC., 401 EAST
JACKSON STREET, SUITE 1700, TAMPA, FLORIDA 33602, ATTENTION:
CORPORATE SECRETARY. NO CHARGE WILL BE MADE FOR COPIES OF SUCH
ANNUAL REPORT; HOWEVER, A REASONABLE CHARGE WILL BE MADE FOR
COPIES OF THE EXHIBITS.
By Order of the Board of Directors
/S/ LAUREL L. GRAMMIG
Laurel L. Grammig
Secretary
Tampa, Florida
March 15, 2000
<PAGE 20>
BROWN & BROWN, INC.
[CHETTAH RUNNING FROM LEFT TO RIGHT THROUGH THE BROWN & BROWN,
INC. LOGO]
ANNUAL MEETING OF SHAREHOLDERS
HILTON DAYTONA BEACH OCEANFRONT RESORT
ATLANTIC ROOM
2637 S. ATLANTIC AVENUE
DAYTONA BEACH, FLORIDA
FRIDAY, APRIL 21, 2000
9:00 A.M.
FOLD AND DETACH HERE
_________________________________________________________________________
BROWN & BROWN, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 21, 2000
The undersigned hereby appoints Laurel L. Grammig and
Cory T. Walker and each of them as proxies with full power of
substitution, with all the powers the undersigned would possess
if personally present, to vote all shares of Common Stock of
Brown & Brown, Inc. which the undersigned is entitled to vote at
the Annual Meeting of Shareholders and any adjournment(s)
thereof.
A vote FOR proposals 1 and 2 is recommended by the Board of
Directors.
1. ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote for all
contrary below) __ nominees listed __
|__| below |__|
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW)
J. Hyatt Brown; Samuel P. Bell, III; Bradley Currey, Jr.;
Jim W. Henderson; Theodore J. Hoepner; David H. Hughes; Toni
Jennings; Jan E. Smith
2. PROPOSAL TO ADOPT THE COMPANY'S 2000 INCENTIVE STOCK OPTION PLAN
__ __ __
|__| FOR |__| AGAINST |__| ABSTAIN
3. In their discretion the Proxies are authorized to vote
upon such other business as may properly come before the
meeting.
__
I will be attending the annual meeting |__| Print Name below
_______________________________________________
<PAGE 20>
FOLD AND DETACH HERE
_________________________________________________________________
PERSONS WHO DO NOT INDICATE ATTENDANCE AT THE ANNUAL MEETING ON
THIS PROXY CARD MAY BE REQUIRED TO PRESENT PROOF OF STOCK
OWNERSHIP TO ATTEND.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2.
Please sign exactly as name appears at left. When shares
are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized
person.
Dated: ____________________________, 2000
Signature: ________________________________
Signature: ________________________________
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE 1>
APPENDIX "A"
BROWN & BROWN, INC.
2000 INCENTIVE STOCK OPTION PLAN FOR EMPLOYEES
ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
0.1 ESTABLISHMENT. Brown & Brown, Inc.
2000 Incentive Stock Option Plan for Employees (the "Plan") is
hereby established effective as of January 1, 2000 (the Effective
Date").
0.2 PURPOSE. The purpose of the Plan is to
promote the success of the Corporation and its stockholders by
attracting and retaining employees by supplementing their cash
compensation and providing a means for them to increase their
holdings of Stock of the Corporation. The opportunity so
provided and the receipt of Options as compensation are intended
to foster in participants a strong incentive to put forth maximum
effort for the continued success and growth of the Corporation
for the benefit of customers and shareholders, to aid in
retaining individuals who put forth such efforts, and to assist
in attracting the best available individuals in the future. Such
Options will be granted to certain Employees to recognize and
reward outstanding individual performance.
0.3 Term of Plan. The Plan shall continue in
effect until the earlier of its termination by the Board or the
date on which all of the shares of Stock available for issuance
under the Plan have been issued. However, all Options shall be
granted, if at all, within ten (10) years from the Effective
Date. Notwithstanding the foregoing, if the maximum number of
shares of Stock issuable pursuant to the Plan as provided in
Section 3.1 has been increased at any time, all Options shall be
granted, if at all, within ten (10) years from the date such
amendment was adopted by the Board.
1. DEFINITIONS AND CONSTRUCTIONS.
1.1 DEFINITIONS. Whenever used herein, the
following terms shall have their respective meanings set forth
below:
(a) "BOARD" means the Board of
Directors of the Corporation.
(b) "CODE" means the Internal
Revenue Code of 1986, as amended, and any applicable
regulations promulgated thereunder.
(c) "COMMITTEE" means the
Compensation Committee of the Board or such other committee
of the Board duly appointed to administer the Plan, and
being composed and having such powers as are specified in
the Plan or by the Board as generally provided for in the
Plan.
(d) "CORPORATION" means Brown &
Brown, Inc., a Florida corporation, or any successor
corporation thereto.
<PAGE 2>
(e) "DISABILITY" means, with respect to
a particular Optionee, that he or she is entitled to receive
benefits under the long-term disability plan of the
Corporation or a Subsidiary, as applicable, or, in the
absence of such a plan, the complete and permanent inability
by reason of illness or accident to perform the duties of
the person's occupation at the time when such disability
commenced, or, if the Optionee was retired when such
disability commenced, the inability to engage in any
substantial gainful activity, in either case as determined
by the Committee based upon medical evidence acceptable to
it.
(f) "EMPLOYEE" means any person
treated as an employee (including an officer or a director
who is also treated as an employee) in the records of the
Corporation and its Subsidiaries.
(g) "EXCHANGE ACT" means the
Securities Exchange Act of 1934, as amended.
(h) "FAIR MARKET VALUE" means, as of
any date, the closing price of the Stock on the New York
Stock Exchange, Inc. (as published by THE WALL STREET
JOURNAL, if published) on the day prior to such date, or if
the Stock was not traded on such day, on the next preceding
day on which the Stock was traded.
(i) "INCENTIVE STOCK OPTION" means an
Option so denominated in the Option Agreement and which
qualifies as an incentive stock option within the meaning of
Section 422(b) of the Code.
(j) "NONQUALIFIED STOCK OPTION"
means an Option so denominated or which does not qualify as
an Incentive Stock Option.
(k) "OPTION" means a right to
purchase Stock (subject to adjustment as provided in Section
3.2) pursuant to the terms and conditions of the Plan. An
Option may be either an Incentive Stock Option or a
Nonqualified Stock Option.
(l) "OPTION AGREEMENT" means a
written agreement between the Corporation and an Optionee
setting forth the terms, conditions and restrictions of an
Option granted to the Optionee.
(m) "OPTIONEE" means a person who has
been granted one or more Options under this Plan and has
executed an Option Agreement.
(n) "OWNERSHIP CHANGE EVENT" shall
mean the occurrence of any of the following with respect to
the Corporation:
(i) the direct or indirect
sale or exchange in a single or series of related
transactions by the shareholders of the Corporation of
more than fifty percent (50%) of the voting stock or
beneficial ownership of the Corporation;
<PAGE 3>
(ii) a merger or
consolidation in which the Corporation is a party; or
(iii) the sale, exchange,
or transfer of all or substantially all of the assets
of the Corporation.
(o) "RULE 16B-3" means Rule 16b-3
under the Exchange Act, as amended from time to time, or any
successor rule or regulation.
(p) "STOCK" means the Corporation's
common stock, $.10 par value, as adjusted from time to time
in accordance with Section 3.2.
(q) "SUBSIDIARY" means any present
or future "subsidiary corporation" of the Corporation, as
defined in Section 424(f) of the Code.
(r) "TEN PERCENT OWNER OPTIONEE"
means an Optionee who, at the time an Option is granted to
the Optionee, owns stock constituting more than ten percent
(10%) of the total combined voting power of all classes of
stock of Corporation within the meaning of Section 422(b)(6)
of the Code. For the purpose of determining under any
provision of this Plan whether an Optionee owns stock
possessing more than ten percent of the total combined
voting power of all classes of stock of the Corporation,
attribution rules contained in Section 425(d) of the Code
shall apply.
(s) "TRANSFER OF CONTROL" shall
mean an Ownership Change Event or a series of related
Ownership Change Events (collectively, the "TRANSACTION")
wherein the shareholders of the Corporation immediately
before the Transaction do not retain immediately after the
Transaction, in substantially the same proportions as their
ownership of shares of the Corporation's voting stock
immediately before the Transaction, direct or indirect
beneficial ownership of more than fifty percent (50%) of the
total combined voting power of the outstanding voting stock
of the Corporation or the corporation or corporations to
which the assets of the Corporation were transferred (the
"TRANSFEREE CORPORATION(S)"), as the case may be. For
purposes of the preceding sentence, indirect beneficial
ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more
corporation which, as a result of the Transaction, own the
Corporation or the Transferee Corporation(s), as the case
may be, either directly or through one or more subsidiary
corporations. The Committee shall have the right to
determine whether multiple sales or exchanges of the voting
stock of the Corporation or multiple Ownership Change Events
are related, and its determination shall be final, binding
and conclusive.
1.2 CONSTRUCTION. Captions and titles
contained herein are for convenience only and shall not affect
the meaning or interpretation of any provision of the Plan.
Except when otherwise indicated by the context, the singular
shall include the plural, the plural shall include the singular,
and the term "or" shall include the conjunctive as well as the
disjunctive.
2. ADMINISTRATION.
<PAGE 4>
2.1 ADMINISTRATION. The Plan shall be
administered by the Committee which shall be duly appointed by
the Board. All questions of interpretation of the Plan or of any
Option shall be determined by the Committee, and such
determination shall be final and binding upon all persons having
an interest in the Plan or such Option. The composition of the
Committee shall at all times comply with the requirements of Rule
16b-3 under the Exchange Act and with the requirements of Section
162(m) of the Code, and all members of the Committee shall be
"non-employee directors" as defined by Rule 16b-3 and "outside
directors" as defined by Section 162(m).
2.2 POWERS OF THE COMMITTEE. The Committee
shall have full power and authority with respect to the Plan,
except those specifically reserved to the Board, and subject at
all times to the terms of the Plan and any applicable limitations
imposed by law. In addition to any other powers set forth in the
Plan and subject to the provisions of the Plan, the Committee
shall have the full and final power and authority, in its sole
discretion:
(a) to determine the persons to
whom, and the time or times at which, Options shall be
granted and the number of shares of Stock to be subject to
each Option which determination need not be uniform among
persons similarly situated and may be made selectively among
Employees;
(b) to designate Options as
Incentive Stock Options or Nonqualified Stock Options;
(c) to determine the terms,
conditions and restrictions applicable (which need not be
identical) to each Option including without limitation, (i)
the exercise price of the Option, (ii) the method of payment
for shares purchased upon the exercise of the Option, (iii)
the method for satisfaction of any tax withholding
obligations arising in connection with the Option, including
by the withholding or delivery of shares of Stock, (iv) the
timing, terms and conditions of the exercisability of the
Option, (v) the time of the expiration of the Option, (vi)
the effect of the Optionee's termination of employment or
service with Corporation on any of the foregoing, and (vii)
all other terms, conditions and restrictions applicable to
the Option or such shares not inconsistent with the terms of
the Plan;
(d) to approve one or more forms
of Option Agreement;
(e) to amend the exercisability of
any Option, including with respect to the period following
an Optionee's termination of employment or service with the
Corporation;
(f) to prescribe, amend or rescind
rules, guidelines and policies relating to the Plan, or to
adopt supplements to, or alternative versions of, the Plan,
including, without limitations, as the Committee deems
necessary or desirable to comply with the laws of, or to
accommodate the tax policy or custom of, foreign
jurisdictions whose citizens may be granted Options; and
<PAGE 5>
(g) to correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any
Option Agreement and to make all other determinations and
take such other actions with respect to the Plan or any
Option as the Committee may deem advisable to the extent
consistent with the Plan and applicable law.
(h) to establish performance goals
on which the vesting of the Options are based.
(i) to certify in writing that
such performance goals referred to in (h) above have been
met.
2.3 DISINTERESTED ADMINISTRATION. The Plan
shall be administrated in compliance with the "disinterested
administration" requirements of Rule 16b-3.
3. SHARES SUBJECT TO PLAN.
3.1 MAXIMUM NUMBER OF SHARES ISSUABLE.
Subject to adjustment as provided in Section 4.2, the maximum
aggregate number of shares of Stock that may be issued under the
Plan shall be three hundred thousand (300,000) and shall consist
of authorized by unissued or reacquired shares of Stock or any
combination thereof. If an outstanding Option for any reason
expires or is terminated or canceled prior to being fully
exercised, the shares of Stock allocable to the unexercised
portion of such Option, shall again be available for issuance
under the Plan. The maximum number of shares of Stock subject to
any Option issued to any Optionee under the Plan shall be
300,000.
3.2 ADJUSTMENTS FOR CHANGES IN CAPITAL
STRUCTURE. In the event of any stock dividend, stock split,
reverse stock split, recapitalization, combination,
reclassification or similar event or change in the capital
structure of the Corporation, appropriate adjustments shall be
made in the number and class of shares available for issuance
under the Plan as set forth in Section 3.1 and in the number and
class of shares of any outstanding Options. If a majority of the
shares which are of the same class as the shares that are subject
to outstanding Options are exchanged for, converted into, or
otherwise become (whether or not pursuant to an Ownership Change
Event) shares of another corporation (the "NEW SHARES"), the
Committee shall amend the outstanding Options to provide that
such Options are exercisable for or with respect to New Shares.
In the event of any such amendment, the number of shares subject
to, and the exercise price per share of, the outstanding Options
shall be adjusted in a fair and equitable manner as determined by
the Committee, in its sole discretion. Notwithstanding the
foregoing, any fractional share resulting from an adjustment
pursuant to this Section 3.2 shall be rounded up or down to the
nearest whole number, as determined by the Committee, and in no
event may the exercise price be decreased to any amount less than
the par value, if any, of the stock subject to the Option. The
adjustments determined by the Committee pursuant to this Section
3.2 shall be final, binding and conclusive.
4. ELIGIBILITY AND OPTION LIMITATIONS.
<PAGE 6>
4.1 PERSONS ELIGIBLE FOR OPTIONS. Options
may be granted only to officers and Employees of the Corporation,
as designated by the Committee in its sole discretion. Only
Employees of the Corporation shall be eligible to receive grants
of Incentive Stock Options. The Committee's designation of a
person as a participant in any year does not require the
Committee to designate that person to receive an award under this
Plan in any other year or, if so designated, to receive the same
award as any other participant in any year. The Committee may
consider such factors as it deems pertinent in selecting
participants and in determining the amount of their respective
awards, including, but without being limited to: (a) the
financial condition of the Corporation; (b) expected profits for
the current or future years; (c) the contributions of a
prospective participant to the profitability and success of the
Corporation; and (d) the adequacy of the prospective
participant's other compensation. The Committee, in its
discretion, may grant benefits to a participant under this Plan,
even though stock, stock options, stock appreciation rights and
other benefits previously were granted to him under this or
another plan of the Corporation, whether or not the previously
granted benefits have been exercised, but the participant may
hold such options only on the terms and subject to the
restrictions hereafter set forth. A person who has participated
in another benefit plan of the Corporation may also participant
in this Plan.
4.2 DIRECTORS SERVING ON COMMITTEE. No
member of the Committee, while a member, shall be eligible to be
granted an Option.
4.3 FAIR MARKET VALUE LIMITATION. To the
extent that the aggregate Fair Market Value of stock with respect
to which options designated as Incentive Stock Options are
exercisable by an Optionee for the first time during any calendar
year (under all stock option plans of the Corporation, including
the Plan) exceeds One Hundred Thousand Dollars ($100,000), the
portion of such Options which exceeds such amount shall be
treated as Nonqualified Stock Options. For purposes of this
Section 4.3, options designated as Incentive Stock Options shall
be taken into account in the order in which they were granted,
and the Fair Market Value of Stock shall be determined as of the
time the Option with respect to such Stock is granted. If the
Code is amended to provide for a different limitation from that
set forth in this Section 4.3, such different limitation shall be
deemed incorporated herein effective as of the date and with
respect to such Options as required or permitted by such Options
as required or permitted by such amendment to the Code. If an
Option is treated as an Incentive Stock Option is part and as a
Nonqualified Stock Option in part by reason of the limitation set
forth in this Section 4.3, the Optionee may designate which
portion of such Option the Optionee is exercising and may request
that separate certificates representing each such portion be
issued upon the exercise of the Option. In the absence of such
designation, the Optionee shall be deemed to have exercised the
Incentive Stock Option portion of the Option first.
4.4 NO RIGHT OF GRANT OR EMPLOYMENT. No
employee of the Corporation or a Subsidiary shall have any claim
or right to be granted an Option under the Plan, or, having been
selected for the grant of an Option, to be selected for a grant
of any other Option. Neither the Plan nor any action taken
hereunder shall be construed as giving any Optionee any right to
be retained in the employ or service of the Company or a
Subsidiary nor interfere in any way with the right of the
Corporation or its Subsidiaries to terminate such Employee's
employment at any time.
5. TERMS AND CONDITIONS OF GRANTS. Options shall
be evidenced by Option Agreements specifying the number of shares
of Stock covered thereby, in such form as the
<PAGE 7>
Committee shall from time to time establish. Option Agreements
may incorporate all or any of the terms of the Plan by reference
and shall comply with and be subject to the following terms and conditions.
5.1 EXERCISE PRICE. The exercise price for
each Option shall be established in the sole discretion of the
Committee; provided, however, that if the Option is an Incentive
Stock Option (a) the exercise price per share for an Option
shall not be less than the Fair Market Value of a share of Stock
on the effective date of grant of the Option and (b) no Option
granted to a Ten Percent Owner Optionee shall have an exercise
price per share less than on hundred ten (110%) of the Fair
Market Value of a share of Stock on the effective date of grant
of the Option. The exercise price for a Nonqualified Stock Option
shall be the same as provided above, unless otherwise determined
by the Committee. Notwithstanding the foregoing, an Option
(whether an Incentive Stock Option or a Nonqualified Stock
Option) may be granted with an exercise price lower than the
minimum exercise price set forth above if such Option is granted
pursuant to an assumption or substitution for another option in a
manner qualifying under the provisions of Section 424(a) of the
Code.
5.2 EXERCISE PERIOD. Options shall be
exercisable at such time or times, or upon such event or events,
and subject to such terms, conditions, performance criteria, and
restrictions as shall be determined by the Committee and set
forth in the Option Agreement evidencing such Option; provided,
however, that (a) no Option shall be exercisable after the
expiration of ten (10) years after the effective date of grant of
such Option; and (b) no Incentive Stock Option granted to a Ten
Percent Owner Optionee shall be exercisable after the expiration
of five (5) years after the effective date of grant of such
Option.
5.3 PAYMENT OF OPTION EXERCISE PRICE.
(a) FORMS OF CONSIDERATION
AUTHORIZED. Except as otherwise provided below, payment of
the exercise price for the number of shares of Stock being
purchased pursuant to any Option shall be made (i) in cash,
by check, or cash equivalent, (ii) by tender to the
Corporation of shares of Stock owned by the Optionee having
a Fair Market Value (as determined by the Corporation
without regard to any restrictions on transferability
applicable to such Stock by reason of federal or state
securities laws or agreements with an underwriter for the
Corporation) not less than the exercise price, (iii) by the
assignment of the proceeds of a sale or loan with respect to
some or all of the shares being acquired upon the exercise
of the Option (including, without limitation, through an
exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of
the Federal Reserve System) (a "CASHLESS EXERCISE"), (iv) by
such other consideration as may be approved by the Committee
from time to time to the extent permitted by applicable law
or (v) by any combination thereof. The Committee may at any
time or from time to time, by adoption of or by amendment to
the standard forms of Option Agreement described in Section
6, or by other means, grant Options which do not permit all
of the foregoing forms of consideration to be used in
payment of the exercise price or which otherwise restrict
one or more forms of considerations.
<PAGE 8>
(b) TENDER OF STOCK.
Notwithstanding the foregoing, an Option may not be
exercised by tender to the Corporation of shares of Stock to
the extent such tender of Stock would constitute a violation
of the provisions of any law, regulation or agreement
restricting the redemption of the Corporation's Stock.
Unless otherwise provided by the Committee, an Option may
not be exercised by tender to the Corporation of shares of
Stock unless such shares either have been owned by the
Optionee for more than six (6) months or were not acquired,
directly or indirectly, from the Corporation.
(c) CASHLESS EXERCISE. The
Corporation reserves, at any and all times, the right, in
the Corporation's sole and absolute discretion, to
establish, decline to approve or terminate any program or
procedures for the exercise of Options by means of a
Cashless Exercise.
5.4 TAX WITHHOLDING. The Corporation shall
have the right, but not the obligation, to deduct from the shares
of Stock issuable upon the exercise of an Option, a number of
whole shares of Stock having a Fair Market Value, as determined
by the Corporation, equal to all or any part of the federal,
state, local and foreign taxes, if any, required by law to be
withheld by the Corporation with respect to such Option.
Alternatively, or in addition, in its sole discretion, the
Corporation shall have the right to require the Optionee, through
payroll withholding, cash payment or otherwise, including by
means of a Cashless Exercise, to make adequate provision for any
such tax withholding obligations of the Corporation arising in
connection with the exercise. The Corporation shall have no
obligation to deliver shares of Stock, money or to release shares
of Stock from an escrow established pursuant to the Option
Agreement until the Corporation's tax withholding obligations
have been satisfied by the Optionee.
6. STANDARD FORMS OF OPTION AGREEMENT.
6.1 INCENTIVE STOCK OPTIONS. Unless
otherwise provided by the Committee at the time the Option is
granted, an Option designated as an "Incentive Stock Option"
shall comply with and be subject to the terms and conditions set
forth in the appropriate form of Incentive Stock Option Agreement
as adopted by the Committee and as amended from time to time.
6.2 NONQUALIFIED STOCK OPTIONS. Unless
otherwise provided by the Committee at the time the Option is
granted, an Option designated as a "Nonqualified Stock Option"
shall comply with and be subject to the terms and conditions set
forth in the appropriate form of Nonqualified Stock Option
Agreement as adopted by the Committee and as amended from time to
time.
6.3 STANDARD TERM OF OPTIONS. Except as
otherwise provided by the Committee in the grant of an Option,
any Option granted hereunder shall have a term of ten (10) years
from the effective date of grant of the Option.
6.4 STANDARD VESTING PROVISIONS. Except as
otherwise provided by the Committee in the grant of an Option,
any Option granted hereunder shall become vested based upon the
attainment of certain performance levels as described in the
Option Agreement executed in connection with such Option.
<PAGE 9>
6.5 AUTHORITY TO VARY TERMS. The Committee
shall have the authority from time to time to vary the terms of
any of the standard forms of Option Agreement described in this
Section 6 either in connection with the grant or amendment of any
individual Option or in connection with the authorization of a
new standard form or forms; provided, however, that the terms and
conditions of any such new, revised or amended standard form or
forms of Option Agreement shall be in accordance with the terms
of the Plan. The Committee, may in its discretion, provide for
the extension of the exercise period of an Option, accelerate the
vesting of an Option, eliminate or make less restrictive any
restrictions contained in an Option Agreement or waive any
restriction or provision of this Plan or an Option Agreement in
any manner that is either (i) not adverse to the Optionee or (ii)
consented to by the Optionee.
7. NONTRANSFERABILITY OF OPTIONS. During the
lifetime of the Optionee, an Option shall be exercisable only by
the Optionee or the Optionee's guardian or legal representative.
No Option shall be assignable or transferable by the Optionee,
except by will or by the laws of descent and distribution.
Following an Optionee's death, the Option shall be exercisable to
the extent provided in Section 8 below.
8. EFFECT OF TERMINATION OF SERVICE.
8.1 OPTION EXERCISABILITY.
(a) TIME OF SERVICE. No stock
option granted under this Plan may be exercised before the
Optionee's completion of such period of service as may be
specified by the Committee in the Option Agreement.
Thereafter, or if no such period is specified, subject to
the provisions of subsections (b), (c), (d), (e) and (f) of
this Section, the Optionee may exercise the Option in full
or in part at any time until expiration of the Option.
(b) CONTINUED EMPLOYMENT.
An Optionee cannot exercise an Option granted under this
Plan unless, at the time of exercise, he has been
continuously employed by the Corporation since the date the
Option was granted. The Committee may decide in each case
to what extent bona fide leaves of absence for illness,
temporary disability, government or military service, or
other reasons will not be deemed to interrupt continuous
employment.
(c) TERMINATION OF SERVICE.
Except as provided in subsection (d), (e), (f) and (g) of
this Section 8, an Optionee cannot exercise an Option after
he ceases to be an Employee of the Corporation, unless the
Committee, in its sole discretion, grants the recipient an
extension of time to exercise the Option after termination
of employment. The extension of time of exercise that may
be granted by the Committee under this subsection (c) shall
not exceed three months after the date on which an Optionee
terminates employment and in no case shall extend beyond the
stated expiration date of the Option.
(d) RETIREMENT. If an Optionee
ceases to be an Employee as a result of retirement, the
Option, to the extent unexercised and exercisable on the
date of his retirement, may be exercised by the Optionee at
any time prior to the expiration of three
<PAGE 10>
months after the date on which he ceases to be an Employee (but
no later than the stated expiration date of the Option). An Employee
shall be regarded as retired if he terminates employment after his
sixty-fifth birthday.
(e) DISABILITY. If the Optionee's
service with the Corporation is terminated because of the
disability (within the meaning of 105(d)(4) of the Code) of
the Optionee, the Option, to the extent unexercised and
exercisable on the date on which the Optionee's service
terminated, may be exercised by the Optionee (or the
Optionee's guardian or legal representative) at any time
prior to the expiration of twelve (12) months after the date
on which the Optionee's service terminated, but in any event
not later than the Option expiration date.
(f) DEATH. If the Optionee's
service with the Corporation is terminated because of the
death of the Optionee, the Option, to the extent unexercised
and exercisable on the date on which the Optionee's service
terminated, may be exercised by the Optionee's legal
representative or other person who acquired the right to
exercise the Option by reason of the Optionee's death at any
time prior to the expiration of twelve (12) months after the
date on which the Optionee's service terminated, but in any
event no later than the Option Expiration Date.
(g) TERMINATION AFTER TRANSFER OF
CONTROL. If the Optionee's service with the Corporation
terminates by reason of Termination After Transfer of
Control (as defined in Section 8.2), (i) the Option may be
exercised by the Optionee at any time prior to the
expiration of three (3) months from the date on which the
Optionee's service terminated, but in any event no later
than the Option Expiration Date, and (ii) notwithstanding
any other provision of the Option Agreement or this Plan to
the contrary, the Employee shall be deemed to have vested
one hundred percent (100%).
8.2 TERMINATION AFTER TRANSFER OF CONTROL.
(a) "TERMINATION AFTER TRANSFER OF CONTROL"
shall mean either of the following events occurring after a
Transfer of Control:
(i) terminating by the Corporation
of the Optionee's service with Corporation, within
twelve (12) months following the Transfer of Control,
for any reason other than Termination for Cause (as
defined below); or
(ii) upon Optionee's Constructive
Termination (as defined below), the Optionee's
resignation from service with the Corporation within
twelve (12) months following the Transfer of Control
Notwithstanding any provision herein to the contrary,
Termination After Transfer of Control shall not include any
termination of the Optionee's service with the Corporation
which (i) is a Termination for Cause (as defined below);
(ii) is a result of the Optionee's death or Disability;
(iii) is a result of the Optionee's voluntary termination of
service other
<PAGE 11>
than upon Constructive Termination (as defined
below); or (iv) occurs prior to the effectiveness of a
Transfer of Control.
(b) "TERMINATION FOR CAUSE" shall mean
termination by the Corporation of the Optionee's service
with the Corporation for any of the following reasons: (i)
theft, dishonesty, or falsification of any employment or
Corporation records; (ii) improper use or disclosure of the
Corporation's confidential or proprietary information; (iii)
the Optionee's failure or inability to perform any
reasonable assigned duties after written notice from the
Corporation of, and a reasonable opportunity to cure, such
failure or inability; (iv) any material breach by the
Optionee of any employment agreement between the Optionee
and Corporation, which breach is not cured pursuant to the
terms of such agreement; or (v) the Optionee's conviction of
any criminal act which impairs Optionee's ability to perform
his or her duties with Corporation. Termination for Cause
pursuant to the foregoing shall be determined in the sole
but reasonably exercised discretion of the Corporation.
(c) "CONSTRUCTIVE TERMINATION" shall mean
any one or more of the following:
(i) without the Optionee's express
written consent, the assignment to the Optionee of any
duties, or any limitation of the Optionee's
responsibilities, substantially inconsistent with the
Optionee's positions, duties, responsibilities and
status with Corporation immediately prior to the date
of the Transfer of Control;
(ii) without the Optionee's
express written consent, the relocation of the
principal place of the Optionee's employment to a
location that is more than fifty (5) miles from the
Optionee's principal place of employment immediately
prior to the date of the Transfer of Control, or the
imposition of travel requirements substantially more
demanding of the Optionee than such travel requirements
existing immediately prior to the date of the Transfer
of Control;
(iii) any failure by Corporation
to pay, or any material reduction by Corporation of,
(1) the Optionee's base salary is effect immediately
prior to the date of the Transfer of Control (unless
reductions comparable in amount an duration are
concurrently made for all other employees of
Corporation with responsibilities, organizational level
and title comparable to the Optionee's), or (2) the
Optionee's bonus compensation, if any, in effect
immediately prior to the date of the Transfer of
Control (subject to applicable performance requirements
with respect to the actual amount of bonus compensation
earned by the Optionee); or
(iv) any failure by Corporation to
(1) continue to provide the Optionee with the
opportunity to participate, on terms no less favorable
than those in effect for the benefit of any employee
group which customarily includes a person holding the
employment position or a comparable position with
Corporation then held by the Optionee, in any benefit
or compensation plans and programs, including, but not
limited to, Corporation's life, disability, health,
dental, medial, savings, profit sharing, stock purchase
and retirement plans, if any, in which the Optionee was
participating immediately prior to the date of the
Transfer of Control, or their
<PAGE 12>
equivalent, or (2)
provide the Optionee with all other fringe benefits (or
their equivalent) from time to time in effect for the
benefit of any employee group which customarily
includes a person holding the employment position or a
comparable position with Corporation then held by the
Optionee.
9. INDEMNIFICATION. In addition to such other
rights of indemnification as they may have as members of the
Board or a committee thereof or officers or employees of the
Corporation, members of the Board, the Committee and any officers
or employees of the Corporation to whom authority to act for the
Board or Committee is delegated shall be indemnified by the
Corporation against all reasonable expenses, including attorneys'
fees, incurred in connection with the defense of any action, suit
or proceeding, or in connection with any appeal therein, to which
they or any of them may be party by reason of any action taken or
failure to act under or in connection with the Plan, Option, or
any right granted hereunder, and against all amounts in
settlement thereof (provided such settlement is approved by
independent legal counsel selected by the Corporation) or paid in
satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such person is
liable for gross negligence, bad faith or intentional misconduct
in duties; provided, however, that within sixty (60) days after
the institution of such action, suit or proceeding, such person
shall offer to the Corporation, in writing, the opportunity at
its own expense to handle and defend the same. Without limiting
the generality of the foregoing, the Corporation will pay the
expenses (including reasonable counsel fees) of defending any
such claim, action, suit or proceeds in advance of its final
disposition, upon receipt of such person's written agreement to
repay all amounts advanced if it should ultimately be determined
that such person is not entitled to be indemnified under this
Section.
10. TERMINATION OR AMENDMENT OF PLAN. The
Committee, without further approval of the shareholders, may
terminate or amend this Plan at any time in any respect as the
Committee deems advisable, subject to any required stockholder or
regulatory approval and to any conditions established by the
terms of such amendment. In any event, no termination or
amendment of the Plan may adversely affect and then outstanding
Option or any unexercised portion thereof, without the consent of
the Optionee, unless such termination or amendment is required to
enable an Option designated as an Incentive Stock Option to
qualify as an Incentive Stock Option or is necessary to comply
with any applicable law or government regulation.
11. DISSOLUTION OF CORPORATION. Upon the dissolution of the
Corporation, the Plan shall terminate and any and all Options
previously granted shall lapse on the date of such dissolution.
12. RIGHTS AS SHAREHOLDERS. No Optionee, nor any
beneficiary or other person claiming through an Optionee, shall
have any interest in any shares of Stock allocated for the
purposes of the Plan or that are subject to an Option until such
shares of Stock shall have been issued to the Optionee or such
beneficiary or other person. Furthermore, the existence of the
Options shall not affect the right or power of the Corporation or
its shareholders to make adjustments, recapitalization,
reorganizations, or other changes in the Corporation's capital
structure or its business; issue bonds, debentures, preferred or
prior preference stocks affecting the Stock of the Corporation or
the rights thereof; dissolve the Corporation or sell or transfer
any part of its assets or business; or do any other corporate
act, whether of a similar character or otherwise.
<PAGE 13>
13. APPLICATION OF FUNDS. The proceeds received
by the Corporation from the sale of stock pursuant to Options
granted under this Plan will be used for general corporate
purposes.
14. CHOICE OF LAW. The validity, interpretation,
and administration of the Plan and of any rules, regulations,
determinations, or decisions made thereunder, and the rights of
any and all person having or claiming to have any interest
therein or thereunder, shall be determined exclusively in
accordance with the laws of the State of Florida. Without
limiting the generality of the foregoing, the period within which
any action in connection with Plan must be commenced shall be
governed by the Laws of the State of Florida without regard to
the place where the act or omission complained of took place or
the resident of any party to such action. Any action in
connection with the Plan must be brought in the State of Florida,
County of Hillsborough.
15. NUMBER AND GENDER. Unless otherwise clearly
indicated in this Plan, words in the singular or plural shall
include the plural and singular, respectively, where they would
so apply, and words in the masculine or neuter gender shall
include the feminine, masculine or neuter gender where
applicable.
16. SHAREHOLDER APPROVAL. The Plan or any
increase in the maximum number of shares of Stock issuable
thereunder as provided in Section 3.1 (the "MAXIMUM SHARES")
shall be approved by the shareholders of the Corporation within
twelve (12) months of the date of adoption thereof by the Board.
Options granted prior to shareholder approval of the Plan or in
excess of the Maximum Shares previously approved by the
shareholders shall become exercisable no earlier than the date of
shareholder approval of the Plan or such increase in the Maximum
Shares, as the case may be,
IN WITNESS WHEREOF, the undersigned Secretary of the
Corporation certifies that the foregoing Brown & Brown, Inc. 2000
Incentive Stock Option Plan for Employees was duly adopted by the
Board on January 26, 2000.
/S/ LAUREL L. GRAMMIG
Secretary
