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As filed with the Securities and Exchange Commission on November 12, 1998
Registration No. 333-
--------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE PMI GROUP, INC.
(Exact name of issuer as specified in its charter)
Delaware 94-3199675
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
601 Montgomery Street,
San Francisco, CA 94111
(800) 288-1970
(Address, including zip code, of
registrant's principal executive office)
Victor J. Bacigalupi
Senior Vice President, General Counsel and Secretary
The PMI Group, Inc.
601 Montgomery Street
San Francisco, CA 94111
(415) 788-7878
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
John E. Aguirre
Orrick, Herrington & Sutcliffe LLP
400 Sansome Street
San Francisco, CA 94111
Approximate date of commencement of proposed sale to the public: At such
time or times after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box: /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
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CALCULATION OF REGISTRATION FEE
=====================================================================================================================
Title of each class Proposed Maximum Proposed Maximum
of securities to be Amount to be Offering Price Per Aggregate Offering Amount of
registered Registered Share* Price* Registration Fee*
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 800,000 $54.09375 $43,275,000 $12,031
=====================================================================================================================
<CAPTION>
* Estimated on the basis of $54.09375, the average of the high and low prices of shares on the New York Stock
Exchange on November 10, 1998.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
THE PMI GROUP, INC.
601 MONTGOMERY STREET
SAN FRANCISCO, CA 94111
(800) 288-1970
NYSE: PMA
PROSPECTUS
800,000 SHARES OF COMMON STOCK
THE PMI GROUP, INC. EQUITY INCENTIVE PLAN
AND THE
THE PMI GROUP, INC. STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
Neither the Securities and Exchange Commission
----------------------------------------------
nor any state securities commission has approved
------------------------------------------------
or disapproved of these securities or passed upon the adequacy
--------------------------------------------------------------
or accuracy of this prospectus.
-------------------------------
Any representation to the contrary is a criminal offense.
---------------------------------------------------------
The date of this Prospectus is November 12, 1998
<PAGE>
TABLE OF CONTENTS
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<S> <C>
ABOUT THIS PROSPECTUS................................................................................................ 2
THE EQUITY INCENTIVE PLAN............................................................................................ 2
INTRODUCTION.................................................................................................... 2
1. What is the purpose of the Plan?...................................................................... 2
2. How many shares of Stock are available under the Plan?................................................ 2
ADMINISTRATION AND ELIGIBILITY.................................................................................. 3
3. Who administers the Plan?............................................................................. 3
4. Who is eligible to receive an Award under the Plan?................................................... 3
STOCK OPTIONS................................................................................................... 3
5. What is an Option and how do I benefit from it?....................................................... 3
6. How will I know the terms of my option?............................................................... 4
7. What is the exercise price of my option?.............................................................. 4
8. When can my option be exercised?...................................................................... 4
9. When does my option expire?........................................................................... 5
10. What is a Reload Option?.............................................................................. 5
11. When can an option be cancelled?...................................................................... 5
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS................................................................................ 6
INTRODUCTION.................................................................................................... 6
12. What is the purpose of the Plan?...................................................................... 6
13. How many shares of Stock are available under the Plan?................................................ 6
ADMINISTRATION AND ELIGIBILITY.................................................................................. 6
14. Who administers the Plan?............................................................................. 6
15. Who is eligible to participate in the Plan?........................................................... 6
STOCK OPTIONS................................................................................................... 7
16. When do Participants receive stock options?........................................................... 7
17. What is the exercise price of my option?.............................................................. 7
ADDITIONAL INFORMATION CONCERNING THE PLANS.......................................................................... 8
TRANSFERABILITY OF OPTIONS...................................................................................... 8
18. How can a Participant transfer an option?............................................................. 8
19. Can a Permitted Transferee transfer an option?........................................................ 8
20. How does a Participant's continued service affect the Permitted Transferee's option?.................. 8
EXERCISE OF STOCK OPTIONS....................................................................................... 9
21. How do I exercise my Option?.......................................................................... 9
22. How is tax withholding paid?.......................................................................... 9
OTHER IMPORTANT INFORMATION..................................................................................... 10
23. Do the Plans restrict a Participant's ability to resell Stock acquired under the Plans?............... 10
24. Does participation in a Plan affect a Participant's service with the Company?......................... 10
25. Can the Plans be changed or terminated?............................................................... 10
TAX AND ERISA INFORMATION....................................................................................... 11
26. What are the tax effects of my option?................................................................ 11
27. What are the general federal income tax effects of options that have been transferred?................ 11
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Page
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28. What are the general federal estate and gift tax effects of options that have been transferred?....... 12
29. What is the tax effect for the Company?............................................................... 12
30. Are the Plans subject to ERISA?....................................................................... 12
USE OF PROCEEDS................................................................................................. 13
LEGAL OPINION................................................................................................... 13
EXPERTS......................................................................................................... 13
AVAILABLE INFORMATION................................................................................................ 13
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.................................................................... 13
INFORMATION ABOUT THIS PROSPECTUS.................................................................................... 14
</TABLE>
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ABOUT THIS PROSPECTUS
The PMI Group, Inc. (the "Company") is offering up to 800,000 shares of its
common stock (the "Stock") that Permitted Transferees may purchase by exercising
transferable stock options issued to certain individuals (the "Participants")
who participate in the Company's Equity Incentive Plan and the Company's Stock
Plan for Non-Employee Directors.
Permitted Transferees are:
. Members of the Participant's "Immediate Family", that is, the
Participant's spouse, parents, siblings, children, stepchildren and
grandchildren; and
. Trusts or other entities established solely for the benefit of the
Participant and/or members of the Participant's Immediate Family.
This Prospectus gives a summary of the main features of the Plans, as of
November 12, 1998 as they relate to transferable stock options. However, as a
summary, this Prospectus does not contain all of the terms and conditions of the
official Plan documents. Accordingly, the Plan documents will govern if the
terms and conditions of the Plans as described in this Prospectus are in
conflict with the provisions of the Plan documents. Please read this Prospectus
carefully.
THE EQUITY INCENTIVE PLAN
INTRODUCTION
1. WHAT IS THE PURPOSE OF THE PLAN?
--------------------------------
The Equity Incentive Plan (the "Plan") is intended to provide key employees of
the Company and its Subsidiaries with an opportunity to acquire Stock to
strengthen their commitment to the success of the Company and their desire to
remain employed by the Company and its Subsidiaries. (An entity generally is a
subsidiary of the Company if the Company owns at least 50% of the entity.)
The Plan permits the grant of (1) incentive stock options (which are entitled to
certain favorable federal tax treatment) ("ISOs"), (2) nonqualified stock
options (that is, options that are not ISOs), (3) restricted shares, (4)
unrestricted shares or performance shares (collectively, "Awards"). A separate
Prospectus describes these Awards in greater detail. For a copy of that
Prospectus, please contact the Human Resources Department at (415) 291-6345.
2. HOW MANY SHARES OF STOCK ARE AVAILABLE UNDER THE PLAN?
------------------------------------------------------
A maximum of 1,400,000 shares of Stock are available under the Plan. If an
Award expires or is cancelled for any reason without having been fully exercised
or vested, the unvested or cancelled shares generally again will be available
for grant under the Plan. The Committee will adjust the
2
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shares of Stock available under the Plan and any outstanding Awards as
appropriate if the Company experiences a stock split, stock dividend,
recapitalization or other change to the capital structure of the Company.
ADMINISTRATION AND ELIGIBILITY
3. WHO ADMINISTERS THE PLAN?
-------------------------
The Compensation Committee (the "Committee") of the Board of Directors of the
Company (the "Board") administers the Plan. The Committee consists of at least
two directors of the Company who are not employees of the Company, any of its
Subsidiaries. The members of the Committee serve at the pleasure of the Board.
The Committee has all discretion and authority necessary or appropriate to
administer the Plan and to control its operation. For example, the Committee
has the power to determine which employees will be granted Awards, and the terms
and conditions of the Awards. The Committee may make whatever rules it
considers appropriate for the administration and interpretation of the Plan.
The Committee's decisions are final and binding on all persons.
The Board may delegate to another committee of the Board part or all of the
Committee's authority under the Plan. The other committee may consist of one or
more directors who may be officers or employees of the Company or its
Subsidiaries. However, only the Committee may grant and administer Awards to
Participants who must comply with section 16 of the Securities Exchange Act of
1934, as amended (the "1934 Act").
4. Who is eligible to receive an Award under the Plan?
---------------------------------------------------
Employees of the Company and its Subsidiaries are eligible to be selected for
participation in the Plan. The Committee has complete authority to determine
which employees will receive Awards. An employee who receives an Award is
referred to in this Plan description as a "Participant."
STOCK OPTIONS
5. WHAT IS AN OPTION AND HOW DO I BENEFIT FROM IT?
-----------------------------------------------
An option is a right to purchase a specified number of shares Stock for a fixed
price (the "exercise price") during a prescribed period of time. If the value
of the Stock increases above your exercise price during its term, your option
will enable you to acquire the Stock at a "discount"; if the value of the Stock
does not increase above your exercise price, you will not recognize an economic
benefit from your option.
The principal benefit of your option is the opportunity to have an economic
interest in the value of the Stock during the period in which the option is
exercisable, without risking any of your capital.
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The Committee has complete discretion to determine the number of shares of Stock
subject to each option, except that no single employee may receive options
covering more than a total of 150,000 shares. Certain additional limits apply
to ISOs.
6. HOW WILL I KNOW THE TERMS OF MY OPTION?
---------------------------------------
If the Committee awards a Participant an option, the Participant will be sent a
written agreement (an "Option Agreement") between the Company and the
Participant. The Option Agreement shows the exercise price of the option, the
expiration date of the option, the number of shares purchasable with the option,
any conditions to exercise of the option, and any other terms and conditions
determined by the Committee (in its discretion). The Option Agreement also will
specify whether the option is intended to be an ISO or a nonqualified stock
option.
7. WHAT IS THE EXERCISE PRICE OF MY OPTION?
----------------------------------------
The exercise price is the price at which you may purchase a share of Stock when
you exercise your option. The Committee, in its discretion, sets the exercise
price for each option. However, the exercise price generally may not be less
than 100% of the Fair Market Value of the Stock on the date of grant.
For purposes of the Plan, "Fair Market Value" is the mean between the highest
and lowest sale prices of the Stock as reported on the New York Stock Exchange
for the date of grant. If no sale prices are reported for the date in question,
Fair Market Value is calculated for the next preceding date for which sale
prices are reported.
There are a couple of exceptions to the above rules regarding Exercise Prices.
An automatic, discretionary formula will determine the Exercise Price of an
option granted as a replacement of an option that was previously granted under
certain stock option and incentive plans sponsored by Sears, Roebuck and Co. and
The Allstate Corporation. The automatic, nondiscretionary formula takes into
account the exercise price of the previous option, the market value (on the date
of the Company's initial public offering) of the Stock, and the market value of
Sears or Allstate stock (on the same date). Also, certain additional rules
apply to the exercise price of ISOs.
8. WHEN CAN MY OPTION BE EXERCISED?
--------------------------------
You generally cannot exercise an option immediately. Instead, you will be able
to exercise an option (that is, the option will "vest") as to a certain number
of shares of Stock at the time or times set forth in the Participant's Option
Agreement, assuming that all conditions to vesting (for example, the
Participant's continued employment) have been satisfied.
The Committee, in its discretion, determines the vesting schedule for each
option. However, an option generally may not be exercised during the first year
after its grant. In addition, an option
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will become fully exercisable upon (1) the Participant's termination of
employment on account of Retirement (as defined in the Plan), death or
Disability (as defined in the Plan), or (2) a Change of Control (as defined in
the Plan) that occurs prior to the Participant's termination of employment
(unless the Committee determines that full vesting in the event of a Change of
Control will not occur).
In order to comply with certain tax qualification rules applicable to the
Company's Savings & Profit-Sharing Plan (the "401(k) Plan"), if a Participant
takes a hardship withdrawal from his or her account (if any) under the 401(k)
Plan, the Participant's options may not be exercised during the 12-month period
following the withdrawal.
9. WHEN DOES MY OPTION EXPIRE?
---------------------------
In general, you cannot exercise an option after the earlier of the expiration
date set forth in the related Option Agreement or twelve years from the date of
its grant. However, an option may terminate even earlier if, for example, the
Participant's employment ends before the date on which the option otherwise
would have expired. The specific expiration provisions for each option are set
forth in the applicable Option Agreement. Option expiration provisions may vary
for different options and Participants, as determined by the Committee in its
discretion. After an option is granted, the Committee, in its discretion and
subject to the terms of the Plan, may extend the maximum term of the option. In
addition, there are a couple of special rules for ISOs.
10. WHAT IS A RELOAD OPTION?
------------------------
The Committee, in its discretion, may provide in an Option Agreement that if the
exercise price of the option is paid in Stock, the Participant will receive a
new option (a "Reload Option") as of the date that the previously granted option
is exercised. The Reload Option will cover a number of shares equal to the
number of shares of Stock tendered to exercise the previously granted option,
plus, if the Committee determines, the number of shares of Stock the Company
retains for tax withholding. Reload Options will have an exercise price equal
to the Fair Market Value of Stock on the grant date. As provided in the Option
Agreement for each Reload Option, the terms and conditions of a Reload Option
generally will be similar to the terms and conditions applicable to the
exercised option.
11. WHEN CAN AN OPTION BE CANCELLED?
--------------------------------
The Committee, in its discretion, may at any time elect to cancel all or part of
an option and instead pay the Participant cash or Stock having a value equal to
the number of shares of Stock subject to such cancelled option, multiplied by
the amount (if any) by which the Fair Market Value of the Stock on the date of
cancellation of the option exceeds the exercise price. However, if the
Committee (in its discretion) determines that not making a payment upon the
cancellation of an option would be in the best interests of the Company's
stockholders (ignoring in such determination the cost of such payment and
considering only other matters), the Committee may
5
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void an option and declare that no payment shall be made to the Participant on
account of such cancellation.
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
INTRODUCTION
12. WHAT IS THE PURPOSE OF THE PLAN?
--------------------------------
The Stock Plan for Non-Employee Directors (the "Plan") is intended to closely
align the interests of the eligible directors with the interests of the
Company's stockholders. This is achieved by tying a significant portion of
director compensation to the performance of the Stock. The Plan also is intended
to encourage Stock ownership on the part of eligible directors.
13. HOW MANY SHARES OF STOCK ARE AVAILABLE UNDER THE PLAN?
------------------------------------------------------
A maximum of 100,000 shares of Stock are available under the Plan. If an option
expires or is cancelled for any reason without having been fully exercised or
vested, the unvested or cancelled shares generally again will be available for
grant under the Plan. The Committee may adjust the number of shares of Stock
available under the Plan, any outstanding stock options and the number of shares
and options to be granted to individual directors in the future, as the
Committee deems appropriate to reflect any stock splits, stock dividends,
recapitalizations, or other changes to the capital structure of the Company.
ADMINISTRATION AND ELIGIBILITY
14. WHO ADMINISTERS THE PLAN?
-------------------------
A committee (the "Committee") of the Board of Directors of the Company (the
"Board") administers the Plan. The Committee consists of one or more members of
the Board who are not eligible to participate in the Plan. The members of the
Committee are appointed by the Company's Chief Executive Officer. The Committee
has all discretion and authority necessary or appropriate to administer the
Plan.
15. WHO IS ELIGIBLE TO PARTICIPATE IN THE PLAN?
-------------------------------------------
Only Non-Employee Directors are eligible to participate in the Plan. A Non-
Employee Director is a member of the Board who is an employee of neither the
Company nor of any Subsidiary of the Company. Participation in the Plan is
automatic; there is no requirement for a Non-Employee Director (a "Participant")
to complete an enrollment form or agreement in order to participate in the Plan.
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Participation in the Plan will end when a Participant is no longer is eligible
for the Plan. For example, participation will end when the Participant ceases
to be a Board member, he or she becomes an employee of the Company or a
Subsidiary, or the Plan is terminated or amended so that the individual no
longer is eligible for the Plan.
STOCK OPTIONS
16. WHEN DO PARTICIPANTS RECEIVE STOCK OPTIONS?
-------------------------------------------
Under the Plan, each Participant will receive an initial stock option covering
3,000 shares of Stock. Each Participant who was on the Board on June 3, 1996,
received his or her initial 3,000 Share option at that time. Each Participant
who first joins the Board after June 3, 1996, will receive his or her initial
3,000 Share option on the first business day of June, either in the year the
Director first joins the Board (if he or she joins the Board prior to such first
business day), or in the immediately following year (if the Director joins the
Board after the first business day in June).
Each Participant who has received an initial option for 3,000 shares of Stock
thereafter automatically will receive annual grants of options to purchase 1,500
shares of Stock. All such options will be granted on the first business day in
June (beginning in the year after the year in which the Director receives the
initial 3,000 Share option). However, on any scheduled grant date, a
Participant actually will receive an option only if he or she (1) still is a
Participant, and (2) has continuously served as a Non-Employee Director since
his or her last option grant.
17. WHAT IS THE EXERCISE PRICE OF MY OPTION?
----------------------------------------
The exercise price of each option will equal 100% of the "Fair Market Value" (on
the date of grant) of the shares covered by the option. Under the Plan, Fair
Market Value is the mean between the highest and lowest sale prices of the Stock
as reported on the New York Stock Exchange. Each option granted to the
Participant in his or her initial year of Board service (e.g., up to 3,000
shares) will become exercisable in increments of one-third, commencing one year
from the date of grant. That is, one-third of the shares of Stock covered by the
option will become exercisable on the first, second and third anniversaries of
the grant date. Each option automatically granted to a Participant after his or
her initial year of Board service (e.g., 1,500 shares) will become exercisable
as to 100% of the shares of Stock subject to such option in full on the first
anniversary of the applicable date of grant. In addition, an option will become
fully exercisable upon a Participant's death, Disability (as defined in the
Plan), Retirement (as defined in the Plan), resignation or non-reelection to the
Board of Directors. However, if a Participant's service on the Board is
terminated for any other reason prior to all shares becoming exercisable, the
unexercisable shares will be forfeited.
Options granted to Participants normally expire ten years after the date of
grant (assuming the Director remains on the Board for the entire period of ten
years). If a Participant terminates service on the Board prior to an option's
normal expiration date, the period of exercisability of the option will vary
depending upon the reason for the termination. An option may be exercised for
up to:
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(1) three months following termination of service prior to age 70 for any
reason other than death or Disability (subject to the Committee's discretion to
extend such three-month period to a maximum of ten years), (2) five years
following termination of service at or after age 70 for any reason other than
death or Disability, and (3) two years following termination of service due to
the Participant's Disability, but in all cases no later than the normal
expiration date. In the event of the Participant's death, an option may be
exercised for up to two years from the date of death, regardless of the original
expiration date of the option.
ADDITIONAL INFORMATION CONCERNING THE PLANS
TRANSFERABILITY OF OPTIONS
18. HOW CAN A PARTICIPANT TRANSFER AN OPTION?
-----------------------------------------
Participants generally may not transfer stock options granted under the Plans
except by will or by the laws of descent and distribution. If permitted by the
Committee, a Participant may designate one or more beneficiaries to receive any
vested stock option following his or her death.
However, nonqualified stock options may be transferred to a Permitted
Transferee. Permitted Transferees are limited to (1) the Participant's spouse,
parents, siblings, children, stepchildren or grandchildren (the Participants
"Immediate Family"), and (2) trusts or other entities established solely for the
benefit of the Participant and/or members of the Participant's Immediate Family.
Plan provisions continue to apply to a transferred option. The rights of a
Permitted Transferee are subject to the same limitations as the original option
grant to the Participant, including those Plan provisions relating to
expiration, exercise and cancellation of stock options, except as otherwise
described in the Plans or established by the Committee.
19. CAN A PERMITTED TRANSFEREE TRANSFER AN OPTION?
----------------------------------------------
A Permitted Transferee cannot further transfer an option except by will or the
laws of descent and distribution. If permitted by the Committee, a Permitted
Transferee may designate one or more beneficiaries to receive any vested stock
option following his or her death.
20. HOW DOES A PARTICIPANT'S CONTINUED SERVICE AFFECT THE PERMITTED
---------------------------------------------------------------
TRANSFEREE'S OPTION?
- --------------------
Because transferred options continue to be governed by the Plans, the
Participant's employment or service with the Company continues to affect their
exercisability. Therefore, Permitted Transferees should pay close attention to
the termination of employment or service provisions of the Plans (e.g., the
effect of termination of employment or service on the vesting or termination of
the transferred option).
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EXERCISE OF STOCK OPTIONS
21. HOW DO I EXERCISE MY OPTION?
You may exercise an option by signing and delivering a notice of exercise form
to the Company's Human Resources Department accompanied by full payment of the
exercise price.
The exercise price must be paid in full in cash at the time of exercise.
However, the Committee, in its discretion, may permit payment of the exercise
price by the tender of previously acquired Stock having an aggregate Fair Market
Value at the time of exercise equal to the total exercise price, or such other
means (consistent with the Plan) as the Committee may approve in its discretion.
As soon as practicable after receipt of the notice of exercise and full payment
for the Stock purchased, the Company will deliver to you, a share certificate
(which may be in book-entry form) representing such Stock. Alternatively,
Participants who are eligible to participate in the Company's Officer Deferred
Compensation Plan or the Directors' Deferred Compensation Plan may elect to
defer the delivery of shares of Stock pursuant to an exercise of nonqualified
stock option subject to rules established by the Committee.
Federal regulations permit brokers to provide loans to Participants for the
purpose of facilitating the exercise of options. A Participant may wish to
inquire of his or her broker regarding whether the broker would make such a
facility available to him or her.
22. HOW IS TAX WITHHOLDING PAID?
----------------------------
Prior to the delivery of any Stock or cash pursuant to exercise of a stock
option (or exercise thereof), the Company may deduct or withhold, or require the
Participant to pay to the Company, an amount sufficient to satisfy federal,
state, and local taxes (including any FICA obligation) required to be withheld
with respect to such exercise.
In addition, the Committee (in its discretion) may permit a Participant to
satisfy any tax withholding obligation, in whole or in part, by electing to have
the Company withhold otherwise deliverable Stock having a value equal to the
amount required to be withheld or by delivering to the Company already-owned
Stock in order to satisfy the withholding requirement. The amount of the
withholding requirement will be deemed to include any amount which the Committee
agrees may be withheld at the time the election is made, not to exceed the
amount determined by using the maximum federal, state or local marginal income
tax rates applicable to the Participant on the date that the amount of tax to be
withheld is to be determined. The value of the Stock to be withheld or
delivered will be based on their Fair Market Value on the date that the taxes
are required to be withheld.
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Upon exercise of a transferred option by a Permitted Transferee, federal, state
or local withholding taxes are the obligation of the Participant. The Company
may deduct or withhold or require the Participant to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes (including any
applicable FICA obligation) required to be withheld upon exercise of a
transferred option. Once exercise is completed, stock certificates for the
appropriate number of shares will be delivered to the Permitted Transferee.
OTHER IMPORTANT INFORMATION
23. DO THE PLANS RESTRICT A PARTICIPANT'S ABILITY TO RESELL STOCK ACQUIRED
----------------------------------------------------------------------
UNDER THE PLANS?
- ----------------
The Committee may impose such restrictions on Stock acquired from the exercise
of options as it may deem advisable, including, but not limited to, restrictions
relating to federal securities laws, the requirements of any national securities
exchange or system upon which Stock then is listed or traded, or any blue sky or
state securities laws.
The Plans generally do not restrict your ability to sell or otherwise transfer
Stock acquired under the Plans through the exercise of a stock option. However,
as explained below, federal securities laws and Company policy may affect your
ability to sell (or otherwise transfer) Stock in certain circumstances.
While a Participant is in possession of "inside" information (that is,
information which would be important to an investor, but which has not yet been
made public), the Participant is prohibited by federal securities laws and
Company policy from trading Stock until the information has become public.
Also, a Participant who is an "affiliate" of the Company (within the meaning of
Rule 405 the 1933 Act), may not resell under this Prospectus any Stock purchased
or received under the Plans. Any such resales must be either described in a
separate prospectus, or, in certain instances, registered in a separate
registration statement, or sold in accordance with the requirements of Rule 144
under the 1933 Act or another exemption available under the 1933 Act.
24. DOES PARTICIPATION IN A PLAN AFFECT A PARTICIPANT'S SERVICE WITH THE
--------------------------------------------------------------------
COMPANY?
- --------
The grant of an option under either of the Plans does not affect the terms and
conditions of the Participant's service with the Company. The Company and its
affiliates reserve the right to terminate a Participant's employment or service
at any time, with or without cause.
25. CAN THE PLANS BE CHANGED OR TERMINATED?
---------------------------------------
The Board of Directors generally may amend, suspend or terminate the Plans, or
any part of the Plans, at any time and for any reason. However, in some cases,
the Company's stockholders must approve certain material amendments to the
Plans.
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TAX AND ERISA INFORMATION
The following discussion is intended only as a summary of (1) the general
federal income tax consequences of nonqualified stock options granted under the
Plans, and the disposition of any Stock acquired pursuant thereto, and (2) the
general federal income and federal estate and gift tax consequences of
nonqualified stock options that have been transferred under the Plans. However,
please note that the federal, state and local tax consequences to any particular
taxpayer will depend upon his or her individual circumstances. Accordingly,
each Participant is advised to seek the advice of a qualified tax adviser
regarding his or her participation in the Plans. In addition, prior to
transferring an option, the Participant should consult his or her personal tax
advisor on the federal and state tax consequences of transferring a stock
option, including federal and state estate and gift tax consequences.
The following discussion assumes that the per share Exercise Price of an option
is less than the Fair Market Value of a share on the date of exercise.
26. WHAT ARE THE TAX EFFECTS OF MY OPTION?
--------------------------------------
Participants who hold nonqualified stock options will not be required to include
an amount in income at the time of grant but will have ordinary income upon the
exercise of such options to the extent the value on the date of exercise of the
Stock (and any cash) received exceeds the Exercise Price paid for such Stock.
Participants who exercise nonqualified stock options through payment of the
Exercise Price in Stock, or in a combination of Stock and cash, will have
ordinary income upon such exercise to the extent that the value (on the date of
exercise) of the Stock purchased exceeds the value of the Stock surrendered,
less the amount of any cash paid upon such exercise.
Any gain or loss recognized upon the sale or exchange of Stock acquired
generally will be treated as capital gain or loss and will be long-term or
short-term depending on whether the Stock has been held for more than one year.
The holding period for the Stock will commence just after the time the
Participant recognizes income. The amount of such gain or loss will be the
difference between the amount realized upon the sale or exchange of the shares
and the value of the Stock at the time income is recognized.
27. WHAT ARE THE GENERAL FEDERAL INCOME TAX EFFECTS OF OPTIONS THAT HAVE BEEN
-------------------------------------------------------------------------
TRANSFERRED?
- ------------
Participants who transfer a nonqualified stock option will not recognize income
at the time of transfer. Instead, at the time the Permitted Transferee
exercises the option, the Participant will recognize ordinary income in an
amount equal to the excess of the fair market value of the shares of Stock
received over the Exercise Price paid for such Stock. If a Permitted Transferee
exercises an option after the death of a Participant, ordinary income will be
recognized by the Participant's estate.
11
<PAGE>
A Permitted Transferee will not recognize income when the option is transferred
or exercised. The tax basis for the shares of Stock in the hands of the
Permitted Transferee would be the Exercise Price paid for the option plus the
amount of ordinary income recognized by the Participant at the time of exercise.
If the Permitted Transferee later sells the Stock acquired upon exercise, any
gain or loss recognized upon the sale or exchange of Stock will be treated as
capital gain or loss and will be long-term or short-term, depending on whether
the Stock has been held for more than one year.
28. WHAT ARE THE GENERAL FEDERAL ESTATE AND GIFT TAX EFFECTS OF OPTIONS THAT
------------------------------------------------------------------------
HAVE BEEN TRANSFERRED?
- ----------------------
If a Participant transfers an option to a Permitted Transferee as a completed
gift, the Participant may have gift tax liability. Whether the Participant will
owe gift tax depends upon whether the Participant has exhausted his applicable
credit (which currently effectively exempts from gift tax the first $625,000 of
gifts made during the Participant's lifetime) or whether the transfer qualifies
for the annual $10,000 per-donee gift tax exclusion. Once the gift is complete,
there generally is no further estate or gift tax liability for the Participant,
either when the Permitted Transferee exercises the option or later disposes of
the Stock acquired after exercising the transferred option.
The Internal Revenue Service (the "IRS") has recently ruled that the transfer of
an option is not a completed gift until the option has vested. If the transfer
of an option is incomplete, the option generally will be treated for estate tax
purposes as though it had not been transferred.
29. WHAT IS THE TAX EFFECT FOR THE COMPANY?
---------------------------------------
The Company will receive a deduction for federal income tax purposes in
connection with an option made under the Plan only in an amount equal to the
ordinary income realized by the Participant and only if applicable withholding
requirements are met.
In addition, the Code contains special rules regarding the federal income tax
deductibility of compensation paid to the Company's Chief Executive Officer and
to each of the other four most highly compensated executive officers. In
general, compensation paid to any of these executives will be deductible only to
the extent that it does not exceed $1 million during any calendar year.
However, the Company can preserve the deductibility of certain compensation in
excess of this $1 million limit if it complies with certain conditions. The
Company's Equity Incentive Plan has been designed to permit the Committee to
grant options, which will be fully deductible to the Company.
30. ARE THE PLANS SUBJECT TO ERISA?
-------------------------------
The Plans are not subject to any of the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
12
<PAGE>
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Stock
offered hereby for general corporate purposes.
LEGAL OPINION
Orrick, Herrington & Sutcliffe LLP has reviewed the validity of the Stock
issuable under the Plans to Permitted Transferees.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
AVAILABLE INFORMATION
The Company files annual, quarterly and current reports, proxy statements
and other information with the Securities and Exchange Commission (the "SEC").
You may read an copy any reports, statements or other information the Company
files at the SEC's public reference rooms in Washington, D.C., New York, New
York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. The Company filings with the SEC are
also available to the public from commercial document retrieval services and at
the website maintained by the SEC at "http://www.sec.gov."
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows the Company to "incorporate by reference" the information it
files with the SEC, which means that the Company can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this Prospectus, and later
information filed with the SEC will update and supersede this information. The
Company incorporates by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934 until we sell all of the Common Stock.
1. The Company's annual report on Form 10-K for the year ended
December 31, 1997.
2. Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30, and September 30, 1998.
13
<PAGE>
3. The description of the Stock contained in the Company's registration
statement on Form S-1, dated January 17, 1995 (Commission File No.
33-88542), as it may have been amended from time to time.
The Company will provide (free of charge) to each person to whom a copy of
this Prospectus is delivered on oral or written request, a copy of any or all of
the documents incorporated by reference in this Prospectus and in the
Registration Statement on Form S-3 filed with the SEC relating to the Plans
(except for any exhibits to such documents), including the Company's annual
report, and copies of other reports, proxy statements and communications
distributed to the Company's stockholders. Requests should be directed to:
Investor Relations Department
The PMI Group, Inc.
601 Montgomery Street
San Francisco, CA 94111
(Telephone: (415) 291-6429)
Copies of this Prospectus, any supplements to the Prospectus, and further
information concerning the Plan and its administration are available (free of
charge) on oral or written request to:
Human Resources Department
The PMI Group, Inc.
601 Montgomery Street
San Francisco, CA 94111
(Telephone: (415) 291-6345)
INFORMATION ABOUT THIS PROSPECTUS
You should rely only on the information incorporated by reference or
provided in this Prospectus or any prospectus supplement. The Company has not
authorized anyone to provide you with different or additional information. The
Company is not making an offer to sell any stock in any state or country where
the offer is not permitted. You should not assume that the information in this
Prospectus or any prospectus supplement is accurate as of any date other than
the date on the front of this document.
This Prospectus may be updated in the future by furnishing to Participants
or Permitted Transferees an appendix, memorandum, notice or replacement page
containing such updated information. New prospectuses will not be delivered,
except upon request. Accordingly, you should keep this Prospectus for future
reference.
14
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses relating to the registration of shares will be borne by the
registrant. Such expenses are estimated to be as follows:
- ----------------------------------------------------------------------
Registration Fee Securities and Exchange $12,031
Commission
- ----------------------------------------------------------------------
Accountants' Fees and Expenses $3,500
- ----------------------------------------------------------------------
Legal Fees and Expenses $7,200
- ----------------------------------------------------------------------
Miscellaneous Expenses $4,000
- ----------------------------------------------------------------------
Total $26,731
- ----------------------------------------------------------------------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, inter alia,
empowers a Delaware corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (other than an action by or in the right of the corporation)
by reason of the fact that such person is or was a director, officer, employee
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she 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 action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Similar indemnity is authorized for such person against expenses (including
attorneys' fees) actually and reasonably incurred in connection with the defense
or settlement of any such threatened, pending or completed action or suit if
such 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 provided
further that (unless a court of competent jurisdiction otherwise provides) such
person shall not have been adjudged liable to the corporation. Any such
indemnification may be made only as authorized in each specific case upon a
determination by the stockholders or disinterested directors or, if there are no
disinterested directors, or if such disinterested directors so direct, by
independent legal counsel in a written opinion that indemnification is proper
because the indemnitee has met the applicable standard of conduct.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145. The Company
maintains policies
ii-1
<PAGE>
insuring its and its subsidiaries' officers and directors
against certain liabilities for actions taken in such capacities, including
liabilities under the Securities Act of 1933.
Article V of the By-laws of the Company provides for indemnification
of the directors and officers of the Company to the fullest extent permitted by
law, as now in effect or later amended. In addition, the By-laws provide for
indemnification against expenses incurred by a director or officer to be paid by
the Company in advance of the final disposition of such action, suit or
proceeding; provided, however, that if required by the Delaware General
Corporation Law, an advancement of expenses will be made only upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall be ultimately determined that he is not entitled to be indemnified by
the Company. The By-laws further provide for a contractual cause of action on
the part of directors and officers of the Company with respect to
indemnification claims which have not been paid by the Company.
The Company also has provided liability insurance for each director
and officer for certain losses arising from claims or charges made against them
while acting in their capacities as directors or officers of the Company.
The Company has entered into indemnification agreements with its
directors and executive officers that require the Company to indemnify such
persons against all expenses (including attorneys' fees and amounts paid in
settlement), judgments, fines and penalties which are actually incurred in
connection with any threatened, pending or completed action, suit or other
proceeding (including an action by or in the right of the Company) to which such
person is, was or is threatened to be made a party, by reason of the fact that
such person is or was a director or officer of the Company, or is or was serving
at the request of the Company as a director, officer, employee or other agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, to the fullest extent permitted by applicable law and the
Company's Restated Certificate of Incorporation and By-laws. The indemnification
agreements also set forth certain procedures that will apply in the event of a
claim for indemnification thereunder.
Article Nine of the Company's Restated Certificate of Incorporation
limits to the fullest extent permitted by the Delaware General Corporation Law,
as the same exists or may have been amended, the personal liability of the
Company's directors to the Company or its stockholders for monetary damages for
a breach of their fiduciary duty as directors. Section 102(b)(7) of the Delaware
General Corporation Law currently provides that such provisions do not eliminate
or limit the liability of a director (i) for a breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law (relating
to the declaration of dividends and purchase or redemption of shares in
violation of the Delaware General Corporation Law), or (iv) for any transaction
from which the director derived an improper personal benefit.
ii-2
<PAGE>
ITEM 16. EXHIBITS.
4.1 Restated Certificate of Incorporation of The PMI Group, Inc. (incorporated
by reference to Exhibit 3.1 to the registrant's Registration Statement on
Form S-1, Commission File No. 33-88542).
4.2 By-Laws of The PMI Group, Inc. (incorporated by reference to Exhibit 3(ii)
to the registrant's report on Form 8-K, Commission File No. 001-13664,
filed with the Commission on September 29, 1998).
4.3 The PMI Group, Inc. Equity Incentive Plan, as amended (incorporated by
reference to Exhibit 10.2 of the registrant's Quarterly Report on Form 10-
Q, Commission File No. 001-13664, filed with Commission on August 13,
1998).
4.4 Form of The PMI Group, Inc. Equity Incentive Plan Nonqualified Stock Option
Agreement.
4.5 The PMI Group, Inc. Stock Plan for Non-Employee Directors, as amended
(incorporated by reference to Exhibit 10.3 of the registrant's Quarterly
Report on Form 10-Q, Commission File No. 001-13664, filed with Commission
on August 13, 1998).
4.6 Form of The PMI Group, Inc. Stock Plan for Non-Employee Directors
Nonqualified Stock Option Agreement.
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP.
23.1 Consent of Deloitte & Touche LLP, Independent Auditors.
23.2 Consent of Orrick, Herrington & Sutcliffe LLP is included in Exhibit 5.1 to
this Registration Statement.
24.1 Power of Attorney of Directors (contained on the signature pages of this
Registration Statement).
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
ii-3
<PAGE>
volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933 each filing of the
registrant'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 the
Plan's annual report pursuant to 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.
(c) 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.
ii-4
<PAGE>
Signatures
THE REGISTRANT
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-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Francisco, State of California on the 30th day of
October, 1998.
THE PMI GROUP, INC.
(Registrant)
/s/ W. Roger Haughton
- ----------------------------------------------------------
W. Roger Haughton
Chairman of the Board and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
Principal Executive Officer:
/s/ W. Roger Haughton
- ------------------------------
W. Roger Haughton Chief Executive Officer October 30, 1998
Principal Financial Officer:
/s/ John M. Lorenzen, Jr.
- ------------------------------
John M. Lorenzen, Jr Executive Vice October 30, 1998
President and Chief
Financial Officer
Principal Accounting Officer:
/s/ William A. Seymore
- ------------------------------
William A. Seymore Vice President October 30, 1998
and Controller
</TABLE>
ii-5
<PAGE>
POWER OF ATTORNEY OF DIRECTORS
KNOW BY ALL PERSONS BY THESE PRESENTS:
Each of the undersigned hereby constitutes and appoints Victor J.
Bacigalupi, Mark C. Berkowitz, Charles F. Broom, John M. Lorenzen, Jr., Claude
J. Seaman, and William A. Seymore and each of them with power to act alone, his
or her true and lawful attorney-in-fact and agent, 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 a Registration Statement or
Registration Statements on Form S-3 or other appropriate form, under the
Securities Act of 1933, as amended, with respect to shares of Common Stock of
the Company, and any and all amendments of such Registration Statements,
including post-effective amendments, and to file the same, together with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto such attorney-in-fact full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises hereof, as fully to all intents
and purposes as he or she might do or could do in person, thereby ratifying and
confirming all that said attorney-in-fact or his or her substitutes may lawfully
do or cause to be done by virtue hereof.
/s/ W. Roger Haughton October 30, 1998
- ----------------------------------
W. Roger Haughton
/s/ Wayne E. Hedien October 30, 1998
- ----------------------------------
Wayne E. Hedien
/s/ Ronald H. Zech October 30, 1998
- ----------------------------------
Ronald H. Zech
/s/ Donald C. Clark October 30, 1998
- ----------------------------------
Donald C. Clark
/s/ Kenneth T. Rosen October 31, 1998
- ----------------------------------
Kenneth T. Rosen
October ___, 1998
- ----------------------------------
Mary Lee Widener
/s/ Richard L. Thomas October 30, 1998
- ----------------------------------
Richard L. Thomas
ii-6
<PAGE>
/s/ James C. Castle October 30, 1998
- ----------------------------------
James C. Castle
/s/ John D. Roach October 30, 1998
- ----------------------------------
John D. Roach
A majority of the members of the Board of Directors.
ii-7
<PAGE>
EXHIBIT INDEX
4.1 Restated Certificate of Incorporation of The PMI Group, Inc.
(incorporated by reference to Exhibit 3.1 to the registrant's Registration
Statement on Form S-1, Commission File No. 33-88542).
4.2 By-Laws of The PMI Group, Inc. (incorporated by reference to Exhibit 3.2 to
the registrant's report on Form 8-K, Commission File No. 001-13664, filed
with the Commission on September 29, 1998).
4.3 The PMI Group, Inc. Equity Incentive Plan, as amended (incorporated by
reference to Exhibit 10.2 of the registrant's Quarterly Report on Form 10-
Q, Commission File No. 001-13664, filed with Commission on August 13,
1998).
4.4 Form of The PMI Group, Inc. Equity Incentive Plan Nonqualified Stock Option
Agreement.
4.5 The PMI Group, Inc. Stock Plan for Non-Employee Directors, as amended
(incorporated by reference to Exhibit 10.3 of the registrant's Quarterly
Report on Form 10-Q, Commission File No. 001-13664, filed with Commission
on August 13, 1998).
4.6 Form of The PMI Group, Inc. Stock Plan for Non-Employee Directors
Nonqualified Stock Option Agreement.
5.1 Opinion of Orrick, Herrington & Sutcliffe LLP.
23.1 Consent of Deloitte & Touche LLP, Independent Auditors.
23.2 Consent of Orrick, Herrington & Sutcliffe LLP is included in Exhibit 5.1
to this Registration Statement.
24.1 Power of Attorney of Directors (contained on the signature pages of this
Registration Statement).
<PAGE>
EXHIBIT 4.3
AMENDMENT NO. 1 TO
THE PMI GROUP, INC.
EQUITY INCENTIVE PLAN
THE PMI GROUP, INC., having adopted The PMI Group, Inc. Equity
Incentive Plan (the "Plan") and having amended and restated the Plan on two
previous occasions, hereby amends the last sentence of Section 7 of the Plan,
effective as of November 12, 1998, to read as follows:
Notwithstanding the foregoing, the Grantee may, to the extent provided
in the Plan and in a manner specified by the Committee, (a) designate
in writing a beneficiary to exercise his options after the Grantee's
death, and (b) transfer an option (other than an incentive stock
option) by bona fide gift and not for any consideration, to (i) a
member of the Grantee's immediate family, (ii) to a trust for the
exclusive benefit of the Grantee and/or a member or members of the
Grantee's immediate family, or (iii) a partnership or limited
liability company whose only partners or members are the Grantee
and/or a member or members of the Grantee's immediate family.
IN WITNESS WHEREOF, The PMI Group, Inc., by its duly authorized
officer, has executed this Amendment No. 1 on the date indicated below.
THE PMI GROUP, INC.
Dated: ______________, 1998 By _____________________________
Title:
<PAGE>
EXHIBIT 4.4
THE PMI GROUP, INC.
Nonqualified Stock Option Agreement
The PMI Group, Inc. (the "Company") hereby grants you, [NAME] (the "Employee"),
a stock option under the Company's Equity Incentive Plan (the "Plan"), to
purchase shares of common stock of the Company ("Stock"). The date of this
Agreement is [MONTH, DAY, YEAR]. The latest date this option will expire is
[MONTH, DAY, YEAR (10 yrs. after grant)] (the "Expiration Date"). Subject to
the provisions of the Plan, the principal features of this option are as
follows:
MAXIMUM NUMBER OF SHARES
PURCHASABLE WITH THIS OPTION: PRICE PER SHARE: $
---------------------------- --------- --------------- ---------
SCHEDULED VESTING DATES: NUMBER OF SHARES
----------------------- ----------------
[month, day, year]
------
[month, day, year]
------
[month, day, year]
------
EVENT TRIGGERING MAXIMUM TIME TO EXERCISE
Option Termination AFTER TRIGGERING EVENT*
------------------ ----------------------
Termination of Employment (except as shown below) 3 months
Termination of Employment due to Disability 2 years
Termination of Employment due to Retirement
(age 65 or over) 5 years
Termination of Employment due to Death 2 years
IMPORTANT
---------
IT IS YOUR RESPONSIBILITY TO EXERCISE THIS OPTION BEFORE IT EXPIRES.
*However, in no event may this option be exercised after the Expiration
Date (see above).
Your signature below indicates your agreement and understanding that this option
is subject to all of the terms and conditions contained in the Plan.
THE PMI GROUP, INC. EMPLOYEE
- --------------------------------- ---------------------------------------
Signature/Title [NAME]
Date: Date:
--------------------------- ---------------------------------
(Please return to Charles Broom, Human Resources Department,
by [month, day, year])
<PAGE>
EXHIBIT 4.5
AMENDMENT NO. 1 TO
THE PMI GROUP, INC.
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
THE PMI GROUP, INC., having adopted The PMI Group, Inc. Stock Plan for
Non-Employee Directors (the "Plan") and having amended and restated the Plan on
two previous occasions, hereby amends the last sentence of Section 7.5 of the
Plan, effective as of November 12, 1998, to read as follows:
Notwithstanding the foregoing, the Participant may, to the extent
provided in the Plan and in a manner specified by the Committee,
transfer an Option by bona fide gift and not for any consideration, to
(a) a member of the Participant's immediate family, (b) to a trust for
the exclusive benefit of the Participant and/or a member or members of
the Participant's immediate family, or (c) a partnership or limited
liability company whose only partners or members are the Participant
and/or a member or members of the Participant's immediate family.
IN WITNESS WHEREOF, The PMI Group, Inc., by its duly authorized
officer, has executed this Amendment No. 1 on the date indicated below.
THE PMI GROUP, INC.
Dated: ______________, 1998 By _____________________________
Title:
<PAGE>
EXHIBIT 4.6
Grant Year ___________
DIRECTOR STOCK OPTION AGREEMENT
GRANT #TPG0002
The PMI Group, Inc. (The "Company") hereby grants you, [NAME] (the "Director"),
a stock option under the Company's Stock Plan for Non-Employee Directors (the
"Plan") to purchase shares of common stock of the Company ( "Stock"). The date
of this Agreement is [MONTH], [DAY], [YEAR] ("Agreement"). Subject to certain
conditions, the latest date this option will expire is [MONTH], [DAY],[YEAR (10
years after grant)] (the "Expiration Date"). Subject to the provisions of the
Plan, the principal features of this option are as follows:
MAXIMUM NUMBER OF SHARES
PURCHASABLE WITH THIS OPTION: PRICE PER SHARE: $
---------------------------- ----- --------------- -----
SCHEDULED VESTING DATES NUMBER OF SHARES
----------------------- ----------------
[month, day, year]
-----
EVENT TRIGGERING MAXIMUM TIME TO EXERCISE
OPTION TERMINATION AFTER TRIGGERING EVENT*
------------------ ------------------------
Termination of Board Membership prior to age 70
(except for Disability or Death).................... 3 months
Termination of Board Membership at or after age 70
(except for Disability or Death).................... 5 years
Termination of Board membership due to Disability...... 2 years
Termination of Board membership due to Death........... 2 years
* However, in no event may this option be exercised after the Expiration
Date.
IMPORTANT
---------
IT IS YOUR RESPONSIBILITY TO EXERCISE THIS OPTION BEFORE IT EXPIRES.
Your signature below indicates your agreement and understanding that this
option is subject to all of the terms and conditions contained in the Plan.
______________________________________ ______________________________________
Victor J. Bacigalupi Director Signature
Senior Vice President, General
Counsel and Secretary
______________________________________ ______________________________________
Date Date
RETURN IN THE ATTACHED ENVELOPE TO VICTOR J. BACIGALUPI BY [MONTH, DAY, YEAR]
-----------------------------------------------------------------------------
<PAGE>
EXHIBIT 5.1
November 4, 1998
The PMI Group, Inc.
601 Montgomery Street
San Francisco, CA 94111
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
At your request, we are rendering this opinion in connection with the
Registration Statement on Form S-3 which The PMI Group, Inc., a Delaware
corporation (the "Company") intends to file with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to 800,000
shares of the Company's common stock, $0.01 par value ("Common Stock"). The
shares of Common Stock being registered are expected to be offered and sold from
time to time pursuant to the exercise of transferable stock options granted to
participants in The PMI Group, Inc. Equity Incentive Plan, as amended and The
PMI Group, Inc. Stock Plan for Non-Employee Directors, as amended (collectively,
the "Plans") and subsequently transferred by those participants to certain
permitted transferees in accordance with the terms of the respective Plans.
We have examined instruments, documents, and records which we deemed
relevant and necessary for the basis of our opinion hereinafter expressed. In
such examination, we have assumed the following: (a) the authenticity of
original documents and the genuineness of all signatures; (b) the conformity to
the originals of all documents submitted to us as copies; and (c) the truth,
accuracy and completeness of the information, representations and warranties
contained in the records, documents, instruments and certificates we have
reviewed.
Based on such examination, we are of the opinion that the 800,000
shares of Common Stock to be issued by the Company upon the exercise of
transferred stock options in accordance with the terms of the Plans are validly
authorized shares of Common Stock and, when issued in accordance with the
provisions of the Plans, will be legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to this
Registration Statement on Form S-3 and to the use of our name wherever it
appears in said Registration Statement. In giving such consent, we do not
consider that we are "experts" within the meaning of such term as used in the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission issued thereunder, with respect to any part
of the Registration Statement, including this opinion as an exhibit or
otherwise.
Very truly yours,
/s/ Orrick, Herrington & Sutcliffe LLP
ORRICK, HERRINGTON & SUTCLIFFE LLP
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
the PMI Group, Inc. on Form S-3 of our report dated January 20, 1998,
incorporated by reference in the Annual Report on Form 10-K of the PMI Group,
Inc. for the year ended December 31, 1997 and our report dated January 20, 1998
relating to the financial statement schedules appearing in such Form 10-K.
We also consent to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
November 10, 1998
