EXHIBIT 2
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Option Agreement"), dated as of
January 30, 1996, is made jointly and severally between Xxxxxxx X. Xxxxxx,
Xxxxxx X. Xxxxxx and Xxx and Xxxx Xxxxxxx on the one hand (collectively the
"Purchasers", and each individually a "Purchaser") and The Seibels Xxxxx Group,
Inc., a South Carolina corporation (the "Company"). Reference is made to the
Stock Purchase Agreement, dated as of January 29, 1996, between the Purchasers
and the Company (the "Stock Purchase Agreement"). Capitalized terms used herein
without definition shall have the definitions assigned to them in the Stock
Purchase Agreement.
WITNESSETH:
WHEREAS, under the Stock Purchase Agreement, the Company is obligated
to issue options to the Purchasers as additional consideration for the purchase
of the Shares.
NOW, THEREFORE, subject to the terms and conditions hereof and in
consideration of the premises and the promises contained herein, the Purchasers
jointly and severally on one hand and the Company on the other, hereto agree as
follows:
SECTION 1
Option Terms
1.1 Amount of Option. The Company hereby grants the Purchasers an
irrevocable option (the "Option"), to purchase from the Company, 6,250,000
shares of common stock, par value $1.00 ("Common Stock") per share, of the
Company (the "Additional Shares"), upon the terms and conditions set forth below
and in Section 1.2:
(a) The Option for 3,125,000 of the Additional Shares shall
have an exercise price of the greater of (i) Book Value (as defined in Section
1.1(c)), per share on the date of exercise or (ii) $1.50 per share. This portion
of the Option for 3,125,000 of the Additional Shares shall terminate on December
31, 1998.
(b) The Option for the remaining 3,125,000 of the Additional
Shares shall have an exercise price of the greater of (i) Book Value (as defined
in Section 1.1(c)), per share on the date of exercise or (ii) $2.00 per share.
This portion of the Option for 3,125,000 of the Additional Shares shall
terminate on December 31, 2000.
(c) For purposes of this Option Agreement, "Book Value" shall
be the total shareholders equity of the Company divided by the shares issued and
outstanding, determined under the standard practices of the Company and reported
on SEC Form 10-Q, as of the end of the previous calendar quarter.
(d) The Option for the Shares shall be divided among the
Purchasers as follows:
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1. Xxxxxxx X. Xxxxxx - An Option for 5 million
shares.
2. Xxxxxx X. Xxxxxx - An Option for 1 million
shares.
3. Xxx and Xxxx Xxxxxxx - An Option for 250,000
shares.
One-half of each Purchaser[s] Option shall be
exercisable in accordance with the terms and
conditions as set forth in paragraph 1.1(a) above and
one-half of each Purchaser[s] Option shall be
exercisable in accordance with the terms and
conditions as set forth in paragraph 1.1(b) above.
1.2 Additional Terms and Conditions. In addition to the terms and
conditions in Section 1.1, the Option shall be subject to the following terms
and conditions:
(a) The Option may not be exercised before the approval of the
shareholders of the Company of an increase in the authorized capital of the
Company of an additional 25,000,000 shares of Common Stock and, if deemed
necessary by the Company's Board of Directors on the advice of counsel, the
reduction of the par value of the shares of Company Stock. Each exercise of the
Option must be made in an amount equal to at least 500 shares.
(b) Full payment of the exercise price must be made to the
Company upon exercise of the Option by certified or cashiers check or wire
transfer.
(c) The Option is not transferable by the Purchasers, except
as provided in Section 6.4 of the Stock Purchase Agreement.
(d) The Option is irrevocable until termination under Section
1.1(a) or (b).
SECTION 2
Exercise and Additional Shares
2.1 Exercise of Option. To exercise the Option, the Purchasers,
individually or jointly, must deliver to the Company written notice, signed by
the Purchaser[s], stating the number of Shares the Purchaser[s] elect to be
purchased, and stating that payment to the Company is made as described in
Section 1.2(d).
2.2 Issuance of Additional Shares. Upon exercise of all or part of the
Option, the Company shall issue the Additional Shares to the Purchasers within
30 days or such later time as may be deemed necessary by the Company's Board of
Directors on the advice of counsel, to comply with applicable federal or state
securities laws or state insurance laws.
2.3 Securities Act of 1933. The provisions of Section 5.4 of the Stock
Purchase Agreement shall apply to the Option and the Additional Shares as if the
Option and Additional
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Shares were Shares. The Purchasers understand and agree that there shall be
imprinted on the certificates for the Shares a legend substantially in the form
as the following:
The options under which the shares of common stock represented by this
certificate were acquired and the shares acquired under exercise of
that option have not been registered under the Securities Act of 1933,
as amended and may not be offered or sold unless the shares are
registered under the Securities Act of 1933, as amended, or an
exemption from the registration requirements under the Securities Act
of 1933, as amended, is available.
2.4 Registration of Shares. The provisions of Section 7 of the Stock
Purchase Agreement shall apply to any of the Additional Shares, after exercise
of the Option as to those Additional Shares, as if the Additional Shares were
Shares.
2.5 Change in Capital Stock Structure. In the event of a stock
dividend, stock split or combination of shares, recapitalization or merger in
which the Company is the surviving corporation or other change in the Company's
capital stock (including, but not limited to, the creation or issuance to
shareholders generally of rights, options or warrants for the purchase of common
stock or preferred stock of the Company), the number and kind of shares of stock
or securities of the Company to be subject to the Option then remaining
outstanding, the number of Additional Shares with respect to which the Option is
unexercised, and the exercise price shall be appropriately adjusted by the
Company.
2.6 Additional Matters. The following provisions of the Stock Purchase
Agreement shall apply to any Additional Shares, after exercise of the Option as
to those Additional Shares, as if the Additional Shares were Shares: Section
5.4, Section 6.4, and Section 6.5.
SECTION 3
Miscellaneous
3.1 Governing Law. This Option Agreement shall be deemed to be a
contract under the laws of the State of South Carolina and will be construed in
accordance with and governed by the laws of said State. Both parties agree to
submit to the jurisdiction of the Court of Common Pleas for Richland County,
Columbia, South Carolina in settlement of any dispute or controversy arising
under or in connection with this Option Agreement.
3.2 Parties in Interest; Assignment. This Option Agreement shall be
binding upon and inure to the benefit of the parties hereto and to each of their
respective successors or permitted assigns, but this Option Agreement and the
rights and obligations under this Option Agreement shall not be assignable by
either the Company or any of the Purchasers without written consent of the other
party.
3.3 Agreement. This Option Agreement and the Stock Purchase Agreement
contain the entire agreement between the parties hereto with respect to the
Option for the Additional
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Shares and supersedes any prior agreements or understandings between or among
any of the parties hereto relating to the Option.
3.4 Notices. The provisions of Section 14 of the Stock Purchase
Agreement with respect to notices and other communications shall apply to this
Option Agreement.
3.5 Modification No amendment or modification of or supplement to this
Option Agreement will be effective unless it is in writing and duly executed by
each party to be charged thereunder.
IN WITNESS WHEREOF, the parties have executed this Option Agreement on
the date first above-written
THE COMPANY:
THE SEIBELS XXXXX GROUP, INC.
By:____________________________
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
THE PURCHASERS:
By:____________________________
Xxxxxxx X. Xxxxxx
By:____________________________
Xxxxxx X. Xxxxxx
By:____________________________
Xxx Xxxxxxx
By:____________________________
Xxxx Xxxxxxx
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