-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FoTFrlGiejnYkqcsUL7LiuElkKQzhzyJUK1woUo5Xj851eOJppd5J8MXWdaYS61W MqeeFBnFAu+sPhKv6Ksdow== 0000950168-97-001549.txt : 19970613 0000950168-97-001549.hdr.sgml : 19970613 ACCESSION NUMBER: 0000950168-97-001549 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19970612 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTEGON CORP /DE/ CENTRAL INDEX KEY: 0000878660 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 133559471 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-29053 FILM NUMBER: 97623039 BUSINESS ADDRESS: STREET 1: 500 W FIFTH ST CITY: WINSTON SALEM STATE: NC ZIP: 27152 BUSINESS PHONE: 9107702000 MAIL ADDRESS: STREET 1: 500 W FIFTH STREET STREET 2: 500 W FIFTH STREET CITY: WINSTON SALEM STATE: NC ZIP: 27152 S-3 1 INTEGON CORPORATION S-3 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------- INTEGON CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 13-3559471 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 500 WEST FIFTH STREET, WINSTON-SALEM, NORTH CAROLINA 27152 (910) 770-2000 (Address, including zip code and telephone number, including area code, of Registrant's principal executive offices) --------------------- JOHN B. YORKE Vice President and Corporate General Counsel Integon Corporation 500 West Fifth Street Winston-Salem, North Carolina 27152 (910) 770-2000 (Name, address, including zip code and telephone number, including area code, of agent for service) ---------------------- COPIES TO: STEPHEN M. LYNCH, ESQ. ROBINSON, BRADSHAW & HINSON, P.A. 101 North Tryon Street, Suite 1900 Charlotte, North Carolina 28246-1900 (704) 377-2536 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time 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, 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, please 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. / / ---------------------- CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF SECURITIES BEING REGISTERED BE REGISTERED PER UNIT* OFFERING PRICE* REGISTRATION FEE Common Stock, par value $.01 per 50,000 shares $13.50 $675,000 $205 share . . . . . . . . . . . . . . . . ===================================== ================== ================== =================== ====================
* Estimated solely for the purpose of calculating the registration fee and computed in accordance with Rule 457(c) under the Securities Act of 1933, based upon the average of the high and low price for shares of Common Stock of the Registrant reported on the New York Stock Exchange composite tape on June 9, 1997. 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 THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. INTEGON CORPORATION CROSS-REFERENCE SHEET BETWEEN ITEMS IN PART I OF FORM S-3 AND THE PROSPECTUS
FORM S-3 ITEM NUMBER AND CAPTION LOCATION OR CAPTION IN PROSPECTUS 1. Forepart of the Registration Statement and Outside Front Cover Page of Prospectus.................................... Facing Page; Cross-Reference Sheet; Outside Front Cover Page 2. Inside Front and Outside Back Cover Pages of Prospectus..... Inside Front and Outside Back Cover Pages 3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges............................................... Inside Front Cover Page 4. Use of Proceeds............................................. Use of Proceeds 5. Determination of Offering Price............................. Not Applicable 6. Dilution.................................................... Not Applicable 7. Selling Security Holders.................................... Not Applicable 8. Plan of Distribution........................................ Outside Front Cover Page 9. Description of Securities to be Registered.................. Not Applicable 10. Interests of Named Experts and Counsel...................... Not Applicable 11. Material Changes............................................ Not Applicable 12. Incorporation of Certain Information by Reference........... Documents Incorporated by Reference 13. Disclosure of Commission Position on Indemnification for Securities Act Liabilities.................................. Not Applicable
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED JUNE ___, 1997 PROSPECTUS 50,000 SHARES INTEGON CORPORATION COMMON STOCK This prospectus relates to up to 50,000 shares of Common Stock, $.01 par value ("Common Stock"), of Integon Corporation (the "Corporation"), which may be offered and sold to permitted transferees (the "Option Transferees") of certain participants (the "Participants") in the Corporation's 1992 Stock Option Plan (the "Plan"), pursuant to nonqualified stock options ("Options") granted to such Participants under the Plan, some or all of which may be transferred by Participants to Option Transferees in accordance with the Plan and the grant documents specifying the terms and conditions of such Options. This Prospectus also relates to the offer and sale of Common Stock pursuant to such Options to the beneficiaries of such Option Transferees, or the executors, administrators or beneficiaries of their estates, or other persons duly authorized by law to administer the estate or assets of such persons. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ THIS PROSPECTUS SHOULD BE RETAINED FOR FUTURE REFERENCE. ------------------------ The date of this Prospectus is June ___, 1997 AVAILABLE INFORMATION The Corporation is subject to the informational requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files reports, proxy statements, and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements, and other information can be inspected and copied at the offices of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices at 7 World Trade Center, 13th Floor, New York, New York 10048, and 500 West Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of such material can also be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such material may also be accessed electronically by means of the Commission's home page on the Internet (http:\\www.sec.gov). Such reports, proxy statements, and other information can also be inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on which exchange the Common Stock and certain of the Corporation's other securities are listed. DOCUMENTS INCORPORATED BY REFERENCE The following documents heretofore filed by the Corporation with the Commission are incorporated herein by reference: 1. Annual Report on Form 10-K for the year ended December 31, 1996. 2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1997. 3. The description of the Common Stock contained in the Corporation's Registration Statement on Form 8-A dated January 31, 1992, as amended by Amendment No. 1 thereto on Form 8, dated February 6, 1992, and as further amended by Amendment No. 2 thereto on Form 8, dated February 10, 1993, and including any other amendment or report filed for the purpose of updating such description of the Common Stock. In addition, all documents filed by the Corporation pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act subsequent to the date of this Prospectus, and prior to the filing of a post-effective amendment which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute part of this Prospectus. The Corporation will provide without charge to each person to whom this Prospectus is delivered, upon written or oral request, a copy of any or all of the documents incorporated herein by reference, other than exhibits to such documents. Requests should be made to Integon Corporation, Investor Relations Department, 500 West Fifth Street, Winston-Salem, North Carolina 27152 (Telephone (910) 770-2000). FOR NORTH CAROLINA PURCHASERS: THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE COMMISSIONER OF INSURANCE FOR THE STATE OF NORTH CAROLINA, NOR HAS THE COMMISSIONER OF INSURANCE RULED UPON THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. -2- THE CORPORATION IS A HOLDING COMPANY WHICH OWNS ALL OF THE OUTSTANDING SHARES OF CAPITAL STOCK OF CERTAIN INSURANCE COMPANY SUBSIDIARIES DOMICILED IN NORTH CAROLINA. INSURANCE LAWS AND REGULATIONS OF NORTH CAROLINA PROVIDE THAT NO PERSON MAY ACQUIRE CONTROL OF THE CORPORATION, AND THUS INDIRECT CONTROL OF ITS INSURANCE SUBSIDIARIES, UNLESS SUCH PERSON HAS OBTAINED THE PRIOR APPROVAL OF THE NORTH CAROLINA INSURANCE COMMISSIONER. ANY PURCHASER OF 10% OR MORE (OR HOLDER OF REVOCABLE PROXIES REPRESENTING 10% OR MORE) OF THE VOTING STOCK OF THE CORPORATION IS PRESUMED TO HAVE ACQUIRED CONTROL OF THE CORPORATION AND IS REQUIRED TO OBTAIN THE APPROVAL OF THE NORTH CAROLINA INSURANCE COMMISSIONER. SUCH PRESUMPTION MAY BE REBUTTED BY A SHOWING MADE IN THE MANNER PROVIDED BY STATUTE THAT CONTROL DOES NOT EXIST IN FACT. THE RESTATED CERTIFICATE OF INCORPORATION OF THE CORPORATION PROVIDES THAT NO STOCKHOLDER OF THE CORPORATION MAY CAST VOTES WITH RESPECT TO 10% OR MORE OF THE VOTING STOCK (INCLUDING THROUGH REVOCABLE PROXIES) OF THE CORPORATION UNLESS SUCH STOCKHOLDER'S ACQUISITION OF CONTROL HAS BEEN PREVIOUSLY APPROVED BY THE NORTH CAROLINA INSURANCE COMMISSIONER. -3- THE CORPORATION Integon Corporation, the issuer of the Common Stock offered hereby, was incorporated in the State of Delaware in 1989. The Corporation's principal executive office is located at 500 West Fifth Street, Winston-Salem, North Carolina 27152, and its telephone number is (910) 770-2000. The Corporation, through its wholly-owned property and casualty insurance subsidiaries, specializes in the underwriting and marketing of nonstandard automobile insurance products to individuals. The Corporation, headquartered in Winston-Salem, North Carolina, markets its products through approximately 13,000 independent agencies located primarily in the Southeast and Northeast United States. DESCRIPTION OF THE PLAN AND THE OPTIONS THE PLAN A copy of the Plan is filed as an exhibit to the Registration Statement of which this Prospectus forms a part. The following summary of certain provisions of the Plan does not purport to be complete and is subject to, and qualified in its entirety by reference to, all of the provisions of the Plan, including the definitions therein of certain terms. The Corporation's Board of Directors adopted the Plan in February 1992. Certain officers and other employees (including directors who are also officers or employees) of the Corporation may participate in the Plan. Approximately fifty officers and other employees are currently participating in the Plan. The purposes of the Plan are to provide an incentive for the participants to join and/or remain in the employment or service of the Corporation, to maintain and enhance the long-term performance and profitability of the Corporation and to enable participants to acquire a financial interest in the success of the Corporation. The Options were granted, and in the future will be granted, under the Plan in consideration of the services rendered by eligible employees. A total of 1,430,000 shares of the Corporation's Common Stock may be issued under the Plan. As of May 31, 1997, 32,700 shares had been issued under the Option Plan and Options for 1,236,120 shares were outstanding. The total number of shares is subject to adjustment in the event of certain changes in the outstanding Common Stock of the Corporation such as a stock dividend. Shares issued pursuant to the Plan may be either authorized but unissued shares or treasury shares. The Plan is administered by the Compensation and Personnel Committee of the Corporation's Board of Directors (the "Committee"). The Committee determines to whom Options will be granted and the times at which grants will be made, as well as the terms of each Option. The exercise price of the shares of Common Stock covered by each Option may not be less than the fair market value of the Common Stock on the date of the grant. Unless otherwise determined by the Committee, the Options become exercisable in 20% increments on each anniversary date from the date of grant, until they become fully exercisable after the fifth anniversary from the date granted. Subject to the terms of the applicable Option agreement, all Options, including Options which otherwise would have been exercisable because of the passage of time, will cease to be exercisable upon termination of an Option holder's employment for "cause" (as defined in the Plan) and may, at the discretion of the Committee, cease to be exercisable in the event of the Option holder's bankruptcy. Under certain circumstances, such as the reorganization or change in control of the Corporation (as defined therein), the Committee may accelerate the exercisability of all or a portion of the outstanding Options. Options may not be exercised after the tenth anniversary of the date of the grant. -4- The amount of an initial award of Options that may be granted to any one participant under the Plan is limited to a maximum of 200,000 shares of stock and the amount of an annual award of Options that may be granted to any one participant under the Plan is limited to a maximum of 50,000 shares of stock. These limits, along with other features of the Plan, are designed to minimize the risk that the compensation expense attributable to Options granted under the Plan will be subject to the $1,000,000 executive compensation deduction limit imposed by Section 162(m) of the Internal Revenue Code of 1986 (the "Code"). The Board of Directors amended the Plan effective January 22, 1997 to provide that Options granted under the Plan may be transferable to the extent provided by the Committee. The scope of and limitations on the transferability of the Options must be set forth in the written agreement with the Participant evidencing the grant of Options (the "Option Agreement"). In the absence of any express provision in a Participant's Option Agreement, the Participant's Options may not be transferred other than by will or the laws of descent and distribution. It is currently contemplated that the only permitted transfers of Options issued under the Plan (other than by will or the laws of descent and distribution) will be transfers by gift to members of the Participant's immediate family or to trusts for such persons. The Plan is not intended to be qualified under Section 401(a) of the Code, and the Options issued thereunder are not intended to qualify for special tax treatment under Section 422 of the Code. See "Federal Income Tax Consequences." FEDERAL INCOME TAX CONSEQUENCES None of the Options issuable under the Plan qualifies for special tax treatment under Section 422 of the Code. Prior to making a transfer of a Nonqualified Stock Option ("NSO"), a Participant should consult with his or her personal tax advisors concerning the possible Federal and state gift, estate, inheritance, and generation skipping tax consequences of such a transfer, as well as state and local income tax consequences which are not addressed herein. The discussion of federal income tax consequences for the Participant and the Option Transferee set forth below assumes that the transfer of an NSO during a Participant's lifetime is made by way of gift and no consideration is received therefor. INCOME TAX CONSEQUENCES FOR PARTICIPANT TRANSFERORS In general, a Participant who transfers an NSO by way of gift to an immediate family member will not recognize income at the time of the transfer. Instead, the Participant will recognize ordinary compensation income in an amount equal to the excess of the fair market value of the shares purchased (which will not necessarily be equal to the price at which such shares are sold, even if sold on the same day as exercise) over the exercise price at the time the Option Transferee exercises the NSO (special rules may apply to Participants subject to potential liability under Section 16(b) of the Exchange Act, which may defer the recognition of compensation income). Moreover, such income will be subject to payment and withholding of income and FICA taxes. Participants may satisfy the withholding obligation by writing a check to the Corporation or by another method, such as share withholding, if permitted by the Corporation. Subject to certain limitations, the Corporation will generally be entitled to claim a Federal income tax deduction at such time and in the same amount that the Participant realizes ordinary income. In the event the Option Transferee exercises the NSO after the death of the Participant, any such ordinary income will be recognized by the Option Transferee. -5- INCOME TAX CONSEQUENCES FOR OPTION TRANSFEREE An Option Transferee generally will not recognize income at the time of the transfer of the NSO since a gift is specifically excluded from gross income. As described in the preceding paragraph, the Participant and not the Option Transferee will recognize ordinary compensation income at the time the Option Transferee exercises the NSO if the Participant is alive at the date the NSO is exercised. In the event that the Option Transferee exercises the NSO after the death of the Participant, any such ordinary income will be recognized by the Option Transferee. Such income will not be subject to withholding of income tax but will be subject to withholding of FICA tax unless such income is recognized after the calendar year of the Participant's death. An Option Transferee who chooses to exercise an NSO in whole or in part by delivery, if permitted by the Corporation, of other Common Stock already owned by the Option Transferee should consult with tax counsel concerning the tax consequences of such a transaction. INCOME TAX CONSEQUENCES ON SUBSEQUENT SALE OF STOCK If shares acquired upon exercise of an NSO are later sold or exchanged, then the difference between the sales price and the Option Transferee's tax basis for the shares will generally be taxable as long-term or short-term capital gain or loss (if the stock is a capital asset of the taxpayer) depending upon whether the stock has been held for more than one year after the exercise date. If the NSO is exercised by the Option Transferee for cash while the Participant is alive, the tax basis for the shares in the hands of the Option Transferee would be the exercise price for the NSO plus the amount of the income recognized by the Participant transferor at the time of exercise. If the NSO is exercised for cash by the Option Transferee after the Participant's death, the tax basis for the Shares would be the exercise price for the NSO plus the amount of income recognized upon exercise by the Option Transferee. Different basis rules will apply if the Option Transferee delivered Common Stock in payment of all or a portion of the exercise price of the NSO. RESALE RESTRICTIONS Under the Securities Act of 1933, any Participant under the Plans or any Option Transferee who is an "affiliate" of the Corporation (generally presumed to include directors, executive officers and beneficial owners of 10% of the Corporation's Common Stock) may not resell shares of Common Stock unless such sale is registered or made pursuant to the provisions of Rule 144. The resale of shares acquired upon the exercise of the Options granted under the Plans is not registered pursuant to the registration statement filed with the Commission relating to the shares offered hereby. Sales pursuant to Rule 144 are subject to certain volume limitations. Any person who is an "affiliate" of the Corporation should seek legal counsel regarding the resale of such shares. USE OF PROCEEDS The Corporation intends to use any net proceeds from the sales of such shares for general corporate purposes. LEGAL MATTERS Certain legal matters with respect to the Common Stock offered hereby will be passed upon for the Corporation by Robinson, Bradshaw & Hinson, P.A., 101 North Tryon Street, Suite 1900, Charlotte, North Carolina 28246. -6- EXPERTS The financial statements and the related financial statement schedules incorporated in this prospectus by reference from the Corporation's Annual Report on Form 10-K for the year ended December 31, 1996 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. -7- NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE. ------------------------ TABLE OF CONTENTS PAGE AVAILABLE INFORMATION................................................2 DOCUMENTS INCORPORATED BY REFERENCE.........................................................2 THE CORPORATION......................................................4 DESCRIPTION OF THE PLAN AND THE OPTIONS..............................4 FEDERAL INCOME TAX CONSEQUENCES......................................5 RESALE RESTRICTIONS..................................................6 USE OF PROCEEDS......................................................6 LEGAL MATTERS........................................................6 EXPERTS..............................................................7 [GRAPHIC LOGO OMITTED] INTEGON CORPORATION COMMON STOCK --------- P R O S P E C T U S --------- June ___, 1997 -8- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following is an itemized statement of estimated expenses to be paid by Integon in connection with the issuance and sale of the Common Stock being registered: Securities and Exchange Commission registration fee.......................................................$ 205 Stock Exchange listing fees..............................................$ - Blue Sky fees and expenses...............................................$ - Accounting fees and expenses.............................................$5,000 Printing fees............................................................$1,000 Legal fees and expenses..................................................$2,500 Transfer Agent and Registrar fees........................................$ 200 Miscellaneous............................................................$1,095 Total...................................................................$10,000 - -------------------------- ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law (the "DGCL") grants a Delaware corporation the power to indemnify any director, officer, employee or agent against reasonable expenses (including attorneys' fees) incurred by him in connection with any proceeding brought by or on behalf of the corporation and against judgments, fines, settlements and reasonable expenses (including attorneys' fees) incurred by him in connection with any other proceeding, if (a) he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and (b) in the case of any criminal proceeding, he had no reasonable cause to believe his conduct was unlawful. Except as ordered by a court, however, no indemnification is to be made in connection with any proceeding brought by or in the right of the corporation where the person involved is adjudged to be liable to the corporation. Section 10 of the Corporation's restated certificate of incorporation and Article 8 of the Corporation's bylaws provide that the Corporation shall to the extent not prohibited by law, indemnify any person who is or was made, or threatened to be made, a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, including, without limitation, an action by or in the right of the Corporation to procure a judgment in its favor, by reason of the fact that such person, or a person of whom such person is the legal representative, is or was a director or officer of the Corporation, or is or was serving in any capacity at the request of the Corporation for any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (an "Other Entity"), against judgments, fines, penalties, excise taxes, amounts paid in settlement and costs, charges and expenses (including attorneys' fees and disbursements). Persons who are not directors or officers of the Corporation may be similarly indemnified in respect of service to the Corporation or to an Other Entity at the request of the Corporation to the extent the Board of Directors at any time specifies that such persons are entitled to the benefits of these provisions. -II-1- Section 102 of the DGCL permits the limitation of directors' personal liability to a corporation or its stockholders for monetary damages for breach of fiduciary duties as a director except for (i) any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (iii) breaches under section 174 of the DGCL, which relate to unlawful payments of dividends or unlawful stock repurchase or redemptions, and (iv) any transaction from which the director derived an improper personal benefit. Section 9 of the Corporation's restated certificate of incorporation limits the personal liability of directors of the Corporation to the fullest extent permitted by paragraph (7) of subsection (b) of section 102 of the DGCL. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Securities Act") may be permitted to directors, officers or persons controlling the Corporation pursuant to the foregoing provisions, the Corporation has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. The Company is also a party to certain contractual indemnification provisions entered in connection with the private placement in February 1997 of $100,000,000 aggregate principal amount of 10 3/4% Capital Securities, Series A (the "Series A Capital Securities") of Integon Capital I, an affiliate of the Corporation created for the sole purpose of issuing such securities, and the subsequent offer of substantially identical registered securities in exchange therefor. Pursuant to article 6 of the Exchange and Registration Rights Agreement, dated February 10, 1997 among the Corporation, Integon Capital I, and Goldman, Sachs & Co., as representative for itself and Deutsche Morgan Grenfell Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as initial purchasers (the "Initial Purchasers") of the Series A Capital Securities, the Corporation and Integon Capital I have agreed to indemnify the holders of certain securities, the underwriters participating in any offering or sale of such securities and any controlling person of such persons against any losses, claims, damages, liabilities or expenses that may arise out of an untrue statement or alleged untrue statement of or omission to state a material fact, contained in the registration statement or prospectus provided to such persons by the Corporation or Integon Capital I relating to certain registered securities issued in exchange for the Series A Capital Securities, except where such statement or omission arises from written information provided by such persons to the Corporation or Integon Capital I for use in such registration statement or prospectus. The Corporation and Integon Capital I may require an undertaking from the holders of the securities to be included in such registration statement and the underwriters participating in any offering or sale of such securities to indemnify the Corporation and Integon Capital I and their directors and controlling persons to the same extent as the foregoing indemnity from the Corporation and Integon Capital I, but only with reference to written information provided by such persons to the Corporation and Integon Capital I for use in such registration statement and prospectus. The Corporation maintains certain directors' and officers' liability and reimbursement insurance policies that are designed to reimburse the Corporation for any payments made by it pursuant to the foregoing indemnification. Such policies have aggregate coverage of $20 million. ITEM 16. EXHIBITS. The following exhibits are filed as part of this Registration Statement or, where so indicated, have been previously filed and are incorporated herein by reference. -II-2-
FILED HEREWITH(*), PREVIOUSLY FILED (+), NONAPPLICABLE (NA), OR INCORPORATED BY REFERENCE FROM Exhibit Integon Number Exhibit Registration No. or Report 4.1 Restated Certificate of Incorporation of the Corporation 4.1 33-58022 4.2 Amended and Restated Bylaws of the Corporation, effective February 18, 1997 3 333-22839 4.3 Specimen Common Stock Certificate 4.1 33-42463 4.4 Indenture dated as of August 15, 1993 between the Corporation and The First National Bank of Chicago, as Trustee, relating to the Corporation's 8% Senior Notes due 1999, including form of such Notes 4.23 33-54676 4.5 Indenture dated October 15, 1994 between the Corporation and the First National 1994 Third Bank of Chicago, as Trustee, relating to Quarter Form the Corporation's 9 1/2% Senior Notes due 2001 4.2 10-Q 4.6 Certificate of Designation of the Corporation's 1994 Third Preferred Stock 4.1 Quarter Form 10-Q 4.7 Specimen Preferred Stock Certificate 4.5 33-91896 5.1 Opinion of Robinson, Bradshaw & Hinson, P.A. regarding legality of securities * NA 8.1 Opinion of Robinson, Bradshaw & Hinson, P.A. regarding tax matters (included in Exhibit 5.1) 23.1 Consent of Deloitte & Touche LLP * NA 23.2 Consent of Robinson, Bradshaw & Hinson, P.A. (included in Exhibit 5.1) 24.1 Power of Attorney (included in the signature pages to the Registration Statement) 99.1 Integon Corporation 1992 Stock Option Plan *
-II-3- ITEM 17. UNDERTAKINGS. Insofar as indemnification for liabilities arising under the Securities Act of 1933 ("the Act") 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 of whether such indemnification by the Registrant is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities and Exchange Act of 1934 (and, where applicable, each filing of an employee benefit 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. 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 Act; (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, but notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) or any deviation from the estimated maximum offering price may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) promulgated under the Act 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 (i) and (ii) do not apply if the information required to be included in the post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant II-4 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 Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. -II-5- SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Winston-Salem, North Carolina, on the 12th day of June, 1997. INTEGON CORPORATION By: /s/ JOHN B. MCKINNON John B. McKinnon President and Chief Executive Officer (Principal Executive Officer) POWER OF ATTORNEY Each undersigned director and officer of Integon Corporation hereby constitutes and appoints John C Head III and John B. Yorke, and each of them, with full power to act without the other and with full power of substitution and resubstitution, his true and lawful attorneys-in-fact and agents, for him and in his name, place, and stead, in any and all capacities, to sign on his behalf any and all amendments (including post-effective amendments and amendments thereto) to this Registration Statement and any related registration statement (and any amendments thereto) filed pursuant to Rule 462(b) under the Securities Act, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Commission, and grants unto said attorneys-in-fact and agents, and each of them, 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 as fully as to all intents and purposes as he might or could do in person, and hereby ratifies and confirms all that such attorneys-in-fact or agents, or any of them, or their substitutes shall lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
NAME TITLE DATE /s/ JOHN C HEAD III Chairman of the Board June 12, 1997 - --------------------------------------- John C Head III /s/ DONALD F. MCKEE Senior Vice President of June 12, 1997 - ----------------------------------- Finance and Administration Donald F. McKee (Principal Financial Officer) /s/ BRIAN T. SHEEKEY Controller - -------------------------------------- (Principal Accounting Officer) June 12, 1997 Brian T. Sheekey /s/ LESTER L. COLEMAN Director June 12, 1997 - ---------------------------------- Lester L. Coleman /s/ JOHN B. MCKINNON President, Chief Executive Officer and June 12, 1997 - ----------------------------------- Director (Principal Executive Officer) John B. McKinnon /s/ DEREK V. SMITH Director June 12, 1997 - -------------------------------------- Derek V. Smith /s/ FREDERICK B. WHITTEMORE Director June 12, 1997 - --------------------------- Frederick B. Whittemore /s/ RONALD N. ZEBEK Director June 12, 1997 - ------------------------------------ Ronald N. Zebek
INDEX TO EXHIBITS FILED HEREWITH EXHIBIT DESCRIPTION - ------------------------------------------------------------------------------ 5.1 Opinion of Robinson, Bradshaw & Hinson, P.A. regarding legality of securities 8.1 Opinion of Robinson, Bradshaw & Hinson, P.A. regarding tax matters (included in Exhibit 5.1) 23.1 Consent of Deloitte & Touche LLP 23.2 Consent of Robinson, Bradshaw & Hinson, P.A. (included in Exhibit 5.1) 24.1 Power of Attorney (included in the signature pages to the Registration Statement) 99.1 Integon Corporation 1992 Stock Option Plan EX-5.1 2 EXHIBIT 5.1 (ROBINSON, BRADSHAW & HINSON, P.A. LETTERHEAD) 101 North Tryon Street, Suite 1900 Charolotte, North Carolina 28246 Telephone (704) 377-2536 Fax (704) 378-4000 June 12, 1997 Integon Corporation 500 West Fifth Street Winston-Salem, North Carolina 27152 Ladies and Gentlemen: We refer to the Registration Statement, as amended, of Integon Corporation, a Delaware corporation (hereinafter referred to as the "Company"), filed with the Securities and Exchange Commission for the purpose of registering under the Securities Act of 1933, as amended, up to 50,000 shares of the Company's Common Stock, par value $.01 per share (the "Shares"), that may be issued to certain persons in accordance with the Company's 1992 Stock Option Plan (the "Plan"). We have examined the Restated Certificate of Incorporation and the Amended and Restated Bylaws of the Company, minutes of applicable meetings of the Board of Directors of the Company, and other Company records, together with applicable certificates of public officials and other documents that we have deemed relevant. Based upon the foregoing and subject to the conditions set forth below, it is our opinion that the Shares, when sold as contemplated by the Registration Statement, will be legally issued, fully paid and nonassessable. We have assumed that the Company and those persons purchasing Shares under the Plan will have complied with the relevant requirements of the Plan. The opinions expressed herein are contingent upon the Company's Restated Certificate of Incorporation and Amended and Restated Bylaws not being further amended prior to the issuance of any Shares after the date hereof. It is also our opinion that, under current law, the discussion set forth under the heading "Federal Income Tax Consequences" in the Registration Statement, although general in nature, is an accurate summary of the material federal income tax consequences related to stock options under the Plan and the transfer and exercise thereof. Integon Corporation June 12, 1997 Page 2 We hereby consent to the filing of this opinion as an exhibit to said Registration Statement and to the use of our name appearing in the Registration Statement and any amendment thereto. This opinion is limited to the General Corporation Law of the State of Delaware and the federal laws of the United States, and we express no opinion with respect to the laws of any other state or jurisdiction. Very truly yours, ROBINSON, BRADSHAW & HINSON, P.A. /s/ PATRICK S. BRYANT Patrick S. Bryant EX-23 3 EXHIBIT 23.1 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Integon Corporation on Form S-3 of our reports dated January 22, 1997, appearing in the Annual Report on Form 10-K of Integon Corporation for the year ended December 31, 1996 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ Deloitte & Touche LLP Deloitte & Touche LLP Winston-Salem, North Carolina June 12, 1997 EX-99 4 EXHIBIT 99.1 Exhibit 99.1 INTEGON CORPORATION 1992 STOCK OPTION PLAN TABLE OF CONTENTS Page SECTION 1. PURPOSE...............................................1 SECTION 2. ELIGIBILITY...........................................1 SECTION 3. ADMINISTRATION........................................1 3.1 The Committee...................................1 3.2 Committee Authority.............................2 3.3 Binding Determinations..........................3 3.4 Delegation of Committee Authority...............3 SECTION 4. STOCK SUBJECT TO PLAN.................................3 4.1 Shares Available for Awards.....................3 4.2 Adjustments upon Certain Changes................4 4.3 Reorganization Events...........................4 SECTION 5. AWARDS UNDER THE PLAN.................................6 5.1 Stock Options...................................6 5.2 Non-Qualified Options...........................6 5.3 Terms and Conditions............................6 SECTION 6. WITHHOLDING TAXES; RIGHT TO OFFSET...................10 SECTION 7. PLAN AMENDMENTS AND TERMINATION......................11 SECTION 8. MISCELLANEOUS........................................11 8.1 Listing, Registration and Legal Compliance.....11 8.2 Right of Discharge Reserved....................13 8.3 Non-Uniform Determinations.....................13 8.4 Other Payments or Awards.......................13 SECTION 9. EXCULPATION OF COMPANY, ETC..........................14 SECTION 10. GOVERNING LAW.......................................15 SECTION 11. NOTICES.............................................15 SECTION 12. SECTION HEADINGS....................................16 SECTION 13. EFFECTIVE DATE......................................16 -i- INTEGON CORPORATION 1992 STOCK OPTION PLAN SECTION 1. PURPOSE. Integon Corporation, a Delaware corporation (the "Company"), hereby adopts the Integon Corporation 1992 Stock Option Plan (the "Plan"). The purpose of the Plan is to provide an incentive to the Participants (i) to join and/or remain in the employment or service of the Company or its Affiliates (as defined below), (ii) to maintain and enhance the long-term performance and profitability of the Company and (iii) to acquire a financial interest in the success of the Company. For purposes of the Plan, an "Affiliate" means any corporation, partnership, joint venture or other entity in which the Company owns, directly or indirectly, at least a 50% beneficial ownership interest. SECTION 2. ELIGIBILITY. Officers and employees of the Company or of its Affiliates are eligible to be granted awards under the Plan. Directors on the Company's Board of Directors (the "Board") who are also officers or employees of the Company or any Affiliate are eligible to be granted awards under the Plan. The persons to whom awards will be granted under the Plan shall be selected from time to time by the Committee, in its sole discretion, from among those eligible (a "Participant" or the "Participants"). SECTION 3. ADMINISTRATION. 3.1 The Committee. The Plan shall be administered by the Compensation/Stock Option Committee of the Board or such other committee of directors as the Board shall designate (the "Committee"), which shall consist of two or more directors, each of whom is a "disinterested person" (as such term is defined in Rule 16b-3 under the Securities Exchange Act of 1934 or any successor rule ("Rule 16b-3")). The members of the Committee shall be appointed by, and serve at the pleasure of, the Board, and any vacancy on the Committee may be filled only by the Board. 3.2 Committee Authority. Subject to the limitations of the Plan, the Committee shall have the sole authority: to interpret the Plan and any award granted under the Plan; to adopt, amend and rescind such administrative rules, regulations, guidelines and practices relating to the Plan as it shall deem advisable; and to otherwise supervise the administration of the Plan. In particular, and without limiting its authority and powers, the Committee shall have the authority to: (a) select the persons to whom awards will be granted from the eligible officers and employees of the Company and its Affiliates; (b) grant awards in such amounts as it shall determine for shares of common stock, par value $.01 per share, of the Company and any other shares into which such stock shall thereafter be changed by reason of merger, reorganization, recapitalization, consolidation, split-up, combination of shares, or similar event as set forth in and in accordance with Section 4 of the Plan (the "Stock"); -2- (c) impose such terms, conditions, limitations and restrictions upon such awards as it may determine, and to determine whether the terms and conditions of awards are satisfied; and (d) deliver the consideration stated in Section 4.3 upon a Reorganization Event (as defined herein). 3.3 Binding Determinations. The Committee's determinations on matters within its authority relating to the Plan shall be conclusive and binding on the Company, its Affiliates and all persons, including the Participants. 3.4 Delegation of Committee Authority. The Committee may, from time to time, delegate to one or more officers of the Company, as it deems appropriate, its administrative authority granted hereunder, to the extent that any such action will not prevent the Plan from complying with Rule 16b-3. SECTION 4. STOCK SUBJECT TO PLAN. 4.1 Shares Available for Awards. Subject to Section 4.2 (relating to adjustments upon changes in capitalization), as of any date the total number of shares of Stock with respect to which options may be granted under the Plan shall be equal to the excess (if any) of (i) 1,430,000 shares, over (ii) the sum of (A) the number of shares subject to outstanding options granted under the Plan, and (B) the number of shares previously transferred pursuant to the exercise of options granted under the Plan. In accordance with (and without limitation upon) the preceding sentence, shares of Stock covered by options granted under the Plan which expire or terminate for any reason whatsoever shall again become available -3- for awards under the Plan. Shares of stock that shall be transferable pursuant to the exercise of options granted under the Plan shall be authorized and unissued or treasury shares of the Stock. Without limiting the generality of the preceding provisions of this Section 4.1, the Committee may, but solely with the Participant's consent, agree to cancel any award of options under the Plan and issue a new award in substitution therefor, provided that the award as so substituted shall satisfy all of the requirements of the Plan as of the date such new award is made. 4.2 Adjustments upon Certain Changes. In the event of any merger, reorganization, recapitalization, consolidation, sale or other distribution of substantially all of the assets of the Company, any stock dividend, split, spin-off, split-up, split-off, distribution of cash, securities or other property by the Company, or other change in the Company's corporate structure affecting the stock, the Committee may, in its sole discretion, substitute or adjust as it determines to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be awarded under the Plan: (i) the aggregate number of shares reserved for issuance under the Plan, (ii) the number of shares of stock subject to outstanding awards and (iii) the amount to be paid by Participants or the Company, as the case may be, with respect to any outstanding awards. 4.3 Reorganization Events. In the event (i) that the Company is merged or consolidated with another corporation and (A) the Company shall not be the surviving corporation or (B) the Company -4- shall be the surviving corporation and there shall be any change in the shares of Stock by reason of such merger or consolidation, (ii) that all or substantially all of the assets of the Company are acquired by another person, or (iii) of a reorganization or liquidation of the Company (each such event being hereinafter referred to as a "Reorganization Event") or in the event that the Board shall propose that the Company enter into a Reorganization Event, then (i) unless otherwise determined by the Committee, the Committee shall advance the dates upon which any or all outstanding stock options awarded under the Plan shall become fully exercisable and vested, and (ii) the Committee may, in its sole discretion, take any or all of the following actions: (a) by written notice to each Participant, provide that his outstanding stock options shall be terminated unless exercised within 30 days (or such longer period of time as the Committee shall determine in its discretion) after the date of such notice; and (b) deliver upon the exercise of a stock option (or any portion thereof), in lieu of or in addition to the number of shares of stock theretofore deliverable, as appropriate, the number of shares of stock, other securities, cash or property to which the holder of the number of shares of Stock which would otherwise have been deliverable upon the exercise of such option (or such portion thereof) would have been entitled at the time of such Reorganization Event. -5- Whenever deemed appropriate by the Committee, any action referred to in this Section 4.3 may be made conditional upon the consummation of the applicable Reorganization Event. SECTION 5. AWARDS UNDER THE PLAN. 5.1 Stock Options. Awards under the Plan shall be in the form of stock options ("Stock Options") for shares of Stock. 5.2 Non-Qualified Options. The Stock Options awarded under the Plan shall be non-qualified stock options which are not intended to qualify for special tax treatment under Section 422 of the Internal Revenue Code of 1986, as amended, or any successor provision thereof. 5.3 Terms and Conditions. Subject to the following provisions, Stock Options awarded under the Plan shall be in such form and shall have such terms and conditions as the Committee may determine: (a) Option Agreements. Each award of a Stock Option shall be evidenced by a written agreement executed by the Participant to whom such award is granted and containing such terms and conditions as the Committee may determine from time to time. (b) Option Price. The purchase price of Stock under each Stock Option ("Option Price") shall be determined by the Committee, and in any event, shall not be less than 100% of the fair market value of the Stock on the date the Stock Option is granted; provided, however, that the Option Price of Stock Options granted contemporaneously with the initial public offering of at least 6,500,000 shares of Common Stock shall be set at a price per -6- share equal to the initial public offering price per share of Common Stock. For purposes of the Plan, the term "fair market value" shall mean the closing sale price of the Stock on the New York Stock Exchange on the relevant date. (c) Option Term. The term of each Stock Option shall be fixed by the Committee, but shall not be longer than 10 years after the date such Stock Option is granted. (d) Exercisability; Vesting. To the extent required to comply with Rule 16b-3, no Option shall be exercisable within the first six months of its term, unless death or Disability (as defined below) of the Participant occurs during such period. Except as otherwise determined by the Committee, Stock Options shall become cumulatively exercisable in 20 percent increments on each anniversary date from the date of grant and shall become fully (100%) exercisable on and after the fifth anniversary from the date of grant. (e) Method of Exercise. Stock Options may be exercised in whole or in part at any time and from time to time during the option period by giving written notice of exercise to the Company, in such form and manner as the Committee may require, and by specifying the number of shares of Stock to be purchased accompanied by full payment of the Option Price. Such payment shall be made in cash, or if so permitted by the Committee, by delivery of shares of Stock already owned by the Participant, or in such other manner as may be determined by the Committee. -7- (f) No Stockholder Rights. A Participant shall have neither rights to dividends nor other rights of a stockholder with respect to shares subject to a Stock Option until the Committee has received the Participant's written notice of exercise and payment in full for such shares. (g) Non-Transferability. No Stock Option shall be transferable by a Participant other than by will or by the laws of descent and distribution. During the Participant's lifetime, Stock Options shall be exercisable only by the Participant. (h) Termination of Employment or Service. Stock Options which remain outstanding on the date of a Participant's termination of employment or service with the Company and all Affiliates shall cease to be exercisable and shall terminate on the date of such Participant's termination, except as otherwise provided in this Section 5.3(h). To the extent permitted under Rule 16b-3, notwithstanding the option term fixed pursuant to Section 5.3(c) of the Plan, all outstanding Stock Options on the date of a Participant's termination of employment or service with the Company and all Affiliates by reason of Disability or Retirement (as such terms are defined below) or death shall remain or become exercisable in accordance with the terms of such Stock Options by the Participant (or the Participant's legal representative or designated beneficiary, in the case of the Participant's death) for an additional period of up to one year after the date of such Participant's termination (but not beyond the original expiration date of such Stock Options). If a Participant's employment or -8- service with the Company and all Affiliates terminates for any other reason, including by reason of voluntary or involuntary termination (other than termination for "Cause," as defined below), all outstanding Stock Options shall remain exercisable to the same extent as they were exercisable on the date of the Participant's termination for a period of up to 90 days after the Participant's termination (but not beyond the original expiration date of such Stock Options), provided, however, that unless otherwise determined by the Committee, all outstanding options granted to a Participant shall vest upon such Participant's involuntary termination (other than for Cause) within one year following a Change in Control. A "Change in Control" shall be deemed to occur on the date of a sale of all or substantially all the assets of the Company or of a majority of the Stock to a person or entity which is not a stockholder of the Company as of the effective date of the Plan and which person or entity is not controlled by, controlling, or under common control with, any such stockholder. All outstanding Stock Options, whether or not vested, granted to a Participant whose employment or service is terminated for Cause shall cease to be exercisable and shall be forfeited upon such Participant's termination. "Disability" shall mean, with respect to any Participant, a good-faith determination by the Committee that as a result of mental, emotional or physical impairment, such Participant is no longer capable of performing the ordinary duties of his employment or service. "Retirement" shall mean, with respect to any Participant, the termination of employment or -9- service with the Company or any Affiliate at or after age 65, or at any earlier date with the consent of the Company. "Cause" shall mean, with respect to any Participant, if (i) the Participant habitually neglects or refuses to perform his duties, except pursuant to a Disability; or (ii) the Participant commits an act constituting a felony. The foregoing provisions of this Section 5.3(h) may be varied as determined by the Committee in the applicable option agreement. (i) Bankruptcy of Participant. If a Participant files a voluntary petition under any bankruptcy, insolvency or similar law or if an involuntary petition is filed under any such law against a Participant, the Committee, in its sole discretion, within 90 days following the date on which the Company receives notice of such filing, may (but shall not be obligated to) determine the extent to which any outstanding Stock Options granted to the Participant shall cease to be exercisable. SECTION 6. WITHHOLDING TAXES; RIGHT TO OFFSET. The Company shall be entitled to require as a condition of delivery of any shares of Stock upon exercise of an option that the Participant remit an amount sufficient to satisfy all foreign, federal, state, local and other governmental withholding tax requirements related thereto (if any) and any or all indebtedness or other obligation of the Participant to the Company or any of its Affiliates. To the extent permitted by the Committee, and subject to such terms and conditions as the Committee may provide, a Participant may irrevocably elect to have the withholding tax obligation, or any -10- additional tax obligation with respect to any awards hereunder, satisfied by (i) having the Company withhold shares of Stock from the shares otherwise issuable to the Participant with respect to the award or (ii) delivering to the Company shares of Stock. Without limiting the generality of the foregoing: (i) the Committee may require, as a condition of accepting any such delivery of shares of Stock, that the Participant furnish to the Company an opinion of counsel to the effect that such delivery would not result in the Participant incurring any liability under Section 16(b) of the Securities Exchange Act of 1934; and (ii) the Committee may permit any such delivery to be made by withholding shares of Stock from the shares otherwise issuable pursuant to the exercise of the award(s) giving rise to the tax withholding obligation (in which event the date of delivery shall be deemed the date the award(s) was exercised). SECTION 7. PLAN AMENDMENTS AND TERMINATION. The Board may suspend or terminate the plan at any time and may amend it at any time and from time to time, in whole or in part. No suspension, termination or amendment of the Plan shall adversely affect any award previously granted without the written consent of the Participants affected thereby. Amendments may be made without stockholder approval except as required to satisfy Rule 16b-3 or other tax or regulatory requirements. SECTION 8. MISCELLANEOUS. 8.1 Listing, Registration and Legal Compliance. If the Committee shall at any time determine that any Consent (as -11- hereinafter defined) is necessary or desirable as a condition of, or in connection with, the granting of any award under the Plan, the issuance or purchase of shares or other rights hereunder or the taking of any other action hereunder (each such action being hereinafter referred to as a "Plan Action"), then such Plan Action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Committee. Without limiting the generality of the foregoing, in the event that (i) the Committee shall be entitled under the Plan to make any payment is cash, Stock or both, and (ii) the Committee shall determine that a Consent is necessary or desirable as condition of, or in connection with, payment in any one or more of such forms, then the Committee shall be entitled to determine not to make any payment whatsoever until such Consent shall have been obtained in the manner aforesaid. The term "Consent" as used herein with respect to any Plan Action means (i) the listings, registrations or qualifications in respect thereof upon any securities exchange or under any foreign, federal, state or local law, rule or regulation, (ii) any and all consents, clearances and approvals in respect of a Plan Action by any governmental or other regulatory bodies, or (iii) any and all written agreements and representation by the recipient of an award with respect to the disposition of Stock or with respect to any other matter; which the Committee shall deem necessary or desirable to comply with the terms of any such listing, registration or -12- qualification or to obtain an exemption from the requirement that any such listing, qualification or registration may be made. 8.2 Right of Discharge Reserved. Nothing in the Plan shall confer upon any Participant the right to continue in the employment or service of the Company or any of its Affiliates or affect any right that the Company, such Affiliate or any Participant may have to terminate the employment or service of such Participant. 8.3 Non-Uniform Determinations. The Committee's determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or who are eligible to receive, awards under the Plan (whether or not such persons are similarly situated). Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make non-uniform and selective determinations as to (i) the persons to receive awards under the Plan, (ii) the amounts, duration and other terms and provisions of awards under the Plan and (iii) interpretations of the Plan. 8.4 Other Payments or Awards. Nothing contained in the Plan shall be deemed in any way to limit or restrict the Company, any Affiliate or the Committee from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect. Any awards and payments made under this Plan shall constitute a special incentive payment to the Participant and shall not be taken into account in computing the amount of salary or compensation of the Participant for the purposes of determining any pension, retirement, death or other -13- benefits under (i) any pension, retirement, profit sharing, bonus, life insurance or other benefit plan of the Company or any Affiliate or (ii) any agreement between the Company or any Affiliate, on the one hand, and the Participant, on the other hand, except as such plan or agreement may otherwise expressly provide. SECTION 9. EXCULPATION OF COMPANY, ETC. So long as the Company acts in good faith on the basis of its knowledge of the facts, the "Exculpated Persons" (as defined herein) shall incur no liability to any person because of any failure to pay to the proper persons any of the amounts payable hereunder. For purposes of this Plan, the term "Exculpated Persons" shall mean the Company, the Board, the Committee, the Affiliates, Integon Partners L.P., Integon Partners II L.P., their respective subsidiaries and any person that is, directly or indirectly, controlling, controlled by or under common control with, any of the foregoing persons, their respective directors, officers, partners, employees, agents and counsel. The Exculpated Persons shall be under no obligation to investigate the facts or to inquire as to the persons who are entitled to receive any amounts payable hereunder. Should any of the Exculpated Persons undertake any such investigation or inquiry, the Exculpated Persons shall not be liable for any failure to carry out such investigation or inquiry diligently or thoroughly. No Exculpated Person shall incur any liability whatsoever on account of any matter connected with or related to the Plan or the administration of the Plan, and the Company shall indemnify and hold harmless all Exculpated Persons from all loss and expense -14- (including reasonable attorneys' fees) arising from the assertion or judicial determination of any such liability. Each Participant accepting an award pursuant to the Plan shall thereby agree and acknowledge that (a) each such award shall be subject to all of the terms and provisions of the Plan and (b) all financial information concerning the Company and any of the subsidiaries, including auditor's reports, are confidential and are not (by virtue of the Plan or otherwise) made available to its employees generally or Participants in particular except, in the case of Participants, to the extent they may be available to shareholders under applicable state law. SECTION 10. GOVERNING LAW. The Plan is deemed adopted, made and delivered in New York and shall be governed by the laws of the State of New York applicable to agreements made and to be performed entirely within such state. SECTION 11. NOTICES. All notices and other communications hereunder shall be given in writing, shall be personally delivered against receipt or sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery or of mailing, and if mailed, shall be addressed (a) to the Company, at its principal corporate headquarters, and (b) to a Participant, at the Participant's principal residential address last furnished to the Company. Notices sent to the Company shall be sent to Integon Corporation, 500 West Fifth Street, P.O. Box 3199, Winston-Salem, North Carolina 27152-0206, Attn.: Chairman, with a copy to the attention of the Secretary of the Company at the same address. -15- Either party may, by notice, change the address to which notice to such party is to be given. SECTION 12. SECTION HEADINGS. The Section headings contained herein are for the purposes of convenience only and are not intended to define or limit the contents of said Sections. SECTION 13. EFFECTIVE DATE. The Plan shall become effective upon February 13, 1992, subject to approval by the Company's stockholders. IN WITNESS WHEREOF, and as evidence of the adoption of this Plan, the Company has caused this instrument to be executed as of the date set forth above. INTEGON CORPORATION /s/ JAMES T. LAMBIE ------------------------------------ James T. Lambie Acknowledged and Accepted: - ------------------------ Participant Date: __________________ -16- AMENDMENT TO THE INTEGON CORPORATION 1992 STOCK OPTION PLAN Integon Corporation (the "Company"), having heretofore adopted the Integon Corporation 1992 Stock Option Plan, hereby amends the plan as follows: Section 3.2(b) is hereby amended to insert the following clause at the end of such section: " . . . provided, however, that no participant shall be entitled to receive an initial grant award of more than 200,000 shares of stock and annual awards thereafter of more than 50,000 shares of stock. IN WITNESS WHEREOF, the Company has caused this instrument to be executed as of the 6th day of November, 1995, subject to the approval of its stockholders at the 1996 annual meeting. INTEGON CORPORATION /s/ James T. Lambie James T. Lambie President AMENDMENT NO. 2 TO THE INTEGON CORPORATION 1992 STOCK OPTION PLAN 1. Purpose The purpose of this Amendment No. 2 (this "Amendment") to the Integon Corporation 1992 Stock Option Plan, as amended (the "Plan"), is to provide that Stock Options granted under the Plan may be transferable to the extent permitted by the Committee. Terms not otherwise defined herein shall have the meanings given them in the Plan. 2. Effective Date The effective date of this Amendment shall be January 22, 1997. 3. Transferability of Options The Plan is hereby amended by deleting Section 5.3(g) thereof and replacing it with the following: (g) Transferability. The Committee may award to a Participant Stock Options that are transferable by such Participant and subsequent transferees. The scope and limitations of the transferability of Stock Options shall be set forth in the written agreement evidencing the Stock Options. In the absence of any express provision in such written agreement with respect to the transferability of such Stock Options, such Stock Options shall not be transferable by a Participant other than by will or the laws of descent and distribution. 4. Conforming and Other Changes Section 5.3(h) of the Plan is hereby amended to permit the exercise of any Stock Option properly transferred (pursuant to the Plan and the written agreement evidencing such Stock Option) by the holder thereof to the same extent that such Stock Option could have been exercised by the Participant (or the Participant's legal representative or designated beneficiary, in the case of the Participant's death) had such Stock Option not been transferred. In addition, the first sentence of Section 5.3(h) of the Plan is amended and restated as follows: "Stock Options which remain outstanding on the date of a Participant's termination of employment or service with the Company and all Affiliates shall cease to be exercisable and shall terminate on the date of such Participant's termination, except as otherwise provided in this Section 5.3(h) or in the written agreement evidencing such Stock Options." -----END PRIVACY-ENHANCED MESSAGE-----