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As filed with the Securities and Exchange Commission on MARCH 29, 1996
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(MARK ONE)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended DECEMBER 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-9667
BULL & BEAR GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-1897916
(State of incorporation) (I.R.S. Employer Identification No.)
11 HANOVER SQUARE, NEW YORK, NEW YORK 10005
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 785-0900
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
NONE NONE
Securities registered pursuant to Section 12(g) of the Act:
CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
No voting stock was held by non-affiliates of the registrant as of March
15, 1996.
The number of shares outstanding of each of the registrant's classes of
common stock, as of March 15, 1996:
Class A Non-Voting Common Stock, par value $.01 per share - 1,348,017 shares
Class B Voting Common Stock, par value $.01 per share - 20,000 shares
TABLE OF CONTENTS
PART I
ITEM PAGE
1. Business ........................................................... 2
2. Properties ......................................................... 5
3. Legal Proceedings .................................................. 5
4. Submission of Matters to a Vote of Security Holder ................. 5
PART II
5. Market for Company's Common Equity and Related Stockholder Matters . 6
6. Selected Financial Data .............................................6
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations ....................................... 9
8. Financial Statements and Supplementary Data .........................11
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ..............................25
PART III
10. Directors and Executive Officers ................................... 26
11. Executive Compensation .............................................28
12. Security Ownership of Certain Beneficial Owners and Management ......30
13. Certain Relationships and Related Transactions .....................31
PART IV
14. Exhibits, Consolidated Financial Statements and Schedules,
and Reports on Form 8-K .........................................32
PART I
ITEM 1. BUSINESS
Bull & Bear Group, Inc., a Delaware corporation (the "Company"), is a
holding company with seven principal subsidiaries: Bull & Bear Advisers, Inc.
("BBAI"), Bull & Bear Securities, Inc. ("BBSI"), Investor Service Center, Inc.
("ISC"), Midas Management Corporation ("MMC"), Bull & Bear Properties, Inc.
("Properties"), Bull & Bear NJ Properties, Inc. ("NJ Properties") and Hanover
Direct Advertising Company, Inc. ("Hanover Direct").
BBAI and MMC act as investment managers to open-end management investment
companies (mutual funds) (the "Funds") registered under the Investment Company
Act of 1940 (the "Act"). The Funds are: Bull & Bear Special Equities Fund, Inc.;
Bull & Bear Gold Investors Ltd.; Bull & Bear U.S. and Overseas Fund and Bull &
Bear Quality Growth Fund, each a series of shares issued by Bull & Bear Funds I,
Inc.; Bull & Bear Dollar Reserves, Bull & Bear Global Income Fund and Bull &
Bear U.S. Government Securities Fund, each a series of shares issued by Bull &
Bear Funds II, Inc.; Bull & Bear Municipal Income Fund, a series of shares
issued by Bull & Bear Municipal Securities, Inc.; and, Midas Fund, Inc.
BBSI was organized in 1984 to operate a discount brokerage service. BBSI
has access to every major U.S. stock, option and bond exchange as well as the
over-the-counter market. Investors may use the discount brokerage services
provided by BBSI to trade stocks, bonds and options at substantial commission
discounts from full cost rates, access their investment in any of the Funds to
pay for securities purchased or invest proceeds of sales of securities in the
Funds. BBSI is registered with the Securities and Exchange Commission ("SEC") as
a broker/dealer and is a member of the National Association of Securities
Dealers, Inc. ("NASD") and Securities Investors Protection Corporation ("SIPC").
ISC (formerly Bull & Bear Service Center, Inc.) was organized in 1985 and
is registered with the SEC as a broker/dealer and is a member of the NASD. ISC
acts as the Funds' exclusive agent to be the principal distributor of the Funds
and also provides shareholder administration services to the Funds.
Properties was organized in 1986 and NJ Properties in 1994 both to invest
in real estate.
Hanover Direct was organized in 1988 and acts as an advertising agency,
which places advertising for ISC on behalf of the Funds and for BBSI. Currently,
the commission revenue generated by Hanover Direct from ISC and BBSI represents
a recapture of sums paid for advertising and, rather than additional income,
represents a reduction in advertising expense of ISC and BBSI. Hanover Direct
has not performed any work for unaffiliated clients.
The Company has granted each of the Funds and its subsidiaries a
non-exclusive license to use the service marks "Bull & Bear", "Bull & Bear
Performance Driven", and "Performance Driven" under certain terms and conditions
on a royalty free basis. Such license may be withdrawn from a Fund in the event
the investment manager of the Fund is not a subsidiary of the Company.
-2-
INVESTMENT MANAGEMENT BUSINESS
The Company is engaged, through its subsidiaries, in the business of
managing mutual funds registered under the Act. The Funds and their respective
net assets as of December 31, 1995 were as follows:
Bull & Bear Dollar Reserves $ 58,253,440
Bull & Bear Global Income Fund 36,452,690
Bull & Bear Gold Investors Ltd. 26,924,033
Bull & Bear Municipal Income Fund 16,220,031
Bull & Bear Quality Growth Fund 2,215,764
Bull & Bear Special Equities Fund, Inc. 56,339,551
Bull & Bear U.S. and Overseas Fund 9,807,779
Bull & Bear U.S. Government Securities Fund 15,403,714
Midas Fund, Inc. 15,753,043
--------------
TOTAL NET ASSETS $237,370,045
The mutual fund industry along with the entire financial sector of the
economy has been rapidly changing to meet the increasing needs of investors.
Competition for management of financial resources has increased as banks,
insurance companies and broker/dealers have introduced products and services
traditionally offered by independent mutual fund management companies. There are
also many mutual fund groups with substantially more resources than the Company.
While Congress, governmental agencies and special interest groups have been
struggling with regulatory problems created by consolidation of the financial
services industry, the Company continues to develop products to meet the
specialized requirements of investors. While the Company's business is not
seasonal, it is affected by the financial markets, which in turn, are dependent
upon current and future economic conditions.
Drastic material declines in the securities markets can have a significant
effect on the Company's business. Volatile stock markets may affect management
and distribution fees earned by the Company's subsidiaries. If the market value
of securities owned by the Funds declines, shareholder redemptions may occur,
either by transfer out of the equity Funds and into the fixed income Funds,
which generally have lower management and distribution fee rates than the equity
Funds, or by redemptions out of the Funds entirely. Lower asset levels in the
Funds may also cause or increase reimbursements to the Funds pursuant to the
expense limitations described below.
In general, investment management services are rendered to the Funds
pursuant to written contractual agreements. Such agreements relate to the
general management of the affairs of each Fund, in addition to supervising the
acquisition and sale of each Fund's portfolio investments. As provided in the
agreements, BBAI and MMC may receive management fees ranging from 0.4% to 1.0%
per annum of the Funds' average daily net assets. The Act requires that such
contractual agreements be initially approved by the Funds' Board of Directors,
including a majority of all of the directors who are not "interested persons"
(as defined in the Act), and by the vote of a majority of the outstanding shares
of the Fund (as defined in the Act). Agreements, if approved, may be for a term
of up to two years, and thereafter their continuance must be approved at least
annually by a majority of the directors of the Fund, including a majority of
those directors of the Fund who are not "interested persons", or by such a vote
of "disinterested" directors and the vote of a majority of the outstanding
shares of the Fund. In addition, all such agreements are subject to termination
on 60 days' notice by majority vote of the Board of Directors or the
shareholders and are subject to automatic termination in the event of
assignment. The termination of any of the agreements for investment management
services between any of the Funds, BBAI and MMC would have a serious adverse
impact upon the Company.
-3-
Pursuant to contracts with these Funds, BBAI and MMC are entitled to
management fees, which are received monthly and are based on annual percentages
of the average daily net assets of the Funds. Under the contracts, BBAI and MMC
are required to reimburse the Funds for certain expenses to the extent that such
expenses exceed limitations prescribed by any state in which shares of the Funds
are qualified for sale. In addition, from time to time BBAI and MMC may waive or
reimburse management fees to increase a Fund's performance. Each of BBAI and MMC
has a subadvisory agreement with respect to Bull & Bear Gold Investors Ltd. and
Midas Fund, Inc. Each of BBAI and MMC, not the respective Funds, pays the
Subadviser, Lion Resource Management Limited, based upon performance and net
assets of the Funds.
Each of the Funds has adopted a plan of distribution pursuant to Rule
12b-1 under the Act (the "Plan"). Pursuant to the Plans with eight of the Funds,
ISC may receive as compensation amounts ranging from one-quarter of one percent
to one percent per annum of the Funds' average daily net assets for distribution
and service activities. The service fee portion is intended to cover services
provided to shareholders in the Funds and the maintenance of shareholder
accounts. The distribution fee portion is to cover all other activities and
expenses primarily intended to result in the sale of the Funds' shares. Pursuant
to the Plan with the other Fund, ISC may be reimbursed in an amount of up to
one-half of one percent per annum of the Fund's average daily net assets for
expenditures that are primarily intended to result in the sale of the Fund's
shares. In connection with this Plan, if ISC incurs reimbursable expenditures in
excess of the limitations under the Plan, it may be reimbursed in future periods
at which time the fee income will be recorded as income. At December 31, 1995,
ISC incurred expenses in excess of the amounts previously reimbursable of
approximately $422,400 for this Plan.
The Act requires that a plan of distribution be initially approved by the
Fund's Board of Directors, including a majority of the directors who are not
"interested persons" and who have no financial interest in the Plan, and by the
vote of a majority of the outstanding shares of the Fund. If approved, a plan of
distribution may be for a term of one year, and thereafter it must be approved
at least annually by the entire Board of Directors and by a majority of the
"disinterested" directors. In addition, all plans of distribution are subject to
termination at any time by majority vote of the "disinterested" directors or
shareholders.
BBAI and MMC are registered with the SEC as investment advisers under the
Investment Advisers Act of 1940. The Funds are registered with the SEC under the
Act. The activities of BBAI and MMC and of the Funds are subject to regulation
under Federal and state securities laws. The provisions of these laws, including
those relating to the contractual arrangements between the Funds and their
investment manager, are primarily designed to protect the shareholders of the
Funds and not the shareholders of the Company.
DISCOUNT BROKERAGE BUSINESS
BBSI, with access to every major U.S. stock, option and bond exchange as
well as the over-the-counter market, provides discount brokerage services to
investors throughout the United States and various foreign countries.
Substantial commission savings off full service rates as well as prompt,
courteous service and professional order execution are available to all accounts
regardless of how often trades are made. All accounts are carried by U.S.
Clearing Corp., a New York Stock Exchange member firm. The SIPC, of which BBSI
and U.S. Clearing Corp. are members, protects each account against broker/dealer
insolvency (not market losses) for up to $500,000, of which $100,000 may be in
cash. In addition, Aetna Casualty and Surety Company protects each account for
an additional $49,500,000 in securities value.
BBSI offers investors commission savings of up to 84% over full cost
brokers (as of March 29, 1996) and guarantees commissions 20% less than Charles
Schwab & Co. on every stock, bond and option trade. BBSI customers may save an
additional 10% in commissions with every trade entered via personal computer
through Bull & Bear PC OnLine Investment Center and by touch tone telephone
using Bull & Bear TeleQuote/TeleTrade. Commencing November 1, 1995, BBSI
customers earn American Airlines AAdvantage miles with every trade -- 500
AAdvantage miles for each of the customer's first five trades and then 100 miles
per trade thereafter (limited to 35,000 miles in any 12 month period).
-4-
BBSI provides its customers free investment information such as:
*Standard & Poor's Market Month: Timely investment information with customer
statements each month.
*Standard & Poor's Stock Guide:Information, ranking and rating changes on 6,800
stocks each month.
*Standards & Poor's Stock Reports:Up-to-date information on over 4,600
companies by mail or by fax.
*Standard & Poor's Stock Screens: Thousands of stocks screened by objective
and investment results.
*Bull & Bear Tax Guide: Information to help investors compute and record gains
losses and dividend income to minimize taxes.
BBSI also offers its customers a no-fee cash management service featuring
unlimited free check writing with only a $100 minimum per check (Bull & Bear
Performance Plus Account), the Bull & Bear No-Fee IRA, and Bull & Bear Mutual
Funds Network (including a no transaction fee, no-load mutual funds service).
Volatile stock markets could have a significant effect on the brokerage
commissions earned by BBSI by affecting the number of transactions processed.
BBSI is responsible for potential losses resulting from trade errors of BBSI
personnel and customers' bad debts, including under- margined accounts. As a
discount broker, BBSI does not give investment advice and therefore management
believes it is less likely to be involved in significant litigation with
customers, as may be typical in the ordinary course of business of a broker that
does give investment advice to its customers.
ITEM 2. PROPERTIES
The principal office of the Company is located at 11 Hanover Square, New
York, New York 10005. The approximate area of the office is 11,400 square feet.
The rent is approximately $116,250 per annum plus $32,550 per annum for
electricity. The lease expires on December 31, 1996 and is cancelable at the
option of the Company on three months' notice. BBSI has a branch office at 395
East Palmetto Boulevard, Boca Raton, Florida consisting of approximately 1,000
square feet. The rent is approximately $21,600 per annum and is cancelable at
the option of the Company on six months' notice.
Properties purchased land and a two story office building located in
Middletown, Ohio in 1986. The building consists of approximately 45,000 square
feet. The property was purchased for cash, has no mortgage and was purchased as
an investment. NJ Properties purchased land and a two story office building
located in Red Bank, New Jersey in 1994. The building consists of approximately
13,000 square feet. The building was purchased for cash, has no mortgage and was
purchased as an investment.
-5-
ITEM 3. LEGAL PROCEEDINGS
The Company and its directors are defendants in a lawsuit brought on April
24, 1995 by Maxus Investment Group, Maxus Capital Partners, Maxus Asset
Management, Inc., and Maxus Securities Corp. as plaintiffs (collectively
"Maxus") claiming to collectively own or control 357,500 shares, or
approximately 26.5%, of the Class A common stock of the Company. The action,
seeking declaratory and injunctive relief, was filed in the federal district
court for the Southern District of New York and purports to be brought on the
plaintiffs' own behalf and derivatively on behalf of the Company. The complaint
alleges that defendants breached fiduciary duties to the Company regarding the
adoption and implementation of the Company's 1990 incentive stock option plan
("ISOP"), the rejection, in July 1994, of Maxus' proposal for the liquidation of
the Company and the Company's 1986 purchase of an office building. Plaintiffs
also allege that all the individual defendants have received excessive
compensation and other unspecified benefits. The complaint seeks rescission of
the ISOP and an accounting, attorneys' fees, the imposition of a constructive
trust and restitution regarding all allegedly improper benefits. On December 21,
1995, plaintiffs moved to file a supplemental complaint challenging the voiding
of certain stock option exercises that occurred in November 1993, and the
exercise by the Company's chairman of stock options that he received in 1990 in
accordance with their original terms. The supplemental complaint also seeks
attorneys' fees. The Company believes that the lawsuit is without merit and
intends to defend it vigorously.
From time to time, the Company and/or its subsidiaries are threatened or
named as defendants in litigation arising in the normal course of business. As
of December 31, 1995, neither the Company nor any of its subsidiaries was
involved in any other litigation that, in the opinion of management, would have
a material adverse impact on the consolidated financial statements.
-6-
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS DURING
FOURTH QUARTER OF THE YEAR ENDED DECEMBER 31, 1995
At a December 6, 1995 special meeting, the Class B shareholder voted to
ratify, approve, and confirm the actions of the Board of Directors of the
Company in adopting the Bull & Bear Group, Inc. 1995 Long-Term Incentive Plan.
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Class A Common Stock is traded under the Nasdaq symbol BNBGA.
The Company's Class B Common Stock has no public trading market. There were
approximately 330 holders of record of Class A Common Stock and 1 holder of
Class B Common Stock as of December 31, 1995. No dividends have been paid on
either class of Common Stock in the past five years and the Company does not
expect to pay any such dividends in the foreseeable future. The high and low
closing bid prices of the Class A Common Stock during each quarterly period over
the last two years were as follows. Such bid prices reflect inter-dealer prices
without retail mark-up, mark-down or commission and may not necessarily
represent actual transactions.
1995 1994
------------------------ --------------
HIGH LOW HIGH LOW
First Quarter $1-1/2 $1-1/4 $3-3/8 $2-3/4
Second Quarter $2-1/4 $1-1/4 $2-5/8 $1-3/4
Third Quarter $1-3/4 $1-1/2 $2-1/2 $1-3/4
Fourth Quarter $1-3/4 $1-5/8 $2 $1-1/2
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data for the five years ended December 31, 1995 is
presented on the following pages.
-7-
BULL & BEAR GROUP, INC.
CONSOLIDATED SELECTED FINANCIAL DATA
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
REVENUES:
Brokerage commissions 1,821,513 1,768,527 2,047,999 1,488,856 1,259,781
Dividends, interest and other 147,169 (7,378) 227,422 602,206 234,327
------------ -------------- ------------ ------------ ------------
5,291,030 5,547,215 6,367,650 5,477,215 5,303,327
----------- ----------- ----------- ----------- -----------
EXPENSES:
General and administrative 3,195,115 3,225,891 3,519,704 3,072,364 3,118,520
Marketing 779,026 1,361,155 1,389,204 1,356,060 1,257,490
Clearing and brokerage charges 576,096 532,832 619,673 512,968 433,858
Professional fees 454,430 208,012 205,316 228,975 374,450
Amortization and depreciation 97,399 98,094 125,399 193,156 161,537
------------ ------------- ------------ ------------ ------------
5,102,066 5,425,984 5,859,296 5,363,523 5,345,855
----------- ----------- ----------- ----------- -----------
Income (loss) before provision for income taxes 188,964 121,231 508,354 113,692 (42,528)
INCOME TAXES 32,588 37,771 39,149 38,198 38,626
------------ ------------- ------------ ------------- -------------
NET INCOME (LOSS) $ 156,376 $ 83,460 $ 469,205 $ 75,494 $ (81,154)
=========== ============ =========== ============ ============
NET INCOME (LOSS) PER SHARE OF WEIGHTED
AVERAGE COMMON STOCK OUTSTANDING:
Primary and fully diluted
Net income (loss) $.10 $.05 $.32 $.05 $(.07)
==== ==== ==== ==== =====
WEIGHTED AVERAGE SHARES OF
COMMON STOCK OUTSTANDING:
Primary 1,549,815 1,610,443 1,480,654 1,434,922 1,211,152
========= =========== =========== =========== ===========
Fully diluted 1,551,564 1,610,658 1,483,272 1,446,922 1,211,152
========= =========== =========== =========== ===========
TOTAL ASSETS $4,963,792 $4,240,241 $4,711,438 $3,817,556 $3,224,349
========== ========== ========== ========== ==========
LONG-TERM OBLIGATIONS $ - $ - $ - $ - $ -
================== ================= ================= ================= ===============
-8-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1995 COMPARED TO 1994
Total revenues for the year decreased $256,185 or 4.6%. Management,
distribution and service fees decreased $192,611 or 10.3%, $167,532 or 11.5%,
and $103,575 or 22.2%, respectively. The decrease in management and distribution
fees was due to an overall decrease in the net asset levels of the Funds from
which these revenues are generated. Service fees represent reimbursement for
actual expenses incurred. Such fees decreased as the costs for providing these
services decreased. Net assets under management were approximately $236.1
million at December 31, 1994, $235.0 million at March 31, 1995, $236.9 million
at June 30, 1995, $245.9 million at September 30, 1995, and $237.4 million at
December 31, 1995. Brokerage commissions increased $52,986 or 3.0% while
brokerage customers' equity increased to $145.9 million or 32.2%. The increase
in brokerage commissions was due to an increase in customer transaction activity
and the continued growth in the number of discount brokerage accounts and
customers' equity. Dividends, interest and other amounted to $147,169 in 1995
compared to ($7,378) in 1994. Dividends and interest increased $56,773 or 62.8%
due to higher earnings on the Company's short term investments.
Total expenses, including income taxes, decreased $329,101 or 6.0% for the
year. General and administrative expenses decreased $30,776 or 1.0%. Marketing
expenses decreased $582,129 or 42.8%. Clearing and brokerage charges increased
$43,264 or 8.1% as a result of the previously noted increase in brokerage
commissions. Professional fees increased $246,418 or 118.5% due to the increase
in legal fees primarily associated with the lawsuit brought by Maxus.
Amortization and depreciation decreased $695 or 0.7% for the year.
Net income for 1995 was $156,376 or $.10 per share as compared to $83,460
or $.05 per share in 1994.
1994 COMPARED TO 1993
Total revenues for the year decreased $820,435 or 12.9%. Management and
distribution fees decreased $183,108 or 8.9% and $256,013 or 14.9%,
respectively. The decrease in management and distribution fees was due to an
overall decrease in the net asset levels of the Funds from which these revenues
are generated. Service fees increased $132,958 or 39.8%. Service fees represent
reimbursement for actual expenses incurred. The fees increased as the costs for
providing these services increased. Net assets under management were
approximately $317.3 million at December 31, 1993, $278.3 million at March 31,
1994, $251.6 million at June 30, 1994, $255.6 million at September 30, 1994 and
$236.1 million at December 31, 1994. Brokerage commissions decreased $279,472 or
13.6% while brokerage customers' equity remained substantially the same at
$110.4 million. The decrease in brokerage commissions was due to a decrease in
customer transaction activity despite continued growth in the number of discount
brokerage accounts. Dividends, interest and other amounted to ($7,378) in 1994
as compared to $227,422 in 1993. Dividends and interest increased $20,888 or
30.0% due to higher yields on the Company's short term fixed-income investments.
Realized and unrealized gain or loss for 1994 and 1993 amounted to a loss of
$97,774 and a gain of $157,914, respectively.
Total expenses, including income taxes, decreased $434,690 or 7.4% for the
year. General and administrative expenses decreased $293,813 or 8.4% due to a
slight reduction in staffing levels. Marketing expenses decreased minimally by
$28,049 or 2.0%. Clearing and brokerage charges decreased $86,841 or 14.0% as a
result of the previously noted decrease in brokerage commissions. Professional
fees increased $2,696 or 1.3%. Amortization and depreciation decreased $27,305
or 21.8% for the year.
Net income for 1994 was $83,460 or $.05 per share as compared to $469,205
or $.32 per share in 1993.
-9-
LIQUIDITY AND CAPITAL RESOURCES
The following table reflects the Company's consolidated working capital,
total assets, long-term debt and shareholders' equity as of the dates indicated.
DECEMBER 31,
1995 1994 1993
---- ---- ----
Working Capital $2,792,059 $2,779,722 $3,300,568
Total Assets $4,963,792 $4,240,241 $4,711,438
Long-Term Debt - - -
Shareholders' Equity $4,170,095 $3,909,699 $3,799,989
For the year 1995, working capital, total assets and shareholders' equity
increased $12,337, $723,551 and $260,396, respectively.
Working capital increased as a result of the net income for 1995, the
non-cash expense items of depreciation and amortization offset by the
acquisition of intangible assets and fixed assets. The increase in shareholders'
equity was primarily the result of the net income for 1995 of $156,376, the
issuance of common stock on exercise of stock options of $33,000 and the
unrealized capital gains on marketable securities of $66,020. Total assets
increased as a result of net income, the unrealized gains on marketable
securities and the increase in current liabilities.
For the year 1994, shareholders' equity increased $109,710 and working
capital and total assets decreased $520,846 and $471,197, respectively.
The decrease in working capital in 1994 was due to the liquidation and
dissolution on December 30, 1994 of Dover Regional Financial Shares ("Dover"), a
closed-end registered investment company, which resulted in the distribution of
its assets to the minority shareholders and the purchase of real estate held for
investment of $260,088. These decreases in working capital were offset by
working capital generated from net income from operations of $83,460 and by the
non-cash expense items of depreciation and amortization of $98,094. The increase
in shareholders' equity was due primarily to the net income for the year. As
discussed previously, significant changes in the securities market can have a
dramatic effect on the Company's results of operations. Based on current
information available, management believes that current resources are sufficient
to meet the Company's liquidity needs.
For the year 1993, working capital, total assets and shareholders' equity
increased $881,070, $893,882 and $471,205, respectively.
The increase in working capital and total assets was primarily the result
of the net income from operations for 1993 of $469,205 and the inclusion of the
balance sheet of Dover. Working capital was also positively affected by the
non-cash expense items of depreciation and amortization of $125,399. As
discussed previously, significant changes in the securities market can have a
dramatic effect on the Company's results of operations.
The increase in shareholders' equity was due primarily to the net income
for the year.
Management knows of no contingencies that are reasonably likely to result
in a material decrease in the Company's liquidity or that are likely to
adversely affect the Company's capital resources. This includes the restrictions
placed on the transfer of funds to the Company from BBSI and ISC as a result of
their regulatory net capital requirements. At December 31, 1995, the amount
subject to these restrictions was $278,700 or 5.7% of total assets.
EFFECTS OF INFLATION AND CHANGING PRICES
Since the Company derives revenue from investment management, distribution
and shareholder administration services from the Funds and from discount
brokerage services, it is not possible for it to discuss or predict with
accuracy the impact of inflation and changing prices on its revenues from
continuing operations.
-10-
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements required by Regulation S-X and Supplementary
Financial Information required by Regulation S-K are presented herein.
FINANCIAL STATEMENTS AND SUPPORTING SCHEDULES
TABLE OF CONTENTS
PAGE
Report of Independent Certified Public Accountants 12
Consolidated Balance Sheets,
December 31, 1995 and 1994 13
Consolidated Statements of Income,
Years ended December 31, 1995, 1994 and 1993 14
Consolidated Statements of Changes in Shareholders' Equity,
Years ended December 31, 1995, 1994 and 1993 15
Consolidated Statements of Cash Flows,
Years ended December 31, 1995, 1994 and 1993 16
Notes to Consolidated Financial Statements 18
-11-
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
BULL & BEAR GROUP, INC.:
We have audited the accompanying consolidated balance sheets of Bull & Bear
Group, Inc. and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, changes in shareholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Bull & Bear Group,
Inc. and subsidiaries at December 31, 1995 and 1994, and the consolidated
results of their operations and their consolidated cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
TAIT, WELLER & BAKER
PHILADELPHIA, PENNSYLVANIA
FEBRUARY 13, 1996
-12-
BULL & BEAR GROUP, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
1995 1994
---- ----
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,467,674 $ 2,316,040
Marketable securities (Note 3) 1,257,062 183,534
Management, distribution and service fees receivable 179,209 160,567
Interest, dividends and other receivables 248,241 215,854
Prepaid expenses and other assets 433,570 234,269
------------- -------------
TOTAL CURRENT ASSETS 3,585,756 3,110,264
------------ ------------
REAL ESTATE HELD FOR INVESTMENT, NET 308,799 315,388
EQUIPMENT, FURNITURE AND FIXTURES, NET 207,194 199,760
EXCESS OF COST OVER NET BOOK VALUE OF
SUBSIDIARIES, NET (Note 2) 735,368 505,352
OTHER 126,675 109,477
------------- -------------
1,378,036 1,129,977
------------ ------------
TOTAL ASSETS $ 4,963,792 $ 4,240,241
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 610,242 $ 197,523
Accrued professional fees 111,486 49,183
Accrued payroll and other related costs 43,208 45,293
Accrued other expenses 15,381 24,443
Other 13,380 14,100
-------------- --------------
TOTAL CURRENT LIABILITIES 793,697 330,542
------------- -------------
CONTINGENCIES (Note 10) - -
SHAREHOLDERS' EQUITY: (Notes 3, 4, 5, and 6)
Common Stock, $.01 par value
Class A, 10,000,000 shares authorized;
1,348,017 and 1,503,152 shares
issued and outstanding 13,481 15,032
Class B, 20,000 shares authorized;
20,000 shares issued and outstanding 200 200
Additional paid-in capital 6,232,347 6,497,796
Retained earnings (deficit) (2,141,953) (2,298,329)
Unrealized gains on marketable securities 66,020 -
Notes receivable for common stock issued - (305,000)
------------------- -------------
TOTAL SHAREHOLDERS' EQUITY 4,170,095 3,909,699
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,963,792 $ 4,240,241
=========== ===========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-13-
BULL & BEAR GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
1995 1994 1993
---- ---- ----
REVENUES:
Management, distribution and service fees $3,322,348 $3,786,066 $4,092,229
Brokerage commissions and fees 1,821,513 1,768,527 2,047,999
Dividends, interest and other 147,169 (7,378) 227,422
-------------------------- ------------
5,291,030 5,547,215 6,367,650
----------- ----------- -----------
EXPENSES:
General and administrative (Note 9) 3,195,115 3,225,891 3,519,704
Marketing 779,026 1,361,155 1,389,204
Clearing and brokerage charges 576,096 532,832 619,673
Professional fees 454,430 208,012 205,316
Amortization and depreciation 97,399 98,094 125,399
------------- ------------- ------------
5,102,066 5,425,984 5,859,296
----------- ----------- -----------
Income before income taxes 188,964 121,231 508,354
Income taxes (Note 8) 32,588 37,771 39,149
------------- ------------- -------------
NET INCOME $156,376 $83,460 $469,205
=========== ============ ===========
PER SHARE DATA:
Primary and fully diluted
Net income $.10 $.05 $.32
==== ==== ====
AVERAGE SHARES OUTSTANDING:
Primary 1,549,815 1,610,443 1,480,654
========= ========= =========
Fully diluted 1,551,564 1,610,658 1,483,272
========= ========= =========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-14-
BULL & BEAR GROUP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NUMBER OF SHARES AMOUNT
NOTES
RECEIVABLE NOTES
FOR UNREALIZED FOR UNREALIZED
ADDITIONAL COMMON RETAINED GAINS TOTAL
CLASS A CLASS B CLASS A CLASS B PAID-IN STOCK EARNINGS MARKETABLE SHAREHOLDERS'
COMMON COMMON COMMON COMMON CAPITAL ISSUED (DEFICIT) SECURITIES EQUITY
------ ------ ------ ------ ------------ --------- ---------- ----------- -----------
BAL., 12/31/92 1,191,152 20,000 11,912 200 6,167,666 (2,850,994) - 3,328,784
Issuance of Class
A Common stock
on exercise of
stock options 307,000 - 3,070 - 323,930 - - - 327,000
Issuance of notes
receivable (Note 6) - - - - - (325,000) - - (325,000)
Net income - - - - - - 469,205 - 469,205
---------- -------- ---------- -------- ----------- ---------- -------- ------------- ------------
BAL. 12/31/93 1,498,152 20,000 14,982 200 6,491,596 (325,000) (2,381,789) - 3,799,989
Issuance of Class A
Common stock
on exercise of
stock options 5,000 - 50 - 6,200 - - - 6,250
Collection of
note receivable - - - - - 20,000 - - 20,000
Net income - - - - - - 83,460 - 83,460
-------- ---------- -------- ---------- ----------- ---------- ------- --------- ----------
BAL. 12/31/94 1,503,152 20,000 15,032 200 6,497,796 (305,000) (2,298,329) 3,909,699
Voiding of exercise
of 1993 stock
options and
cancellation of
notes receivable (280,000) - (2,800) - (297,200) 300,000 - -
Issuance of Class
NOTE(6)A common stock
on exercise of
stock options 274,020 - 2,740 - 291,280 - - 294,020
Received in exchange
for exercise of
stock options (149,155) - (1,491) - (259,529) - - (261,020)
Collection of note
receivable - - - - - 5,000 - 5,000
Net income - - - - - - 156,376 156,376
Unrealized gains on
marketable securities - - - - - - - 66,020 66,020
---------- ----------------- ------------ ----------- ---------------- ----- ------------- --------
BAL., 12/31/95 1,348,017 20,000 $13,481 $200 $6,232,347 $(2,141,953) $66,020 $4,170,095
========= ====== ======= ==== ========== =============== =========== =======
ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-15-
BULL & BEAR GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
1995 1994 1993
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $156,376 $83,460 $469,205
----------------------------------
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Depreciation and amortization 97,399 98,094 125,399
Increase in cash value of life insurance (30,000) (16,675) --
Realized/unrealized (gain) loss on investments (26,048) 97,774 (157,914)
(Increase) decrease in:
Management, distribution and
service fees receivable (18,642) 62,628 51,515
Interest, dividends and other receivables (32,387) (12,556) (7,852)
Prepaid expenses and other assets (199,301) (6,571) (19,944)
Other 12,802 4,668 (17,470)
Increase (decrease) in:
Accounts payable 412,719 (151,530) 155,664
Accrued expenses 51,156 (64,095) 79,995
Due to affiliated partnership -- -- (57,062)
Other (720) (802) (121,139)
-------------------------------------
TOTAL ADJUSTMENTS 266,978 10,935 31,192
-----------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 423,354 94,395 500,397
-----------------------------------
-16-
BULL & BEAR GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
YEARS ENDED DECEMBER 31,
1995 1994 1993
---- ---- ----
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of real estate held for investment (2,105) (235,087) --
Capital expenditures (58,744) (37,076) (62,544)
Proceeds from sales of investments 414,790 2,671,623 682
Purchases of investments (1,396,250) (1,281,644)(518,732)
Acquisition of intangible assets (267,411) -- --
--------------------------------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (1,309,720) 1,117,816 (580,594)
------------ ------------ --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Collection of note receivable 5,000 20,000 --
Issuance of notes receivable -- (80,000) (325,000)
Proceeds from issuance of
Class A Common Stock 33,000 6,250 327,000
Redemption of Minority Interest -- (364,480) --
--------------------------------------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 38,000 (418,230) 2,000
-------------------------------------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (848,366) 793,981 (78,197)
INCREASE IN CASH FROM A CONSOLIDATED
SUBSIDIARY -- -- 140,094
CASH AND CASH EQUIVALENTS:
Beginning of year 2,316,040 1,522,059 1,460,162
------------ ------------ ----------
END OF YEAR $1,467,674 $2,316,040 $1,522,059
=========== =========== ==========
SUPPLEMENTAL DISCLOSURE:
The Company did not pay any Federal income taxes or interest in 1995, 1994 or
1993.
Common stock received and retired in exchange for exercise of stock options
was $261,020 in 1995.
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
-17-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Bull & Bear Group, Inc. ("Company") is a holding company. Its
subsidiaries' business consists of providing investment management,
distribution and shareholder administration services for the Bull &
Bear Funds and Midas Fund ("Funds") and discount brokerage services.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Bull &
Bear Group, Inc. and all of its subsidiaries. Substantially all
intercompany accounts and transactions have been eliminated.
ACCOUNTING ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues
and expenses during the reported period. Actual results could differ
from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable, and accrued expenses and other liabilities
approximate fair value because of the short maturity of these items.
Marketable securities are recorded at market value which represents the
fair value of the securities.
CASH AND CASH EQUIVALENTS
Investments in money market funds are considered to be cash
equivalents. At December 31, 1995 and 1994, the Company and
subsidiaries had invested approximately $1,196,300 and $1,672,400,
respectively, in an affiliated money market fund.
MARKETABLE SECURITIES
The Company and its non-broker/dealer subsidiaries adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS 115). SFAS 115
requires that, except for debt securities classified as
"held-to-maturity," marketable securities are to be reported at fair
value. The Company's marketable securities are considered to be
"available-for-sale" and recorded at market value, with the unrealized
gain or loss included in stockholders' equity. Marketable securities
for the broker/dealer subsidiaries continue to be valued at market with
unrealized gains and losses included in earnings. There was no effect
on income with the adoption of SFAS 115.
FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
In the normal course of business, the Company's customer activities
involve the execution and settlement of customer transactions. These
activities may expose the Company to risk of loss in the event the
customer is unable to fulfill its contracted obligations, in which case
the Company may have to purchase or sell financial instruments at
prevailing market prices. Any loss from such transactions is not
expected to have a material effect on the Company's financial
statements.
-18-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1995, 1994 AND 1993
BROKERAGE INCOME AND EXPENSES
Brokerage commission and fee income and clearing and brokerage expenses
are recorded on a settlement date basis. The difference between
recording such income and expenses on a settlement date basis as
opposed to trade date, as required by generally accepted accounting
principles, is not material to the consolidated financial statements.
INCOME TAXES
The Company and its wholly-owned subsidiaries file consolidated income
tax returns. The Company's method of accounting for income taxes
conforms to Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes". This method requires the recognition of
deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the financial reporting
basis and the tax basis of assets and liabilities.
REAL ESTATE HELD FOR INVESTMENT AND EQUIPMENT
Real estate held for investment is recorded at cost and is depreciated
on the straight-line basis over its estimated useful life. At December
31, 1995 and 1994, accumulated depreciation amounted to $123,138 and
$114,444, respectively. Equipment, furniture and fixtures are recorded
at cost and are depreciated on the straight-line basis over their
estimated useful lives, 5 to 10 years. At December 31, 1995 and 1994,
accumulated depreciation amounted to $680,039 and $628,728,
respectively.
EXCESS OF COST OVER NET BOOK VALUE OF SUBSIDIARIES
The excess of cost over net book value of subsidiaries is capitalized
and amortized over fifteen and forty years using the straight-line
method. At December 31, 1995 and 1994, accumulated amortization
amounted to $548,664 and $511,270, respectively.
MARKETING COSTS
Expenses in connection with the distribution of the Funds' shares are
charged to operations as incurred.
EARNINGS PER SHARE
Primary and fully diluted earnings per share for the years ended
December 31, 1995, 1994 and 1993 are determined by dividing net income
by the weighted average number of common shares outstanding after
giving effect for common stock equivalents arising from stock options
assumed converted to common stock.
RECLASSIFICATIONS
Certain reclassifications of the 1994 and 1993 financial statements
have been made to conform to the 1995 presentation.
-19-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1995, 1994 AND 1993
2. ACQUISITION
During the year ended December 31, 1995, the Company purchased the assets
relating to the management of Midas Fund, Inc. for $182,500, plus related
costs of $84,911. This purchase was capitalized as part of excess of cost
over net book value and is being amortized over fifteen years using the
straight-line method.
3. MARKETABLE SECURITIES
At December 31, 1995, marketable securities consisted of:
Broker/dealer securities - at market
U.S. Treasury Note, due 7/31/97 $ 200,876
Affiliated mutual funds 62,494
-------------
Total broker/dealer securities (cost - $264,104) 263,370
------------
ther companies
Available-for-sale securities - at market
Unaffiliated mutual funds 29,024
Affiliated mutual funds 6,220
Equity securities 181,413
U.S. Treasury Notes, due 5/15/97 - 6/30/99 777,035
------------
Total available-for-sale securities (cost - $927,672) 993,692
------------
$1,257,062
At December 31, 1994, marketable securities consisted of:
Broker/dealer subsidiaries - at market
Equity securities (cost - $63,276) $110,558
Affiliated mutual funds (cost - $59,527) 53,941
Other companies
Available-for-sale securities - at market
Mutual Funds (cost - $19,035) 19,035
----------
$183,534
At December 31, 1995, the Company recognized $66,020 of unrealized gains
on "available- for-sale securities" which is reported as a separate
component of consolidated stockholder's equity.
4. SHAREHOLDERS' EQUITY
The Class A and Class B Common Stock are identical in all respects except
for voting rights, which are vested solely in the Class B Common Stock.
The Company also has 1,000,000 shares of Preferred Stock, $.01 par value,
authorized. As of December 31, 1995 and 1994, none of the Preferred Stock
was issued.
-20-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1995, 1994 AND 1993
5. NET CAPITAL REQUIREMENTS
The Company's broker/dealer subsidiaries are member firms of the National
Association of Securities Dealers, Inc. and are registered with the
Securities and Exchange Commission as broker/dealers. Under the Uniform
Net Capital Rule (Rule 15c3-1 under the Securities Exchange Act of 1934),
a broker/dealer must maintain minimum net capital, as defined, of not less
than (a) $250,000 or, when engaged solely in the sale of redeemable shares
of registered investment companies, $25,000, or (b) 6-2/3% of aggregate
indebtedness, whichever is greater; and a ratio of aggregate indebtedness
to net capital, as defined, of not more than 15 to 1. At December 31,
1995, these subsidiaries had net capital of approximately $387,300 and
$106,100; net capital requirements of $250,000 and $28,700; excess net
capital of approximately $137,300 and $77,400; and the ratios of aggregate
indebtedness to net capital were approximately .93 to 1 and 4.06 to 1,
respectively.
6. STOCK OPTIONS
On December 6, 1995, the Company adopted a Long-Term Incentive Plan which
provides for the granting of a maximum of 300,000 options to purchase
Class A Common Stock to directors, officers and key employees of the
Company or its subsidiaries. The plan was amended on February 5, 1996.
With respect to non-employee directors, only automatic grants of stock
options of 10,000 are available on the date the non-employee director is
elected, except for the current two non-employee directors who were
granted 10,000 options each on December 6, 1995. The option price per
share may not be less than the fair value of such shares on the date the
option is granted, and the maximum term of an option may not exceed ten
years except as to non-employee directors for which the maximum term is
five years. If the recipient of any option owns 10% or more of the Class B
shares, the option price must be at least 110% of the fair market value
and the option must be exercised within five years of the date the option
is granted. The plan also provides for reload options in which
non-qualified options may be granted to officers and key employees when
payment of the option price of the original outstanding options is with
previously owned shares of the Company. These reload options have to be
equal to the number of shares surrendered in payment of the option price
of the original options, have an option price equal to the fair market
value of such shares on the date the reload option is granted and have the
same expiration date as the original option. As of December 31, 1995, no
options were granted under this plan except for the options granted to the
two non-employee directors.
The 1990 Incentive Stock Option Plan provided for the granting of a
maximum of 500,000 options to purchase Class A Common Stock to directors,
officers and key employees of the Company. The option price per share may
not be less than the greater of 100% of the fair market value or the par
value of such shares on the date the option is granted, and the maximum
term of an option may not exceed ten years. If the recipient of any option
owns 10% or more of the total combined voting power of all classes of
stock, the option price must be at least 110% of the fair market value and
the option must be exercised within five years of the date the option is
granted.
-21-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1995, 1994 AND 1993
NUMBER OPTION PRICE
OF PER SHARE
STOCK OPTIONS SHARES RANGE
OUTSTANDING AT DECEMBER 31, 1993 165,000 $1.00 - $2.25
Granted 23,000 $1.50
Exercised (5,000) $1.25
Canceled (37,000) $1.00 - $2.25
---------
OUTSTANDING AT DECEMBER 31, 1994 146,000 $1.00 - $1.875
Voided exercise of previously issued
stock options (see below) 280,000 $1.00 - $1,10
Granted 29,000 $1.625 - $2.00
Exercised (268,020) $1.00 - $1.10
Canceled (137,980) $1.00 - $1.875
--------
OUTSTANDING AT DECEMBER 31, 1995 49,000 $1.50 - $2.00
=========
At December 31, 1995, no options to purchase shares were exercisable. In
addition, there were 20,000 non-qualified stock options at an exercise
price of $1.75 outstanding as of December 31, 1995, none of which were
exercisable. During 1995, 6,000 non-qualified stock options were
exercised.
In connection with the action by Maxus plaintiffs described in Note 10,
the Company's Board of Directors determined, at a meeting of the board
held on November 6, 1995, that the 1993 exercise of the 280,000 incentive
stock options by certain officers be voided and the 4.86% promissory notes
given in consideration ("1993 Notes") and Class A shares issued therefor
("1993 Shares") be canceled. As a result, the stock options were restored
to their previous outstanding status. Further, on November 6, 1995,
241,020 of these stock options were exercised. In December 1995, an
additional 7,000 of these stock options were exercised. The Company
received $7,000 in cash and 149,155 shares of Class A shares in payment
for the exercise of these options. The shares acquired by the Company were
canceled and retired. The cancellation of the 1993 Notes resulted in a
reduction of interest income of $29,768 in 1995.
In connection with the 1993 exercise of 280,000 stock options, the Company
had received from certain officers and directors notes with an interest
rate of 4.86% per annum. The balance of these notes at December 31, 1994
and 1993 was $385,000, of which $305,000 was classified as "notes
receivable for common stock issued" and $80,000 included in "other
assets", and $325,000, all classified as "notes receivable for common
stock issued", respectively.
7. PENSION PLAN
The Company has a 401(k) retirement plan for substantially all of its
qualified employees. Contributions to this are based upon a percentage of
earnings of eligible employees and are accrued and funded on a current
basis. Total pension expense for the years ended December 31, 1995, 1994
and 1993 was $31,125, $27,470 and $22,310, respectively.
-22-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1995, 1994 AND 1993
8. INCOME TAXES
The provision for income taxes charged to operations was as follows:
1995 1994 1993
---- ---- ----
Current
State and local $32,588 $37,771 $39,149
Federal - - -
------------- ------------- -----------
$32,588 $37,771 $39,149
======= ======= =======
Deferred tax assets (liabilities) are comprised of the following at
December 31, 1995 and 1994:
1995 1994
Unrealized appreciation on investments $ (29,400) $ (14,200)
Net operating loss carryforwards 436,600 551,900
---------- ----------
Net deferred tax assets 407,200 537,700
Deferred tax asset valuation allowance (407,200) (537,700)
---------- ----------
Net deferred tax assets $ - $ -
================ =============
The full amount of the deferred tax asset was offset by a valuation
allowance due to uncertainties associated with the ultimate realization of
the net operating loss carryforwards. The change in the valuation
allowance for the year ended December 31, 1995 was the result of
utilization of net operating loss carryforwards and the increase in the
unrealized appreciation on investments.
For the year ended December 31, 1995, the provision for income taxes
differs from the amount of income taxes determined by applying the
applicable U.S. statutory federal tax rates to pre-tax income as a result
of utilization of net operating loss carryforwards.
At December 31, 1995, the Company had net operating loss carryforwards for
Federal income tax purposes of approximately $1,284,200, of which
$1,033,700, $187,800, and $62,700 expire in 2004, 2005 and 2006,
respectively.
9. RELATED PARTIES
MANAGEMENT, DISTRIBUTION AND SERVICE FEES
All management and distribution fees are from providing services to the
Funds. All such services are provided pursuant to agreements that set
forth the fees to be charged for these services. These agreements are
subject to annual review and approval by each Fund's Board of Directors
and a majority of the Fund's non-interested directors. Service fees
represent reimbursement of costs incurred by subsidiaries of the
Company on behalf of the Funds. Such reimbursement amounted to
$363,217, $466,792 and $333,834 for the years ended December 31, 1995,
1994 and 1993, respectively.
In connection with investment management services, the Company's
investment managers waived management fees from the Funds in the amount
of $270,233, $256,857 and $222,658 for the years ended December 31,
1995, 1994 and 1993, respectively, and are included in general and
administrative expenses in the Statement of Income.
-23-
BULL & BEAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
DECEMBER 31, 1995, 1994 AND 1993
Certain officers of the Company also serve as officers and/or directors
of the Funds.
Commencing August 1992, the Company has a key man life insurance policy
on the life of the Company's Chairman which provides for the payment of
$1,000,000 to the Company upon his death. As of December 31, 1995, the
policy had a cash surrender value of approximately $46,675 and is
included in other assets in the balance sheet.
The Company's discount broker/dealer received brokerage commissions of
approximately $153,200, $108,100 and $79,600 from the Funds for the
years ended December 31, 1995, 1994 and 1993, respectively.
10. COMMITMENTS AND CONTINGENCIES
The Company has a lease for approximately 9,300 square feet of office
space. The rent is approximately $116,250 per annum plus $32,550 per annum
for electricity. The lease expires December 31, 1996 and is cancelable at
the option of the Company on three months' notice. In addition, the
Company's discount broker/dealer has a branch office in Boca Raton,
Florida consisting of approximately 1,000 square feet. The rent is
approximately $21,600 per annum and is cancelable at the option of the
Company on six months' notice.
The Company and its directors are defendants in a lawsuit brought on April
24, 1995 by Maxus Investment Group, Maxus Capital Partners, Maxus Asset
Management, Inc., and Maxus Securities Corp. as plaintiffs (collectively
"Maxus") claiming to collectively own or control 357,500 shares, or
approximately 26.5%, of the Class A common stock of the Company. The
action, seeking declaratory and injunctive relief, was filed in the
federal district court for the Southern District of New York and purports
to be brought on the plaintiffs' own behalf and derivatively on behalf of
the Company. The complaint alleges that defendants breached fiduciary
duties to the Company regarding the adoption and implementation of the
Company's 1990 incentive stock option plan ("ISOP"), the rejection, in
July 1994, of Maxus' proposal for the liquidation of the Company and the
Company's 1986 purchase of an office building. Plaintiffs also allege that
all the individual defendants have received excessive compensation and
other unspecified benefits. The complaint seeks rescission of the ISOP and
an accounting, attorneys' fees, the imposition of a constructive trust and
restitution regarding all allegedly improper benefits. On December 21,
1995, plaintiffs moved to file a supplemental complaint challenging the
voiding of certain stock option exercises that occurred in November 1993
(See Note 6), and the exercise by the Company's chairman of stock options
that he received in 1990 in accordance with their original terms. The
supplemental complaint also seeks attorneys' fees. The Company believes
that the lawsuit is without merit and intends to defend it vigorously.
From time to time, the Company and/or its subsidiaries are threatened or
named as defendants in litigation arising in the normal course of
business. As of December 31, 1995, neither the Company nor any of its
subsidiaries was involved in any other litigation that, in the opinion of
management, would have a material adverse impact on the consolidated
financial statements.
In July 1994, the Company entered into a Death Benefit Agreement
("Agreement") with the Company's Chairman. Following his death, the
Agreement provides for annual payments to his wife until her death
amounting to 80% of his average annual salary for the three year period
prior to his death subject to certain adjustments. The Company's
obligations under the Agreement are not secured and will terminate if he
leaves the Company's employ under certain conditions.
-24-
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1995
REVENUES $1,292,575 $1,323,620 $1,362,963 $1,311,872
========== ========== ========== ==========
INCOME (LOSS)
Net Income (Loss) $113,764 $115,490 $50,894 $(123,772)
=========== =========== ============ ===========
INCOME (LOSS) PER SHARE
Net Income (Loss) $.07 $.07 $.03 $(.07)
==== ==== ==== ======
1994
REVENUES $1,579,794 $1,375,965 $1,412,499 $1,178,957
========== ========== ========== ==========
INCOME (LOSS)
Net Income (Loss) $(163,608) $(12,946) $93,642 $166,372
=========== ============ ============ ===========
INCOME (LOSS) PER SHARE
Net Income (Loss) $(.11) $(.01) $.06 $.11
===== ===== ==== ====
1993
REVENUES $1,365,348 $1,499,264 $1,598,014 $1,905,024
========== ========== ========== ==========
INCOME (LOSS)
Net Income (Loss) $187,948 $72,731 $228,338 $(19,812)
========== ========== ========== ==========
INCOME (LOSS) PER SHARE
Net Income (Loss) $.13 $.05 $.16 $(.02)
==== ==== ==== =====
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no changes in or disagreements with the Company's accountants
on accounting and financial disclosure matters during the two years ended
December 31, 1995.
-25-
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The following list contains the names, ages, positions and lengths of
service of all directors and executive officers of the Company.
NAME POSITION YEARS OF SERVICE AGE
DIRECTOR OFFICER
Bassett S. Winmill Chairman of the Board 19 19 66
Robert D. Anderson Vice Chairman of the Board, 19 19 66
Mark C. Winmill Co-President, 7 9 38
Chief Financial Officer,
Director
Thomas B. Winmill, EsqCo-President, 7 8 36
General Counsel, Director
Edward G. Webb, Jr. Director 10* - 56
Charles A. Carroll Director 4 - 65
Steven A. Landis Senior Vice President - 1 40
Brett B. Sneed, CFA Senior Vice President - 8 54
William J. Maynard Secretary - 1 31
James R. Mitchell, II Senior Vice President - 2 34
Joseph Leung Treasurer, - 1 30
Chief Accounting Officer
* 1985 TO 1990 AND 1992 TO PRESENT.
-26-
Set forth below is a description of the business experience of the
directors and executive officers of the Company during the past five years.
BASSETT S. WINMILL - Chairman of the Board of Directors. He is also
Chairman of the mutual funds managed by Company subsidiaries. He is a member of
the New York Society of Security Analysts, the Association for Investment
Management and Research and the International Society of Financial Analysts.
ROBERT D. ANDERSON - Vice Chairman of the Board of Directors. He is also
Vice Chairman of the mutual funds managed by Company subsidiaries and of the
subsidiaries of the Company. He is a member of the Board of Governors of the
Mutual Fund Educational Alliance.
MARK C. WINMILL - Co-President, Chief Financial Officer and Director. He is
also President of Bull & Bear Securities, Inc. and Co-President and Chief
Financial Officer of the mutual funds managed by Company subsidiaries and
certain other subsidiaries of the Company. He is a son of Bassett S. Winmill and
a brother of Thomas B. Winmill.
THOMAS B. WINMILL, ESQ. - Co-President, General Counsel and Director. He is also
President of Bull & Bear Advisers, Inc. and Co-President of the mutual
funds managed by Company subsidiaries and certain other subsidiaries of the
Company. He is a member of the New York State Bar. He is a son of Bassett
S. Winmill and a brother of Mark C. Winmill.
EDWARD G. WEBB, JR. - Director. He has been Investment Director for Home
Insurance Company since 1990. Prior to that, he served as a Senior Vice
President and Director of the Company.
CHARLES A. CARROLL - Director. From 1989 to the present, he has been
affiliated with Kalin Associates, Inc., a member firm of the New York Stock
Exchange.
STEVEN A. LANDIS - Senior Vice President. He is also Senior Vice President
of the mutual funds managed by Company subsidiaries. From 1993 to 1995 he was
Associate Director of Proprietary Trading at Barclays De Zoete Wedd Securities,
Inc., from 1992 to 1993 he was Director, Bond Arbitrage at WG Trading Company,
and from 1989 to 1992 he was Vice President of Wilkinson Boyd Capital Markets.
BRETT B. SNEED, CFA - Senior Vice President. He is also Senior Vice
President of the mutual funds managed by Company subsidiaries. He is a Chartered
Financial Analyst and a member of the New York Society of Security Analysts, the
Association for Investment Management and Research and the International Society
of Financial Analysts.
WILLIAM J. MAYNARD - Secretary. He is also Vice President and Secretary of
the mutual funds managed by Company subsidiaries. He is a member of the New York
State Bar. From 1991 to 1994 he was associated with the law firm of Skadden,
Arps, Slate, Meagher & Flom.
JAMES R. MITCHELL, II - Senior Vice President. He is also Senior Vice
President of BBSI.
JOSEPH LEUNG, CPA - Treasurer and Chief Accounting Officer. He is also
Treasurer and Chief Accounting Officer of the mutual funds managed by Company
subsidiaries. From 1992 to 1995 he held various positions with Coopers & Lybrand
L.L.P., a public accounting firm. From 1991 to 1992 he was the accounting
supervisor at Retirement Systems Group, a mutual fund company.
-27-
Each director is elected by the vote or written consent of the holder of a
majority of the Class B Common Stock and holds office until the next meeting of
the Class B common stockholder and until his successor is elected and qualified,
or until his earlier death, resignation or removal.
Based solely on the information from Forms 3, 4, and 5 furnished to it,
the Company believes that the following directors, officers, and owners of more
than 10 percent of the Class A Common Stock of the Company failed to file on a
timely basis reports required by Section 16(a) of the Securities Exchange Act of
1934 during the most recent fiscal year or prior fiscal years, and for each such
person sets forth the number of late reports, the number of transactions that
were not reported on a timely basis, and any known failure to file a required
form: Thomas B Winmill, 1 late report, 2 transactions not timely reported;
Bassett S. Winmill, 1 late report, 2 transactions not timely reported; Mark C.
Winmill, 1 late report, 2 transactions not timely reported; James R. Mitchell, 1
late report, 1 transaction not timely reported; William J. Maynard, 1 late
report; Steven A. Landis, 1 late report.
Based on information available to the Company, including a Schedule 13D,
amendment No. 9 filed with the SEC on Maxus Securities Corp. and First
Enterprise Group Limited Partners II are part of a group owning 357,500 shares
or 26.5% of the outstanding Class A Common Stock of the Company. Such entities
have not furnished the Company with any form under Section 16 of the Securities
Exchange Act of 1934.
ITEM 11. EXECUTIVE COMPENSATION
The following information and tables set forth the information required
under the Securities and Exchange Commission's executive compensation rules. Any
information not presented is omitted because the item is not applicable or not
required since the Company qualifies as a small business issuer.
SUMMARY COMPENSATION TABLE
The following table sets forth, for the three years ended December 31,
1995, the compensation paid to the chief executive officers and the other
executive officers whose total annual salary and bonus exceeded $100,000 in
1995.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION ALL OTHER
NAME AND SALARY BONUS OTHER ANNCOMPENSATION
PRINCIPAL POSITION YEAR ($) ($) COMPENSAT (A)* (B)
------------------ ---- -------------------------- --- ---
Bassett S. Winmill 1995 $160,000 $10,000 -- $4,788 $4,620
Chairman 1994 $160,000 $6,667 -- $3,790 $3,000
1993 $160,000 $13,333 -- $3,790 $2,249
Mark C. Winmill 1995 $100,000 $6,250 -- $132 $3,462
Co-President 1994 $100,000 $4,167 -- $132 $2,083
1993 $100,000 $8,334 -- $132 $1,612
Thomas B. Winmill 1995 $100,000 $6,250 -- $132 $3,678
Co-President 1994 $100,000 $4,167 -- $132 $2,083
1993 $100,000 $8,334 -- $108 $1,612
Brett B. Sneed 1995 $110,000 $15,125 -- $662 $4,091
Senior Vice President 1994 $110,000 $ -- -- $662 $2,420
1993 $110,000 $15,583 -- $662 $1,719
-28-
* Information omitted as perquisites do not exceed the lesser of $50,000 or
10% of the total annual salary and bonus for the year for the named
executive officers.
(a) Represents term life insurance
(b) Represents Company's matching contributions to 401(k) Plan.
OPTION GRANTS TABLE
There were no grants of stock options or stock appreciation rights during
the year ended December 31, 1995 to any of the previously named executive
officers.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table sets forth, for the year ended December 31, 1995,
information regarding the outstanding options for each of the executive officers
named in the Summary Compensation Table.
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT OPTIONS AT
ON VALUE 12-31-95 (#) 12-31-95 ($)
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ---- --------- ------------- ------------- -------------
Bassett S. Winmill200,000 130,000 - / - - / -
Mark C. Winmill 30,800 23,100 - / - - / -
Thomas B. Winmill 17,220 12,915 - / - - / -
Brett B. Sneed 20,000 15,000 - / - - / -
LONG-TERM INCENTIVE PLAN AWARDS TABLE
There were no long-term incentive plan awards made during the year ended
December 31, 1995.
COMPENSATION OF DIRECTORS
Edward G. Webb, Jr. and Charles A. Carroll were the only individuals who
received compensation for their service as directors of the Company in 1995.
They were each paid $100 per quarter as a retainer and $400 per quarterly
meeting attended plus expenses. For the year ended December 31, 1995, Mr. Webb
was paid $1,600 for attending 3 meetings and Mr. Carroll was paid $2,000 for
attending all four quarterly meetings. Mr. Webb and Mr. Carroll each also
received an option to purchase 10,000 shares of Class A Common Stock at an
exercise price of $1.75 per share.
EMPLOYMENT CONTRACTS
In July 1994, the Company entered into a Death Benefit Agreement
("Agreement") with the Company's Chairman. Following his death, the Agreement
provides for annual payments to his wife until her death amounting to 80% of his
average annual salary for the three year period prior to his death subject to
certain adjustments. The Company's obligations under the Agreement are not
secured and will terminate if he leaves the Company's employ under certain
conditions.
The Company has no employment or termination contracts with any of its
employees.
-29-
REPRICING OF OPTIONS TABLE
There was no repricing of options during the year ended December 31, 1995.
1995 LONG-TERM INCENTIVE PLAN
On December 6, 1995, the Board of Directors of the Company ("Board") and
the Class B voting common stockholder adopted the Bull & Bear Group, Inc. 1995
Long-Term Incentive Plan ("Plan"), under which options and stock-based awards
(collectively, "Awards") may be made to directors, officers and employees of the
Company or its subsidiaries. Under the Plan, only automatic Awards are made to
non-employee directors ("Non-Employee Directors"). The Plan was amended by the
Board and the Class B voting common stockholder on February 5, 1996. The amended
Plan is described below.
The purpose of the Plan is to assist the Company and its subsidiaries in
attracting and retaining highly competent officers and directors and otherwise
on behalf of the Company. The Plan also acts as an incentive in motivating
selected officers and key employees to achieve long-term objectives of the
Company, which will inure to the benefit of all stockholders of the Company. Any
proceeds raised by the Company under the Plan will be used for working capital
purposes.
GENERAL PROVISIONS
Duration of the Plan; Share Authorization. The Plan will terminate on
December 6, 2005, unless terminated earlier by the Board.
300,000 shares of the Company's Class A Common Stock ("Shares") are
available for Awards under the Plan. The Shares to be offered under the Plan are
authorized and unissued Shares, or issued Shares that have been reacquired by
the Company and held in its treasury. Holders of Shares do not have voting
rights except as specifically provided by the Delaware General Corporation Law.
Shares covered by any unexercised portions of terminated options, Shares
forfeited by Participants and Shares subject to any Awards that are otherwise
surrendered by a Participant without receiving any payment or other benefit with
respect thereto may again be subject to new Awards under the Plan. In the event
the purchase price of an option or tax withholding relating to an Award is paid
in whole or in part through the delivery of Shares, the number of Shares
issuable in connection with the exercise of the option may not again be
available for the grant of Awards under the Plan.
Plan Administration. The Plan is administered by the Stock Option
Committee ("Committee") of the Board. The Committee is composed of at least two
directors of the Company, each of whom is a "disinterested person" as defined in
Rule 16b-3 promulgated by the SEC ("Rule 16b-3") under Section 16 of the
Securities Exchange Act of 1934, as amended ("Exchange Act"). The Committee will
determine the officers and other key employees who will be eligible for and
granted Awards, determine the amount and type of Awards, establish and modify
administrative rules relating to the Plan, impose such conditions and
restrictions on Awards as it determines appropriate and take such other action
as may be necessary or advisable for the proper administration of the Plan. The
Committee may, with respect to Participants who are not subject to Section 16 of
the Exchange Act, delegate such of its powers and authority under the Plan as it
deems appropriate to certain officers or employees of the Company.
Plan Participants. Any employee of the Company or its subsidiaries,
whether or not a director of the Company, may be selected by the Committee to
receive an Award under the Plan. Non-Employee Directors only receive automatic
and non-discretionary stock options and are not eligible to receive any other
Awards under the Plan.
-30-
AWARDS AVAILABLE UNDER THE PLAN
Awards to employees under the Plan may take the form of stock options or
Restricted Share Awards. Awards under the Plan may be granted alone or in
combination with other Awards. The stock options awarded to Non-Employee
Directors are automatic and non-discretionary in operation. The consideration
for issuance of Awards under the Plan is the continued services of the employees
and non-employee directors to the Company and its subsidiaries.
Stock Options Granted to Employees. Stock options ("Incentive Stock
Options") meeting the requirements of Section 422 of the Internal Revenue Code
of 1986, as amended from time to time, or any successor thereto ("Code"), and
stock options that do not meet such requirements ("Non- Qualified Stock
Options") are both available for grant to employees under the Plan.
The term of each option will be determined by the Committee, but no option
will be exercisable prior to six months from the date of grant or more than ten
years after the date of grant. If, however, an Incentive Stock Option is granted
to a Participant who, at the time of grant of the option, owns (or is deemed to
own under Section 424(d) of the Code) more than 10% (a "Ten Percent
Shareholder") of the Company's Class B common stock, par value $0.01 per share
("Company Voting Securities"), the option is not exercisable more than five
years after the date of grant. Options may also be subject to restrictions on
exercise, such as exercise in periodic installments, performance targets and
waiting periods, as determined by the Committee.
The exercise price of each option is determined by the Committee; however,
the per share exercise price of an option must be at least equal to 100% of the
Fair Market Value (as defined below) of a Share on the date of grant of such
option. If, however, an Incentive Stock Option is granted to a Ten Percent
Shareholder, the per share exercise price of the option must be at least equal
to 110% of the Fair Market Value of a Share on the date of grant of such option.
Fair Market Value of a Share means, as of any given date, the most recently
reported sale price of a Share on such date as of the time when Fair Market
Value is being determined on the principal national securities exchange on which
the Shares are then traded or, if the Shares are not then traded on a national
securities exchange, the most recently reported sale price of the Shares on such
date as of the time when Fair Market Value is being determined on Nasdaq;
provided, however, that, if there were no sales reported as of such date, Fair
Market Value is the last sale price previously reported. In the event the Shares
are not admitted to trade on a securities exchange or quoted on Nasdaq, the Fair
Market Value of a Share as of any given date is as determined in good faith by
the Committee. Notwithstanding the foregoing, the Fair Market Value of a Share
will never be less than par value per share.
Subject to whatever installment exercise and waiting period provisions the
Committee may impose, options may be exercised in whole or in part at any time
prior to expiration of the option by giving written notice of exercise to the
Company specifying the number of Shares to be purchased. Such notice must be
accompanied by payment in full of the purchase price in such form as the
Committee may accept (including payment in accordance with a cashless exercise
program under which, if so instructed by the Participant, Shares may be issued
directly to the Participant's broker or dealer upon receipt of the purchase
price in cash from the broker or dealer). If and to the extent determined by the
Committee in its sole discretion at or after grant, payment in full or in part
may also be made in the form of Shares duly owned by the Participant (and for
which the Participant has good title, free and clear of any liens and
encumbrances) or by reduction in the number of Shares issuable upon such
exercise based, in each case, on the Fair Market Value of the Shares on the date
the option is exercised. In the case of an Incentive Stock Option, however, the
right to make payment of the purchase price in the form of Shares may be
authorized only at the time of grant.
Stock options granted under the Plan are not transferable except by will
or the laws of descent and distribution and may be exercised, during the
Participant's lifetime, only by the Participant.
-31-
Unless the Committee provides for a shorter period of time, upon a
Participant's termination of employment other than by reason of death or
disability, the Participant may, within three months from the date of such
termination of employment, exercise all or any part of his or her options as
were exercisable at the date of termination of employment but only if (x) the
Participant resigns or retires and the Committee consents to such resignation or
retirement and (y) such termination of employment is not for cause. In no event,
however, may any option be exercised after the time when it would otherwise
expire. If such termination of employment is for cause or the Committee does not
so consent, the right of such Participant to exercise such options will
terminate at the date of termination of employment.
Further, unless the Committee provides for a shorter period of time, upon
a Participant's becoming disabled (such date being the "Disability Date"), the
Participant may, within one year after the Disability Date, exercise all or a
part of his or her options that were exercisable upon such Disability Date. In
no event, however, may any option be exercised after the time when it would
otherwise expire.
Further, unless the Committee provides for a shorter period of time, in
the event of the death of a Participant while employed by the Company or prior
to the expiration of the option as provided for in the event of disability, to
the extent all or any part of the option was exercisable as of the date of death
of the Participant, the right of the Participant's beneficiary to exercise the
option will expire upon the expiration of one year from the date of the
Participant's death (but in no event more than one year from the Participant's
Disability Date) or on the stated termination date of the option, whichever is
earlier. In the event of the Participant's death, the Committee may, in its sole
discretion, accelerate the right to exercise all or any part of an Option that
would not otherwise be exercisable.
To the extent all or any part of an option was not exercisable as of the
date of a Participant's termination of employment, such right will expire at the
date of such termination of employment. Notwithstanding the foregoing, the
Committee, in its sole discretion and under such terms as it deems appropriate,
may permit a Participant who will continue to render significant services to the
Company after his or her termination of employment to continue to accrue service
with respect to the right to exercise his or her options during the period in
which the individual continues to render such services.
-32-
On February 5, 1996, the following options were granted to employees under
the Plan. Each of these options has a five year term and was granted with a
Reload Option (as described below):
Exercise Price
Name and Position Per Share Number of Units
Bassett S. Winmill $2.0625 50,000
Chairman of the Board of
Directors
Mark C. Winmill $1.875 50,000
Co-President, Chief
Financial Officer
Thomas B. Winmill $1.875 50,000
Co-President, General
Counsel
Robert D. Anderson $1.875 20,000
Vice Chairman
Steven A. Landis $1.875 20,000
Senior Vice President
Brett B. Sneed $1.875 20,000
Senior Vice President
Executive Officers as a Group 210,000
Non-Executive Officer $1.875 9,000
Employees as a Group
================================================== ============================
Reload Options. The Committee may provide, at the time of grant of
Incentive Stock Options and at or after the time of grant of Non-Qualified Stock
Options, that, if a Participant surrenders Shares in full or partial payment of
the purchase price of an option, then, concurrent with such surrender, the
Participant, subject to the availability of Shares under the Plan, will be
granted a new Non-Qualified Stock Option (a "Reload Option") covering a number
of Shares equal to the number so surrendered. No Reload Option may be granted to
a Non-Employee Director. A Reload Option may be granted in connection with the
exercise of an option that is itself a Reload Option. Each Reload Option will
have the same expiration date as the original option and a per share exercise
price equal to the Fair Market Value of a Share on the date of grant of the
Reload Option. A Reload Option is exercisable at such time or times as the
Committee determines (except that no Reload Option is exercisable during the
first six months after grant) and will be subject to such other terms and
conditions as the Committee may prescribe.
Restricted Shares. The Committee may award restricted Shares ("Restricted
Shares") to a Participant. Such a grant gives a Participant the right to receive
Shares subject to a risk of forfeiture based upon certain conditions. The
forfeiture restrictions on the Restricted Shares may be based upon performance
standards, length of service or other criteria as the Committee may determine.
Until all restrictions are satisfied, lapsed or waived, the Company will
maintain control over the Restricted Shares but the Participant will be entitled
to receive dividends on the Restricted Shares; provided, however, that any
Shares distributed as a dividend or otherwise with respect to any Restricted
Shares as to which the restrictions have not yet lapsed will be subject to the
same restrictions as such Restricted Shares. When all restrictions have been
satisfied and/or waived or have lapsed, the Company will deliver to the
Participant or, in the case of the Participant's death, his or her beneficiary,
stock certificates for the appropriate number of Shares, free of all
restrictions (except those imposed by law). None of the Restricted Shares may be
assigned or transferred (other than by will or the laws of descent and
distribution), pledged or sold prior to lapse or release of the applicable
restrictions.
-33-
All of a Participant's Restricted Shares and rights thereto are forfeited
to the Company unless the Participant continues in the service of the Company or
any parent or subsidiary of the Company as an employee until the expiration of
the forfeiture period, and all other applicable restrictions of the Restricted
Shares. Notwithstanding the foregoing, the Committee may, in its sole
discretion, waive the forfeiture period and any other applicable restrictions on
a Participant's Restricted Share Award, provided that the Participant must at
that time have completed at least one year of employment after the date of
grant.
Non-Employee Director Options. The Plan provides for the grant of a
Non-Qualified Stock Option ("Non-Employee Director Option") to purchase 10,000
Shares to each Non-Employee Director on the date said Non-Employee Director is
elected as such for the first time. However, with respect to directors Edward G.
Webb, Jr. and Charles A. Carroll, they were each granted a Non-Employee Director
Option on December 6, 1995. The per share exercise price for such Non- Employee
Director Options is the Fair Market Value of a Share on the date of grant.
Accordingly, the per share exercise price of the options granted to Messrs.
Carroll and Webb was $1.75. All such options are Non-Qualified Stock Options and
have a five year term. Each such option is fully exercisable six months after
the date of grant, but is forfeited if the person ceases to be a Non- Employee
Director within six months of the date of grant of such option.
If a Non-Employee Director's service with the Company terminates by reason
of death or disability, his or her options may be exercised for a period of one
year from the date of such disability or death or until the expiration of the
option, whichever is shorter. If a Non-Employee Director's service with the
Company terminates other than by reason of death or disability, his or her
options may be exercised for a period of three months from the date of such
termination or until the expiration of the option, whichever is shorter.
TERMINATION AND AMENDMENT
The Board may amend or terminate the Plan at any time it is deemed
necessary or appropriate; provided, however, that no amendment may be made,
without the affirmative approval of the holder of Company Voting Securities,
that would require stockholder approval under Rule 16b-3, the Code or other
applicable law unless the Board determines that compliance with Rule 16b-3
and/or the Code is no longer desired.
Except as provided by the Committee, in its sole discretion, at the time
of an Award or pursuant to certain antidilution provisions (as discussed below),
no Award granted under the Plan to a Participant may be modified (unless such
modification does not materially decrease the value of the Award) after the date
of grant except by express written agreement between the Company and the
Participant, provided that any such change (a) may not be inconsistent with the
terms of the Plan, and (b) must be approved by the Committee.
The Board has the right and the power to terminate the Plan at any time.
No Award may be granted under the Plan after the termination of the Plan, but
the termination of the Plan will not have any other effect and any Award
outstanding at the time of the termination of the Plan may be exercised after
termination of the Plan at any time prior to the expiration date of such Award
to the same extent such Award would have been exercisable had the Plan not
terminated.
-34-
ANTIDILUTION PROVISIONS
Recapitalization. The number and kind of shares subject to outstanding
Awards, the purchase price or exercise price of such Awards, and the number and
kind of shares available for Awards subsequently granted under the Plan will be
appropriately adjusted to reflect any stock dividend, stock split, combination
or exchange of shares, merger, consolidation or other change in capitalization
with a similar substantive effect upon the Plan or the Awards granted under the
Plan. The Committee has the power and sole discretion to determine the nature
and amount of the adjustment to be made in each case. However, in no event will
any adjustment be made in accordance with the Plan's antidilution provisions to
any previous grant of Restricted Shares if an adjustment has been or will be
made to the Shares awarded to a Participant in such person's capacity as a
stockholder.
Sale or Reorganization. After any reorganization, merger or consolidation
in which the Company is the surviving entity, each Participant will, at no
additional cost, be entitled upon the exercise of an Award outstanding prior to
such event, and in connection with the payout after such event of any Award
outstanding at the time of such event, to receive (subject to any required
action by stockholders), in lieu of the number of Shares receivable or
exercisable pursuant to such option, the number and class of shares of stock or
other securities to which such Participant would have been entitled pursuant to
the terms of the reorganization, merger or consolidation if, at the time of such
reorganization, merger or consolidation, such Participant had been the holder of
record of a number of Shares equal to the number of Shares receivable or
exercisable pursuant to such Award. Comparable rights will accrue to each
Participant in the event of successive reorganizations, mergers or
consolidations of the character described above.
Options to Purchase Stock of Acquired Companies. After any reorganization,
merger or consolidation in which the Company is a surviving entity, the
Committee may grant substituted options under the provisions of the Plan,
pursuant to Section 424 of the Code, replacing old options granted under a plan
of another party to the reorganization, merger or consolidation whose stock
subject to the old options may no longer be issued following such merger or
consolidation. The foregoing adjustments and manner of application of the
foregoing provisions will be determined by the Committee in its sole discretion.
Any such adjustments may provide for the elimination of any fractional Shares
that might otherwise become subject to any options.
LOANS
The Company is entitled, if the Committee in its sole discretion deems it
necessary or desirable, to lend money to a Participant for purposes of (a)
exercising his or her rights under an Award hereunder or (b) paying any income
tax liability related to an Award; provided, however, that Non-Employee
Directors are not eligible to receive such loans and provided, further, that the
portion of the per share exercise price of an option equal to the par value per
Share may not be paid by means of a promissory note. Such a loan must be
evidenced by a recourse promissory note payable to the order of the Company
executed by the Participant and containing such other terms and conditions as
the Committee may deem desirable. The interest rate on such loans must be
sufficient to avoid imputed interest under the Code.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(a) Bassett S. Winmill, Chairman of the Board of Directors, owns all of
the issued and outstanding shares of the Company's Class B Common Stock, which
represents 100% of the Company's voting securities.
-35-
(b) The following table sets forth, as of December 31, 1995, information
relating to beneficial ownership by individual directors of the Company,
executive officers named in the Summary Compensation Table and by directors and
executive officers of the Company as a group, of the currently issued and
outstanding Class A Common Stock of the Company.
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (3) OF CLASS
------------------------ ------------------------ --------
Bassett S. Winmill 223,104 16.6%
Robert D. Anderson 98,414 7.3%
Thomas B. Winmill 29,720 (1) 2.2%
Mark C. Winmill 30,800 2.3%
Edward G. Webb, Jr. 6,684 (2)
Charles A. Carroll 7,500 (2)
Brett B. Sneed 20,000 1.5%
All directors and executive officers
as a group (11 persons) 416,222 30.9%
(1)Includes 2,500 and 10,000 shares held by Thomas B. Winmill's wife and sons,
respectively.
(2)Less than 1%.
(3)The nature of the beneficial ownership for all the Class A Common Stock is
investment power.
(c) OTHER INFORMATION
In June 1994, the Board of Directors of the Company rejected an offer of
$3.50 per share contained in a letter dated May 17, 1994 to the Company from
Maxus Investment Group. Maxus, of Pepper Pike, Ohio, which owns 26.5% of the
Company's Class A stock, offered $3.50 per share for the balance of the Class A
stock outstanding subject to due diligence and the agreement by Bassett S.
Winmill, Chairman of the Company, to sell all his Class B voting stock. Mr.
Winmill indicated to Maxus, as he had on numerous previous occasions, that he
had no intention of selling his Class B voting stock.
In July 1994, the Board of Directors of the Company unanimously determined
not to proceed with a revised proposal of Maxus Investment Group to liquidate
the Company and guarantee shareholders no less than $5.00 per share, as
reflected in Maxus' letters dated June 17, 1994 and June 28, 1994. Mr. Winmill
advised Maxus that he had no intention of selling his Class B stock or voting
such stock for any proposal or transaction involving the merger, sale,
acquisition, reorganization, dissolution, or any like extraordinary transaction
involving the Company.
-36-
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following sets forth the reportable items regarding indebtedness of
management in excess of $60,000. In connection with the exercise of stock
options and related tax expense, the Company received notes with an interest
rate of 4.86% per annum payable on the earlier of November 1, 1998 or within 60
days of termination of employment.
LARGEST AMOUNT
AMOUNT OF OUTSTANDING AT
NAME AND RELATIONSHIP INDEBTEDNESS DECEMBER 31, 1995
Bassett S. Winmill, Chairman $329,503 (1) $92,608 (2)
(1) Includes promissory note of $220,000 and accrued interest cancelled in
connection with the voiding of the stock options (See Note 6).
(2) Includes interest on the note of $6,804 which was paid on January 13, 1996
-37-
PART IV
ITEM 14. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES, AND
REPORTS ON FORM 8-K
(a) (1) Financial Statements
See Item 8 for a list of the financial statements filed
as part of this report.
(2) Financial Statement Schedules by Regulation S-X are not
required under the related instructions or are
inapplicable, and therefore have been omitted.
(3) Exhibits
(2) Not applicable
(3) Certificate of Incorporation as amended October
24, 1989 as filed as an exhibit to Form 10-K for
the year ended December 31, 1992 and incorporated
herein by reference and By-Laws amended as of
October 1, 1993 as filed as an exhibit to Form
10-K for the year ended December 31, 1993 and
incorporated herein by reference.
(4) Instruments defining the rights of security
holders, including indentures (see Article Four of
Certificate of Incorporation).
(9) Not applicable.
(10) Material Contracts
(a) Investment Management Agreements,
Distribution Agreements, Plans of
Distribution ("12b-1 Plans") and Shareholder
Services Agreements between subsidiaries of
the Company and the Funds:
SHAREHOLDER
MANAGEMENT DISTRIBUTION 12B-1 SERVICES
FUND AGREEMENT AGREEMENT PLAN AGREEMENT
(i) Bull & Bear Dollar Reserves (2) (2) (2) (5)
(ii) Bull & Bear Gold Investors Ltd. (2) (2) (2) (5)
(iii) Bull & Bear Global Income Fund (2) (2) (2) (5)
(iv) Bull & Bear U.S. and Overseas Fund (2) (2) (2) (5)
(v) Bull & Bear Special Equities Fund, Inc. (2) (2) (2) (5)
(vi) Bull & Bear Municipal Income Fund (1) (2) (4) (5)
(vii) Bull & Bear U.S. Government
Securities Fund (2) (2) (2) (5)
(viii) Bull & Bear Quality Growth Fund (2) (2) (2) (5)
(ix) Midas Fund, Inc. (6) (6) (6) (6)
(1) Filed as exhibits to Form 10-K for the
year ended December 31, 1991 and
incorporated herein by reference.
(2) Filed as exhibits to Form 10-K for the
year ended December 31, 1993 and
incorporated herein by reference.
(3) Filed as exhibits to Form 10-K for the
year ended December 31, 1989 and
incorporated herein by reference.
(4) Filed as exhibits to Form 10-K for the
year ended December 31, 1990 and
incorporated herein by reference.
(5) Filed as exhibits to Form 10-K for the
year ended December 31, 1994
incorporated herein by reference.
-38-
(6) Filed as exhibits to Form 10-K for the year ended December 31, 1995
and filed herewith.
(b) Bull & Bear Group, Inc. 1995 Long-Term Incentive Plan, as adopted
December 6, 1995 and amended February 6, 1996, filed as exhibit to Form
10-K for the year ended December 31, 1995 and filed herewith.
(c) Section 422A Incentive Stock Option Plan, as adopted December 5, 1990,
filed as exhibit to Form 10-K for the year ended December 31, 1990 and
incorporated herein by reference.
(e) Investment Management Transfer Agreements between the investment
management subsidiaries of the Company and filed as exhibit to
Form 10-K for the year ended December 31, 1992 and incorporated
herein by reference.
(e) Bull & Bear Investment Plan, filed as an exhibit to Form 10-K for
the year ended December 31, 1993 and incorporated herein by
reference.
(f) Death Benefit Agreement dated July 22, 1994 and filed as exhibit
to Form 10-K for the year ended December 31, 1994 and incorporated
herein by reference.
(g) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Bassett S. Winmill filed as an exhibit to Form 10-K for
the year ended December 31, 1995 and filed herewith.
(h) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Robert D. Anderson filed as an exhibit to Form 10-K
for the year ended December 31, 1995 and filed herewith.
(i) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Mark C. Winmill filed as an exhibit to Form 10-K for the
year ended December 31, 1995 and filed herewith.
(j) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Thomas B. Winmill filed as an exhibit to Form 10-K for
the year ended December 31, 1995 and filed herewith.
(k) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Steven A. Landis filed as an exhibit to Form 10-K for
the year ended December 31, 1995 and filed herewith.
(l) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Brett B. Sneed filed as an exhibit to Form 10-K for the
year ended December 31, 1995 and filed herewith.
(m) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Edward G. Webb, Jr. filed as an exhibit to Form 10-K for
the year ended December 31, 1995 and filed herewith.
(n) Bull & Bear Group, Inc. Incentive Stock Option Agreement for
Employees - Charles A. Carroll filed as an exhibit to Form 10-K for
the year ended December 31, 1995 and filed herewith.
-39-
(11) Statement Regarding Computation of Per Share Earnings
(12) Not applicable.
(13) Not applicable.
(16) Not applicable.
(18) Not applicable.
(21) Wholly-Owned Subsidiaries of the Company
(22) Not applicable.
(23) Not applicable.
(24) Not applicable.
(27) Financial Data Schedule
(28) Not applicable.
(99) Not applicable.
(b) Reports on Form 8-K. A report on Form 8-K was filed on October 6, 1995
reporting on a Item 2 Acquisition or Disposition of Assets, as follows:
(a) The Company's wholly-owned subsidiary, Midas Management Corporation ("MMC"),
entered into an Asset Purchase Agreement with Excel Advisors, Inc. ("Excel
Advisors"), providing for MMC's purchase of the assets that relate to the
management of Excel Midas Gold Shares, Inc. ("Midas"), a mutual fund, for
$182,500. The source of the funds used was the Company's working capital. The
transfer of these assets resulted in the assignment and automatic termination of
the current investment management agreement between the Excel Advisors and Midas
(the "Current Agreement"). Accordingly, as a result of the termination of the
Current Agreement, shareholders of Midas were asked to consider a new investment
management agreement ("New Agreement") between Midas and MMC effective upon the
termination of the Current Investment Management Agreement. In connection with
such matters, shareholders were also asked to consider a subadvisory agreement,
described below, and a reorganization of Midas, resulting in its reincorporation
as a Maryland company to be named "Midas Fund, Inc." and authorizing the
approval of agreements for Midas Fund, Inc. identical to the New Agreement and
the subadvisory agreement, as well as a plan of distribution with a Company
broker/dealer subsidiary, and to elect a new board of directors comprised
similarly to the boards of directors of the Bull & Bear Funds. Each of the above
items was approved by shareholders on August 25, 1995.
With respect to Midas and Bull & Bear Gold Investors Ltd. (the
"Funds"), the Company investment management subsidiaries (the
"Investment Managers") entered into subadvisory agreements with
Lion Resource Management Limited (the "Subadviser") regarding
Fund portfolio investments. Pursuant to the agreements, the
Subadviser advises and consults with the Investment Managers
regarding the selection, clearing and safekeeping of the Funds'
portfolio investments and assists in pricing and generally
monitoring such investments. The Subadviser also provides the
Investment Managers with advice as to allocating the Funds'
portfolio assets among various countries, including the United
States, and among equities, bullion, and other types of
investments, including recommendations of specific investments.
The Investment Managers, not the Funds, pay the Subadviser
monthly a percentage of the Investment Manager's net fees based
upon the Funds' performance and total net assets. Each agreement
was approved by that Fund's shareholders on August 25, 1995.
-40-
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
BULL & BEAR GROUP, INC.
March 29, 1996 By:
Joseph Leung
Treasurer, Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Company and in
the capacities and on the dates indicated.
March 29, 1996 By:
Bassett S. Winmill,
Chairman of the Board, Director
March 29, 1996 By:
Robert D. Anderson,
Vice Chairman, Director
March 29, 1996 By:
Mark C. Winmill,
Co-President, Chief Financial Officer,
Director
March 29, 1996 By:
Thomas B. Winmill, Esq.
Co-President, General Counsel, Director
March 29, 1996 By:
Edward G. Webb, Jr.
Director
March 29, 1996 By:
Charles A. Carroll,
Director
-41-
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
BULL & BEAR GROUP, INC.
March 29, 1996 By: /s/ Joseph Leung
Joseph Leung
Treasurer, Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Company and in
the capacities and on the dates indicated.
March 29, 1996 By: /s/ Bassett S. Winmill
----------------------
Bassett S. Winmill,
Chairman of the Board, Director
March 29, 1996 By: /s/ Robert D. Anderson
----------------------
Robert D. Anderson,
Vice Chairman, Director
March 29, 1996 By: /s/ Mark C. Winmill
Mark C. Winmill,
Co-President, Chief Financial Officer,
Director
March 29, 1996 By: /s/ Thomas B. Winmill
---------------------
Thomas B. Winmill, Esq.
Co-President, General Counsel, Director
March 29, 1996 By: /s/ Edward G. Webb, Jr.
-----------------------
Edward G. Webb, Jr.
Director
March 29, 1996 By: /s/ Charles A. Carroll
----------------------
Charles A. Carroll,
Director
-41-
INDEX TO EXHIBITS
(3) Exhibits
(10) Material Contracts
(a) Investment Management Agreement between a subsidiary of the Company
and Midas Fund, Inc.
(b) Distribution Agreement between a subsidiary of the Company and Midas
Fund, Inc.
(c) Plan of Distribution between a subsidiary of the Company and Midas Fund,
Inc.
(d) Shareholder Services Agreement between a subsidiary of the Company and
Midas Fund, Inc.
(e) Bull & Bear Group, Inc. 1995 Long-Term Incentive Plan, as adopted Decem
6, 1995 and amended February 5, 1996.
(f) Bull & Bear Group, Inc. Incentive Stock Option Agreement for Employees -
Bassett S. Winmill.
(g) Bull & Bear Group, Inc. Incentive Stock Option Agreement for Employees -
Robert D. Anderson.
(h) Bull & Bear Group, Inc. Incentive Stock Option Agreement for Employees -
Mark C. Winmill.
(i) Bull & Bear Group, Inc. Incentive Stock Option Agreement for Employees -
Thomas B. Winmill.
(j) Bull & Bear Group, Inc. Incentive Stock Option Agreement for Employees -
Steven A. Landis.
(k) Bull & Bear Group, Inc. Incentive Stock Option Agreement for Employees -
Brett B. Sneed.
(l) Bull & Bear Group, Inc. Incentive Stock Option Agreement for Employees -
Edward G. Webb, Jr.
(m) Bull & Bear Group, Inc. Incentive Stock Option Agreement for Employees
Charles A. Carroll.
(11) Statement Regarding Computation of Per Share Earnings
(21) Wholly-Owned Subsidiaries of the Company
-42-
Exhibit 10(a)
Item 1 of 1
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made this day of , 1995, by and between MIDAS FUND, INC. a
Maryland corporation (the "Fund") and MIDAS MANAGEMENT CORPORATION, a Delaware
corporation (the "Investment Manager").
WHEREAS the Fund is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management investment company
and proposes to offer for public sale shares of common stock that may be issued
as distinct series ("Series"), each corresponding to a distinct portfolio; and
WHEREAS the Fund desires to retain the Investment Manager to furnish
certain investment advisory and portfolio management services to the Fund and
any Series thereof, and the Investment Manager desires to furnish such services;
NOW THEREFORE, in consideration of the mutual promises and agreements
herein contained and other good and valuable consideration, the receipt of which
is hereby acknowledged, it is hereby agreed between the parties hereto as
follows:
1. The Fund hereby employs the Investment Manager to manage the
investment and reinvestment of the assets of the Fund and any Series thereof,
including the regular furnishing of advice with respect to the Fund's or its
Series' portfolio transactions subject at all times to the control and final
direction of the Fund's Board of Directors, for the period and on the terms set
forth in this Agreement. The Investment Manager hereby accepts such employment
and agrees during such period to render the services and to assume the
obligations herein set forth, for the compensation herein provided. The
Investment Manager shall for all purposes herein be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have no
authority to act for or represent the Fund in any way, or otherwise be deemed an
agent of the Fund.
2. The Fund (or each Series) assumes and shall pay all the expenses (or
such Series' proportionate share of such expenses) required for the conduct of
its business including, but not limited to, (a) salaries of administrative and
clerical personnel; (b) brokerage commissions; (c) taxes and governmental fees;
(d) costs of insurance and fidelity bonds; (e) fees of the transfer agent,
custodian, legal counsel and auditors; (f) association fees; (g) costs of
preparing, printing and mailing proxy materials, reports and notices to
shareholders; (h) costs of preparing, printing and mailing the prospectus and
statement of additional information and supplements thereto; (i) payment of
dividends and other distributions; (j) costs of stock certificates; (k) costs of
- 1 -
Board and shareholders meetings; (l) fees of the independent directors; (m)
necessary office space rental; (n) all fees and expenses (including expenses of
counsel) relating to the registration and qualification of shares of the Fund
(or its Series) under applicable federal and state securities laws and
maintaining such registrations and qualifications; and (o) such non-recurring
expenses as may arise, including, without limitation, actions, suits or
proceedings affecting the Fund (or its Series) and the legal obligation which
the Fund (or its Series) may have to indemnify its officers and directors with
respect thereto.
3. The Investment Manager may, but shall not be obligated to, pay or
provide for the payment of expenses which are primarily intended to result in
the sale of the Fund's shares or the servicing and maintenance of shareholder
accounts, including, without limitation, payments for: advertising, direct mail
and promotional expenses; compensation to and expenses, including overhead and
telephone and other communication expenses, of the Investment Manager and its
affiliates, the Fund, and selected dealers and their affiliates who engage in or
support the distribution of shares or who service shareholder accounts;
fulfillment expenses including the costs of printing and distributing
prospectuses, statements of additional information, and reports for other than
existing shareholders; the costs of preparing, printing and distributing sales
literature and advertising materials; and, internal costs incurred by the Invest
ment Manager and its affiliates and allocated to efforts to distribute shares of
the Fund such as office rent and equipment, employee salaries, employee bonuses
and other overhead expenses. Such payments may be for the Investment Manager's
own account or may be made on behalf of the Fund pursuant to a written agreement
relating to a plan of distribution adopted pursuant to Rule 12b-1 under the 1940
Act.
4. If requested by the Fund's Board of Directors, the Investment
Manager may provide other services to the Fund (or its Series) such as, without
limitation, the functions of billing, accounting, certain shareholder
communications and services, administering state and Federal registrations,
filings and controls and other administrative services. Any services so
requested and performed will be for the account of the Fund (or its Series) and
the costs of the Investment Manager in rendering such services shall be
reimbursed by the Fund, subject to examination by those directors of the Fund
who are not interested persons of the Investment Manager or any affiliate
thereof.
5. The services of the Investment Manager are not to be deemed
exclusive, and the Investment Manager shall be free to render similar services
to others in addition to the Fund so long as its services hereunder are not
impaired thereby.
- 2 -
6. The Investment Manager shall create and maintain all necessary books
and records in accordance with all applicable laws, rules and regulations,
including but not limited to records required by Section 31(a) of the 1940 Act
and the rules thereunder, as the same may be amended from time to time,
pertaining to the investment management services performed by it hereunder and
not otherwise created and maintained by another party pursuant to a written
contract with the Fund. Where applicable, such records shall be maintained by
the Investment Manager for the periods and in the places required by Rule 31a-2
under the 1940 Act. The books and records pertaining to the Fund which are in
the possession of the Investment Manager shall be the property of the Fund. The
Fund, or the Fund's authorized representatives, shall have access to such books
and records at all times during the Investment Manager's normal business hours.
Upon the reasonable request of the Fund, copies of any such books and records
shall be provided by the Investment Manager to the Fund or the Fund's authorized
representatives.
7. (a) As compensation for its services, with respect to the Fund (or
its Series) the Investment Manager will be paid by the Fund a fee payable
monthly and computed at the annual rate of 1% of the first $200 million of
average daily net assets of the Fund (or its Series), .95% of such net assets
over $200 million up to $400 million, .90% of such net assets over $400 million
up to $600 million, .85% of such net assets over $600 million up to $800
million, .80% of such net assets over $800 million up to $1 billion, and .75% of
such net assets over $1 billion. The aggregate net assets for each day shall be
computed by subtracting the liabilities of the Fund (or its Series) from the
value of its assets, such amount to be computed as of the calculation of the net
asset value per share on each business day.
(b) For the services provided and the expenses assumed pursuant to
this Agreement with respect to any Series hereafter established, the Investment
Manager will be paid by the Fund from the assets of such Series a fee in an
amount to be agreed upon in a written fee agreement ("Fee Agreement") executed
by the Fund on behalf of such Series and the Investment Manager. The Fee
Agreements shall provide that they are subject to all terms and conditions of
this Agreement.
8. The Investment Manager shall direct portfolio transactions to
broker/dealers for execution on terms and at rates which it believes, in good
faith, to be reasonable in view of the overall nature and quality of services
provided by a particular bro ker/dealer, including brokerage and research
services and sales of Fund shares and shares of other investment companies or
series thereof for which the Investment Manager or an affiliate thereof serves
as investment adviser. The Investment Manager may also allocate portfolio
- 3 -
transactions to broker/dealers that remit a portion of their commissions as a
credit against Fund expenses. With respect to brokerage and research services,
the Investment Manager may consider in the selection of broker/dealers brokerage
or research provided and payment may be made of a fee higher than that charged
by another broker/dealer which does not furnish brokerage or research services
or which furnishes brokerage or research services deemed to be of lesser value,
so long as the criteria of Section 28(e) of the Securities Exchange Act of 1934,
as amended, or other applicable law are met. Although the Invest ment Manager
may direct portfolio transactions without necessarily obtaining the lowest price
at which such broker/dealer, or another, may be willing to do business, the
Investment Manager shall seek the best value for the Fund (or its Series) on
each trade that circumstances in the market place permit, including the value
inherent in on-going relationships with quality brokers. To the extent any such
brokerage or research services may be deemed to be additional compensation to
the Investment Manager from the Fund, it is authorized by this Agreement. The
Investment Manager may place Fund brokerage through an affiliate of the
Investment Manager, provided that: the Fund not deal with such affiliate in any
transaction in which such affiliate acts as principal; the commissions, fees or
other remuneration received by such affiliate be reasonable and fair compared to
the commissions, fees or other remuneration paid to other brokers in connection
with comparable transactions involving similar securities being purchased or
sold on a securities exchange during a comparable period of time; and such
brokerage be undertaken in compliance with applicable law. The Investment
Manager's fees under this Agreement shall not be reduced by reason of any
commissions, fees or other remuneration received by such affiliate from the
Fund.
9. The Investment Manager shall waive all or part of its fee or
reimburse the Fund (or its Series) monthly if and to the extent the aggregate
operating expenses of the Fund (or its Series) exceed the most restrictive limit
imposed by any state in which shares of the Fund are qualified for sale or such
lesser amount as may be agreed to by the Fund's Board of Directors and the
Investment Manager. In calculating the limit of operating expenses, all expenses
excludable under state regulation or otherwise shall be excluded. If this
Agreement is in effect for less than all of a fiscal year, any such limit will
be applied proportionately.
10. Subject to and in accordance with the Articles of Incorporation and
By-laws of the Fund and of the Investment Manager, it is understood that
directors, officers, agents and shareholders of the Fund are or may be
interested in the Fund as directors, officers, shareholders or otherwise, that
the Investment Manager is or may be interested in the Fund as a shareholder or
otherwise and that the effect and nature of any such interests shall be governed
by law and by the provisions, if any, of said Articles of Incorporation or
By-laws.
- 4 -
11. This Agreement shall become effective upon the date hereinabove
written and, unless sooner terminated as provided herein, this Agreement shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, this Agreement shall continue automatically for successive periods
of twelve months each, provided that such continuance is specifically approved
at least annually (a) by the Board of Directors of the Fund or by the holders of
a majority of the outstanding voting securities of the Fund as defined in the
1940 Act (or with respect to any given Series by the holders of a majority of
the outstanding voting securities of such Series as defined in the 1940 Act) and
(b) by a vote of a majority of the Directors of the Fund who are not parties to
this Agreement, or interested persons of any such party. This Agreement may be
terminated without penalty at any time either by vote of the Board of Directors
of the Fund or by vote of the holders of a majority of the outstanding voting
securities of the Fund (or with respect to any given Series by the holders of a
majority of the outstanding voting securities of such Series) on 60 days'
written notice to the Investment Manager, or by the Investment Manager on 60
days' written notice to the Fund. Termination of this Agreement with respect to
any given Series shall in no way affect the continued validity of this Agreement
or the performance thereunder with respect to any other Series. This Agreement
shall immediately terminate in the event of its assignment.
12. The Investment Manager shall not be liable to the Fund or any
Series or any shareholder of the Fund for any error of judgment or mistake of
law or for any loss suffered by the Fund or any Series or the Fund's
shareholders in connection with the matters to which this Agreement relates, but
nothing herein contained shall be construed to protect the Investment Manager
against any liability to the Fund or any Series or the Fund's shareholders by
reason of willful misfeasance, bad faith, or gross negligence in the performance
of its duties or by reason of its reckless disregard of obligations and duties
under this Agreement.
13. As used in this Agreement, the terms "interested person,"
"assignment," and "majority of the outstanding voting securities" shall have the
meanings provided therefor in the 1940 Act, and the rules and regulations
thereunder.
14. This Agreement constitutes the entire agreement between the parties
hereto and supersedes any prior agreement with respect to the subject hereof
whether oral or written. If any provision of this Agreement shall be held or
made invalid by a court or regulatory agency decision, statute, rule or
otherwise, the remainder of this Agreement shall not be affected thereby.
15. This Agreement shall be construed in accordance with and
- 5 -
governed by the laws of the State of New York, provided, however, that nothing
herein shall be construed in a manner inconsistent with the 1940 Act or any rule
or regulation promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
MIDAS FUND, INC.
By:____________________________
MIDAS MANAGEMENT CORPORATION
By:____________________________
- 6 -
DISTRIBUTION AGREEMENT
AGREEMENT made as of __________________, 1995, between MIDAS FUND, INC.
("Fund"), a corporation organized and existing under the laws of the State of
Maryland, and Investor Service Center, Inc. ("Distributor"), a corporation
organized and existing under the laws of the State of Delaware.
WHEREAS the Fund is registered under the Investment Company Act of
1940, as amended ("1940 Act"), as an open-end management investment company; and
WHEREAS the Fund desires to retain the Distributor as principal
distributor in connection with the offering and sale of the shares of common
stock ("Shares") and of such other series as may hereafter be designated
("Series") by the Fund's Board of Directors ("Board"); and
WHEREAS the Distributor is willing to act as principal distributor for
each such Series on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Distributor as
its exclusive agent to be the principal distributor to sell and to
arrange for the sale of the Shares on the terms and for the period
set forth in this Agreement. The Distributor hereby accepts such
appointment and agrees to act hereunder.
2. Services and Duties of the Distributor.
(a) The Distributor agrees to sell the Shares on a best
efforts basis from time to time during the term of this Agreement as agent for
the Fund and upon the terms described in the Registration Statement. As used in
this Agreement, the term "Registration Statement" shall mean the currently
effective registration statement of the Fund, and any supplements thereto, under
the Securities Act of 1933, as amended ("1933 Act"), and the 1940 Act.
(b) Upon the later of the date of this Agreement or the
initial offering of the Shares to the public by a Series, the Distributor will
hold itself available to receive purchase orders, satisfactory to the
Distributor for Shares of that Series and will accept such orders on behalf of
the Fund as of the time of receipt of such orders and promptly transmit such
orders as are accepted to
the Fund's transfer agent. Purchase orders shall be deemed effective at the time
and in the manner set forth in the Regis tration Statement.
(c) The Distributor in its discretion may enter into
agreements to sell Shares to such registered and qualified retail dealers, as it
may select. In making agreements with such dealers, the Distributor shall act
only as principal and not as agent for the Fund.
(d) The offering price of the Shares of each Series shall be
the net asset value per Share as next determined by the Fund following receipt
of an order at the Distributor's principal office. The Fund shall promptly
furnish the Distributor with a statement of each computation of net asset value.
(e) The Distributor shall not be obligated to sell any
certain number of Shares.
(f) The Distributor shall provide ongoing shareholder
services, which include responding to shareholder inquiries, providing
shareholders with information on their investments in the Series and any other
services now or hereafter deemed to be appropriate subjects for the payments of
"service fees" under Section 26(d) of the National Association of Securities
Dealers, Inc. ("NASD") Rules of Fair Practice (collectively, "service
activities").
(g) The Distributor shall have the right to use any lists of
shareholders of the Fund or any other lists of investors which it obtains in
connection with its provision of services under this Agreement; provided,
however, that the Distributor shall not sell or knowingly provide such lists of
shareholders to any unaffiliated person unless reasonable payment is made to the
Fund.
3. Authorization to Enter into Dealer Agreements and to Delegate Duties
as Distributor. With respect to any or all Series, the Distributor may enter
into a dealer agreement with respect to sales of the Shares or the provision of
service activities with any registered and qualified dealer. In a separate
contract or as part of any such dealer agreement, the Distributor also may
delegate to another registered and qualified dealer ("sub-distributor") any or
all of its duties specified in this Agreement, provided that such separate
contract or dealer agreement imposes on the sub-distributor bound thereby all
applicable duties and conditions to which the Distributor is subject under this
Agreement, and further provided that such separate contract meets all
requirements of the 1940 Act and rules thereunder.
4. Services Not Exclusive. The services furnished by the Distributor
hereunder are not to be deemed exclusive and the Distributor shall be free to
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. Nothing in this Agreement shall limit or restrict the
right of any director, officer or employee of the Distributor, who may also be a
director, officer or employee of the Fund, to engage in any other business or to
devote his or her time and attention in part to the management or other aspects
of any other business, whether of a similar or a dissimilar nature.
5. Compensation for Distribution and Service Activities.
(a) As compensation for its distribution and service
activities under this Agreement with respect to each Series and its
shareholders, the Distributor shall receive from the Fund a fee (or fees) at the
rate and under the terms and conditions of the Plan of Distribution pursuant to
Rule 12b-1 under the 1940 Act ("Plan") adopted by the Fund with respect to the
Series, as such Plan is amended from time to time, and subject to any further
limitations on such fee as the Board may impose.
(b) The Distributor may reallow any or all of the fees
it is paid to such dealers as the Distributor may from time to time
determine.
6. Duties of the Fund.
(a) The Fund reserves the right at any time to withdraw
offering Shares of any or all Series by written notice to the
Distributor at its principal office.
(b) The Fund shall determine in its sole discretion whether
certificates shall be issued with respect to the Shares. If the Fund has
determined that certificates shall be issued, the Fund will not cause
certificates representing Shares to be issued unless so requested by
shareholders. If such request is transmitted by the Distributor, the Fund will
cause certificates evidencing Shares to be issued in such names and
denominations as the Distributor shall from time to time direct.
(c) The Fund shall keep the Distributor fully informed of its
affairs and shall make available to the Distributor copies of all information,
financial statements, and other papers which the Distributor may reasonably
request for use in connection with the distribution of Shares, including,
without limitation, certified copies of any financial statements prepared for
the Fund by its independent public accountant and such reasonable number of
copies of the most current prospectus, statement of additional information, and
annual and interim reports of any Series as the Distributor may request, and the
Fund shall cooperate fully in the efforts of the Distributor to sell and arrange
for the sale of the Shares of the Series and in the performance of the
Distributor's duties under this Agreement.
(d) The Fund shall take, from time to time, all necessary
action, including payment of the related filing fee, as may be necessary to
register Shares of each Series under the 1933 Act to the end that there will be
available for sale such number of Shares as the Distributor may be expected to
sell. The Fund agrees to file, from time to time, such amendments, reports, and
other documents as may be necessary in order that there will be no untrue
statement of a material fact in the Registration Statement, nor any omission of
a material fact which omission would make the statements therein misleading.
(e) The Fund shall use its best efforts to qualify and
maintain the qualification of an appropriate number of Shares of each Series for
sale under the securities laws of such states or other jurisdictions as the
Distributor and the Fund may approve, and, if necessary or appropriate in
connection therewith, to qualify and maintain the qualification of the Fund as a
broker or dealer in such jurisdictions; provided that the Fund shall not be
required to amend its Articles of Incorporation or By-Laws to comply with the
laws of any jurisdiction, to maintain an office in any jurisdiction, to change
the terms of the offering of the Shares in any jurisdic tion from the terms set
forth in its Registration Statement, to qualify as a foreign corporation in any
jurisdiction, or to consent to service of process in any jurisdiction other than
with respect to claims arising out of the offering of the Shares. The
Distributor shall furnish such information and other material relating to its
affairs and activities as may be required by the Fund in connection with such
qualifications.
7. Expenses of the Fund. The Fund shall bear all costs and expenses of
registering the Shares with the Securities and Exchange Commission and state and
other regulatory bodies, and shall assume expenses related to communications
with shareholders of each Series, including (i) fees and disbursements of its
counsel and independent public accountant; (ii) the preparation, filing and
printing of registration statements and/or prospectuses or statements of
additional information required under the federal securities laws; (iii) the
preparation and mailing of annual and interim reports, prospectuses, statements
of additional information and proxy materials to shareholders; and (iv) the
qualifications of Shares for sale and of the Fund as a broker or dealer under
the securities laws of such jurisdictions as shall be selected by the Fund and
the Distributor pursuant to Paragraph 6(e) hereof, and the costs and expenses
payable to each such jurisdiction for continuing qualification therein.
8. Expenses of the Distributor. Distributor shall bear all costs and
expenses of (i) preparing, printing and distributing any materials not prepared
by the Fund and other materials used by the Distributor in connection with the
sale of Shares under this Agreement, including the additional cost of printing
copies of prospectuses, statements of additional information, and annual and
interim shareholder reports other than copies thereof required for distribution
to existing shareholders or for filing with any Federal or state securities
authorities; (ii) any expenses of advertising incurred by the Distributor in
connection with such offering; (iii) the expenses of registration or
qualification of the Distributor as a broker or dealer under federal or state
laws and the expenses of continuing such registration or qualification; and (iv)
all compensation paid to the Distributor's employees and others for selling
Shares, and all expenses of the Distributor, its employees and others who engage
in or support the sale of Shares as may be incurred in connection with their
sales efforts.
9. Indemnification.
(a) The Fund agrees to indemnify, defend and hold the
Distributor, its officers and directors, and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Distributor, its officers, directors or any such controlling person may incur
under the 1933 Act, or under common law or otherwise, arising out of or based
upon any alleged untrue statement of a material fact contained in the
Registration Statement or arising out of or based upon any alleged omission to
state a material fact required to be stated in the Registration Statement or
necessary to make the statements therein not misleading, except insofar as such
claims, demands, liabilities or expenses arise out of or are based upon any such
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with information furnished in writing by the
Distributor to the Fund for use in the Registration Statement; provided,
however, that this indemnity agreement shall not inure to the benefit of any
person who is also an officer or director of the Fund or who controls the Fund
within the meaning of Section 15 of the 1933 Act, unless a court of competent
jurisdiction shall determine, or it shall have been determined by controlling
precedent, that such result would not be against public policy as expressed in
the 1933 Act; and further provided, that in no event shall anything contained
herein be so construed as to protect the Distributor against any liability to
the Fund or to the shareholders of any Series to which the Distributor would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations under this Agreement. The Fund shall not be liable
to the Distributor under this indemnity agreement with respect to any claim made
against the Distributor or any person indemnified unless the Distributor or
other such person shall have notified the Fund in writing of the claim within a
reasonable time after the summons or other first written notification giving
information of the nature of the claim shall have been served upon the
Distributor or such other person (or after the Distributor or the person shall
have received notice of service on any designated agent). However, failure to
notify the Fund of any claim shall not relieve the Fund from any liability which
it may have to the Distributor or any person against whom such action is brought
otherwise than on account of this indemnity agreement. The Fund shall be
entitled to participate at its own expense in the defense or, if it so elects,
to assume the defense of any suit brought to enforce any claims subject to this
indemnity agreement. If the Fund elects to assume the defense of any such claim,
the defense shall be conducted by counsel chosen by the Fund and satisfactory to
indemnified defendants in the suit whose approval shall not be unreasonably
withheld. In the event that the Fund elects to assume the defense of any suit
and retain counsel, the indemnified defendants shall bear the fees and expenses
of any additional counsel retained by them. If the Fund does not elect to assume
the defense of a suit, it will reimburse the indemnified defendants for the
reasonable fees and expenses of any counsel retained by the indemnified
defendants. The Fund agrees to notify the Distributor promptly of the
commencement of any litigation or proceedings against it or any of its officers
or directors in connection with the issuance or sale of any of its Shares.
(b) The Distributor shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates (including any loss arising out
of the receipt by the Distributor of inadequate consideration in connection with
an order to purchase Shares whether in the form of fraudulent check, draft or
wire; a check returned for insufficient funds; or any other inadequate
consideration (hereinafter "Check Loss")), except a loss resulting from the
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement; provided, however, that the Fund shall not be
liable for Check Loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Distributor.
(c) The Distributor agrees to indemnify, defend, and hold the
Fund, its officers and directors and any person who controls the Fund within the
meaning of Section 15 of the 1933 Act, free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending against such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Fund, its directors or
officers, or any such controlling person may incur under the 1933 Act or under
common law or otherwise arising out of or based upon any alleged untrue
statement of a material fact contained in information furnished in writing by
the Distributor to the Fund for use in the Registration Statement, arising out
of or based upon any alleged omission to state a material fact in connection
with such information required to be stated in the Registration Statement
necessary to make such information not misleading, or arising out of any
agreement between the Distributor and any retail dealer, or arising out of any
supplemental sales literature or advertising used by the Distributor in
connection with its duties under this Agreement. The Distributor shall be
entitled to participate, at its own expense, in the defense or, if it so elects,
to assume the defense of any suit brought to enforce the claim, but if the
Distributor elects to assume the defense, the defense shall be conducted by
counsel chosen by the Distributor and satisfactory to the indemnified defendants
whose approval shall not be unreasonably withheld. In the event that the
Distributor elects to assume the defense of any suit and retain counsel, the
defendants in the suit shall bear the fees and expenses of any additional
counsel retained by them. If the Distributor does not elect to assume the
defense of any suit, it will reimburse the indemnified defendants in the suit
for the reasonable fees and expenses of any counsel retained by them.
10. Services Provided to the Fund by Employees of the Distributor. Any
person, even though also an officer, director, employee or agent of the
Distributor who may be or become an officer, director, employee or agent of the
Fund, shall be deemed, when rendering services to the Fund or acting in any
business of the Fund, to be rendering such services to or acting for solely the
Fund and not as an officer, director, employee or agent or one under the control
or direction of the Distributor even though paid by the Distributor.
11. Duration and Termination.
(a) This Agreement shall become effective upon the date
hereabove written, provided that, with respect to any Series, this Agreement
shall not take effect unless such action has first been approved by vote of a
majority of the Board and by vote of a majority of those directors of the Fund
who are not interested persons of the Fund, and have no direct or indirect
financial interest in the operation of the Plan relating to the Series or in any
agreements related thereto (all such directors collectively being referred to
herein as the "Independent Directors"), cast in person at a meeting called for
the purpose of voting on such action.
(b) Unless sooner terminated as provided herein, this
Agreement shall continue in effect for one year from the above written date.
Thereafter, if not terminated, this Agreement shall continue automatically for
successive periods of twelve months each, provided that such continuance is
specifically approved at least annually (i) by a vote of a majority of the
Independent Directors, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Board or with respect to any given
Series by vote of a majority of the outstanding voting securities of such
Series.
(c) Notwithstanding the foregoing, with respect to any Series,
this Agreement may be terminated at any time, without the payment of any
penalty, by vote of the Board, by vote of a majority of the Independent
Directors or by vote of a majority of the outstanding voting securities of the
Shares of such Series on sixty days' written notice to the Distributor or by the
Distributor at any time, without the payment of any penalty, on sixty days'
written notice to the Fund or such Series. This Agreement will automatically
terminate in the event of its assignment.
(d) Termination of this Agreement with respect to any given
Series shall in no way affect the continued validity of this Agreement or the
performance thereunder with respect to any other Series.
12. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
13. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New York and the 1940 Act. To the extent that the
applicable laws of the State of New York conflict with the applicable provisions
of the 1940 Act, the latter shall control.
14. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient upon receipt in
writing at the other party's principal offices.
15. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors. As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated as of the day and year first above
written.
ATTEST: MIDAS FUND, INC.
By:
ATTEST: INVESTOR SERVICE CENTER, INC.
By:
PLAN OF DISTRIBUTION
WHEREAS MIDAS FUND, INC. (the "Fund") is registered under the
Investment Company Act of 1940, as amended ("1940 Act"), as an open-
end management investment company, and proposes to offer for public
sale shares of common stock; and
WHEREAS the Fund has entered into a Distribution Agreement
("Agreement") with Investor Service Center, Inc. (the "Distributor")
pursuant to which the Distributor has agreed to serve as the
principal distributor for the Fund;
NOW, THEREFORE, the Fund hereby adopts this plan of distri bution
("Plan") with respect to the Fund in accordance with Rule 12b-1 under the Act.
1. As Distributor for the Fund, the Distributor may spend such amounts
as it deems appropriate on any activities or expenses primarily intended to
result in the sale of the Fund's shares or the servicing and maintenance of
shareholder accounts, including, but not limited to: advertising, direct mail,
and promotional expenses; compensation to the Distributor and its employees;
compensation to and expenses, including overhead and telephone and other
communication expenses, of the Distributor, the Investment Manager, the Fund,
and selected broker/dealers and their affiliates who engage in or support the
distribution of shares or who service shareholder accounts; fulfillment
expenses, including the costs of printing and distributing prospectuses,
statements of additional information, and reports for other than existing
shareholders; the costs of preparing, printing and distributing sales literature
and advertising materials; and internal costs incurred by the Distributor and
allocated by the Distributor to its efforts to distribute shares of the Fund or
service shareholder accounts such as office rent and equipment, employee
salaries, employee bonuses and other overhead expenses.
2. A. The Fund is authorized to pay to the Distributor, as compensation
for the Distributor's distribution and service activities as defined in
paragraph 13 hereof with respect to its shareholders, a fee at the rate of 0.25%
on an annualized basis of its average daily net assets. All or a portion of such
fee may be designated by the Fund's board of directors ("Board") as a fee for
service activities or as a fee for distribution activities. Such fee shall be
calculated and accrued daily and paid monthly or at such other intervals as the
Board shall determine.
B. The Fund may pay fees to the Distributor at a lesser rate than
the fees specified in paragraph 2A of this Plan as mutually agreed to by
the Board and the Distributor.
3. This Plan shall not take effect until it has been approved by:
A. the vote of at least a majority of the outstanding
voting securities of the Fund and
B. the vote cast in person at a meeting called for the purpose
of voting on this Plan of a majority of both (i) those directors of the Fund who
are not interested persons of the Fund and have no direct or indirect financial
interest in the operation of this Plan or any agreement related to it (the "Plan
Directors"), and (ii) all of the directors then in office.
4. This Plan shall continue in effect for one year from its execution
or adoption and thereafter for so long as such continuance is specifically
approved at least annually in the manner provided for approval of this Plan in
paragraph 3B.
5. The Distributor shall provide to the Board and the Board shall
review, at least quarterly, a written report of the amounts expended under this
Plan and the purposes for which such expenditures were made. A reasonable
allocation of overhead and other expenses of the Distributor related to its
distribution activities and service activities, including telephone and other
communication expenses, may be included in the information regarding amounts
expended for such activities.
6. This Plan may not be amended to increase materially the amount of
fees provided for in paragraphs 2A and 2B hereof unless such amendment is
approved by a vote of a majority of the outstanding voting securities of the
Fund, and no material amendment to this Plan shall be made unless approved by
the Board and the Plan Directors in the manner provided for approval of this
Plan in para graph 3B.
7. The amount of the fees payable by the Fund to the Distributor under
paragraphs 2A and 2B hereof is not related directly to expenses incurred by the
Distributor on behalf of the Fund in serving as distributor, and paragraph 2
hereof does not obligate the Fund to reimburse the Distributor for such
expenses. The fees set forth in paragraphs 2A and 2B hereof will be paid by the
Fund to the Distributor unless and until this Plan is terminated or not renewed.
If this Plan is terminated or not renewed, any expenses incurred by the
Distributor on behalf of the Fund in excess of payments of the fees specified in
paragraphs 2A and 2B hereof which the Distributor has received or accrued
through the termination date are the sole responsibility and liability of the
Distributor, and are not obligations of the Fund.
8. Any other agreements related to this Plan shall not take effect
until approved in the manner provided for approval of this Plan in paragraph 3B.
9. The Distributor shall use its best efforts in rendering services to
the Fund hereunder, but in the absence of willful misfeasance, bad faith or
gross negligence in the performance of its duties or reckless disregard of its
obligations and duties hereunder, the Distributor shall not be liable to the
Fund, the Fund or to any shareholder of the Fund for any act or failure to act
by the Distributor or any affiliated person of the Distributor or for any loss
sustained by the Fund, the Fund or the Fund's shareholders.
10. This Plan may be terminated at any time by vote of a
majority of the Plan Directors, or by vote of a majority of the
outstanding voting securities of the Fund.
11. While this Plan is in effect, the selection and nomination of
directors who are not interested persons of the Fund shall be committed to the
discretion of the directors who are not interested persons.
12. The Fund shall preserve copies of this Plan and any other
agreements related to this Plan and all reports made pursuant to paragraph 5
hereof, for a period of not less than six years from the date of this Plan, or
the date of any such agreement or of any such report, as the case may be, the
first two years in an easily accessible place.
13. For purposes of this Plan, "distribution activities" shall mean any
activities in connection with the Distributor's performance of its services
under this Plan or the Agreement that are not deemed "service activities."
"Service activities" shall mean activities covered by the definition of "service
fee" contained in amendments to Section 26(b) of the National Association of
Securities Dealers, Inc.'s Rules of Fair Practice.
14. As used in this Plan, the terms: "majority of the out
standing voting securities" and "interested person" shall have the
same meaning as those terms have in the 1940 Act.
IN WITNESS WHEREOF, the Fund has executed this Plan on the day and year
set forth below in the City and State of New York.
DATE:
ATTEST: MIDAS FUND, INC.
_____________________________ By:______________________
SHAREHOLDER ADMINISTRATION AGREEMENT
AGREEMENT made as of August 28, 1995 between Midas Fund, Inc., a
Maryland corporation ("Fund"), and Investor Service
Center, Inc. ("ISC"), a Delaware corporation.
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund desires to retain ISC to provide certain shareholder
services for the Fund and each Series of shares now existing or as hereinafter
may be established; and
WHEREAS, as a convenience to the Fund and its shareholders ISC is
willing to furnish such services at cost and without a view to profit thereby;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints ISC as agent to perform the
services for the period and on the terms set forth in this Agreement. ISC
accepts such appointment and agrees to furnish the services herein set forth, in
return for the reimbursement specified in paragraph 3 of this Agreement. ISC
agrees to comply with all relevant provisions of the 1940 Act and the Securities
Exchange Act of 1934, as amended ("1934 Act"), and applicable rules and
regulations thereunder in performing such services.
2. Services and Duties of ISC. ISC shall be responsible for the
following services relating to shareholders of the Fund ("Shareholders"): (a)
assisting the transfer agent in receiving and responding to written and
telephone Shareholder inquiries concerning their accounts; (b) processing
Shareholder telephone requests for transfers, purchases, redemptions, changes of
address and similar matters; (c) assisting as necessary in proxy solicitation;
(d) providing a service center for coordinating, researching and answering
general inquiries, as well as those required by legal process, regarding
Shareholder account data; and (e) administering and correcting Fund records as
authorized by the Board of Direc tors of the Fund.
1
3. Reimbursement. For the performance of its obligations hereunder, the
Fund will reimburse ISC the actual costs incurred with respect thereto,
including, without limitation, the following costs and all other expenses
related to the performance of ISC's obligations hereunder: (a) benefits, payroll
taxes, and search costs of ISC personnel; (b) telephone; (c) rent; (d)
equipment, including telephone PBX, answering machine, call distributor,
conversation recording machine and maintenance thereon; (e) blue sky
registration and filing for ISC and its registered representatives; (f) travel
and meals; (g) mail, postage, and overnight delivery services; (h) allocated E&O
and fidelity bond insurance; (i) publications, memberships, and subscriptions;
(j) office supplies; (k) printing; (l) Shareholder service related training
courses; and (m) corporate audit and franchise taxes. Such costs and expenses
shall be allocated among the Fund and the other Bull & Bear Funds based on the
relative number of open Shareholder accounts and other factors deemed
appropriate by the Board of Directors of the Fund.
4. Cooperation with Accountants. ISC shall cooperate with the Fund's
independent public accountants and shall take all reasonable action in the
performance of its obligations under this Agreement to assure that the necessary
information is made available to such accountants for the expression of their
unqualified opinion, including but not limited to the opinion included in the
Fund's semi-annual reports on Form N-SAR.
5. Equipment Failures. In the event of failures beyond
ISC's control, ISC shall take reasonable steps to minimize service
interruptions but shall have no liability with respect thereto.
6. Responsibility of ISC. ISC shall be under no duty to take any action
on behalf of the Fund or any Series except as specifically set forth herein or
as may be specifically agreed to by ISC in writing. In the performance of its
duties hereunder, ISC shall be obligated to exercise care and diligence, but
shall not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of ISC or reckless
disregard by ISC of its duties under this Agreement. Without limiting the
generality of the foregoing or of any other provision of this Agreement, in
connection with its duties under this Agreement, ISC shall not be liable for
delays or errors occurring by reason of circumstances beyond ISC's control,
including acts of civil or military authorities, national emergencies, labor
difficulties, fire, mechanical breakdown, flood or catastrophe, acts of God,
insurrection, war, riots or failure
2
of the mails, transportation, communication or power supply.
7. Indemnification. The Fund agrees to indemnify and hold harmless ISC
and its agents from all taxes, charges, expenses, assessments, claims and
liabilities including (without limitation) liabilities arising under the
Securities Act of 1933, as amended, the 1934 Act and any state and foreign
securities and blue sky laws and regulations, all as or to be amended from time
to time, and expenses, including (without limitation) attorneys' fees and
disbursements arising directly or indirectly from any action or matter which ISC
takes or does or omits to take or do.
8. Duration and Termination. This Agreement shall continue until
terminated by the Fund with respect to any or all Series thereof, or by ISC.
Termination of this Agreement with respect to any given Series shall in no way
affect the continued validity of this Agreement or the performance thereunder
with respect to any other Series.
9. Amendments. This Agreement or any part thereof may be
changed or waived only by an instrument in writing signed by the
party against which enforcement of such change or waiver is
sought.
10. Miscellaneous. This Agreement embodies the entire contract and
understanding between the parties hereto. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions thereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first above written.
ATTEST: MIDAS FUND, INC.
By:
Secretary Co-President
ATTEST: INVESTOR SERVICE CENTER, INC.
Secretary By: President
3
BULL & BEAR GROUP, INC.
1995 LONG-TERM INCENTIVE PLAN, AS AMENDED
Article I. Purpose, Adoption, and Term of the Plan
1.01 Purpose. The purpose of the Bull & Bear Group, Inc. 1995 Long-Term
Incentive Plan (hereinafter referred to as the "Plan") is to assist the Company
(as hereinafter defined) and its subsidiaries in attracting and retaining
individuals to serve as directors and highly competent personnel who will
contribute to the success of the Company and its subsidiaries and to act as an
incentive in motivating selected officers and key employees to achieve long-term
objectives, which will inure to the benefit of all stockholders of the Company.
1.02 Adoption and Term. The Plan has been approved by the Board (as
hereinafter defined) subject to the approval of the holder of Company Voting
Securities (as hereinafter defined). The Plan shall terminate without further
action of the Board and the holder of Company Voting Securities on the tenth
anniversary of the date the Plan is approved by the holder of Company Voting
Securities.
Article II. Definitions
For purposes of the Plan, capitalized terms shall have the following
meanings:
2.01 Award means (a) any grant to a Participant of any one or a
combination of Non-Qualified Stock Options or Incentive Stock Options described
in Article VI, or Restricted Shares described in Article VII, or (b) any grant
to a Non-Employee Director of a Non-Employee Director Option described in
Article VIII.
2.02 Award Agreement means a written agreement between the Company and
a Participant or a written acknowledgment from the Company specifically setting
forth the terms and conditions of an Award granted to a Participant under the
Plan.
2.03 Award Period means, with respect to an Award, the period of time,
if any, set forth in the Award Agreement during which specified target
performance goals must be achieved or other conditions set forth in the Award
Agreement must be satisfied.
2.04 Beneficiary means an individual, trust or estate who
or that, by will or the laws of descent and distribution,
succeeds to the rights and obligations of the Participant under the Plan and an
Award Agreement upon the Participant's death.
2.05 Board means the Board of Directors of the Company.
2.06 Cause means termination for, as determined by the Committee in its
sole discretion, (i) dishonest or fraudulent conduct relating to the Company or
any of its subsidiaries or their businesses; (ii) conviction of any felony that,
in the judgment of the Board, involves moral turpitude or otherwise reflects on
the Company or any of its subsidiaries in a significantly adverse way; or (iii)
gross neglect by the Participant in the performance of his or her duties as an
employee, or any material breach by a Participant under any employment agreement
with the Company or any of its subsidiaries.
2.07 Code means the Internal Revenue Code of 1986, as amended from time
to time, or any successor thereto. References to a section of the Code shall
include that section and any comparable section or sections of any future
legislation that amends, supplements or supersedes said section.
2.08 Committee means a Committee of the Board as may be designated by
the Board. The Committee shall be composed of at least two directors of the
Company, each of whom is a "disinterested person" as defined in Rule 16b-3. The
Committee shall have the power and authority to administer the Plan in
accordance with Section 3.01.
2.09 Common Stock means the Class A Common Stock, par value $.01 per
share, of the Company.
2.10 Company means Bull & Bear Group, Inc., a corporation organized
under the laws of the State of Delaware, and its successors.
2.11 Company Voting Securities means the Class B Common Stock, par
value $.01 per share, which is entitled to vote generally in the election of the
Board.
2.12 Date of Grant means the date designated by the Committee as the
date as of which it grants an Award, which shall not be earlier than the date on
which the Committee approves the granting of such Award.
2.13 Disability means any physical or mental impairment or disability
that prevents a Participant from performing the duties of his or her employment
(or service as a member of the Board in the case of Non-Employee Directors) and
that is expected to be of permanent duration. A determination of whether a
Participant is
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disabled shall be made by a licensed physician appointed by the
Committee.
2.14 Disability Date means the date that is 120 days after the date on
which a Participant is first absent from active employment with the Company (or
any of its subsidiaries) or service as a Non-Employee Director, as the case may
be, by reason of a Disability.
2.15 Exchange Act means the Securities Exchange Act of
1934, as amended.
2.16 Fair Market Value of a share of Common Stock means, as of any
given date, the most recently reported sale price of a share of Common Stock on
such date as of the time when Fair Market Value is being determined on the
principal national securities exchange on which the Common Stock is then traded
or, if the Common Stock is not then traded on a national securities exchange,
the most recently reported sale price of the Common Stock on such date as of the
time when Fair Market Value is being determined on the National Association of
Securities Dealers Automated Quotation System ("Nasdaq"); provided, however,
that, if there were no sales reported as of such date, Fair Market Value shall
be the last sale price previously reported. In the event the Common Stock is not
admitted to trade on a securities exchange or quoted on Nasdaq, the Fair Market
Value of a share of Common Stock as of any given date shall be as determined in
good faith by the Committee. Notwithstanding the foregoing, the Fair Market
Value of a share of Common Stock shall never be less than par value per share.
2.17 Incentive Stock Option means an Option designated as an incentive
stock option and that complies with Section 422 of the Code.
2.18 Non-Employee Director means each member of the Board who is not an
employee of the Company or any of its subsidiaries.
2.19 Non-Employee Director Options means Options granted in accordance
with Article VIII.
2.20 Non-Qualified Stock Option means an Option that is not an
Incentive Stock Option.
2.21 Option means any option to purchase Common Stock granted pursuant
to Article VI or Article VIII, including any Reload Option.
2.22 Participant means any employee of the Company or any
of its subsidiaries selected by the Committee to receive an Award
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under the Plan in accordance with Article V and, solely to the extent provided
in Article VIII, any Non-Employee Director.
2.23 Plan means the Bull & Bear Group, Inc. 1995 Long-Term
Incentive Plan as set forth herein, and as the same may be
amended from time to time.
2.24 Reload Option shall have the meaning set forth in
Section 6.03(e) of the Plan.
2.25 Restricted Shares means shares of Common Stock subject to
restrictions imposed in connection with Awards granted under Article VII.
2.26 Rule 16b-3 means Rule 16b-3 promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act, as the same may be
amended from time to time, and any successor rule.
2.27 Ten Percent Shareholder means a Participant who, at the time of
grant of an Option, owns (or is deemed to own under Section 424(d) of the Code)
more than 10% of Company Voting Securities.
2.28 Termination of Employment means the voluntary or involuntary
termination of a Participant's employment with the Company or any of its
subsidiaries for any reason, including death, Disability, retirement or as the
result of the sale or other divestiture of the Participant's employer or any
similar transaction in which the Participant's employer ceases to be the Company
or one of its subsidiaries. Whether entering military or other government
service shall constitute Termination of Employment, and whether a Termination of
Employment is a result of Disability, shall be determined in each case by the
Committee.
Article III. Administration
3.01 Committee. The Plan shall be administered by the Committee, which
shall have exclusive and final authority in each determination, interpretation
or other action affecting the Plan and its Participants. The Committee shall
have the sole and absolute discretion to interpret the Plan, to establish and
modify administrative rules for the Plan, to select the officers and other key
employees to whom Awards may be granted, to determine all claims for benefits
under the Plan, to impose such conditions and restrictions on Awards as it
determines appropriate and to take such steps in connection with the Plan and
Awards granted hereunder as it may deem necessary or advisable. The Committee
may, with respect to Participants who are not subject to Section 16 of the
Exchange Act, delegate such
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of its powers and authority under the Plan as it deems appropriate to designated
officers or employees of the Company.
Article IV. Shares of Common Stock
4.01 Number of Shares of Common Stock Issuable. Subject to adjustments
as provided in Section 9.06, 300,000 shares of Common Stock shall be available
for Awards under the Plan. Any and all of such shares may be issued in respect
of any of the types of Awards. The Common Stock to be offered under the Plan
shall be authorized and unissued Common Stock, or issued Common Stock that shall
have been reacquired by the Company and held in its treasury.
4.02 Number of Shares of Common Stock Awarded to any Participant. In
the event the purchase price of an Option is paid in whole or in part through
the delivery of shares of Common Stock issuable in connection with the exercise
of the Option, a Participant will be determined to have received an Award with
respect to those shares of Common Stock.
4.03 Shares of Common Stock Subject to Terminated Awards. The shares of
Common Stock covered by any unexercised portions of terminated Options granted
under Articles VI or VIII, shares of Common Stock forfeited as provided in
Section 7.02(a) and shares of Common Stock subject to any Awards that are
otherwise surrendered by the Participant without receiving any payment or other
benefit with respect thereto may again be subject to new Awards under the Plan.
In the event the purchase price of an Option or tax withholding relating to an
Award is paid in whole or in part through the delivery of shares of Common
Stock, the number of shares of Common Stock issuable in connection with the
exercise of the Option shall not again be available for the grant of Awards
under the Plan.
Article V. Participation
5.01 Eligible Participants. Participants in the Plan shall be such
officers and other key employees of the Company or its subsidiaries, whether or
not directors of the Company, as the Committee, in its sole discretion, may
designate from time to time. The Committee's designation of a Participant in any
year shall not require the Committee to designate such person to receive Awards
in any other year. The Committee shall consider such factors as it deems
pertinent in selecting Participants and in determining the type and amount of
their respective Awards.
Non-Employee Directors shall receive Non-Employee Director
Options in accordance with Article VIII, the provisions of which
are automatic and non-discretionary in operation. Non-Employee
- 5 -
Directors shall not be eligible to receive any other Awards under the Plan.
Article VI. Stock Options
6.01 Grant of Option. Any Option granted under the Plan shall have such
terms as the Committee may, from time to time, approve, and the terms and
conditions of Options need not be the same with respect to each Participant. The
Committee shall have the authority to grant to any Participant one or more
Incentive Stock Options, Non-Qualified Stock Options, or both types of Options.
To the extent that any Option does not qualify as an Incentive Stock Option
(whether because of its provisions or the time or manner of its exercise or
otherwise), such Option or the portion thereof that does not qualify shall
constitute a separate Non-Qualified Stock Option.
6.02 Incentive Stock Options. In the case of any grant of an Option
intended to be an Incentive Stock Option, whenever possible, each provision in
the Plan and in any related Award Agreement (other than those relating to the
exercise of Options following Termination of Employment) shall be interpreted in
such a manner as to entitle the Option holder to the tax treatment afforded by
Section 422 of the Code and, if any such provision of the Plan or such Award
Agreement shall be held not to comply with requirements necessary to entitle
such Option to such tax treatment, then (a) such provision shall be deemed to
have contained from the outset such language as shall be necessary to entitle
the Option to the tax treatment afforded under Section 422 of the Code, and (b)
all other provisions of the Plan and the Award Agreement relating to such Option
shall remain in full force and effect. If any Award Agreement covering an Option
designated by the Committee to be an Incentive Stock Option shall not explicitly
include any terms required to entitle such Incentive Stock Option to the tax
treatment afforded by Section 422 of the Code (other than those relating to the
exercise of Options following Termination of Employment), all such terms shall
be deemed implicit in the designation of such Option as an Incentive Stock
Option and the Option shall be deemed to have been granted subject to all such
terms.
6.03 Terms of Options. Options granted under the Plan shall be subject
to the following terms and conditions and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable:
(a) Option Price. The option price per share of
Common Stock purchasable under an Option shall be
determined by the Committee at the time of grant but
shall not be less than 100% of the Fair Market Value of
- 6 -
a share of Common Stock on the Date of Grant; provided, however, that,
if an Incentive Stock Option is granted to a Ten Percent Shareholder,
the option price per share shall be at least 110% of the Fair Market
Value of a share of Common Stock on the Date of Grant.
(b) Option Term. The term of each Option shall be fixed by the
Committee, but no Option shall be exercisable more than ten years after
the Date of Grant; provided, however, that, if an Incentive Stock
Option is granted to a Ten Percent Shareholder, the Option shall not be
exercisable more than five years after the Date of Grant.
(c) Exercisability. An Award Agreement with respect to Options
may contain such performance targets, waiting periods, exercise dates
and restrictions on exercise (including, but not limited to, a
requirement that an Option is exercisable in periodic installments) as
may be determined by the Committee at the time of grant; provided,
however, that no Option shall be exercisable during the first six
months from the Date of Grant of such Option.
(d) Method of Exercise. Subject to whatever installment
exercise and waiting period provisions apply under subsection (c)
above, Options may be exercised in whole or in part at any time during
the Award Period, by giving written notice of exercise to the Company
specifying the number of shares of Common Stock to be purchased. Such
notice shall be accompanied by payment in full of the purchase price in
such form as the Committee may accept (including payment in accordance
with a cashless exercise program under which, if so instructed by the
Participant, Common Stock may be issued directly to the Participant's
broker or dealer upon receipt of the purchase price in cash from the
broker or dealer). If and to the extent determined by the Committee in
its sole discretion at or after grant, payment in full or in part may
also be made in the form of Common Stock duly owned by the Participant
(and for which the Participant has good title, free and clear of any
liens and encumbrances) or by reduction in the number of shares of
Common Stock issuable upon such exercise based, in each case, on the
Fair Market Value of the Common Stock on the date the Option is
exercised; provided, however, that, in the case of an Incentive Stock
Option, the right to make payment of the purchase price in the form of
Common Stock may be authorized only at the time of grant. No Common
Stock shall be
- 7 -
issued until payment, as provided herein, therefor has been made. A
Participant shall generally have the rights to dividends or other
rights of a stockholder with respect to Common Stock subject to the
Option when the Participant has given written notice of exercise and
has paid for such Common Stock as provided herein.
(e) Reload Options. The Committee shall have the authority to
specify, at the time of grant or, with respect to Non-Qualified Stock
Options, at or after the time of grant, that a Participant shall be
granted a Non-Qualified Stock Option (a "Reload Option") in the event
such Participant exercises all or a part of an Option (an "Original
Option") by surrendering in accordance with Section 6.03(d) of the Plan
already owned shares of Common Stock in full or partial payment of the
purchase price under the Original Option, subject to the availability
of shares of Common Stock under the Plan at the time of such exercise;
provided, however, that no Reload Option shall be granted to a
Non-Employee Director. Each Reload Option shall cover a number of
shares of Common Stock equal to the number of shares of Common Stock
surrendered in payment of the purchase price under such Original
Option, shall have a purchase price per share of Common Stock equal to
the 100% of the Fair Market Value of a share of Common Stock on the
Date of Grant of such Reload Option, and shall expire on the stated
expiration date of the Original Option. A Reload Option shall be
exercisable at any time and from time to time after the time of grant
of such Reload Option (or, as the Committee in its sole discretion
shall determine at or after the time of grant, at such time or times as
shall be specified in the Reload Option); provided, however, that a
Reload Option shall not be exercisable during the first six months from
the Date of Grant of such Reload Option. Any Reload Option may provide
for the grant, when exercised, of subsequent Reload Options to the
extent and upon such terms and conditions, consistent with this Section
6.03(e), as the Committee in its sole discretion shall specify at or
after the Date of Grant of such Reload Option. A Reload Option shall
contain such other terms and conditions, which may include a
restriction on the transferability of the shares of Common Stock
received upon exercise of the Original Option representing at least the
after-tax profit received upon exercise of the Original Option, as the
Committee in its sole discretion shall deem desirable, and which may be
set forth in rules or guidelines adopted by the Committee or in the
Award Agreements evidencing the Reload Options.
(f) Non-Transferability of Options. No Option
shall be transferable by the Participant otherwise than
by will or by the laws of descent and distribution, and
- 8 -
all Options shall be exercisable, during the
Participant's lifetime, only by the Participant.
(g) Exercise of Options Upon Termination of
Employment.
(i) Exercise of Vested Options Upon
Termination of Employment.
(A) Termination. Unless the Committee, in
its sole discretion, provides for a shorter period of
time in the Award Agreement, upon a Participant's
Termination of Employment other than by reason of
death or Disability, the Participant may, within
three months from the date of such Termination of
Employment, exercise all or any part of his or her
Options as were exercisable at the date of
Termination of Employment but only if (x) the
Participant resigns or retires and the Committee
consents to such resignation or retirement and (y)
such Termination of Employment is not for Cause. If
such Termination of Employment is for Cause or the
Committee does not so consent, the right of such
Participant to exercise such Options shall terminate
at the date of Termination of Employment. In no
event, however, may any Option be exercised later
than the date described in Section 6.03(b).
(B) Disability. Unless the Committee, in its
sole discretion, provides for a shorter period of
time in the Award Agreement, upon a Participant's
Disability Date, the Participant may, within one year
after the Disability Date, exercise all or a part of
his or her Options that were exercisable upon such
Disability Date. In no event, however, may any Option
be exercised later than the date described in Section
6.03(b).
(C) Death. Unless the Committee,
in its sole discretion, provides for a
shorter period of time in the Award
- 9 -
Agreement, in the event of the death of a Participant
while employed by the Company or prior to the
expiration of the Option as provided in Section
6.03(g)(i)(B) above, to the extent all or any part of
the Option was exercisable as of the date of death of
the Participant, the right of the Participant's
Beneficiary to exercise the Option shall expire upon
the expiration of one year from the date of the
Participant's death (but in no event more than one
year from the Participant's Disability Date) or on
the date of expiration of the Option determined
pursuant to Section 6.03(b), whichever is earlier. In
all other cases of death following a Participant's
Termination of Employment, the Participant's
Beneficiary may exercise the Option within the
remaining time, if any, provided in Section
6.03(g)(1)(A) above. In the event of the
Participant's death, the Committee may, in its sole
discretion, accelerate the right to exercise all or
any part of an Option that would not otherwise be
exercisable.
(ii) Expiration of Unvested Options Upon Termination
of Employment. To the extent all or any part of an Option was
not exercisable as of the date of Termination of Employment,
such right shall expire at the date of such Termination of
Employment. Notwithstanding the foregoing, the Committee, in
its sole discretion and under such terms as it deems
appropriate, may permit a Participant who will continue to
render significant services to the Company after his or her
Termination of Employment to continue to accrue service with
respect to the right to exercise his or her Options during the
period in which the individual continues to render such
services.
Article VII. Restricted Shares
7.01 Restricted Share Awards. Restricted Shares may be
issued either alone or in addition to other Awards granted under
the Plan. The Committee may grant to any Participant an Award of
shares of Common Stock in such number, and subject to such terms
- 10 -
and conditions relating to forfeitability and restrictions on delivery and
transfer (whether based on performance standards, periods of service or
otherwise) as the Committee shall establish. The terms of any Restricted Share
Award granted under the Plan shall be set forth in an Award Agreement, which
shall contain provisions determined by the Committee and not inconsistent with
the Plan. The provisions of Restricted Share Awards need not be the same for
each Participant receiving such Awards.
(a) Issuance of Restricted Shares. As soon as practicable
after the Date of Grant of a Restricted Share Award by the Committee,
the Company shall cause to be transferred on the books of the Company
shares of Common Stock, registered on behalf of the Participant in
nominee form, evidencing the Restricted Shares covered by the Award,
but subject to forfeiture to the Company retroactive to the Date of
Grant if an Award Agreement delivered to the Participant by the Company
with respect to the Restricted Shares covered by the Award is not duly
executed by the Participant and timely returned to the Company. Each
Participant, as a condition to the receipt of a Restricted Share Award,
shall pay to the Company in cash the par value of a share of Common
Stock multiplied by the number of shares of Common Stock covered by
such Restricted Share Award. All shares of Common Stock covered by
Awards under this Article VII shall be subject to the restrictions,
terms and conditions contained in the Plan and the Award Agreement
entered into by and between the Company and the Participant. Until the
lapse or release of all restrictions applicable to an Award of
Restricted Shares, the stock certificates representing such Restricted
Shares shall be held in custody by the Company or its designee. Upon
the lapse or release of all restrictions with respect to an Award as
described in Section 7.01(d), one or more stock certificates,
registered in the name of the Participant, for an appropriate number of
shares of Common Stock as provided in Section 7.01(d), free of any
restrictions set forth in the Plan and the Award Agreement, shall be
delivered to the Participant.
(b) Shareholder Rights. Beginning on the Date of Grant of the
Restricted Share Award and subject to execution of the Award Agreement
as provided in Section 7.01(a), the Participant shall become a
shareholder of the Company with respect to all shares of Common Stock
subject to the Award Agreement and shall have all of the rights of a
shareholder, including, but not limited to, the right to vote such
shares of Common Stock and the right to receive dividends (or dividend
equivalents); provided, however, that any shares of Common Stock
distributed as a dividend or otherwise with respect to any Restricted
Shares as to which the
- 11 -
restrictions have not yet lapsed shall be subject to the same
restrictions as such Restricted Shares and shall be represented by book
entry and held as prescribed in Section 7.01(a).
(c) Restriction on Transferability. None of the Restricted
Shares may be assigned or transferred (other than by will or the laws
of descent and distribution), pledged or sold prior to lapse or release
of the restrictions applicable thereto.
(d) Delivery of Shares of Common Stock Upon Release of
Restrictions. Upon expiration or earlier termination of the forfeiture
period without a forfeiture and the satisfaction of or release from any
other conditions prescribed by the Committee, the restrictions
applicable to the Restricted Shares shall lapse. As promptly as
administratively feasible thereafter, subject to the requirements of
Section 9.05, the Company shall deliver to the Participant or, in case
of the Participant's death, to the Participant's Beneficiary, one or
more stock certificates for the appropriate number of shares of Common
Stock, free of all such restrictions, except for any restrictions that
may be imposed by law.
7.02 Terms of Restricted Shares.
(a) Forfeiture of Restricted Shares. Subject to Section
7.02(b), all Restricted Shares shall be forfeited and returned to the
Company and all rights of the Participant with respect to such
Restricted Shares shall terminate unless the Participant continues in
the service of the Company or any parent or subsidiary of the Company
as an employee until the expiration of the forfeiture period for such
Restricted Shares and satisfies any and all other conditions set forth
in the Award Agreement. The Committee, in its sole discretion, shall
determine the forfeiture period (which may, but need not, lapse in
installments) and any other terms and conditions applicable with
respect to any Restricted Share Award.
(b) Waiver of Forfeiture Period. Notwithstanding anything
contained in this Article VII to the contrary, the Committee may, in
its sole discretion, waive the forfeiture period and any other
conditions set forth in any Award Agreement under appropriate
circumstances (including the death, disability or retirement of the
Participant or a material change in circumstances arising after the
date of an Award) and subject to such terms and conditions (including
forfeiture of a proportionate number of Restricted Shares) as the
Committee shall deem appropriate,
- 12 -
provided that the Participant shall at that time have completed at
least one year of employment after the Date of Grant.
Article VIII. Non-Employee Director Options
8.01 Grant of Non-Employee Director Options. On the date a Non-Employee
Director is elected as such for the first time by the holder of Company Voting
Securities, such person shall be granted a Non-Employee Director Option
consisting of an Option to purchase 10,000 shares of Common Stock; provided,
however, that, with respect to directors Edward G. Webb, Jr. and Charles A.
Carroll, they shall each be granted a Non-Employee Director Option under this
Article VIII on the date the Plan is approved by the holder of the Company
Voting Securities; provided, further, however, that no Non-Employee Director
Option shall be granted to Edward G. Webb, Jr. or Charles A. Carroll unless,
immediately prior to the grant of the Non-Employee Director Option, he
surrenders to the Company for cancellation the option to purchase 10,000 shares
of Common Stock granted to Mr. Webb on December 7, 1992 and granted to Mr.
Carroll on March 3, 1993. The exercise price for such Non-Employee Director
Options shall be the Fair Market Value of a share of Common Stock on the Date of
Grant. All such Options shall be designated as Non-Qualified Stock Options and
shall have a five year term. Each such Option shall be fully exercisable six
months after the Date of Grant, but shall be forfeited if the person ceases to
be a Non-Employee Director within six months of the Date of Grant of such
Option.
If a Non-Employee Director's service with the Company terminates by
reason of Disability or death, any Option held by such Non-Employee Director may
be exercised for a period of one year from the Disability Date or date of death,
as the case may be, or until the expiration of the Option, whichever is shorter.
If a Non-Employee Director's service with the Company terminates other than by
reason of Disability or death, any Option held by such Non-Employee Director may
be exercised for a period of three months from the date of such termination, or
until the expiration of the stated term of the Option, whichever is shorter. All
applicable provisions of the Plan (other than Section 6.03(g)) not inconsistent
with this Section 8.01 shall apply to Options granted to Non-Employee Directors.
Article IX. Terms Applicable to All Awards Granted Under
the Plan
9.01 Plan Provisions Control Award Terms. The terms of the
Plan shall govern all Awards granted under the Plan, and in no
event shall the Committee have the power to grant to a
Participant any Award under the Plan that is contrary to any
provisions of the Plan. In the event any provision of any Award
- 13 -
granted under the Plan shall conflict with any of the terms in the Plan as
constituted on the Date of Grant of such Award, the terms in the Plan as
constituted on the Date of Grant of such Award shall control. Except as provided
in Section 9.03 or unless otherwise provided by the Committee, in its sole
discretion, in the Award Agreement, the terms of any Award granted under the
Plan may not be changed after the Date of Grant of such Award so as to
materially decrease the value of the Award without the express written approval
of the holder.
9.02 Award Agreement. No person shall have any rights under any Award
granted under the Plan unless and until the Company and the Participant to whom
such Award shall have been granted shall have executed and delivered an Award
Agreement authorized by the Committee expressly granting the Award to such
person and containing provisions setting forth the terms of the Award. If there
is any conflict between the provisions of an Award Agreement and the terms of
the Plan, the terms of the Plan shall control.
9.03 Modification of Award After Grant. Except as provided by the
Committee, in its sole discretion, in the Award Agreement or as provided in
Section 9.06, no Award granted under the Plan to a Participant may be modified
(unless such modification does not materially decrease the value of the Award)
after the Date of Grant except by express written agreement between the Company
and the Participant, provided that any such change (a) shall not be inconsistent
with the terms of the Plan, and (b) shall be approved by the Committee.
9.04 Limitations on Transfer. The rights and interest of a Participant
under the Plan may not be assigned or transferred other than by will or the laws
of descent and distribution. During the lifetime of a Participant, only the
Participant personally may exercise rights under the Plan. Except as otherwise
specifically provided in the Plan, a Participant's Beneficiary may exercise the
Participant's rights only to the extent they were exercisable under the Plan at
the date of the death of the Participant and are otherwise currently
exercisable.
9.05 Taxes. The Company shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant in
lieu of withholding) the amount of any withholding or other tax required by law
to be withheld or paid by the Company with respect to any amount payable and/or
shares of Common Stock issuable under such Participant's Award, or with respect
to any income recognized upon lapse of restrictions applicable to an Award or
upon a disqualifying disposition of Common Stock received pursuant to the
exercise of an Incentive Stock Option, and the Company may defer issuance of
Common Stock upon the grant, exercise or vesting of an Award
- 14 -
unless indemnified to its satisfaction against any liability for any such tax.
The amount of such withholding or tax payment shall be determined by the
Committee or its delegate and shall be payable by the Participant at such time
as the Committee determines. The Committee shall prescribe in each Award
Agreement one or more methods by which the Participant will be permitted to
satisfy his or her tax withholding obligation, which methods may include,
without limitation, the payment of cash by the Participant to the Company and
the withholding from the Award, at the appropriate time, of a number of shares
of Common Stock sufficient, based upon the Fair Market Value of such Common
Stock, to satisfy such tax withholding requirements. The Committee shall be
authorized, in its sole discretion, to establish such rules and procedures
relating to any such withholding methods as it deems necessary or appropriate,
including, without limitation, rules and procedures relating to elections by
Participants who are subject to the provisions of Section 16 of the Exchange Act
to have shares of Common Stock withheld from an Award to meet such withholding
obligations.
9.06 Adjustments to Reflect Capital Changes.
(a) Recapitalization. The number and kind of shares subject to
outstanding Awards, the purchase price or exercise price of such
Awards, and the number and kind of shares available for Awards
subsequently granted under the Plan shall be appropriately adjusted to
reflect any stock dividend, stock split, combination or exchange of
shares, merger, consolidation or other change in capitalization with a
similar substantive effect upon the Plan or the Awards granted under
the Plan. The Committee shall have the power and sole discretion to
determine the nature and amount of the adjustment to be made in each
case. In no event shall any adjustment be made under the provisions of
this Section 9.06(a) to any previous grant of Restricted Shares if an
adjustment has been or will be made to the shares of Common Stock
awarded to a Participant in such person's capacity as a stockholder.
(b) Sale or Reorganization. After any reorganization, merger
or consolidation in which the Company is the surviving entity, each
Participant shall, at no additional cost, be entitled upon the exercise
of an Award outstanding prior to such event, and in connection with the
payout after such event of any Award outstanding at the time of such
event, to receive (subject to any required action by stockholders), in
lieu of the number of shares of Common Stock receivable or exercisable
pursuant to such Option, the number and class of shares of stock or
- 15 -
other securities to which such Participant would have been entitled
pursuant to the terms of the reorganization, merger or consolidation
if, at the time of such reorganization, merger or consolidation, such
Participant had been the holder of record of a number of shares of
Common Stock equal to the number of shares of Common Stock receivable
or exercisable pursuant to such Award. Comparable rights shall accrue
to each Participant in the event of successive reorganizations, mergers
or consolidations of the character described above.
(c) Options to Purchase Stock of Acquired Companies. After any
reorganization, merger or consolidation in which the Company shall be a
surviving entity, the Committee may grant substituted Options under the
provisions of the Plan, pursuant to Section 424 of the Code, replacing
old options granted under a plan of another party to the
reorganization, merger or consolidation whose stock subject to the old
options may no longer be issued following such merger or consolidation.
The foregoing adjustments and manner of application of the foregoing
provisions shall be determined by the Committee in its sole discretion.
Any such adjustments may provide for the elimination of any fractional
shares of Common Stock that might otherwise become subject to any
Options.
9.07 Loans. The Company shall be entitled, if the Committee in its sole
discretion deems it necessary or desirable, to lend money to a Participant for
purposes of (a) exercising his or her rights under an Award hereunder or (b)
paying any income tax liability related to an Award; provided, however, that
Non-Employee Directors shall not be eligible to receive such loans and provided,
further, that the portion of the per share exercise price of an Option equal to
the par value per share of Common Stock shall not be paid by means of a
promissory note. Such a loan shall be evidenced by a recourse promissory note
payable to the order of the Company executed by the Participant and containing
such other terms and conditions as the Committee may deem desirable. The
interest rate on such loans shall be sufficient to avoid imputed interest under
the Code.
9.08 Surrender of Awards. Any Award granted to a Participant under the
Plan may be surrendered to the Company for cancellation on such terms as the
Committee and holder approve.
9.09 No Right to Award; No Right to Employment. No
employee or other person shall have any claim or right to be
granted an Award. Neither the Plan nor any action taken
hereunder shall be construed as giving any employee any right to
- 16 -
be retained in the employ of the Company or any of its
subsidiaries.
9.10 Awards Not Includable for Benefit Purposes. Income recognized by a
Participant pursuant to the provisions of the Plan shall not be included in the
determination of benefits under any employee pension benefit plan (as such term
is defined in Section 3(2) of the Employee Retirement Income Security Act of
1974) or group insurance or other benefit plans applicable to the Participant
that are maintained by the Company or any of its subsidiaries, except as may be
provided under the terms of such plans or determined by resolution of the Board.
9.11 Governing Law. The Plan and all determinations made and actions
taken pursuant to the Plan shall be governed by the laws of the State of
Delaware other than the conflict of laws provisions of such laws, and shall be
construed in accordance therewith.
9.12 No Strict Construction. No rule of strict construction shall be
implied against the Company, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Award granted under the Plan
or any rule or procedure established by the Committee.
9.13 Compliance with Rule 16b-3. It is intended that the Plan be
applied and administered in compliance with Rule 16b-3. If any provision of the
Plan would be in violation of Rule 16b-3 if applied as written, such provision
shall not have effect as written and shall be given effect so as to comply with
Rule 16b-3, as determined by the Committee. The Board is authorized to amend the
Plan and to make any such modifications to Award Agreements to comply with Rule
16b-3, as it may be amended from time to time, and to make any other such
amendments or modifications deemed necessary or appropriate to better accomplish
the purposes of the Plan in light of any amendments made to Rule 16b-3.
9.14 Captions. The captions (i.e., all Section and Article headings)
used in the Plan are for convenience only, do not constitute a part of the Plan,
and shall not be deemed to limit, characterize or affect in any way any
provisions of the Plan, and all provisions of the Plan shall be construed as if
no captions have been used in the Plan.
9.15 Severability. Whenever possible, each provision in the Plan and
every Award at any time granted under the Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of the Plan or any Award at any time granted under the Plan shall be held to be
prohibited by or invalid under applicable law, then (a) such provision shall be
- 17 -
deemed amended to accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (b) all other provisions of
the Plan and every other Award at any time granted under the Plan shall remain
in full force and effect.
9.16 Legends. All certificates for Common Stock delivered under the
Plan shall be subject to such transfer restrictions set forth in the Plan and
such other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Common Stock is then listed and any applicable
federal or state securities law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate references to such
restrictions.
9.17 Amendment and Termination.
(a) Amendment. The Board shall have complete power and
authority to amend the Plan at any time it is deemed necessary or
appropriate; provided, however, that the Board shall not, without the
affirmative approval of the holder of Company Voting Securities, make
any amendment that requires stockholder approval under Rule 16b-3, the
Code or under any other applicable law, unless the Board determines
that compliance with Rule 16b-3 and/or the Code is no longer desired.
No termination or amendment of the Plan may, without the consent of the
Participant to whom any Award shall theretofore have been granted under
the Plan, adversely affect the right of such individual under such
Award; provided, however, that the Committee may, in its sole
discretion, make such provision in the Award Agreement for amendments
that, in its sole discretion, it deems appropriate. Article VIII shall
not be amended or modified more frequently than once in any period of
six consecutive months other than to comport with changes in the
Employment Retirement Income Security Act of 1974, as amended, the Code
or the rules and regulations promulgated thereunder.
(b) Termination. The Board shall have the right and the power
to terminate the Plan at any time. No Award shall be granted under the
Plan after the termination of the Plan, but the termination of the Plan
shall not have any other effect and any Award outstanding at the time
of the termination of the Plan may be exercised after termination of
the Plan at any time prior to the expiration date of such Award to the
same extent such Award would have been exercisable had the Plan not
terminated.
- 18 -
BULL & BEAR GROUP, INC.
INCENTIVE STOCK OPTION AGREEMENT FOR EMPLOYEES
AGREEMENT ("Agreement") dated this 5th day of February, 1996 by and
between Bull & Bear Group, Inc., a Delaware corporation ("Corporation"), and
Bassett S. Winmill, an employee of the Corporation ("Optionee").
WHEREAS, the Corporation desires to have Optionee continue in its
employ and to provide Optionee with an incentive by sharing in the success of
the Corporation;
WHEREAS, in order to provide such an incentive to its officers and key
employees, the Corporation has adopted the Bull & Bear Group, Inc. 1995
Long-Term Incentive Plan, as amended
("Plan");
WHEREAS, the Corporation desires to grant to Optionee under the Plan
options that qualify as "incentive stock options" within the meaning of Section
422 or any successor provision of the Internal Revenue Code of 1986, as amended
("Code"); and
WHEREAS, unless otherwise provided herein, capitalized terms used in
this Agreement shall have the meaning given them in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants and
representations herein contained and intending to be legally bound, the parties
hereto agree as follows:
1. Number of Shares and Price. The Corporation hereby grants to the
Optionee an option ("Option") to purchase the number of shares of Common Stock
set forth on the last page of this Agreement. The exercise price per share of
Common Stock of the Option shall be as is set forth on the last page of this
Agreement, such price being 110% of the Fair Market Value per share of Common
Stock on the Date of Grant of the Option. The Option is intended to be an
Incentive Stock Option; provided, however, that to the extent, but only to the
extent, that the provisions of this Agreement or the nature of any actions taken
by the Optionee are inconsistent with the treatment of the Option as an
Incentive Stock Option, the Option shall be deemed a Non-Qualified Stock Option.
2. Term and Exercise. The Option shall expire five (5)
years from the date hereof, subject to earlier termination as set
forth in Section 3. Subject to the provisions of Section 3, the Option shall
become exercisable in installments as set forth on the last page of this
Agreement. Notwithstanding the foregoing, the Option shall not be exercisable in
whole, or in part, prior to six months from the Date of Grant.
3. Exercise of Option Upon Termination of Employment.
(a) Termination of Vested Option Upon Termination of
Employment.
(i) Termination. Upon the Optionee's Termination of
Employment other than by reason of death or Disability, the
Optionee may, within three months from the date of such
Termination of Employment, exercise all or any part of the
Option to the extent it was exercisable at the date of
Termination of Employment, but only if (a) the Optionee
resigns or retires and the Committee administering the Plan
consents to such resignation or retirement and (b) such
Termination of Employment is not for Cause. If such
Termination of Employment is for Cause, the right of the
Optionee to exercise the Option shall terminate at the date of
Termination of Employment. In no event may the Option be
exercised later than the expiration date described in Section
2.
(ii) Disability. Upon the Optionee's Disability Date, the
Optionee may, within one year after such Disability Date,
exercise all or a part of the Option to the extent it was
exercisable upon such Disability Date. In no event, however,
may the Option be exercised later than the expiration date
described in Section 2.
(iii) Death. In the event of the death of the
Optionee while employed by the Corporation or within the
additional period of time from the date of the Optionee's
Disability Date and prior to the expiration of the Option as
provided in Section 3(a)(ii), to the extent all or any part of
the Option was exercisable as of the date of death, the right
of the Optionee's Beneficiary to exercise the Option shall
expire upon the expiration of one year from the date of the
Optionee's death (but in no event more than one year from the
Optionee's Disability Date) or, if earlier, on the date of
expiration of the Option determined pursuant to Section 2. In
all other cases of death following the Optionee's Termination
of Employment, the Optionee's Beneficiary may exercise the
Option within the remaining time, if any, provided in Section
3(a)(i).
2
(b) Termination of Unvested Option Upon Termination of
Employment. To the extent all or any part of the Option was not
exercisable as of the date of Termination of Employment, the
unexercisable portion of the Option shall expire at the date of
such Termination of Employment.
4. Exercise Procedures. The Option shall be exercisable by written
notice to the Corporation, which must be received by the Secretary of the
Corporation not later than 5:00 P.M. local time at the principal executive
office of the Corporation on the expiration date of the Option. Such written
notice shall set forth (a) the number of shares of Common Stock being purchased,
(b) the total exercise price for the shares of Common Stock being purchased, (c)
the exact name as it should appear on the stock certificate(s) to be issued for
the shares of Common Stock being purchased, and (d) the address to which the
stock certificate(s) should be sent. The exercise price of shares of Common
Stock purchased upon exercise of the Option shall be paid in full (a) in cash,
(b) by delivery to the Corporation of shares of Common Stock (which may include
shares of Common Stock issued in connection with the exercise of the Option,
subject to such rules as the Committee deems appropriate), (c) in any
combination of cash and shares of Common Stock, or (d) by delivery of such other
consideration as the Committee deems appropriate and in compliance with
applicable law (including payment in accordance with a cashless exercise program
under which, if so instructed by the Optionee, shares of Common Stock may be
issued directly to the Optionee's broker or dealer upon receipt of the exercise
price in cash from the broker or dealer). In the event that any shares of Common
Stock shall be transferred to the Corporation to satisfy all or any part of the
exercise price, (i) the part of the exercise price deemed to have been satisfied
by such transfer of shares of Common Stock shall be equal to the product derived
by multiplying the Fair Market Value as of the date of exercise times the number
of shares of Common Stock transferred to the Corporation and (ii) the Optionee
shall be granted a Reload Option covering the number of shares of Common Stock
transferred to the Corporation in payment of the exercise price. The terms of
the Reload Option shall be as set forth in Section 6.03(e) of the Plan and the
Reload Option shall be exercisable in full six months following its date of
grant. The Optionee may not transfer to the Corporation in satisfaction of the
exercise price any fraction of a share of Common Stock, and any portion of the
exercise price that would represent less than a full share of Common Stock must
be paid in cash by the Optionee. Subject to Section 8 hereof, certificates for
the purchased shares of Common Stock will be issued and delivered to the
Optionee as soon as practicable after the receipt of such payment of the
exercise price; provided, however, that delivery of any such shares of Common
Stock shall be deemed effected for all purposes when a stock transfer agent of
the Corporation shall have deposited such certificates in the United States
mail, addressed to Optionee, at
3
the address set forth on the last page of this Agreement or to such other
address as Optionee may from time to time designate in a written notice to the
Corporation. The Optionee shall not be deemed for any purpose to be a
shareholder of the Corporation in respect of any shares of Common Stock as to
which the Option shall not have been exercised, as herein provided, until such
shares of Common Stock have been issued to Optionee by the Corporation
hereunder.
5. Plan Provisions Control Option Terms; Modifications. The Option is
granted pursuant and subject to the terms and conditions of the Plan, the
provisions of which are incorporated herein by reference. In the event any
provision of this Agreement shall conflict with any of the terms in the Plan as
constituted on the Date of Grant, the terms of the Plan as constituted on the
Date of Grant shall control. The Option shall not be modified after the Date of
Grant except by express written agreement between the Corporation and the
Optionee; provided, however, that any such modification (a) shall not be
inconsistent with the terms of the Plan, and (b) shall be approved by the
Committee. No modifications may be made to the Option while the Optionee is
subject to Section 16(b) of the Exchange Act except in compliance with Rule
16b-3.
6. Limitations on Transfer. The Option may not be assigned or
transferred other than by will or the laws of descent and distribution. During
the lifetime of the Optionee, only the Optionee personally may exercise rights
under this Agreement. The Optionee's Beneficiary may exercise the Optionee's
rights hereunder only to the extent they were exercisable under this Agreement
at the date of the death of the Optionee and are otherwise currently
exercisable.
7. Taxes. The Corporation shall be entitled to withhold (or secure
payment from the Optionee in lieu of withholding) the amount of any withholding
or other tax required by law to be withheld or paid by the Corporation with
respect to any shares of Common Stock issuable under this Agreement, or upon a
disqualifying disposition of shares of Common Stock received pursuant to the
exercise of an Incentive Stock Option, and the Corporation may defer issuance of
shares of Common Stock upon the exercise of the Option unless the Corporation is
indemnified to its satisfaction against any liability for any such tax. The
amount of such withholding or tax payment shall be determined by the Committee
or its delegate and shall be payable by the Optionee at such time as the
Committee determines. The Optionee may satisfy his or her tax withholding
obligation by the payment of cash to the Corporation and/or by the withholding
from the Option, at the appropriate time, of a number of shares of Common Stock
sufficient, based upon the Fair Market Value of such shares of Common Stock, to
satisfy such tax withholding requirements. The Committee shall be authorized, in
its sole discretion, to
4
establish such rules and procedures relating to any such withholding methods as
it deems necessary or appropriate, including, without limitation, rules and
procedures relating to elections to have shares of Common Stock withheld upon
exercise of the Option to meet such withholding obligations.
8. No Exercise in Violation of Law. Notwithstanding any of the
provisions of this Agreement, the Optionee hereby agrees that he or she will not
exercise the Option granted hereby, and that the Corporation will not be
obligated to issue any shares of Common Stock to the Optionee hereunder, if the
exercise thereof or the issuance of such shares of Common Stock shall constitute
a violation by the Optionee or the Corporation of any provision of any law or
regulation of any governmental authority. Any determination in this connection
by the Committee shall be final, binding and conclusive.
9. Securities Law Compliance. The Optionee acknowledges that the shares
of Common Stock issuable on exercise of the Option have not been registered
under the Securities Act of 1993, as amended ("Act"). The Optionee represents
and acknowledges that such shares of Common Stock, when purchased, shall be held
for investment and not with a view to the sale or distribution of any part
thereof, and that the Optionee may be required to bear the economic risk of his
or her investment for an indefinite period of time. The Optionee further
represents and warrants that the Optionee and his or her Beneficiaries will not
sell or otherwise dispose of these shares of Common Stock except pursuant to an
effective registration statement under the Act or in a transaction that, in the
opinion of counsel for the Corporation, is exempt from registration under the
Act.
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: BULL & BEAR GROUP, INC.
__________________________ By:____________________________
Member of the Stock Option
Committee
WITNESS: OPTIONEE
- -------------------------- --------------------------------
* * * * *
Number of shares of Common Stock
subject to the Option: 50,000 shares of Common Stock
Exercise Price per share of Common
Stock: $2.0625
Installment Exercise Schedule:
Cumulative Number of Shares
Anniversary of of Common Stock in Respect
Date of Grant of which Option is Exercisable
Prior to 1st 0
On and After 1st-Prior to 2nd 0
On and After 2nd 45,000
On and After 3rd 50,000
Notice Addresses:
If to the Corporation: If to the Optionee:
Bull & Bear Group, Inc. Bassett S. Winmill
11 Hanover Square 11 Hanover Square
New York, New York 10005 New York, New York 10005
Attention: Secretary
6
BULL & BEAR GROUP, INC.
INCENTIVE STOCK OPTION AGREEMENT FOR EMPLOYEES
AGREEMENT ("Agreement") dated this 5th day of February, 1996 by and
between Bull & Bear Group, Inc., a Delaware corporation ("Corporation"), and
Robert D. Anderson, an employee of the Corporation ("Optionee").
WHEREAS, the Corporation desires to have Optionee continue in its
employ and to provide Optionee with an incentive by sharing in the success of
the Corporation;
WHEREAS, in order to provide such an incentive to its officers and key
employees, the Corporation has adopted the Bull & Bear Group, Inc. 1995
Long-Term Incentive Plan, as amended
("Plan");
WHEREAS, the Corporation desires to grant to Optionee under the Plan
options that qualify as "incentive stock options" within the meaning of Section
422 or any successor provision of the Internal Revenue Code of 1986, as amended
("Code"); and
WHEREAS, unless otherwise provided herein, capitalized terms used in
this Agreement shall have the meaning given them in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants and
representations herein contained and intending to be legally bound, the parties
hereto agree as follows:
1. Number of Shares and Price. The Corporation hereby grants to the
Optionee an option ("Option") to purchase the number of shares of Common Stock
set forth on the last page of this Agreement. The exercise price per share of
Common Stock of the Option shall be as is set forth on the last page of this
Agreement, such price being the Fair Market Value per share of Common Stock on
the Date of Grant of the Option. The Option is intended to be an Incentive Stock
Option; provided, however, that to the extent, but only to the extent, that the
provisions of this Agreement or the nature of any actions taken by the Optionee
are inconsistent with the treatment of the Option as an Incentive Stock Option,
the Option shall be deemed a Non-Qualified Stock Option.
2. Term and Exercise. The Option shall expire five (5)
years from the date hereof, subject to earlier termination as set
forth in Section 3. Subject to the provisions of Section 3, the Option shall
become exercisable in installments as set forth on the last page of this
Agreement. Notwithstanding the foregoing, the Option shall not be exercisable in
whole, or in part, prior to six months from the Date of Grant.
3. Exercise of Option Upon Termination of Employment.
(a) Termination of Vested Option Upon Termination of
Employment.
(i) Termination. Upon the Optionee's Termination of
Employment other than by reason of death or Disability, the
Optionee may, within three months from the date of such
Termination of Employment, exercise all or any part of the
Option to the extent it was exercisable at the date of
Termination of Employment, but only if (a) the Optionee
resigns or retires and the Committee administering the Plan
consents to such resignation or retirement and (b) such
Termination of Employment is not for Cause. If such
Termination of Employment is for Cause, the right of the
Optionee to exercise the Option shall terminate at the date of
Termination of Employment. In no event may the Option be
exercised later than the expiration date described in Section
2.
(ii) Disability. Upon the Optionee's Disability Date, the
Optionee may, within one year after such Disability Date,
exercise all or a part of the Option to the extent it was
exercisable upon such Disability Date. In no event, however,
may the Option be exercised later than the expiration date
described in Section 2.
(iii) Death. In the event of the death of the
Optionee while employed by the Corporation or within the
additional period of time from the date of the Optionee's
Disability Date and prior to the expiration of the Option as
provided in Section 3(a)(ii), to the extent all or any part of
the Option was exercisable as of the date of death, the right
of the Optionee's Beneficiary to exercise the Option shall
expire upon the expiration of one year from the date of the
Optionee's death (but in no event more than one year from the
Optionee's Disability Date) or, if earlier, on the date of
expiration of the Option determined pursuant to Section 2. In
all other cases of death following the Optionee's Termination
of Employment, the Optionee's Beneficiary may exercise the
Option within the remaining time, if any, provided in Section
3(a)(i).
2
(b) Termination of Unvested Option Upon Termination of
Employment. To the extent all or any part of the Option was not
exercisable as of the date of Termination of Employment, the
unexercisable portion of the Option shall expire at the date of
such Termination of Employment.
4. Exercise Procedures. The Option shall be exercisable by written
notice to the Corporation, which must be received by the Secretary of the
Corporation not later than 5:00 P.M. local time at the principal executive
office of the Corporation on the expiration date of the Option. Such written
notice shall set forth (a) the number of shares of Common Stock being purchased,
(b) the total exercise price for the shares of Common Stock being purchased, (c)
the exact name as it should appear on the stock certificate(s) to be issued for
the shares of Common Stock being purchased, and (d) the address to which the
stock certificate(s) should be sent. The exercise price of shares of Common
Stock purchased upon exercise of the Option shall be paid in full (a) in cash,
(b) by delivery to the Corporation of shares of Common Stock (which may include
shares of Common Stock issued in connection with the exercise of the Option,
subject to such rules as the Committee deems appropriate), (c) in any
combination of cash and shares of Common Stock, or (d) by delivery of such other
consideration as the Committee deems appropriate and in compliance with
applicable law (including payment in accordance with a cashless exercise program
under which, if so instructed by the Optionee, shares of Common Stock may be
issued directly to the Optionee's broker or dealer upon receipt of the exercise
price in cash from the broker or dealer). In the event that any shares of Common
Stock shall be transferred to the Corporation to satisfy all or any part of the
exercise price, (i) the part of the exercise price deemed to have been satisfied
by such transfer of shares of Common Stock shall be equal to the product derived
by multiplying the Fair Market Value as of the date of exercise times the number
of shares of Common Stock transferred to the Corporation and (ii) the Optionee
shall be granted a Reload Option covering the number of shares of Common Stock
transferred to the Corporation in payment of the exercise price. The terms of
the Reload Option shall be as set forth in Section 6.03(e) of the Plan and the
Reload Option shall be exercisable in full six months following its date of
grant. The Optionee may not transfer to the Corporation in satisfaction of the
exercise price any fraction of a share of Common Stock, and any portion of the
exercise price that would represent less than a full share of Common Stock must
be paid in cash by the Optionee. Subject to Section 8 hereof, certificates for
the purchased shares of Common Stock will be issued and delivered to the
Optionee as soon as practicable after the receipt of such payment of the
exercise price; provided, however, that delivery of any such shares of Common
Stock shall be deemed effected for all purposes when a stock transfer agent of
the Corporation shall have deposited such certificates in the United States
mail, addressed to Optionee, at
3
the address set forth on the last page of this Agreement or to such other
address as Optionee may from time to time designate in a written notice to the
Corporation. The Optionee shall not be deemed for any purpose to be a
shareholder of the Corporation in respect of any shares of Common Stock as to
which the Option shall not have been exercised, as herein provided, until such
shares of Common Stock have been issued to Optionee by the Corporation
hereunder.
5. Plan Provisions Control Option Terms; Modifications. The Option is
granted pursuant and subject to the terms and conditions of the Plan, the
provisions of which are incorporated herein by reference. In the event any
provision of this Agreement shall conflict with any of the terms in the Plan as
constituted on the Date of Grant, the terms of the Plan as constituted on the
Date of Grant shall control. The Option shall not be modified after the Date of
Grant except by express written agreement between the Corporation and the
Optionee; provided, however, that any such modification (a) shall not be
inconsistent with the terms of the Plan, and (b) shall be approved by the
Committee. No modifications may be made to the Option while the Optionee is
subject to Section 16(b) of the Exchange Act except in compliance with Rule
16b-3.
6. Limitations on Transfer. The Option may not be assigned or
transferred other than by will or the laws of descent and distribution. During
the lifetime of the Optionee, only the Optionee personally may exercise rights
under this Agreement. The Optionee's Beneficiary may exercise the Optionee's
rights hereunder only to the extent they were exercisable under this Agreement
at the date of the death of the Optionee and are otherwise currently
exercisable.
7. Taxes. The Corporation shall be entitled to withhold (or secure
payment from the Optionee in lieu of withholding) the amount of any withholding
or other tax required by law to be withheld or paid by the Corporation with
respect to any shares of Common Stock issuable under this Agreement, or upon a
disqualifying disposition of shares of Common Stock received pursuant to the
exercise of an Incentive Stock Option, and the Corporation may defer issuance of
shares of Common Stock upon the exercise of the Option unless the Corporation is
indemnified to its satisfaction against any liability for any such tax. The
amount of such withholding or tax payment shall be determined by the Committee
or its delegate and shall be payable by the Optionee at such time as the
Committee determines. The Optionee may satisfy his or her tax withholding
obligation by the payment of cash to the Corporation and/or by the withholding
from the Option, at the appropriate time, of a number of shares of Common Stock
sufficient, based upon the Fair Market Value of such shares of Common Stock, to
satisfy such tax withholding requirements. The Committee shall be authorized, in
its sole discretion, to
4
establish such rules and procedures relating to any such withholding methods as
it deems necessary or appropriate, including, without limitation, rules and
procedures relating to elections to have shares of Common Stock withheld upon
exercise of the Option to meet such withholding obligations.
8. No Exercise in Violation of Law. Notwithstanding any of the
provisions of this Agreement, the Optionee hereby agrees that he or she will not
exercise the Option granted hereby, and that the Corporation will not be
obligated to issue any shares of Common Stock to the Optionee hereunder, if the
exercise thereof or the issuance of such shares of Common Stock shall constitute
a violation by the Optionee or the Corporation of any provision of any law or
regulation of any governmental authority. Any determination in this connection
by the Committee shall be final, binding and conclusive.
9. Securities Law Compliance. The Optionee acknowledges that the shares
of Common Stock issuable on exercise of the Option have not been registered
under the Securities Act of 1993, as amended ("Act"). The Optionee represents
and acknowledges that such shares of Common Stock, when purchased, shall be held
for investment and not with a view to the sale or distribution of any part
thereof, and that the Optionee may be required to bear the economic risk of his
or her investment for an indefinite period of time. The Optionee further
represents and warrants that the Optionee and his or her Beneficiaries will not
sell or otherwise dispose of these shares of Common Stock except pursuant to an
effective registration statement under the Act or in a transaction that, in the
opinion of counsel for the Corporation, is exempt from registration under the
Act.
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: BULL & BEAR GROUP, INC.
__________________________ By:____________________________
Member of the Stock Option
Committee
WITNESS: OPTIONEE
- -------------------------- --------------------------------
* * * * *
Number of shares of Common Stock
subject to the Option: 20,000 shares of Common Stock
Exercise Price per share of Common
Stock: $1.875
Installment Exercise Schedule:
Cumulative Number of Shares
Anniversary of of Common Stock in Respect
Date of Grant of which Option is Exercisable
Prior to 1st 0
On and After 1st-Prior to 2nd 0
On and After 2nd 20,000
Notice Addresses:
If to the Corporation: If to the Optionee:
Bull & Bear Group, Inc. Robert D. Anderson
11 Hanover Square 11 Hanover Square
New York, New York 10005 New York, New York 10005
Attention: Secretary
6
BULL & BEAR GROUP, INC.
INCENTIVE STOCK OPTION AGREEMENT FOR EMPLOYEES
AGREEMENT ("Agreement") dated this 5th day of February, 1996 by and
between Bull & Bear Group, Inc., a Delaware corporation ("Corporation"), and
Mark C. Winmill, an employee of the Corporation ("Optionee").
WHEREAS, the Corporation desires to have Optionee continue in its
employ and to provide Optionee with an incentive by sharing in the success of
the Corporation;
WHEREAS, in order to provide such an incentive to its officers and key
employees, the Corporation has adopted the Bull & Bear Group, Inc. 1995
Long-Term Incentive Plan, as amended
("Plan");
WHEREAS, the Corporation desires to grant to Optionee under the Plan
options that qualify as "incentive stock options" within the meaning of Section
422 or any successor provision of the Internal Revenue Code of 1986, as amended
("Code"); and
WHEREAS, unless otherwise provided herein, capitalized terms used in
this Agreement shall have the meaning given them in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants and
representations herein contained and intending to be legally bound, the parties
hereto agree as follows:
1. Number of Shares and Price. The Corporation hereby grants to the
Optionee an option ("Option") to purchase the number of shares of Common Stock
set forth on the last page of this Agreement. The exercise price per share of
Common Stock of the Option shall be as is set forth on the last page of this
Agreement, such price being the Fair Market Value per share of Common Stock on
the Date of Grant of the Option. The Option is intended to be an Incentive Stock
Option; provided, however, that to the extent, but only to the extent, that the
provisions of this Agreement or the nature of any actions taken by the Optionee
are inconsistent with the treatment of the Option as an Incentive Stock Option,
the Option shall be deemed a Non-Qualified Stock Option.
2. Term and Exercise. The Option shall expire five (5)
years from the date hereof, subject to earlier termination as set
forth in Section 3. Subject to the provisions of Section 3, the Option shall
become exercisable in installments as set forth on the last page of this
Agreement. Notwithstanding the foregoing, the Option shall not be exercisable in
whole, or in part, prior to six months from the Date of Grant.
3. Exercise of Option Upon Termination of Employment.
(a) Termination of Vested Option Upon Termination of
Employment.
(i) Termination. Upon the Optionee's Termination of
Employment other than by reason of death or Disability, the
Optionee may, within three months from the date of such
Termination of Employment, exercise all or any part of the
Option to the extent it was exercisable at the date of
Termination of Employment, but only if (a) the Optionee
resigns or retires and the Committee administering the Plan
consents to such resignation or retirement and (b) such
Termination of Employment is not for Cause. If such
Termination of Employment is for Cause, the right of the
Optionee to exercise the Option shall terminate at the date of
Termination of Employment. In no event may the Option be
exercised later than the expiration date described in Section
2.
(ii) Disability. Upon the Optionee's Disability Date, the
Optionee may, within one year after such Disability Date,
exercise all or a part of the Option to the extent it was
exercisable upon such Disability Date. In no event, however,
may the Option be exercised later than the expiration date
described in Section 2.
(iii) Death. In the event of the death of the
Optionee while employed by the Corporation or within the
additional period of time from the date of the Optionee's
Disability Date and prior to the expiration of the Option as
provided in Section 3(a)(ii), to the extent all or any part of
the Option was exercisable as of the date of death, the right
of the Optionee's Beneficiary to exercise the Option shall
expire upon the expiration of one year from the date of the
Optionee's death (but in no event more than one year from the
Optionee's Disability Date) or, if earlier, on the date of
expiration of the Option determined pursuant to Section 2. In
all other cases of death following the Optionee's Termination
of Employment, the Optionee's Beneficiary may exercise the
Option within the remaining time, if any, provided in Section
3(a)(i).
2
(b) Termination of Unvested Option Upon Termination of
Employment. To the extent all or any part of the Option was not
exercisable as of the date of Termination of Employment, the
unexercisable portion of the Option shall expire at the date of
such Termination of Employment.
4. Exercise Procedures. The Option shall be exercisable by written
notice to the Corporation, which must be received by the Secretary of the
Corporation not later than 5:00 P.M. local time at the principal executive
office of the Corporation on the expiration date of the Option. Such written
notice shall set forth (a) the number of shares of Common Stock being purchased,
(b) the total exercise price for the shares of Common Stock being purchased, (c)
the exact name as it should appear on the stock certificate(s) to be issued for
the shares of Common Stock being purchased, and (d) the address to which the
stock certificate(s) should be sent. The exercise price of shares of Common
Stock purchased upon exercise of the Option shall be paid in full (a) in cash,
(b) by delivery to the Corporation of shares of Common Stock (which may include
shares of Common Stock issued in connection with the exercise of the Option,
subject to such rules as the Committee deems appropriate), (c) in any
combination of cash and shares of Common Stock, or (d) by delivery of such other
consideration as the Committee deems appropriate and in compliance with
applicable law (including payment in accordance with a cashless exercise program
under which, if so instructed by the Optionee, shares of Common Stock may be
issued directly to the Optionee's broker or dealer upon receipt of the exercise
price in cash from the broker or dealer). In the event that any shares of Common
Stock shall be transferred to the Corporation to satisfy all or any part of the
exercise price, (i) the part of the exercise price deemed to have been satisfied
by such transfer of shares of Common Stock shall be equal to the product derived
by multiplying the Fair Market Value as of the date of exercise times the number
of shares of Common Stock transferred to the Corporation and (ii) the Optionee
shall be granted a Reload Option covering the number of shares of Common Stock
transferred to the Corporation in payment of the exercise price. The terms of
the Reload Option shall be as set forth in Section 6.03(e) of the Plan and the
Reload Option shall be exercisable in full six months following its date of
grant. The Optionee may not transfer to the Corporation in satisfaction of the
exercise price any fraction of a share of Common Stock, and any portion of the
exercise price that would represent less than a full share of Common Stock must
be paid in cash by the Optionee. Subject to Section 8 hereof, certificates for
the purchased shares of Common Stock will be issued and delivered to the
Optionee as soon as practicable after the receipt of such payment of the
exercise price; provided, however, that delivery of any such shares of Common
Stock shall be deemed effected for all purposes when a stock transfer agent of
the Corporation shall have deposited such certificates in the United States
mail, addressed to Optionee, at
3
the address set forth on the last page of this Agreement or to such other
address as Optionee may from time to time designate in a written notice to the
Corporation. The Optionee shall not be deemed for any purpose to be a
shareholder of the Corporation in respect of any shares of Common Stock as to
which the Option shall not have been exercised, as herein provided, until such
shares of Common Stock have been issued to Optionee by the Corporation
hereunder.
5. Plan Provisions Control Option Terms; Modifications. The Option is
granted pursuant and subject to the terms and conditions of the Plan, the
provisions of which are incorporated herein by reference. In the event any
provision of this Agreement shall conflict with any of the terms in the Plan as
constituted on the Date of Grant, the terms of the Plan as constituted on the
Date of Grant shall control. The Option shall not be modified after the Date of
Grant except by express written agreement between the Corporation and the
Optionee; provided, however, that any such modification (a) shall not be
inconsistent with the terms of the Plan, and (b) shall be approved by the
Committee. No modifications may be made to the Option while the Optionee is
subject to Section 16(b) of the Exchange Act except in compliance with Rule
16b-3.
6. Limitations on Transfer. The Option may not be assigned or
transferred other than by will or the laws of descent and distribution. During
the lifetime of the Optionee, only the Optionee personally may exercise rights
under this Agreement. The Optionee's Beneficiary may exercise the Optionee's
rights hereunder only to the extent they were exercisable under this Agreement
at the date of the death of the Optionee and are otherwise currently
exercisable.
7. Taxes. The Corporation shall be entitled to withhold (or secure
payment from the Optionee in lieu of withholding) the amount of any withholding
or other tax required by law to be withheld or paid by the Corporation with
respect to any shares of Common Stock issuable under this Agreement, or upon a
disqualifying disposition of shares of Common Stock received pursuant to the
exercise of an Incentive Stock Option, and the Corporation may defer issuance of
shares of Common Stock upon the exercise of the Option unless the Corporation is
indemnified to its satisfaction against any liability for any such tax. The
amount of such withholding or tax payment shall be determined by the Committee
or its delegate and shall be payable by the Optionee at such time as the
Committee determines. The Optionee may satisfy his or her tax withholding
obligation by the payment of cash to the Corporation and/or by the withholding
from the Option, at the appropriate time, of a number of shares of Common Stock
sufficient, based upon the Fair Market Value of such shares of Common Stock, to
satisfy such tax withholding requirements. The Committee shall be authorized, in
its sole discretion, to
4
establish such rules and procedures relating to any such withholding methods as
it deems necessary or appropriate, including, without limitation, rules and
procedures relating to elections to have shares of Common Stock withheld upon
exercise of the Option to meet such withholding obligations.
8. No Exercise in Violation of Law. Notwithstanding any of the
provisions of this Agreement, the Optionee hereby agrees that he or she will not
exercise the Option granted hereby, and that the Corporation will not be
obligated to issue any shares of Common Stock to the Optionee hereunder, if the
exercise thereof or the issuance of such shares of Common Stock shall constitute
a violation by the Optionee or the Corporation of any provision of any law or
regulation of any governmental authority. Any determination in this connection
by the Committee shall be final, binding and conclusive.
9. Securities Law Compliance. The Optionee acknowledges that the shares
of Common Stock issuable on exercise of the Option have not been registered
under the Securities Act of 1993, as amended ("Act"). The Optionee represents
and acknowledges that such shares of Common Stock, when purchased, shall be held
for investment and not with a view to the sale or distribution of any part
thereof, and that the Optionee may be required to bear the economic risk of his
or her investment for an indefinite period of time. The Optionee further
represents and warrants that the Optionee and his or her Beneficiaries will not
sell or otherwise dispose of these shares of Common Stock except pursuant to an
effective registration statement under the Act or in a transaction that, in the
opinion of counsel for the Corporation, is exempt from registration under the
Act.
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: BULL & BEAR GROUP, INC.
__________________________ By:____________________________
Member of the Stock Option
Committee
WITNESS: OPTIONEE
- -------------------------- --------------------------------
* * * * *
Number of shares of Common Stock
subject to the Option: 50,000 shares of Common Stock
Exercise Price per share of Common
Stock: $1.875
Installment Exercise Schedule:
Cumulative Number of Shares
Anniversary of of Common Stock in Respect
Date of Grant of which Option is Exercisable
Prior to 1st 0
On and After 1st-Prior to 2nd 0
On and After 2nd 50,000
Notice Addresses:
If to the Corporation: If to the Optionee:
Bull & Bear Group, Inc. Mark C. Winmill
11 Hanover Square 11 Hanover Square
New York, New York 10005 New York, New York 10005
Attention: Secretary
6
BULL & BEAR GROUP, INC.
INCENTIVE STOCK OPTION AGREEMENT FOR EMPLOYEES
AGREEMENT ("Agreement") dated this 5th day of February, 1996 by and
between Bull & Bear Group, Inc., a Delaware corporation ("Corporation"), and
Thomas B. Winmill, an employee of the Corporation ("Optionee").
WHEREAS, the Corporation desires to have Optionee continue in its
employ and to provide Optionee with an incentive by sharing in the success of
the Corporation;
WHEREAS, in order to provide such an incentive to its officers and key
employees, the Corporation has adopted the Bull & Bear Group, Inc. 1995
Long-Term Incentive Plan, as amended
("Plan");
WHEREAS, the Corporation desires to grant to Optionee under the Plan
options that qualify as "incentive stock options" within the meaning of Section
422 or any successor provision of the Internal Revenue Code of 1986, as amended
("Code"); and
WHEREAS, unless otherwise provided herein, capitalized terms used in
this Agreement shall have the meaning given them in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants and
representations herein contained and intending to be legally bound, the parties
hereto agree as follows:
1. Number of Shares and Price. The Corporation hereby grants to the
Optionee an option ("Option") to purchase the number of shares of Common Stock
set forth on the last page of this Agreement. The exercise price per share of
Common Stock of the Option shall be as is set forth on the last page of this
Agreement, such price being the Fair Market Value per share of Common Stock on
the Date of Grant of the Option. The Option is intended to be an Incentive Stock
Option; provided, however, that to the extent, but only to the extent, that the
provisions of this Agreement or the nature of any actions taken by the Optionee
are inconsistent with the treatment of the Option as an Incentive Stock Option,
the Option shall be deemed a Non-Qualified Stock Option.
2. Term and Exercise. The Option shall expire five (5)
years from the date hereof, subject to earlier termination as set
forth in Section 3. Subject to the provisions of Section 3, the Option shall
become exercisable in installments as set forth on the last page of this
Agreement. Notwithstanding the foregoing, the Option shall not be exercisable in
whole, or in part, prior to six months from the Date of Grant.
3. Exercise of Option Upon Termination of Employment.
(a) Termination of Vested Option Upon Termination of
Employment.
(i) Termination. Upon the Optionee's Termination of
Employment other than by reason of death or Disability, the
Optionee may, within three months from the date of such
Termination of Employment, exercise all or any part of the
Option to the extent it was exercisable at the date of
Termination of Employment, but only if (a) the Optionee
resigns or retires and the Committee administering the Plan
consents to such resignation or retirement and (b) such
Termination of Employment is not for Cause. If such
Termination of Employment is for Cause, the right of the
Optionee to exercise the Option shall terminate at the date of
Termination of Employment. In no event may the Option be
exercised later than the expiration date described in Section
2.
(ii) Disability. Upon the Optionee's Disability Date, the
Optionee may, within one year after such Disability Date,
exercise all or a part of the Option to the extent it was
exercisable upon such Disability Date. In no event, however,
may the Option be exercised later than the expiration date
described in Section 2.
(iii) Death. In the event of the death of the
Optionee while employed by the Corporation or within the
additional period of time from the date of the Optionee's
Disability Date and prior to the expiration of the Option as
provided in Section 3(a)(ii), to the extent all or any part of
the Option was exercisable as of the date of death, the right
of the Optionee's Beneficiary to exercise the Option shall
expire upon the expiration of one year from the date of the
Optionee's death (but in no event more than one year from the
Optionee's Disability Date) or, if earlier, on the date of
expiration of the Option determined pursuant to Section 2. In
all other cases of death following the Optionee's Termination
of Employment, the Optionee's Beneficiary may exercise the
Option within the remaining time, if any, provided in Section
3(a)(i).
2
(b) Termination of Unvested Option Upon Termination of
Employment. To the extent all or any part of the Option was not
exercisable as of the date of Termination of Employment, the
unexercisable portion of the Option shall expire at the date of
such Termination of Employment.
4. Exercise Procedures. The Option shall be exercisable by written
notice to the Corporation, which must be received by the Secretary of the
Corporation not later than 5:00 P.M. local time at the principal executive
office of the Corporation on the expiration date of the Option. Such written
notice shall set forth (a) the number of shares of Common Stock being purchased,
(b) the total exercise price for the shares of Common Stock being purchased, (c)
the exact name as it should appear on the stock certificate(s) to be issued for
the shares of Common Stock being purchased, and (d) the address to which the
stock certificate(s) should be sent. The exercise price of shares of Common
Stock purchased upon exercise of the Option shall be paid in full (a) in cash,
(b) by delivery to the Corporation of shares of Common Stock (which may include
shares of Common Stock issued in connection with the exercise of the Option,
subject to such rules as the Committee deems appropriate), (c) in any
combination of cash and shares of Common Stock, or (d) by delivery of such other
consideration as the Committee deems appropriate and in compliance with
applicable law (including payment in accordance with a cashless exercise program
under which, if so instructed by the Optionee, shares of Common Stock may be
issued directly to the Optionee's broker or dealer upon receipt of the exercise
price in cash from the broker or dealer). In the event that any shares of Common
Stock shall be transferred to the Corporation to satisfy all or any part of the
exercise price, (i) the part of the exercise price deemed to have been satisfied
by such transfer of shares of Common Stock shall be equal to the product derived
by multiplying the Fair Market Value as of the date of exercise times the number
of shares of Common Stock transferred to the Corporation and (ii) the Optionee
shall be granted a Reload Option covering the number of shares of Common Stock
transferred to the Corporation in payment of the exercise price. The terms of
the Reload Option shall be as set forth in Section 6.03(e) of the Plan and the
Reload Option shall be exercisable in full six months following its date of
grant. The Optionee may not transfer to the Corporation in satisfaction of the
exercise price any fraction of a share of Common Stock, and any portion of the
exercise price that would represent less than a full share of Common Stock must
be paid in cash by the Optionee. Subject to Section 8 hereof, certificates for
the purchased shares of Common Stock will be issued and delivered to the
Optionee as soon as practicable after the receipt of such payment of the
exercise price; provided, however, that delivery of any such shares of Common
Stock shall be deemed effected for all purposes when a stock transfer agent of
the Corporation shall have deposited such certificates in the United States
mail, addressed to Optionee, at
3
the address set forth on the last page of this Agreement or to such other
address as Optionee may from time to time designate in a written notice to the
Corporation. The Optionee shall not be deemed for any purpose to be a
shareholder of the Corporation in respect of any shares of Common Stock as to
which the Option shall not have been exercised, as herein provided, until such
shares of Common Stock have been issued to Optionee by the Corporation
hereunder.
5. Plan Provisions Control Option Terms; Modifications. The Option is
granted pursuant and subject to the terms and conditions of the Plan, the
provisions of which are incorporated herein by reference. In the event any
provision of this Agreement shall conflict with any of the terms in the Plan as
constituted on the Date of Grant, the terms of the Plan as constituted on the
Date of Grant shall control. The Option shall not be modified after the Date of
Grant except by express written agreement between the Corporation and the
Optionee; provided, however, that any such modification (a) shall not be
inconsistent with the terms of the Plan, and (b) shall be approved by the
Committee. No modifications may be made to the Option while the Optionee is
subject to Section 16(b) of the Exchange Act except in compliance with Rule
16b-3.
6. Limitations on Transfer. The Option may not be assigned or
transferred other than by will or the laws of descent and distribution. During
the lifetime of the Optionee, only the Optionee personally may exercise rights
under this Agreement. The Optionee's Beneficiary may exercise the Optionee's
rights hereunder only to the extent they were exercisable under this Agreement
at the date of the death of the Optionee and are otherwise currently
exercisable.
7. Taxes. The Corporation shall be entitled to withhold (or secure
payment from the Optionee in lieu of withholding) the amount of any withholding
or other tax required by law to be withheld or paid by the Corporation with
respect to any shares of Common Stock issuable under this Agreement, or upon a
disqualifying disposition of shares of Common Stock received pursuant to the
exercise of an Incentive Stock Option, and the Corporation may defer issuance of
shares of Common Stock upon the exercise of the Option unless the Corporation is
indemnified to its satisfaction against any liability for any such tax. The
amount of such withholding or tax payment shall be determined by the Committee
or its delegate and shall be payable by the Optionee at such time as the
Committee determines. The Optionee may satisfy his or her tax withholding
obligation by the payment of cash to the Corporation and/or by the withholding
from the Option, at the appropriate time, of a number of shares of Common Stock
sufficient, based upon the Fair Market Value of such shares of Common Stock, to
satisfy such tax withholding requirements. The Committee shall be authorized, in
its sole discretion, to
4
establish such rules and procedures relating to any such withholding methods as
it deems necessary or appropriate, including, without limitation, rules and
procedures relating to elections to have shares of Common Stock withheld upon
exercise of the Option to meet such withholding obligations.
8. No Exercise in Violation of Law. Notwithstanding any of the
provisions of this Agreement, the Optionee hereby agrees that he or she will not
exercise the Option granted hereby, and that the Corporation will not be
obligated to issue any shares of Common Stock to the Optionee hereunder, if the
exercise thereof or the issuance of such shares of Common Stock shall constitute
a violation by the Optionee or the Corporation of any provision of any law or
regulation of any governmental authority. Any determination in this connection
by the Committee shall be final, binding and conclusive.
9. Securities Law Compliance. The Optionee acknowledges that the shares
of Common Stock issuable on exercise of the Option have not been registered
under the Securities Act of 1993, as amended ("Act"). The Optionee represents
and acknowledges that such shares of Common Stock, when purchased, shall be held
for investment and not with a view to the sale or distribution of any part
thereof, and that the Optionee may be required to bear the economic risk of his
or her investment for an indefinite period of time. The Optionee further
represents and warrants that the Optionee and his or her Beneficiaries will not
sell or otherwise dispose of these shares of Common Stock except pursuant to an
effective registration statement under the Act or in a transaction that, in the
opinion of counsel for the Corporation, is exempt from registration under the
Act.
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: BULL & BEAR GROUP, INC.
__________________________ By:____________________________
Member of the Stock Option
Committee
WITNESS: OPTIONEE
- -------------------------- --------------------------------
* * * * *
Number of shares of Common Stock
subject to the Option: 50,000 shares of Common Stock
Exercise Price per share of Common
Stock: $1.875
Installment Exercise Schedule:
Cumulative Number of Shares
Anniversary of of Common Stock in Respect
Date of Grant of which Option is Exercisable
Prior to 1st 0
On and After 1st-Prior to 2nd 0
On and After 2nd 50,000
Notice Addresses:
If to the Corporation: If to the Optionee:
Bull & Bear Group, Inc. Thomas B. Winmill1
11 Hanover Square 11 Hanover Square
New York, New York 10005 New York, New York 10005
Attention: Secretary
6
BULL & BEAR GROUP, INC.
INCENTIVE STOCK OPTION AGREEMENT FOR EMPLOYEES
AGREEMENT ("Agreement") dated this 5th day of February, 1996 by and
between Bull & Bear Group, Inc., a Delaware corporation ("Corporation"), and
Steven A. Landis, an employee of the Corporation ("Optionee").
WHEREAS, the Corporation desires to have Optionee continue in its
employ and to provide Optionee with an incentive by sharing in the success of
the Corporation;
WHEREAS, in order to provide such an incentive to its officers and key
employees, the Corporation has adopted the Bull & Bear Group, Inc. 1995
Long-Term Incentive Plan, as amended
("Plan");
WHEREAS, the Corporation desires to grant to Optionee under the Plan
options that qualify as "incentive stock options" within the meaning of Section
422 or any successor provision of the Internal Revenue Code of 1986, as amended
("Code"); and
WHEREAS, unless otherwise provided herein, capitalized terms used in
this Agreement shall have the meaning given them in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants and
representations herein contained and intending to be legally bound, the parties
hereto agree as follows:
1. Number of Shares and Price. The Corporation hereby grants to the
Optionee an option ("Option") to purchase the number of shares of Common Stock
set forth on the last page of this Agreement. The exercise price per share of
Common Stock of the Option shall be as is set forth on the last page of this
Agreement, such price being the Fair Market Value per share of Common Stock on
the Date of Grant of the Option. The Option is intended to be an Incentive Stock
Option; provided, however, that to the extent, but only to the extent, that the
provisions of this Agreement or the nature of any actions taken by the Optionee
are inconsistent with the treatment of the Option as an Incentive Stock Option,
the Option shall be deemed a Non-Qualified Stock Option.
2. Term and Exercise. The Option shall expire five (5)
years from the date hereof, subject to earlier termination as set
forth in Section 3. Subject to the provisions of Section 3, the Option shall
become exercisable in installments as set forth on the last page of this
Agreement. Notwithstanding the foregoing, the Option shall not be exercisable in
whole, or in part, prior to six months from the Date of Grant.
3. Exercise of Option Upon Termination of Employment.
(a) Termination of Vested Option Upon Termination of
Employment.
(i) Termination. Upon the Optionee's Termination of
Employment other than by reason of death or Disability, the
Optionee may, within three months from the date of such
Termination of Employment, exercise all or any part of the
Option to the extent it was exercisable at the date of
Termination of Employment, but only if (a) the Optionee
resigns or retires and the Committee administering the Plan
consents to such resignation or retirement and (b) such
Termination of Employment is not for Cause. If such
Termination of Employment is for Cause, the right of the
Optionee to exercise the Option shall terminate at the date of
Termination of Employment. In no event may the Option be
exercised later than the expiration date described in Section
2.
(ii) Disability. Upon the Optionee's Disability Date, the
Optionee may, within one year after such Disability Date,
exercise all or a part of the Option to the extent it was
exercisable upon such Disability Date. In no event, however,
may the Option be exercised later than the expiration date
described in Section 2.
(iii) Death. In the event of the death of the
Optionee while employed by the Corporation or within the
additional period of time from the date of the Optionee's
Disability Date and prior to the expiration of the Option as
provided in Section 3(a)(ii), to the extent all or any part of
the Option was exercisable as of the date of death, the right
of the Optionee's Beneficiary to exercise the Option shall
expire upon the expiration of one year from the date of the
Optionee's death (but in no event more than one year from the
Optionee's Disability Date) or, if earlier, on the date of
expiration of the Option determined pursuant to Section 2. In
all other cases of death following the Optionee's Termination
of Employment, the Optionee's Beneficiary may exercise the
Option within the remaining time, if any, provided in Section
3(a)(i).
2
(b) Termination of Unvested Option Upon Termination of
Employment. To the extent all or any part of the Option was not
exercisable as of the date of Termination of Employment, the
unexercisable portion of the Option shall expire at the date of
such Termination of Employment.
4. Exercise Procedures. The Option shall be exercisable by written
notice to the Corporation, which must be received by the Secretary of the
Corporation not later than 5:00 P.M. local time at the principal executive
office of the Corporation on the expiration date of the Option. Such written
notice shall set forth (a) the number of shares of Common Stock being purchased,
(b) the total exercise price for the shares of Common Stock being purchased, (c)
the exact name as it should appear on the stock certificate(s) to be issued for
the shares of Common Stock being purchased, and (d) the address to which the
stock certificate(s) should be sent. The exercise price of shares of Common
Stock purchased upon exercise of the Option shall be paid in full (a) in cash,
(b) by delivery to the Corporation of shares of Common Stock (which may include
shares of Common Stock issued in connection with the exercise of the Option,
subject to such rules as the Committee deems appropriate), (c) in any
combination of cash and shares of Common Stock, or (d) by delivery of such other
consideration as the Committee deems appropriate and in compliance with
applicable law (including payment in accordance with a cashless exercise program
under which, if so instructed by the Optionee, shares of Common Stock may be
issued directly to the Optionee's broker or dealer upon receipt of the exercise
price in cash from the broker or dealer). In the event that any shares of Common
Stock shall be transferred to the Corporation to satisfy all or any part of the
exercise price, (i) the part of the exercise price deemed to have been satisfied
by such transfer of shares of Common Stock shall be equal to the product derived
by multiplying the Fair Market Value as of the date of exercise times the number
of shares of Common Stock transferred to the Corporation and (ii) the Optionee
shall be granted a Reload Option covering the number of shares of Common Stock
transferred to the Corporation in payment of the exercise price. The terms of
the Reload Option shall be as set forth in Section 6.03(e) of the Plan and the
Reload Option shall be exercisable in full six months following its date of
grant. The Optionee may not transfer to the Corporation in satisfaction of the
exercise price any fraction of a share of Common Stock, and any portion of the
exercise price that would represent less than a full share of Common Stock must
be paid in cash by the Optionee. Subject to Section 8 hereof, certificates for
the purchased shares of Common Stock will be issued and delivered to the
Optionee as soon as practicable after the receipt of such payment of the
exercise price; provided, however, that delivery of any such shares of Common
Stock shall be deemed effected for all purposes when a stock transfer agent of
the Corporation shall have deposited such certificates in the United States
mail, addressed to Optionee, at
3
the address set forth on the last page of this Agreement or to such other
address as Optionee may from time to time designate in a written notice to the
Corporation. The Optionee shall not be deemed for any purpose to be a
shareholder of the Corporation in respect of any shares of Common Stock as to
which the Option shall not have been exercised, as herein provided, until such
shares of Common Stock have been issued to Optionee by the Corporation
hereunder.
5. Plan Provisions Control Option Terms; Modifications. The Option is
granted pursuant and subject to the terms and conditions of the Plan, the
provisions of which are incorporated herein by reference. In the event any
provision of this Agreement shall conflict with any of the terms in the Plan as
constituted on the Date of Grant, the terms of the Plan as constituted on the
Date of Grant shall control. The Option shall not be modified after the Date of
Grant except by express written agreement between the Corporation and the
Optionee; provided, however, that any such modification (a) shall not be
inconsistent with the terms of the Plan, and (b) shall be approved by the
Committee. No modifications may be made to the Option while the Optionee is
subject to Section 16(b) of the Exchange Act except in compliance with Rule
16b-3.
6. Limitations on Transfer. The Option may not be assigned or
transferred other than by will or the laws of descent and distribution. During
the lifetime of the Optionee, only the Optionee personally may exercise rights
under this Agreement. The Optionee's Beneficiary may exercise the Optionee's
rights hereunder only to the extent they were exercisable under this Agreement
at the date of the death of the Optionee and are otherwise currently
exercisable.
7. Taxes. The Corporation shall be entitled to withhold (or secure
payment from the Optionee in lieu of withholding) the amount of any withholding
or other tax required by law to be withheld or paid by the Corporation with
respect to any shares of Common Stock issuable under this Agreement, or upon a
disqualifying disposition of shares of Common Stock received pursuant to the
exercise of an Incentive Stock Option, and the Corporation may defer issuance of
shares of Common Stock upon the exercise of the Option unless the Corporation is
indemnified to its satisfaction against any liability for any such tax. The
amount of such withholding or tax payment shall be determined by the Committee
or its delegate and shall be payable by the Optionee at such time as the
Committee determines. The Optionee may satisfy his or her tax withholding
obligation by the payment of cash to the Corporation and/or by the withholding
from the Option, at the appropriate time, of a number of shares of Common Stock
sufficient, based upon the Fair Market Value of such shares of Common Stock, to
satisfy such tax withholding requirements. The Committee shall be authorized, in
its sole discretion, to
4
establish such rules and procedures relating to any such withholding methods as
it deems necessary or appropriate, including, without limitation, rules and
procedures relating to elections to have shares of Common Stock withheld upon
exercise of the Option to meet such withholding obligations.
8. No Exercise in Violation of Law. Notwithstanding any of the
provisions of this Agreement, the Optionee hereby agrees that he or she will not
exercise the Option granted hereby, and that the Corporation will not be
obligated to issue any shares of Common Stock to the Optionee hereunder, if the
exercise thereof or the issuance of such shares of Common Stock shall constitute
a violation by the Optionee or the Corporation of any provision of any law or
regulation of any governmental authority. Any determination in this connection
by the Committee shall be final, binding and conclusive.
9. Securities Law Compliance. The Optionee acknowledges that the shares
of Common Stock issuable on exercise of the Option have not been registered
under the Securities Act of 1993, as amended ("Act"). The Optionee represents
and acknowledges that such shares of Common Stock, when purchased, shall be held
for investment and not with a view to the sale or distribution of any part
thereof, and that the Optionee may be required to bear the economic risk of his
or her investment for an indefinite period of time. The Optionee further
represents and warrants that the Optionee and his or her Beneficiaries will not
sell or otherwise dispose of these shares of Common Stock except pursuant to an
effective registration statement under the Act or in a transaction that, in the
opinion of counsel for the Corporation, is exempt from registration under the
Act.
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: BULL & BEAR GROUP, INC.
__________________________ By:____________________________
Member of the Stock Option
Committee
WITNESS: OPTIONEE
- -------------------------- --------------------------------
* * * * *
Number of shares of Common Stock
subject to the Option: 20,000 shares of Common Stock
Exercise Price per share of Common
Stock: $1.875
Installment Exercise Schedule
Cumulative Number of Shares
Anniversary of of Common Stock in Respect
Date of Grant of which Option is Exercisable
Prior to 1st 0
On and After 1st-Prior to 2nd 0
On and After 2nd 20,000
Notice Addresses:
If to the Corporation: If to the Optionee:
Bull & Bear Group, Inc. Steven A. Landis
11 Hanover Square 11 Hanover Square
New York, New York 10005 New York, New York 10005
Attention: Secretary
6
BULL & BEAR GROUP, INC.
INCENTIVE STOCK OPTION AGREEMENT FOR EMPLOYEES
AGREEMENT ("Agreement") dated this 5th day of February, 1996 by and
between Bull & Bear Group, Inc., a Delaware corporation ("Corporation"), and
Brett B. Sneed, an employee of the Corporation ("Optionee").
WHEREAS, the Corporation desires to have Optionee continue in its
employ and to provide Optionee with an incentive by sharing in the success of
the Corporation;
WHEREAS, in order to provide such an incentive to its officers and key
employees, the Corporation has adopted the Bull & Bear Group, Inc. 1995
Long-Term Incentive Plan, as amended
("Plan");
WHEREAS, the Corporation desires to grant to Optionee under the Plan
options that qualify as "incentive stock options" within the meaning of Section
422 or any successor provision of the Internal Revenue Code of 1986, as amended
("Code"); and
WHEREAS, unless otherwise provided herein, capitalized terms used in
this Agreement shall have the meaning given them in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants and
representations herein contained and intending to be legally bound, the parties
hereto agree as follows:
1. Number of Shares and Price. The Corporation hereby grants to the
Optionee an option ("Option") to purchase the number of shares of Common Stock
set forth on the last page of this Agreement. The exercise price per share of
Common Stock of the Option shall be as is set forth on the last page of this
Agreement, such price being the Fair Market Value per share of Common Stock on
the Date of Grant of the Option. The Option is intended to be an Incentive Stock
Option; provided, however, that to the extent, but only to the extent, that the
provisions of this Agreement or the nature of any actions taken by the Optionee
are inconsistent with the treatment of the Option as an Incentive Stock Option,
the Option shall be deemed a Non-Qualified Stock Option.
2. Term and Exercise. The Option shall expire five (5)
years from the date hereof, subject to earlier termination as set
forth in Section 3. Subject to the provisions of Section 3, the Option shall
become exercisable in installments as set forth on the last page of this
Agreement. Notwithstanding the foregoing, the Option shall not be exercisable in
whole, or in part, prior to six months from the Date of Grant.
3. Exercise of Option Upon Termination of Employment.
(a) Termination of Vested Option Upon Termination of
Employment.
(i) Termination. Upon the Optionee's Termination of
Employment other than by reason of death or Disability, the
Optionee may, within three months from the date of such
Termination of Employment, exercise all or any part of the
Option to the extent it was exercisable at the date of
Termination of Employment, but only if (a) the Optionee
resigns or retires and the Committee administering the Plan
consents to such resignation or retirement and (b) such
Termination of Employment is not for Cause. If such
Termination of Employment is for Cause, the right of the
Optionee to exercise the Option shall terminate at the date of
Termination of Employment. In no event may the Option be
exercised later than the expiration date described in Section
2.
(ii) Disability. Upon the Optionee's Disability Date, the
Optionee may, within one year after such Disability Date,
exercise all or a part of the Option to the extent it was
exercisable upon such Disability Date. In no event, however,
may the Option be exercised later than the expiration date
described in Section 2.
(iii) Death. In the event of the death of the
Optionee while employed by the Corporation or within the
additional period of time from the date of the Optionee's
Disability Date and prior to the expiration of the Option as
provided in Section 3(a)(ii), to the extent all or any part of
the Option was exercisable as of the date of death, the right
of the Optionee's Beneficiary to exercise the Option shall
expire upon the expiration of one year from the date of the
Optionee's death (but in no event more than one year from the
Optionee's Disability Date) or, if earlier, on the date of
expiration of the Option determined pursuant to Section 2. In
all other cases of death following the Optionee's Termination
of Employment, the Optionee's Beneficiary may exercise the
Option within the remaining time, if any, provided in Section
3(a)(i).
2
(b) Termination of Unvested Option Upon Termination of
Employment. To the extent all or any part of the Option was not
exercisable as of the date of Termination of Employment, the
unexercisable portion of the Option shall expire at the date of
such Termination of Employment.
4. Exercise Procedures. The Option shall be exercisable by written
notice to the Corporation, which must be received by the Secretary of the
Corporation not later than 5:00 P.M. local time at the principal executive
office of the Corporation on the expiration date of the Option. Such written
notice shall set forth (a) the number of shares of Common Stock being purchased,
(b) the total exercise price for the shares of Common Stock being purchased, (c)
the exact name as it should appear on the stock certificate(s) to be issued for
the shares of Common Stock being purchased, and (d) the address to which the
stock certificate(s) should be sent. The exercise price of shares of Common
Stock purchased upon exercise of the Option shall be paid in full (a) in cash,
(b) by delivery to the Corporation of shares of Common Stock (which may include
shares of Common Stock issued in connection with the exercise of the Option,
subject to such rules as the Committee deems appropriate), (c) in any
combination of cash and shares of Common Stock, or (d) by delivery of such other
consideration as the Committee deems appropriate and in compliance with
applicable law (including payment in accordance with a cashless exercise program
under which, if so instructed by the Optionee, shares of Common Stock may be
issued directly to the Optionee's broker or dealer upon receipt of the exercise
price in cash from the broker or dealer). In the event that any shares of Common
Stock shall be transferred to the Corporation to satisfy all or any part of the
exercise price, (i) the part of the exercise price deemed to have been satisfied
by such transfer of shares of Common Stock shall be equal to the product derived
by multiplying the Fair Market Value as of the date of exercise times the number
of shares of Common Stock transferred to the Corporation and (ii) the Optionee
shall be granted a Reload Option covering the number of shares of Common Stock
transferred to the Corporation in payment of the exercise price. The terms of
the Reload Option shall be as set forth in Section 6.03(e) of the Plan and the
Reload Option shall be exercisable in full six months following its date of
grant. The Optionee may not transfer to the Corporation in satisfaction of the
exercise price any fraction of a share of Common Stock, and any portion of the
exercise price that would represent less than a full share of Common Stock must
be paid in cash by the Optionee. Subject to Section 8 hereof, certificates for
the purchased shares of Common Stock will be issued and delivered to the
Optionee as soon as practicable after the receipt of such payment of the
exercise price; provided, however, that delivery of any such shares of Common
Stock shall be deemed effected for all purposes when a stock transfer agent of
the Corporation shall have deposited such certificates in the United States
mail, addressed to Optionee, at
3
the address set forth on the last page of this Agreement or to such other
address as Optionee may from time to time designate in a written notice to the
Corporation. The Optionee shall not be deemed for any purpose to be a
shareholder of the Corporation in respect of any shares of Common Stock as to
which the Option shall not have been exercised, as herein provided, until such
shares of Common Stock have been issued to Optionee by the Corporation
hereunder.
5. Plan Provisions Control Option Terms; Modifications. The Option is
granted pursuant and subject to the terms and conditions of the Plan, the
provisions of which are incorporated herein by reference. In the event any
provision of this Agreement shall conflict with any of the terms in the Plan as
constituted on the Date of Grant, the terms of the Plan as constituted on the
Date of Grant shall control. The Option shall not be modified after the Date of
Grant except by express written agreement between the Corporation and the
Optionee; provided, however, that any such modification (a) shall not be
inconsistent with the terms of the Plan, and (b) shall be approved by the
Committee. No modifications may be made to the Option while the Optionee is
subject to Section 16(b) of the Exchange Act except in compliance with Rule
16b-3.
6. Limitations on Transfer. The Option may not be assigned or
transferred other than by will or the laws of descent and distribution. During
the lifetime of the Optionee, only the Optionee personally may exercise rights
under this Agreement. The Optionee's Beneficiary may exercise the Optionee's
rights hereunder only to the extent they were exercisable under this Agreement
at the date of the death of the Optionee and are otherwise currently
exercisable.
7. Taxes. The Corporation shall be entitled to withhold (or secure
payment from the Optionee in lieu of withholding) the amount of any withholding
or other tax required by law to be withheld or paid by the Corporation with
respect to any shares of Common Stock issuable under this Agreement, or upon a
disqualifying disposition of shares of Common Stock received pursuant to the
exercise of an Incentive Stock Option, and the Corporation may defer issuance of
shares of Common Stock upon the exercise of the Option unless the Corporation is
indemnified to its satisfaction against any liability for any such tax. The
amount of such withholding or tax payment shall be determined by the Committee
or its delegate and shall be payable by the Optionee at such time as the
Committee determines. The Optionee may satisfy his or her tax withholding
obligation by the payment of cash to the Corporation and/or by the withholding
from the Option, at the appropriate time, of a number of shares of Common Stock
sufficient, based upon the Fair Market Value of such shares of Common Stock, to
satisfy such tax withholding requirements. The Committee shall be authorized, in
its sole discretion, to
establish such rules and procedures relating to any such withholding methods as
it deems necessary or appropriate, including, without limitation, rules and
procedures relating to elections to have shares of Common Stock withheld upon
exercise of the Option to meet such withholding obligations.
8. No Exercise in Violation of Law. Notwithstanding any of the
provisions of this Agreement, the Optionee hereby agrees that he or she will not
exercise the Option granted hereby, and that the Corporation will not be
obligated to issue any shares of Common Stock to the Optionee hereunder, if the
exercise thereof or the issuance of such shares of Common Stock shall constitute
a violation by the Optionee or the Corporation of any provision of any law or
regulation of any governmental authority. Any determination in this connection
by the Committee shall be final, binding and conclusive.
9. Securities Law Compliance. The Optionee acknowledges that the shares
of Common Stock issuable on exercise of the Option have not been registered
under the Securities Act of 1993, as amended ("Act"). The Optionee represents
and acknowledges that such shares of Common Stock, when purchased, shall be held
for investment and not with a view to the sale or distribution of any part
thereof, and that the Optionee may be required to bear the economic risk of his
or her investment for an indefinite period of time. The Optionee further
represents and warrants that the Optionee and his or her Beneficiaries will not
sell or otherwise dispose of these shares of Common Stock except pursuant to an
effective registration statement under the Act or in a transaction that, in the
opinion of counsel for the Corporation, is exempt from registration under the
Act.
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: BULL & BEAR GROUP, INC.
__________________________ By:____________________________
Member of the Stock Option
Committee
WITNESS: OPTIONEE
- -------------------------- --------------------------------
* * * * *
Number of shares of Common Stock
subject to the Option: 20,000 shares of Common Stock
Exercise Price per share of Common
Stock: $1.875
Installment Exercise Schedule:
Cumulative Number of Shares
Anniversary of of Common Stock in Respect
Date of Grant of which Option is Exercisable
Prior to 1st 0
On and After 1st-Prior to 2nd 0
On and After 2nd 20,000
Notice Addresses:
If to the Corporation: If to the Optionee:
Bull & Bear Group, Inc. Brett B. Sneed
11 Hanover Square 11 Hanover Square
New York, New York 10005 New York, New York 10005
Attention: Secretary
6
BULL & BEAR GROUP, INC.
STOCK OPTION AGREEMENT FOR NON-EMPLOYEE DIRECTORS
AGREEMENT ("Agreement") dated this 6th day of December, 1995 by and
between Bull & Bear Group, Inc., a Delaware corporation ("Corporation"), and
Edward G. Webb, Jr., a non-employee director of the Corporation ("Optionee").
WHEREAS, the Corporation desires to have Optionee continue to serve on
its Board of Directors and to provide Optionee with an incentive by sharing in
the success of the Corporation;
WHEREAS, in order to provide such an incentive to its key
employees and non-employee directors, the Corporation has adopted
the Bull & Bear Group, Inc. 1995 Long-Term Incentive Plan
("Plan");
WHEREAS, the option granted hereby is not intended to qualify as an
"incentive stock option" within the meaning of Section 422 or any successor
provision of the Internal Revenue Code of 1986, as amended; and
WHEREAS, unless otherwise provided herein, capitalized terms used in
this Agreement shall have the meaning given them in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants and
representations herein contained and intending to be legally bound, the parties
hereto agree as follows:
1. Number of Shares and Price. The Corporation hereby grants to the
Optionee an option ("Option") to purchase 10,000 shares of Common Stock. The
exercise price per share of Common Stock of the Option shall be as is set forth
on the last page of this Agreement, such price being the Fair Market Value per
share of Common Stock on the Date of Grant of the Option. The Option is a
Non-Qualified Stock Option.
2. Term and Exercise. The Option shall expire five (5) years from the
date hereof, subject to earlier termination as set forth in Section 3. Subject
to the provisions of Section 3, the Option shall become exercisable in full six
months after the Date of Grant.
3. Exercise of Option Upon Termination of Service.
(a) Termination of Vested Option Upon Termination of
Service.
(i) Termination. Upon the Optionee's termination of
service as a director, other than by reason of death or
Disability, the Optionee may, within three months from the
date of such termination of service, exercise all or any part
of the Option to the extent it was exercisable at the date of
termination of service. In no event may the Option be
exercised later than the expiration date described in Section
2.
(ii) Disability or Death. Upon the Optionee's
Disability Date or termination of service by reason of death,
the Optionee (or his or her Beneficiary, as the case may be)
may, within one year after such Disability Date or termination
of service by reason of death, as the case may be, exercise
all or a part of the Option to the extent it was exercisable
upon such Disability Date or termination of service. In no
event, however, may the Option be exercised later than the
expiration date described in Section 2.
(b) Termination of Unvested Option Upon Termination of
Service. To the extent the Option was not exercisable as of the
date of termination of service as a director, the unexercisable
portion of the Option shall expire at the date of such
termination of service.
4. Exercise Procedures. The Option shall be exercisable by written
notice to the Corporation, which must be received by the Secretary of the
Corporation not later than 5:00 P.M. local time at the principal executive
office of the Corporation on the expiration date of the Option. Such written
notice shall set forth (a) the number of shares of Common Stock being purchased,
(b) the total exercise price for the shares of Common Stock being purchased, (c)
the exact name as it should appear on the stock certificate(s) to be issued for
the shares of Common Stock being purchased, and (d) the address to which the
stock certificate(s) should be sent. The exercise price of shares of Common
Stock purchased upon exercise of the Option shall be paid in full (a) in cash,
(b) by delivery to the Corporation of shares of Common Stock (which may include
shares of Common Stock issued in connection with the exercise of the Option,
subject to such rules as the Committee deems appropriate), (c) in any
combination of cash and shares of Common Stock, or (d) by delivery of such other
consideration as the Committee deems appropriate and in compliance with
applicable law (including payment in accordance with a cashless exercise program
under which, if so instructed by the Optionee, shares of Common Stock may be
issued directly to
2
the Optionee's broker or dealer upon receipt of the exercise price in cash from
the broker or dealer). In the event that any shares of Common Stock shall be
transferred to the Corporation to satisfy all or any part of the exercise price,
the part of the exercise price deemed to have been satisfied by such transfer of
shares of Common Stock shall be equal to the product derived by multiplying the
Fair Market Value as of the date of exercise times the number of shares of
Common Stock transferred to the Corporation. The Optionee may not transfer to
the Corporation in satisfaction of the exercise price any fraction of a share of
Common Stock, and any portion of the exercise price that would represent less
than a full share of Common Stock must be paid in cash by the Optionee. Subject
to Section 8 hereof, certificates for the purchased shares of Common Stock will
be issued and delivered to the Optionee as soon as practicable after the receipt
of such payment of the exercise price; provided, however, that delivery of any
such shares of Common Stock shall be deemed effected for all purposes when a
stock transfer agent of the Corporation shall have deposited such certificates
in the United States mail, addressed to Optionee, at the address set forth on
the last page of this Agreement or to such other address as Optionee may from
time to time designate in a written notice to the Corporation. The Optionee
shall not be deemed for any purpose to be a shareholder of the Corporation in
respect of any shares of Common Stock as to which the Option shall not have been
exercised, as herein provided, until such shares of Common Stock have been
issued to Optionee by the Corporation hereunder.
5. Plan Provisions Control Option Terms; Modifications. The Option is
granted pursuant and subject to the terms and conditions of the Plan, the
provisions of which are incorporated herein by reference. In the event any
provision of this Agreement shall conflict with any of the terms in the Plan as
constituted on the Date of Grant, the terms of the Plan as constituted on the
Date of Grant shall control. The Option shall not be modified after the Date of
Grant except by express written agreement between the Corporation and the
Optionee; provided, however, that any such modification (a) shall not be
inconsistent with the terms of the Plan, and (b) shall be approved by the
Committee. No modifications may be made to the Option while the Optionee is
subject to Section 16(b) of the Exchange Act except in compliance with Rule
16b-3.
6. Limitations on Transfer. The Option may not be assigned or
transferred other than by will or the laws of descent and distribution. During
the lifetime of the Optionee, only the Optionee personally may exercise rights
under this Agreement. The Optionee's Beneficiary may exercise the Optionee's
rights hereunder only to the extent they were exercisable under this Agreement
at the date of the death of the Optionee and are otherwise currently
exercisable.
3
7. Taxes. The Corporation shall be entitled to withhold (or secure
payment from the Optionee in lieu of withholding) the amount of any withholding
or other tax required by law to be withheld or paid by the Corporation with
respect to any shares of Common Stock issuable under this Agreement, and the
Corporation may defer issuance of shares of Common Stock upon the exercise of
the Option unless the Corporation is indemnified to its satisfaction against any
liability for any such tax. The amount of such withholding or tax payment shall
be determined by the Committee or its delegate and shall be payable by the
Optionee at such time as the Committee determines. The Optionee may satisfy his
or her tax withholding obligation by the payment of cash to the Corporation
and/or by the withholding from the Option, at the appropriate time, of a number
of shares of Common Stock sufficient, based upon the Fair Market Value of such
shares of Common Stock, to satisfy such tax withholding requirements. The
Committee shall be authorized, in its sole discretion, to establish such rules
and procedures relating to any such withholding methods as it deems necessary or
appropriate, including, without limitation, rules and procedures relating to
elections to have shares of Common Stock withheld upon exercise of the Option to
meet such withholding obligations.
8. No Exercise in Violation of Law. Notwithstanding any of the
provisions of this Agreement, the Optionee hereby agrees that he or she will not
exercise the Option granted hereby, and that the Corporation will not be
obligated to issue any shares of Common Stock to the Optionee hereunder, if the
exercise thereof or the issuance of such shares of Common Stock shall constitute
a violation by the Optionee or the Corporation of any provision of any law or
regulation of any governmental authority. Any determination in this connection
by the Committee shall be final, binding and conclusive.
9. Securities Law Compliance. The Optionee acknowledges that the shares
of Common Stock issuable on exercise of the Option have not been registered
under the Securities Act of 1993, as amended ("Act"). The Optionee represents
and acknowledges that such shares of Common Stock, when purchased, shall be held
for investment and not with a view to the sale or distribution of any part
thereof, and that the Optionee may be required to bear the economic risk of his
or her investment for an indefinite period of time. The Optionee further
represents and warrants that the Optionee and his or her Beneficiaries will not
sell or otherwise dispose of these shares of Common Stock except pursuant to an
effective registration statement under the Act or in a transaction that, in the
opinion of counsel for the Corporation, is exempt from registration under the
Act.
4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: BULL & BEAR GROUP, INC.
__________________________ By: ___________________________
Member of the Compensation
Committee
WITNESS: OPTIONEE
__________________________ /s/ Edward G. Webb, Jr.
* * * * * *
Exercise Price per share of
Common Stock: $1.75
Notice Addresses:
If to the Corporation: If to the Optionee:
Bull & Bear Group, Inc. Edward G. Webb, Jr.
11 Hanover Square ___________________________
New York, New York 10005 ___________________________
Attention: Secretary
5
BULL & BEAR GROUP, INC.
STOCK OPTION AGREEMENT FOR NON-EMPLOYEE DIRECTORS
AGREEMENT ("Agreement") dated this 6th day of December, 1995 by and
between Bull & Bear Group, Inc., a Delaware corporation ("Corporation"), and
Charles A. Carroll, a non-employee director of the Corporation ("Optionee").
WHEREAS, the Corporation desires to have Optionee continue to serve on
its Board of Directors and to provide Optionee with an incentive by sharing in
the success of the Corporation;
WHEREAS, in order to provide such an incentive to its key
employees and non-employee directors, the Corporation has adopted
the Bull & Bear Group, Inc. 1995 Long-Term Incentive Plan
("Plan");
WHEREAS, the option granted hereby is not intended to qualify as an
"incentive stock option" within the meaning of Section 422 or any successor
provision of the Internal Revenue Code of 1986, as amended; and
WHEREAS, unless otherwise provided herein, capitalized terms used in
this Agreement shall have the meaning given them in the Plan;
NOW, THEREFORE, in consideration of the mutual covenants and
representations herein contained and intending to be legally bound, the parties
hereto agree as follows:
1. Number of Shares and Price. The Corporation hereby grants to the
Optionee an option ("Option") to purchase 10,000 shares of Common Stock. The
exercise price per share of Common Stock of the Option shall be as is set forth
on the last page of this Agreement, such price being the Fair Market Value per
share of Common Stock on the Date of Grant of the Option. The Option is a
Non-Qualified Stock Option.
2. Term and Exercise. The Option shall expire five (5) years from the
date hereof, subject to earlier termination as set forth in Section 3. Subject
to the provisions of Section 3, the Option shall become exercisable in full six
months after the Date of Grant.
3. Exercise of Option Upon Termination of Service.
(a) Termination of Vested Option Upon Termination of
Service.
(i) Termination. Upon the Optionee's termination of
service as a director, other than by reason of death or
Disability, the Optionee may, within three months from the
date of such termination of service, exercise all or any part
of the Option to the extent it was exercisable at the date of
termination of service. In no event may the Option be
exercised later than the expiration date described in Section
2.
(ii) Disability or Death. Upon the Optionee's
Disability Date or termination of service by reason of death,
the Optionee (or his or her Beneficiary, as the case may be)
may, within one year after such Disability Date or termination
of service by reason of death, as the case may be, exercise
all or a part of the Option to the extent it was exercisable
upon such Disability Date or termination of service. In no
event, however, may the Option be exercised later than the
expiration date described in Section 2.
(b) Termination of Unvested Option Upon Termination of
Service. To the extent the Option was not exercisable as of the
date of termination of service as a director, the unexercisable
portion of the Option shall expire at the date of such
termination of service.
4. Exercise Procedures. The Option shall be exercisable by written
notice to the Corporation, which must be received by the Secretary of the
Corporation not later than 5:00 P.M. local time at the principal executive
office of the Corporation on the expiration date of the Option. Such written
notice shall set forth (a) the number of shares of Common Stock being purchased,
(b) the total exercise price for the shares of Common Stock being purchased, (c)
the exact name as it should appear on the stock certificate(s) to be issued for
the shares of Common Stock being purchased, and (d) the address to which the
stock certificate(s) should be sent. The exercise price of shares of Common
Stock purchased upon exercise of the Option shall be paid in full (a) in cash,
(b) by delivery to the Corporation of shares of Common Stock (which may include
shares of Common Stock issued in connection with the exercise of the Option,
subject to such rules as the Committee deems appropriate), (c) in any
combination of cash and shares of Common Stock, or (d) by delivery of such other
consideration as the Committee deems appropriate and in compliance with
applicable law (including payment in accordance with a cashless exercise program
under which, if so instructed by the Optionee, shares of Common Stock may be
issued directly to
2
the Optionee's broker or dealer upon receipt of the exercise price in cash from
the broker or dealer). In the event that any shares of Common Stock shall be
transferred to the Corporation to satisfy all or any part of the exercise price,
the part of the exercise price deemed to have been satisfied by such transfer of
shares of Common Stock shall be equal to the product derived by multiplying the
Fair Market Value as of the date of exercise times the number of shares of
Common Stock transferred to the Corporation. The Optionee may not transfer to
the Corporation in satisfaction of the exercise price any fraction of a share of
Common Stock, and any portion of the exercise price that would represent less
than a full share of Common Stock must be paid in cash by the Optionee. Subject
to Section 8 hereof, certificates for the purchased shares of Common Stock will
be issued and delivered to the Optionee as soon as practicable after the receipt
of such payment of the exercise price; provided, however, that delivery of any
such shares of Common Stock shall be deemed effected for all purposes when a
stock transfer agent of the Corporation shall have deposited such certificates
in the United States mail, addressed to Optionee, at the address set forth on
the last page of this Agreement or to such other address as Optionee may from
time to time designate in a written notice to the Corporation. The Optionee
shall not be deemed for any purpose to be a shareholder of the Corporation in
respect of any shares of Common Stock as to which the Option shall not have been
exercised, as herein provided, until such shares of Common Stock have been
issued to Optionee by the Corporation hereunder.
5. Plan Provisions Control Option Terms; Modifications. The Option is
granted pursuant and subject to the terms and conditions of the Plan, the
provisions of which are incorporated herein by reference. In the event any
provision of this Agreement shall conflict with any of the terms in the Plan as
constituted on the Date of Grant, the terms of the Plan as constituted on the
Date of Grant shall control. The Option shall not be modified after the Date of
Grant except by express written agreement between the Corporation and the
Optionee; provided, however, that any such modification (a) shall not be
inconsistent with the terms of the Plan, and (b) shall be approved by the
Committee. No modifications may be made to the Option while the Optionee is
subject to Section 16(b) of the Exchange Act except in compliance with Rule
16b-3.
6. Limitations on Transfer. The Option may not be assigned or
transferred other than by will or the laws of descent and distribution. During
the lifetime of the Optionee, only the Optionee personally may exercise rights
under this Agreement. The Optionee's Beneficiary may exercise the Optionee's
rights hereunder only to the extent they were exercisable under this Agreement
at the date of the death of the Optionee and are otherwise currently
exercisable.
3
7. Taxes. The Corporation shall be entitled to withhold (or secure
payment from the Optionee in lieu of withholding) the amount of any withholding
or other tax required by law to be withheld or paid by the Corporation with
respect to any shares of Common Stock issuable under this Agreement, and the
Corporation may defer issuance of shares of Common Stock upon the exercise of
the Option unless the Corporation is indemnified to its satisfaction against any
liability for any such tax. The amount of such withholding or tax payment shall
be determined by the Committee or its delegate and shall be payable by the
Optionee at such time as the Committee determines. The Optionee may satisfy his
or her tax withholding obligation by the payment of cash to the Corporation
and/or by the withholding from the Option, at the appropriate time, of a number
of shares of Common Stock sufficient, based upon the Fair Market Value of such
shares of Common Stock, to satisfy such tax withholding requirements. The
Committee shall be authorized, in its sole discretion, to establish such rules
and procedures relating to any such withholding methods as it deems necessary or
appropriate, including, without limitation, rules and procedures relating to
elections to have shares of Common Stock withheld upon exercise of the Option to
meet such withholding obligations.
8. No Exercise in Violation of Law. Notwithstanding any of the
provisions of this Agreement, the Optionee hereby agrees that he or she will not
exercise the Option granted hereby, and that the Corporation will not be
obligated to issue any shares of Common Stock to the Optionee hereunder, if the
exercise thereof or the issuance of such shares of Common Stock shall constitute
a violation by the Optionee or the Corporation of any provision of any law or
regulation of any governmental authority. Any determination in this connection
by the Committee shall be final, binding and conclusive.
9. Securities Law Compliance. The Optionee acknowledges that the shares
of Common Stock issuable on exercise of the Option have not been registered
under the Securities Act of 1993, as amended ("Act"). The Optionee represents
and acknowledges that such shares of Common Stock, when purchased, shall be held
for investment and not with a view to the sale or distribution of any part
thereof, and that the Optionee may be required to bear the economic risk of his
or her investment for an indefinite period of time. The Optionee further
represents and warrants that the Optionee and his or her Beneficiaries will not
sell or otherwise dispose of these shares of Common Stock except pursuant to an
effective registration statement under the Act or in a transaction that, in the
opinion of counsel for the Corporation, is exempt from registration under the
Act.
4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: BULL & BEAR GROUP, INC.
__________________________ By: ___________________________
Member of the Compensation
Committee
WITNESS: OPTIONEE
__________________________ /s/ Charles A. Carroll
* * * * * *
Exercise Price per share of
Common Stock: $1.75
Notice Addresses:
If to the Corporation: If to the Optionee:
Bull & Bear Group, Inc. Charles A. Carroll
11 Hanover Square ___________________________
New York, New York 10005 ___________________________
Attention: Secretary
5
EXHIBIT 11 - STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
1995 1994 1993
------------------------ --------------------- ----------------
FULLY FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED
Weighted average
common shares
outstanding 1,499,516 1,499,516 1,523,152 1,523,152 1,257,844 1,257,844
Weighted average common shares issuable upon exercise of stock options under the
treasury stock
method 50,299 52,048 87,291 87,506 222,810 225,428
Weighted average
common shares
issuable upon
exercise of
warrants under
the treasury
stock method - - - - -
Weighted average
common shares
and common
share equivalents
utilized for
earnings per
share computation 1,549,8151,551,564 1,610,443 1,610,658 1,480,654 1,483,272
-43-
EXHIBIT 21 - WHOLLY-OWNED SUBSIDIARIES OF THE COMPANY
Bull & Bear Securities, Inc.,
a Delaware corporation
Investor Service Center, Inc.,
a Delaware corporation
Bull & Bear NJ Properties, Inc.,
a Delaware corporation
Bull & Bear Properties, Inc.,
a Delaware corporation
Hanover Direct Advertising Company, Inc.,
a Delaware corporation
Bull & Bear Advisers, Inc.,
a Delaware corporation
Lion Exploration, Inc.,
a Delaware corporation
Midas Management Corporation
a Delaware corporation
-44-
ITEM NUMBER ITEM DESCRIPTION
5-02(1) 1,467,674 cash and cash items
5-02(2) 1,257,062 marketable securities
5-02(3)(a)(1) 0 notes and accounts receivable-trade
5-02(4) 0 allowances for doubtful accounts
5-02(6) 0 inventory
5-02(9) 3,585,756 total current assets
5-02(13) 1,319,170 property, plant and equipment
5-02(14) 803,177 accumulated depreciation
5-02(18) 4,963,792 total assets
5-02(21) 793,697 total current liabilities
5-02(22) 0 bonds, mortgages and similar debt
5-02(28) 0 preferred stock-mandatory redemption
5-02(29) 0 preferred stock-no mandatory
redemption
5-02(30) 13,681 common stock
5-02(31) 4,156,414 other stockholders' equity
5-02(32) 4,170,095 total liabilities and stockholders' equity
5-03(b)1(a) 0 net sales of tangible products
5-03(b)1 5,291,030 total revenues
5-03(b)2(a) 0 cost of tangible goods sold
5-03(b)2 0 total costs and expenses applicable to
sale and revenues
5-03(b)3 5,102,066 other costs and expenses
5-03(b)5 0 provision for doubtful accounts and
notes
5-03(b)(8) 0 interest and amortization of debt
discount
5-03(b)(10) 188,964 income before taxes and other items
5-03(b)(11) 32,588 income tax expense
5-03(b)(14) 0 income/loss continuing operations
5-03(b)(15) 0 discontinued operations
5-03(b)(17) 0 extraordinary items
5-03(b)(18) 0 cumulative effect-changes in accounting
principles
5-03(b)(19) 156,376 net income or loss
5-03(b)(20) .10 earnings per share - primary
5-03(b)(20) .10 earnings per share - fully diluted