-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rnpgb7m4yj9g0LFL83dzLpuJNdhZOLiMfbVuZyz+kNXSAb+Au6YWvCUz2Kh4msKN DAqERyJuS1qnjatKusUaEw== 0000356130-03-000023.txt : 20030411 0000356130-03-000023.hdr.sgml : 20030411 20030411150823 ACCESSION NUMBER: 0000356130-03-000023 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20030411 EFFECTIVENESS DATE: 20030411 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMC INSURANCE GROUP INC CENTRAL INDEX KEY: 0000356130 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 426234555 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-104469 FILM NUMBER: 03647023 BUSINESS ADDRESS: STREET 1: 717 MULBERRY ST CITY: DES MOINES STATE: IA ZIP: 50309 BUSINESS PHONE: 5152802902 MAIL ADDRESS: STREET 1: 717 MULBERRY STREET CITY: DES MOINES STATE: IA ZIP: 50309 S-8 1 s8form.txt FORM S-8 As filed with the Securities and Exchange Commission on April 11, 2003 Registration No. 333-____ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES EXCHANGE ACT OF 1933 EMC INSURANCE GROUP INC. ------------------------------------------------ (Exact name of issuer as specified in its charter) Iowa 42-6234555 - ------------------------------- ----------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 717 Mulberry Street, Des Moines, Iowa 50309 -------------------------------------------------- (Address of principal executive office and Zip Code) 2003 Employers Mutual Casualty Company Non-Employee Director Stock Option Plan ---------------------------------------- (Full title of the plan) Donald D. Klemme, EMC Insurance Group Inc. 717 Mulberry Street, Des Moines, Iowa 50309 ------------------------------------------- (Name and address of agent for service) (515) 280-2626 ----------------------------------------------------------- (Telephone number, including area code, of agent for service) CALCULATION OF REGISTRATION FEE Proposed Proposed Maximum Maximum Amount to Offering Aggregate Amount Of Title Of Securities Be Price Offering Registration To Be Registered Registered (1) Per Share (2) Price (1)(2) Fee - ------------------------------------------------------------------------------ COMMON STOCK, 200,000 $1.00 PAR VALUE shares $19.11 $3,822,000 $351.62 - ------------------------------------------------------------------------------ (1) This registration statement covers an indeterminate amount of additional securities which may be issued under the above-referenced Plan pursuant to the share adjustment provisions of such Plan. In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this Registration Statement also covers an indeterminate amount of interests to be offered or sold pursuant to the employee benefit plan described herein. (2) Estimated in accordance with Rules 457(c) and (h)(1), the proposed maximum offering price per share, proposed maximum aggregate offering price and the amount of the registration fee are based upon the last sale price reported on the NASDAQ National Market System on April 9, 2003. PART I INFORMATION REQUIRED IN SECTION 10(a) PROSPECTUS ITEM 2.REGISTRANT INFORMATION AND INCENTIVE STOCK OPTION PLAN INFORMATION. EMC Insurance Group Inc. (the "Company") will provide without charge, upon written or oral request, a copy of the documents incorporated herein by reference in Item 3 of Part II of this Registration Statement, or other documents required to be delivered to participants pursuant to Rule 428(b) of the Securities Act of 1933 (the "Securities Act"). The documents identified in Item 3 of Part II are incorporated by reference into the Section 10(a) Prospectus. Requests for such copies should be directed to Donald D. Klemme, Senior Vice President and Secretary, EMC Insurance Group Inc., 717 Mulberry Street, Des Moines, IA 50309, (515) 280-2626. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE. The following documents, filed by the Company with the Commission, are incorporated herein by reference: (1) The Company's Annual Report on Form 10-K for the calendar year ended December 31, 2002, filed pursuant to Section 13 of the Exchange Act. (2) The Company's Current Report on Form 8-K filed January 29, 2003. (3) The Company's Current Report on Form 8-K filed March 12, 2003. (4) The Company's Current Report on Form 8-K filed April 9, 2003. (5) The description of the Company's Common Stock contained in its Registration Statement on Form 8-A under Section 12 of the Exchange Act, including any amendments or reports filed for the purpose of updating such description. (6) All reports and other documents subsequently filed by the Company pursuant to Section 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date hereof, and prior to the filing of a post- effective amendment to the Registration Statement which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of the filing of such reports and documents. Any statement contained in a document incorporated or deemed to be incorporated herein by reference shall be deemed to be modified or superseded for the purpose of this Registration Statement to the extent that such a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such document. ITEM 4. DESCRIPTION OF SECURITIES. Not applicable. ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable. ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Iowa Business Corporation Act makes provision for the indemnification of directors and officers in terms sufficiently broad to indemnify such persons from liability (including reimbursements for expenses incurred) arising under the Securities Act of 1933. Generally, indemnification is permissible if (i) the person acted in good faith and, (ii) if acting in the person's official capacity, in a manner reasonably believed to be in the best interests of the Company and, in all other cases, that the person's conduct was at least not opposed to the Company's best interests and, (iii) in the case of any criminal proceeding, the person had no reasonable cause to believe the person's conduct was unlawful. The By-Laws of the Company provide for indemnification of officers, directors, employees, or agents as permitted under the Iowa Business Corporation Act or as otherwise permitted by law. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions, the registrant has been informed that in the opinion of the Commission such indemnification is against public policy as expressed in the Act and is therefore unenforceable. ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED. Not applicable. ITEM 8. EXHIBITS. The exhibits accompanying this Registration Statement are listed on the accompanying Exhibit Index. ITEM 9. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement; (i) to include any prospectus required by Section 10(a) (3) of the Securities Act; (ii) to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post- effective amendment thereof) which, individually or in the aggregate, represents a fundamental change in the information set forth in this Registration Statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; provided, however, that (a)(1)(i) and (a)(1)(ii) shall not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act and, where interim financial information required to be presented by Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. (d) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. SIGNATURES The Registrant. Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Des Moines, State of Iowa, on April 11, 2003. EMC INSURANCE GROUP INC. By:/s/ Bruce G. Kelley ---------------------- Bruce G. Kelley President and Chief Executive Officer The Plan. Pursuant to the requirements of the Securities Act of 1933, Employers Mutual Casualty Company has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Des Moines, State of Iowa on April 11, 2003. This registration statement has been signed by Employers Mutual Casualty Company. Employers Mutual Casualty Company By: /s/ Bruce G. Kelley ----------------------- Bruce G. Kelley President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. By: /s/ Bruce G. Kelley April 11, 2003 - ----------------------- Bruce G. Kelley President, Chief Executive Officer and Director By: /s/ Mark E. Reese April 11, 2003 - ----------------------- Mark E. Reese Chief Financial and Accounting Officer POWER OF ATTORNEY Know Everyone By These Presents, that each of the undersigned hereby constitutes and appoints, jointly and severally, Bruce G. Kelley and Mark E. Reese, or either of them (with full power to each of them to act alone), as his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and on his behalf to sign, execute and file an S-8 Registration Statement with respect to the 2003 Employers Mutual Casualty Company Non-Employee Director Stock Option Plan, as well as any or all amendments (including, without limitation, post-effective amendments) to such S-8 Registration Statement, and to file the same, with all exhibits thereto and all documents required to be filed with respect therewith, with the Securities and Exchange Commission or any regulatory authority, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith and about the remises in order to effectuate the same as fully to all intents and purposes as he might or could do if personally present, hereby ratifying and confirming all that such attorneys-in-fact and agents, or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done. By: /s/ George C. Carpenter III * April 5, 2003 - ------------------------------------- George C. Carpenter III, Director By: /s/ E. H. Creese * March 30, 2003 - ------------------------------------- E. H. Creese, Director By: /s/ David J. Fisher * March 28, 2003 - ------------------------------------- David J. Fisher, Director By: /s/ George W. Kochheiser * April 2, 2003 - ------------------------------------- George W. Kochheiser, Director By: /s/ Raymond A. Michel * April 7, 2003 - ------------------------------------- Raymond A. Michel, Director By: /s/ Fredrick A. Schiek * March 27, 2003 - ------------------------------------- Fredrick A. Schiek, Director * By /s/ Mark E. Reese April 11, 2003 --------------------------- Mark E. Reese (Attorney-in-Fact) EXHIBIT INDEX Exhibit Number Exhibit 4 Instruments defining rights of security holders, including indentures 4(a) Articles of Incorporation of the Company, as amended. (Incorporated by reference from the Company's Form 10-K for the calendar year ended December 31, 1998.) 4(b) Bylaws of the Company, as amended. (Incorporated by reference from the Company's Form 10-K for the calendar year ended December 31, 2001.) 5 Opinion of Nyemaster, Goode, Voigts, West, Hansell & O'Brien, P.C. with respect to the legality of securities 23.1 Consent of Nyemaster, Goode, Voigts, West, Hansell & O'Brien, P.C. (contained in Exhibit 5) 23.2 Consent of Ernst & Young LLP 23.3 Consent of KPMG LLP 24 Power of Attorney (included on signature page hereof) 99.1 2003 Employers Mutual Casualty Company Non-Employee Director Stock Option Plan EX-5 3 exhibit5.txt EXHIBIT 5 AND 23.1 Exhibit 5 and 23.1 ------------------ April 10, 2003 EMC Insurance Group Inc. 717 Mulberry Street Des Moines, IA 50309 Re: 2003 Employers Mutual Casualty Company Non-Employee Director Stock Option Plan (the "Plan") Ladies and Gentlemen: We have acted as counsel with respect to the Registration Statement on Form S-8 (the "Registration Statement") being filed by EMC Insurance Group Inc. (the "Company") with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), relating to the registration of 200,000 shares of Common Stock, $1.00 par value, of the Company (the "Shares") which have been reserved for issuance upon the exercise of options issuable to eligible directors of Employers Mutual Casualty Company and its subsidiaries and affiliates pursuant to the Plan. In rendering our opinion, we have examined and relied upon a copy of the Plan and the Registration Statement relating to the Plan. We have also examined such records, documents and questions of law as we have considered relevant and necessary as a basis for this opinion. As to matters of fact material to our opinion, we have with your agreement relied upon certificates of officers of the Company. We have assumed with your agreement the authenticity of all documents submitted to us as originals, the conformity with the original documents of any copies submitted to us for our examination and the authenticity of the original of any such copies. Based on the foregoing, and subject to the foregoing qualifications and limitations, it is our opinion that the Shares will be legally issued, fully paid and non-assessable when: (i) the Registration Statement shall have become effective under the Securities Act; (ii) the Shares shall have been duly issued and sold in the manner contemplated by the Plan; and (iii) certificates representing Shares shall have been duly executed, countersigned and registered and duly delivered to the purchasers thereof against payment of the agreed consideration therefor in accordance with the terms of the Plan. We are admitted to the Bar of the State of Iowa, and express no opinion herein as to the laws of any other jurisdiction, including the laws of the United States of America. Except as expressly set forth herein, we express no opinion, and no opinion is implied or may be inferred, in connection with the Registration Statement, the Plan or the issuance of the Shares. Without limiting the generality of the foregoing, we express no opinion with respect to the securities or blue sky laws of the State of Iowa or any other jurisdiction. The undersigned law firm also hereby consents to the filing of this opinion as an Exhibit to the Registration Statement and to the use of its name in the Registration Statement. Very truly yours, Nyemaster, Goode, Voigts, West, Hansell & O'Brien, P.C. By: /s/ G. Thomas Sullivan ---------------------- G. Thomas Sullivan EX-23 4 exhibit232.txt EXHIBIT 23.2 Exhibit 23.2 ------------ CONSENT OF ERNST & YOUNG LLP We consent to the incorporation by reference in the Registration Statement (Form S-8) pertaining to the 2003 Employers Mutual Casualty Company Non-Employee Director Stock Option Plan for the registration of 200,000 shares of common stock of EMC Insurance Group Inc. of our reports dated February 25, 2003, with respect to the consolidated financial statements and schedules of EMC Insurance Group Inc. and Subsidiaries included in its Annual Report (Form 10-K) for the year ended December 31, 2002, filed with the Securities and Exchange Commission. By /s/ Ernst & Young LLP --------------------- Ernst & Young LLP Des Moines, Iowa April 7, 2003 EX-23 5 exhibit233.txt EXHIBIT 23.3 Exhibit 23.3 ------------ CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to incorporation by reference in the Registration Statement on Form S-8 of EMC Insurance Group Inc. of our report dated February 27, 2001, relating to the consolidated statements of income, stockholders' equity and cash flows and related financial statement schedules of EMC Insurance Group Inc. for the year ended December 31, 2000, which reports appear in the December 31, 2002 annual report on Form 10-K of EMC Insurance Group Inc. By /s/ KPMG LLP ------------ KPMG LLP Des Moines, Iowa April 9, 2003 EX-99 6 exhibit99.txt EXHIBIT 99.1 Exhibit 99.1 ------------ 2003 EMPLOYERS MUTUAL CASUALTY COMPANY NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN Section 1. Purpose ------- The purpose of the 2003 Non-Employee Director Stock Option Plan (the "Plan") is to enable Employers Mutual Casualty Company ("EMCC") and such of its Subsidiaries and Affiliates (as hereinafter defined) which (i) have one or more non-employee directors and (ii) adopt this Plan (collectively, with EMCC, the "Company") to attract and retain non-employee persons of exceptional ability to serve as directors and to more closely identify the directors with the interests of the shareholders of EMC Insurance Group Inc. ("EMC Group"), a Subsidiary, through the granting of options to purchase shares of the common stock ("Stock") of EMC Group. Section 2. Definitions ----------- "Affiliate" shall mean any non-stock corporation which is required under Iowa law to be shown as a member of the EMCC Insurance Holding Company System. "Annual Retainer" for any given year shall mean the cash retainer to be paid to such Eligible Director in respect of services as a director but shall not include (i) any meeting fees, (ii) any fees related to service as chair of a committee, or (iii) per diem amounts paid with respect to board or committee meeting attendance. "Disinterested Director" shall mean, for 2003, a director of EMCC who is not an Eligible Director or who elects, on or before January 1, 2003, not to receive, and does not receive, an Option in 2003; and shall mean, for 2004 and subsequent years, a director of EMCC (i) who did not receive, during the one year prior to service on the Disinterested Director Committee, an Option and (ii) who does not receive, during his or her period of service on the Disinterested Director Committee, an Option. Provided, however, that the qualifications for a Disinterested Director as provided herein shall, for all years, be subject to such modifications and amendments as Section 16(b) of the Securities and Exchange Act of 1934, as amended (the "1934 Act"), may, from time to time, provide. "Eligible Directors" shall mean all non-employee directors of the Company, each of whom shall be eligible to participate in the Plan and each of whom shall have not elected to be a Disinterested Director. Directors who are officers or employees of the Company shall not be eligible to participate in the Plan. "Exercise Date" shall mean the date on which notice of exercise of an Option is received at the office of the Chief Executive Officer ("CEO") or the corporate Secretary of EMCC. There shall be only one Exercise Date during each Option Period for each Option granted to an Eligible Director. "Option" shall mean a Stock option granted under this Plan. "Option Payment" shall mean the amount paid by the Eligible Director in the exercise of his or her Option. "Option Period" shall, for a director of EMCC or an insurance company Affiliate, mean the period of time from, and commencing on, the date of the Annual Meeting of Policyholders of such entity to the day immediately prior to the next and subsequent Annual Meeting of such entity; and, for a director of EMC Group or another Subsidiary, shall mean the period from, and commencing on, the date of the Annual Meeting of the Board of Directors of such entity to the day immediately prior to such board's next and subsequent Annual Meeting. The first Option Period for EMCC shall commence with its 2003 Annual Meeting. The first Option Period for each of the participating Subsidiaries and Affiliates shall commence with either its first Annual Meeting following the adoption of the Plan by such Subsidiary or Affiliate, or the Annual Meeting at which the Plan was adopted, whichever is earlier. "Option Price" shall be equal to seventy-five percent (75%) of the fair market value of the Stock at the Exercise Date. Fair market value shall be deemed to be the average between the high and low prices for the Exercise Date as reported (as of the close of regular trading) on Nasdaq-online.com. In the event the high and low prices for the Exercise Date are not reported on Nasdaq-online.com (e.g., if no trades in the Stock occurred on the Exercise Date), then the prices reported (as of the close of regular trading) on Nasdaq-online.com for the closest date prior thereto shall be used to determine the fair market value of the Stock. "Subsidiary" shall mean any corporation of which a majority of the voting stock or voting power is owned or controlled, directly or indirectly, by EMCC. Section 3. Administration -------------- All decisions concerning (a) the eligibility of directors of the Company to participate in the Plan and (b) the timing, price and amount of Stock that can be purchased by an Eligible Director under this Plan shall be determined in accordance with the provisions of the Plan. All other decisions relating to the administration of the Plan shall be made by a committee of two or more Disinterested Directors of EMCC (the "Disinterested Director Committee"). The Disinterested Director Committee shall have the authority, not inconsistent with the express provisions of the Plan, to take all action necessary or appropriate hereunder, to establish appropriate rules and regulations relating to the Plan, to interpret its provisions, and to decide all questions and resolve all disputes which may arise in connection therewith. Such determination shall be conclusive and shall bind all parties, including Eligible Directors and any and all persons claiming under or through any Eligible Director. The Disinterested Director Committee may, in its discretion, designate an administrator for the day to day operations of the Plan. Section 4. Stock ----- The maximum number of shares of Stock available under the Plan for purchase pursuant to the exercise of Options granted under the Plan is an aggregate of 200,000 shares which EMCC shall provide for Eligible Directors, other than those of EMC Group, from Stock owned by EMCC, purchased by EMCC on the open market or acquired by EMCC through means other than purchase on the open market including but not limited to the purchase of unissued shares from EMC Group at not less than fair market value as defined in the "Option Price" definition of Section 2 above. EMC Group shall provide the shares of Stock purchased by its Eligible Directors pursuant to the exercise of Options granted under the Plan. The number of such shares provided by EMC Group shall be included within the 200,000 shares authorized for all purchases under the Plan. Such aggregate number of shares is subject to adjustment in accordance with the provisions of Section 10 below. The shares involved in the unexercised portion of any terminated, lapsed or expired options under the Plan may again be subjected to options under the Plan to the maximum extent possible under the then-applicable rules under Section 16 of the 1934 Act. Section 5. Options and Exercise -------------------- Subject to the provisions of Section 6 below, each Eligible Director shall annually receive, as of the date of his or her respective company's Annual Meeting, an Option to purchase shares of Stock at the Option Price during the Option Period then commencing. The exercise of the Option shall be in accordance with the following: A. Such Option may only be exercised once during the Option Period. B. Notice of exercise of the Option may be in writing or given by telephone, telegraph, facsimile or other similar form of communication. The date on which such notice is received in the office of the CEO or the corporate Secretary of EMCC shall constitute the Exercise Date. If such notice is initially other than in writing, then written confirmation of the exercise of the Option must be received in the office of the CEO or the corporate Secretary of EMCC within five (5) business days of the Exercise Date. C. The Option Payment in purchase of the shares shall be paid in full within five (5) business days subsequent to the Exercise Date, and shall not be less than twenty-five percent (25%) of the Eligible Director's Annual Retainer nor more than one hundred percent 100%) of his or her Annual Retainer fixed at the Annual Meeting at which the Option was granted. D. The number of shares of Stock which may be purchased in the exercise of the Option shall be determined by dividing the Option Payment by the Option Price as of the Exercise Date; provided, however, that only whole shares of Stock shall be issued and any balance of the Option Payment in excess of the total purchase price of the whole shares shall be refunded to the Optionee. No fractional shares shall be issued under the Plan. Section 6. Directors Elected at Other Than Annual Meeting Time --------------------------------------------------- In the year in which any Eligible Director is elected to a Board at a time other than at the Annual Meeting, such Eligible Director shall receive an Option to purchase shares under the Plan; provided, however, that his or her respective Option Period shall commence from the date of his or her election and the Option Payment shall be limited to the prorated amount of the respective Annual Retainer. Section 7. Nontransferability of Options ----------------------------- No Option shall be transferable by an Eligible Director. Any exercise of an Option and the purchase of shares of Stock pursuant thereto may be made only by an Eligible Director during his or her tenure as a director of the Company. If an Eligible Director shall cease to be an Eligible Director for any reason, then any unexercised Option of such director shall immediately terminate. Section 8. Rights as a Shareholder ----------------------- An Eligible Director under the Plan shall have no rights as a shareholder with respect to any shares of Stock until the purchase of shares in the exercise of an Option on the Exercise Date. As soon as practical following such date, the shares of Stock purchased under this Plan shall be registered in the name of the Eligible Director and a certificate for such shares shall be issued. Section 9. No Right to Continue as a Director ---------------------------------- Neither the Plan, nor the issuing of Stock nor any other action taken pursuant to the Plan, shall constitute or be evidence of any agreement or understanding, express or implied, that the Company will retain or re-elect an Eligible Director for any period of time or pay any particular Annual Retainer. Section 10. Change in Capitalization ------------------------ In the event of (i) payment of a Stock dividend on Stock; (ii) a subdivision or combination of shares of Stock; (iii) a Stock split of Stock; (iv) a reclassification of Stock; (v) any other distributions to common shareholders other than cash dividends, or (vi) any other change in the authorized number or par value of the Stock, then the remaining number of the 200,000 shares of Stock provided under Section 4 above, which have not been sold to Eligible Directors, shall be appropriately adjusted by the Board of Directors of EMCC, whose determination shall be binding on all persons. In the event of a merger in which EMC Group is not the surviving corporation or in the event of the sale or transfer of substantially all of EMC Group's assets (other than by the grant of a mortgage or security interest), all outstanding Options and the Plan shall thereupon terminate. Section 11. Amendment and Termination of the Plan ------------------------------------- The Board of Directors of EMCC may at any time or times amend the Plan for the purpose of satisfying the requirements of any changes in applicable laws or regulations or for any other purpose which may at the time be permitted by law, provided that no such amendment (except to the extent explicitly required or permitted herein) will, without the approval of the policyholders of EMCC, (a) increase the maximum number of shares available under the Plan, (b) reduce the Option price of outstanding Options or reduce the price at which Options may be granted, (c) amend the provisions of this Section 11 of the Plan, or (d) be adopted where shareholder approval is required by Section 16 of the 1934 Act, by any national securities exchange or system on which the Stock is listed or reported, or by a regulatory body having jurisdiction with respect thereto, unless such approval is in fact obtained from the shareholders of EMC Group; and no such amendment will adversely affect the rights of any Eligible Director (without his or her consent) under any unexercised Option previously granted. Notwithstanding the foregoing, the Board may, without shareholder approval, increase the number of shares which may be issued under the Plan to reflect adjustments made pursuant to Section 10 of the Plan. The Plan may be permanently terminated or temporarily suspended at any time by the Board of Directors of EMCC, but no such termination or temporary suspension shall adversely affect the rights and privileges of Eligible Directors with unexercised Options without their consent. Any such termination or temporary suspension shall be effective as of the close of business on the last day of the then-current Option Period(s). Section 12. Effective Date and Duration of the Plan --------------------------------------- The Plan shall, subject to approval at the 2002 Annual Meeting of Policyholders of EMCC (and, if deemed necessary and/or appropriate by legal counsel, at the 2002 Annual Meeting of Shareholders of EMC Group), become effective on January 1, 2003. The Plan shall continue through the Option Period for Options granted at the 2012 Annual Meeting(s), but the Plan may be terminated prior thereto by action of the Board of Directors of EMCC or through issuance of the maximum number of shares available under the Plan as and to the extent, if any, increased by amendment thereto. Section 13. Titles ------ Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan. Section 14. Governing Law ------------- The Plan and all rights and obligations under the Plan shall be construed in accordance with and governed by the laws of the State of Iowa. -----END PRIVACY-ENHANCED MESSAGE-----