EXHIBIT 10.7
AMENDED AND RESTATED
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE
OPTION PLAN
JUNE 26, 1998
STEINER LEISURE LIMITED
NON-EMPLOYEE DIRECTORS' SHARE OPTION PLAN
1. INTRODUCTION.
This plan shall be known as the "Steiner Leisure Limited
Non-Employee Directors' Share Option Plan" (this "Plan"). This Plan sets forth
the terms of grants of options (each, an "Option") to purchase the common shares
(the "Shares") of Steiner Leisure Limited (the "Company") to Non-Employee
Directors (as defined below) of the Company. The purpose of this Plan is to
advance the interests of Company and its shareholders by promoting an identity
of interest between the Company's non-employee directors and its shareholders,
providing non-employee directors with a proprietary stake in the Company's
success and strengthening the Company's ability to attract and retain qualified
non-employee directors by affording such persons an opportunity to share in the
future success of the Company.
2. DEFINITIONS.
(a) ACT means the Securities Act of 1933, as amended.
(b) BOARD means the Board of Directors of the Company.
(c) COMPANY means Steiner Leisure Limited.
(d) DATE OF GRANT means the date as of which an Option is
granted to a Non-Employee Director pursuant to Section 5 of this Plan.
(e) EXCHANGE ACT means the Securities Exchange Act of
1934, as amended.
(f) FAIR MARKET VALUE means, on the date in question, or if
the prices described in clauses (i) and (ii), below, are not available on such
date, on the latest date preceding the date in question on which such prices are
available, (i) the closing sales price per share of the Shares underlying an
Option on the Nasdaq Stock Market ("Nasdaq") or, if the Shares are not then
traded on Nasdaq, on any national securities exchange, or (ii) if the Shares are
not then traded on Nasdaq or such exchange, and are then traded on an
over-the-counter market, the average of the closing bid and asked prices for the
Shares in such over-the-counter market or (iii) if the Shares are then not
listed on Nasdaq or such exchange, or traded in an over-the-counter market, such
value as the Board may determine.
(g) NON-EMPLOYEE DIRECTOR means a member of the Board of
Directors of the Company who is not an employee of the Company or any subsidiary
(as defined under Rule 12b-2 under the Exchange Act) of the Company on a date in
question.
(h) OPTIONS means the options to purchase Shares granted
pursuant to this Plan.
(i) PLAN means this Steiner Leisure Limited Directors'
Share Option Plan.
(j) SHARES means the common shares of the Company, par
value (U.S.) $.01 per share.
3. ADMINISTRATION.
This Plan shall be administered by the Board or a committee of the
Board so designated by the Board to administer this Plan. Where the context so
requires, references to the Board herein shall refer to any such committee.
Subject to the provisions of this Plan, the Board shall be authorized to
interpret this Plan, to establish, amend and rescind any rules and regulations
relating to this Plan and to make all other determinations necessary or
advisable for the administration of this Plan; provided, however, that the Board
shall have no discretion with respect to the selection of directors to receive
Options, the number of Shares to be received upon exercise of Options or the
timing of grants of Options, all of which shall be determined in accordance with
the provisions of this Plan. Notwithstanding the foregoing, the Board may amend
this Plan pursuant to Section 8, below. The determinations of the Board in the
administration of this Plan, as described herein, shall be final and conclusive.
The Chairman of the Board and the Chief Operating Officer of the Company, and
either of them, shall be authorized to implement this Plan in accordance with
its terms and to take such actions of a ministerial nature as shall be necessary
to effectuate the intent and purposes thereof. Except as otherwise provided
herein, the validity, construction and effect of this Plan and any rules and
regulations relating to this Plan shall be determined in accordance with the
laws of the Commonwealth of the Bahamas subject to any applicable requirements
under United States federal or state securities laws.
4. ELIGIBILITY; OPTION AGREEMENT.
Only Non-Employee Directors shall be eligible to receive Options
under this Plan. Options shall be evidenced by written option agreements in such
form as the Board shall approve.
5. GRANTS OF OPTIONS.
Options shall be granted to Non-Employee Directors, subject to the
limitation on the number of Shares that may be issued under this Plan as
described in Section 6, below, as follows:
(a) GRANTS TO INITIAL DIRECTORS. Each of the initial four
Non-Employee Directors (the "Initial Directors") shall be granted, on the
effective date of the appointment or election of such Initial Director (the
"Initial Effective Date") without the need for further action by the Board,
Options to purchase that number of Shares equal to 2,813 multiplied by a
fraction, the numerator of which is the number of days from the Initial
Effective Date until the scheduled date of the then next annual meeting of
Shareholders of the Company ("Annual Meeting") (or, if such date has not yet
been scheduled, a date approximating the date of the next Annual Meeting as
determined in good faith by the Board), and the denominator of which is 365.
(b) ANNUAL GRANTS. On the date of each Annual Meeting during
the term of this Plan (an Annual Meeting Date") each individual elected or
re-elected as a Non-Employee Director at such meeting or continuing as a
Non-Employee Director shall be granted, without the need for further action by
the Board, an Option to purchase 2,813 Shares. In addition, any Non-Employee
Director who serves as Chairman of each of the Audit Committee and Compensation
Committee of the Board shall be granted on each Annual Meeting Date an option to
purchase an additional 750 Shares.
(c) OTHER GRANTS. Any new Non-Employee Director who is
appointed by the Board to fill a vacancy on the Board, or who is otherwise
appointed or elected to the Board otherwise than at an Annual Meeting shall be
granted, on the effective date of such appointment or election (the "Effective
Date"), without the need for further action by the Board, an Option to purchase
that number of Shares equal to 2,813 multiplied by a fraction, the numerator of
which is the number of days from the Effective Date until the scheduled date of
the then next Annual meeting (or, if such date has not yet been scheduled, the
anniversary date of the then immediately preceding Annual Meeting or, in the
absence of such date, a date approximating the date of the next Annual Meeting
as determined in good faith by the Board), and the denominator of which is 365.
(d) EXERCISE PRICE. The exercise price of each Option
shall be the Fair Market Value of the Shares on the Date of Grant.
(e) DURATION OF OPTIONS. Except as otherwise provided herein,
the latest date on which an Option may be exercised (the "Final Exercise Date")
shall be the date which is ten years from the Date of Grant.
(f) EXERCISE OF OPTIONS. Except as otherwise provided herein,
an Option shall become exercisable one year after the Date of Grant. An Option
may be exercised by giving written notice to the Secretary of the Company
specifying the number of Shares to be purchased, accompanied by the full
purchase price for the Shares to be purchased. An Option may not be exercised
for a fraction of a Share.
(g) PAYMENT FOR SHARES. Shares purchased pursuant to the
exercise of an Option granted under this Plan shall be paid for as follows: (i)
in cash or by certified check, bank draft or money order payable to the order of
the Company, (ii) through the delivery of Shares having a Fair Market Value on
the last business day preceding the date of exercise equal to the purchase
price, provided that, in the case of Shares acquired directly from the Company,
such Shares have been held for at least six months, or (iii) by a combination of
cash and Shares, as provided in clauses (i) and (ii), above.
(h) WITHHOLDING TAXES. Prior to issuance of the Shares upon
exercise of an Option, the Option holder shall pay or make adequate provision
for any applicable United States federal or state, or other tax withholding
obligations of the Company. Where approved by the Board in its sole discretion,
the Option holder may provide for the payment of withholding taxes upon exercise
of the Option by requesting that the Company retain Shares with a Fair Market
Value equal to the amount of taxes required to be withheld. In such case, the
Company shall issue the net number of Shares to the Option holder by deducting
the Shares retained from the Shares with respect to which the Option was
exercised. The Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is to be
determined. All elections by Option holders to have Shares withheld for this
purpose shall be made in writing in form acceptable to the Board.
(i) DELIVERY OF SHARE CERTIFICATES. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the certificate evidencing the
Shares underlying an Option, an Option holder shall not have any rights as a
shareholder of the Company. A certificate for the number of Shares purchased
pursuant to the exercise of an Option shall be issued as soon as practicable
after exercise of the Option. However, the Company shall not be obligated to
deliver a certificate evidencing Shares issuable under an Option (i) until, in
the opinion of the Company's counsel, all applicable Bahamas and United States
federal and state laws and regulations have been complied with and any
applicable taxes have been paid, (ii) if the Shares are at the time traded on
Nasdaq or any national securities exchange, until the Shares represented by the
certificate to be delivered have been listed or are authorized to be listed on
Nasdaq or such exchange, and (iii) until all other legal matters in connection
with the issuance and delivery of such certificate have been approved by the
Company's counsel. If the sale of Shares has not been registered under the Act,
the Company may require, as a condition to exercise of the Option, such
representations or agreements as counsel for the Company may consider
appropriate to avoid violation of the Act and may require that the certificate
evidencing such Shares bear an appropriate legend restricting transfer. The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares.
(j) ASSIGNMENT OR TRANSFER. Except as set forth in this Section 5(j),
no Option may be transferred other than by will or by the laws of descent and
distribution, and during a Non-Employee Director's lifetime an Option may be
exercised only by the Non-Employee Director to whom it was granted. An Option
may be transferred to a (i) Non-Employee Director's spouse, children or
grandchildren (referred to herein as "Family Members"), (ii) a trust or trusts
for the exclusive benefit of Family Members or (iii) a partnership in which
Family Members are the only partners. Any transfer pursuant to this Section 5
(j) shall be subject to the following: (i) there shall be no consideration for
such transfer, (ii) there may be no subsequent transfers without the approval of
the Board and (iii) all transfers shall be made so that no liability under
Section 16(b) of the Exchange Act arises as a result of such transfer. Following
any transfer, an Option shall continue to be subject to the same terms and
conditions as were applicable to the Non-Employee Director immediately prior to
transfer, with the transferee being deemed to be the Non-Employee Director for
such purposes, except that the events of death and termination of service
described in Sections 5(k) and 5(l), below, shall continue to apply with respect
to the Non-Employee Director.
(k) DEATH. Upon the death of a Non-Employee Director, all Options
held by such Non-Employee Director that are not then exercisable shall
immediately become exercisable. All Options held by such Non-Employee Director
immediately prior to death may be exercised by his or her executor or
administrator, or by the person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, at any time within the
three years following the date of death (but not later than the Final Exercise
Date); provided, however, that the Company shall be under no obligation to
deliver a certificate representing Shares that may be issued pursuant to such
exercise until the Company is satisfied as to the authority of the person or
persons exercising the Option.
(l) OTHER TERMINATION OF STATUS OF NON-EMPLOYEE DIRECTOR. If a
Non-Employee Director ceases to be a member of the Board for any reason other
than death, all Options held by such Non-Employee Director that are not then
exercisable shall terminate three years following the date they first become
exercisable. Options that are exercisable on the date of such termination shall
continue to be exercisable for a period of three years following the date of
termination (or until the Final Exercise Date, if earlier). Notwithstanding the
foregoing, all Options held by a Non-Employee Director shall terminate
immediately upon the termination of such Non-Employee Director's membership on
the Board if such termination was based on the misconduct of such Non-Employee
Director. After completion of the aforesaid three-year periods, such Options
shall terminate to the extent not previously exercised, expired or terminated.
(m) CHANGE IN CONTROL. In the event of a Change in Control (as
defined below) of the Company, any Options outstanding as of the date of such
Change in Control is determined to have occurred that are not yet exercisable on
such date shall become fully exercisable. For purposes of this Section 5(m) a
"Change in Control" means the happening of any of the following:
i. any transaction as a result of which a change in
control of the Company would be required to be
reported in response to Item 1(a) of the Current
Report on Form 8-K as in effect on the date hereof,
pursuant to Sections 13 or 15(d) of the Exchange Act,
whether or not the Company is then subject to such
reporting requirement, otherwise than through an
arrangement or arrangements consummated with the
prior approval of the Board;
ii. any "person" or "group" within the meaning of
Sections 13(d) and 14(d)(2) of the Exchange Act (a)
becomes the "beneficial owner," as defined in Rule
13d-3 under the Exchange Act, of more than 20% of the
then outstanding voting securities of the Company,
otherwise than through a transaction or transactions
arranged by, or consummated with the prior approval
of, the Board or (b) acquires by proxy or otherwise
the right to vote for the election of directors, for
any merger or consolidation of the Company or for any
other matter or question, more than 20% of the then
outstanding voting securities of the Company,
otherwise than through an arrangement or arrangements
consummated with the prior approval of the Board;
iii. during any period of 24 consecutive months (not
including any period prior to the adoption of this
Plan), Present Directors and/or New Directors cease
for any reason to constitute a majority of the
Board. For purposes of the preceding sentence,
"Present Directors" shall mean individuals who, at
the beginning of such consecutive 24 month period,
were members of the Board and "New Directors" shall
mean any director whose election by the Board or
whose nomination for election by the Company's
shareholders was approved by a vote of at least
two-thirds of the Directors then still in office who
were Present Directors or New Directors; or
iv. any "person" or "group" within the meaning of Sections
13(d) and 14(d)(2) of the Exchange Act that is the
"beneficial owner" as defined in Rule 13d-3 under the
Exchange Act of 20% or more of the then outstanding
voting securities of the Company commences soliciting
proxies.
(n) RULE 16B-3. Options granted hereunder are required to comply with
the applicable provisions of Rule 16b-3 under the Exchange Act and the award
thereof shall contain such additional conditions or restrictions as may be
required thereunder to qualify to the maximum extent for the exemption from
Section 16(b) of the Exchange Act available pursuant to Rule 16b-3.
6. SHARES AUTHORIZED.
(a) Subject to adjustment as provided below, the aggregate
number of Shares that may be issued pursuant to Options granted under this Plan
is 185,625. Such Shares may be authorized, but unissued Shares, or may be Shares
reacquired by the Company and held in treasury. If any Option granted under this
Plan terminates without being exercised in full, the number of Shares as to
which such Option was not exercised shall be available for future grants within
the limits set forth in this Section 6(a).
(b) Subject to any required action by the shareholders of the
Company in the event of any reorganization, recapitalization, share split, share
dividend, combination of shares, issuance of rights or any other change in the
capital or corporate structure of the Company, the number of Shares covered by
each outstanding Option and the number of Shares available for issuance under
this Plan, but as to which Options have not been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the exercise price per Share under outstanding Options, shall be adjusted
equitably to reflect the occurrence of such event; provided, however, that no
adjustments shall be made except as shall be necessary to preserve, rather than
enlarge or reduce the value of awards under this Plan. Any such adjustment shall
be made by the Board.
7. EFFECT AND DISCONTINUANCE.
Neither adoption of this Plan nor the grant of Options to a
Non-Employee Director hereunder shall confer upon any person any right to
continued status as a director of the Company or affect in any way the right of
the Company to terminate a director at any time. The Board may at any time
discontinue granting Options under this Plan.
8. EFFECTIVE DATE; TERMINATION AND AMENDMENT OF PLAN.
(a) The effective date of this Plan shall be the date of its
adoption by the Board of Directors and shareholders of the Company as indicated
on the cover page of this Plan. The final award under this Plan shall be made on
the date of the Annual Meeting in 2006, but the pertinent terms of this Plan
shall continue thereafter while previously awarded Options remain outstanding.
(b) The Board may terminate or amend this Plan as it shall
deem advisable or to conform to any change in any law or regulation applicable
thereto; provided, however, that the Board may not make any amendment that would
reduce any award previously made under this Plan.
9. GENERAL PROVISIONS.
(a) Nothing in this Plan is intended to be a
substitute for, or shall preclude or limit the establishment or continuation of,
any other plan, practice or arrangement for the payment of compensation or
benefits to Non-Employee Directors that the Company now has or may hereafter put
into effect.
(b) Options awarded hereunder and Shares underlying such
Options shall be held by the Non-Employee Director for such period of time
required so as to avoid liability under Section 16(b) of the Exchange Act.
(c) Headings are given to sections of this Plan solely as a
convenience to facilitate reference and are not intended to affect the meaning
of any provision hereof. The references herein to any statute, regulation or
other provision of law shall be construed to refer to any amendment or successor
to such provisions.