EXHIBIT 10.7
SEABRIGHT INSURANCE HOLDINGS, INC.
2005 LONG-TERM EQUITY INCENTIVE PLAN
1. Purpose.
This plan shall be known as the SeaBright Insurance Holdings, Inc.
2005 Long-Term Equity Incentive Plan (the "Plan"). The purpose of the Plan shall
be to promote the long-term growth and profitability of SeaBright Insurance
Holdings, Inc. (the "Company") and its Subsidiaries by (i) providing certain
directors, officers and employees of, and certain other individuals who perform
services for, the Company and its Subsidiaries with incentives to maximize
stockholder value and otherwise contribute to the success of the Company and
(ii) enabling the Company to attract, retain and reward the best available
persons for positions of responsibility. Grants of incentive or non-qualified
stock options, restricted stock, restricted stock units, deferred stock units,
performance awards, or any combination of the foregoing may be made under the
Plan.
2. Definitions
(a) "Board of Directors" and "Board" mean the board of directors of
the Company.
(b) "Cause" means the occurrence of one or more of the following
events:
(i) Conviction of a felony or any crime or offense lesser than
a felony involving the property of the Company or a Subsidiary; or
(ii) Conduct that has caused demonstrable and serious injury
to the Company or a Subsidiary, monetary or otherwise; or
(iii) Willful refusal to perform or substantial disregard of
duties properly assigned, as determined by the Company or a Subsidiary, as the
case may be; or
(iv) Breach of duty of loyalty to the Company or a Subsidiary
or other act of fraud or dishonesty with respect to the Company or a Subsidiary.
(c) "Change in Control" means the occurrence of one of the following
events:
(i) if any "person" or "group" as those terms are used in
Sections 13(d) and 14(d) of the Exchange Act or any successors thereto, other
than an Exempt Person, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act or any successor thereto), directly or indirectly,
of securities of the Company representing 50% or more of the combined voting
power of the Company's then outstanding securities; or
(ii) during any period of two consecutive years, individuals
who at the beginning of such period constitute the Board and any new directors
whose election by the Board or nomination for election by the Company's
stockholders was approved by at least two-thirds of
the directors then still in office who either were directors at the beginning of
the period or whose election was previously so approved, cease for any reason to
constitute a majority thereof; or
(iii) consummation of a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation (A) which would
result in all or a portion of the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) more than 50% of the combined voting power of the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation or (B) by which the corporate existence of the Company is not
affected and following which the Company's chief executive officer and directors
retain their positions with the Company (and constitute at least a majority of
the Board); or
(iv) consummation of a plan of complete liquidation of the
Company or a sale or disposition by the Company of all or substantially all the
Company's assets, other than a sale to an Exempt Person.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the Compensation Committee of the Board, which
shall consist solely of two or more members of the Board.
(f) "Common Stock" means the Common Stock, par value $0.01 per
share, of the Company, and any other shares into which such stock may be changed
by reason of a recapitalization, reorganization, merger, consolidation or any
other change in the corporate structure or capital stock of the Company.
(g) "Competition" is deemed to occur if a person whose employment
with the Company or its Subsidiaries has terminated obtains a position as a
full-time or part-time employee of, as a member of the board of directors of, or
as a consultant or advisor with or to, or acquires an ownership interest in
excess of 5% of, a corporation, partnership, firm or other entity that engages
in any of the businesses of the Company or any Subsidiary with which the person
was involved in a management role at any time during his or her last five years
of employment with or other service for the Company or any Subsidiaries.
(h) "Disability" means a disability that would entitle an eligible
participant to payment of monthly disability payments under any Company
disability plan or as otherwise determined by the Committee.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(j) "Exempt Person" means (i) Summit Master Company, LLC, Summit
Partners, LLC, Summit Partners, L.P. or any of their affiliates, (ii) any
person, entity or group under the control of any party included in clause (i),
or (iii) any employee benefit plan of the Company or a trustee or other
administrator or fiduciary holding securities under an employee benefit plan of
the Company.
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(k) "Family Member" has the meaning given to such term in General
Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended,
and any successor thereto.
(l) "Fair Market Value" of a share of Common Stock of the Company
means, as of the date in question, the officially-quoted closing selling price
of the stock (or if no selling price is quoted, the bid price) on the principal
securities exchange on which the Common Stock is then listed for trading
(including for this purpose the Nasdaq National Market) (the "Market") for the
applicable trading day or, if the Common Stock is not then listed or quoted in
the Market, the Fair Market Value shall be the fair value of the Common Stock
determined in good faith by the Board; provided, however, that when shares
received upon exercise of an option are immediately sold in the open market, the
net sale price received may be used to determine the Fair Market Value of any
shares used to pay the exercise price or applicable withholding taxes and to
compute the withholding taxes.
(m) "Incentive Stock Option" means an option conforming to the
requirements of Section 422 of the Code and any successor thereto.
(n) "Non-Employee Director" has the meaning given to such term in
Rule 16b-3 under the Exchange Act and any successor thereto.
(o) "Non-qualified Stock Option" means any stock option other than
an Incentive Stock Option.
(p) "Other Company Securities" mean securities of the Company other
than Common Stock, which may include, without limitation, unbundled stock units
or components thereof, debentures, preferred stock, warrants and securities
convertible into or exchangeable for Common Stock or other property.
(q) "Retirement" means retirement as defined under any Company
pension plan or retirement program or termination of one's employment on
retirement with the approval of the Committee.
(r) "Subsidiary" means a corporation or other entity of which
outstanding shares or ownership interests representing 50% or more of the
combined voting power of such corporation or other entity entitled to elect the
management thereof, or such lesser percentage as may be approved by the
Committee, are owned directly or indirectly by the Company.
3. Administration.
The Plan shall be administered by the Committee; provided that the
Board may, in its discretion, at any time and from time to time, resolve to
administer the Plan, in which case the term "Committee" shall be deemed to mean
the Board for all purposes herein. Subject to the provisions of the Plan, the
Committee shall be authorized to (i) select persons to participate in the Plan,
(ii) determine the form and substance of grants made under the Plan to each
participant, and the conditions and restrictions, if any, subject to which such
grants will be made, (iii) certify that the conditions and restrictions
applicable to any grant have been met, (iv) modify the terms of
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grants made under the Plan, (v) interpret the Plan and grants made thereunder,
(vi) make any adjustments necessary or desirable in connection with grants made
under the Plan to eligible participants located outside the United States and
(vii) adopt, amend, or rescind such rules and regulations, and make such other
determinations, for carrying out the Plan as it may deem appropriate. Decisions
of the Committee on all matters relating to the Plan shall be in the Committee's
sole discretion and shall be conclusive and binding on all parties. The
validity, construction, and effect of the Plan and any rules and regulations
relating to the Plan shall be determined in accordance with applicable federal
and state laws and rules and regulations promulgated pursuant thereto and the
rules and regulations of the principal securities exchange on which the Common
Stock is then listed for trading. No member of the Committee and no officer of
the Company shall be liable for any action taken or omitted to be taken by such
member, by any other member of the Committee or by any officer of the Company in
connection with the performance of duties under the Plan, except for such
person's own willful misconduct or as expressly provided by statute.
The expenses of the Plan shall be borne by the Company. The Plan
shall not be required to establish any special or separate fund or make any
other segregation of assets to assume the payment of any award under the Plan,
and rights to the payment of such awards shall be no greater than the rights of
the Company's general creditors.
4. Shares Available for the Plan.
Subject to adjustments as provided in Section 16 hereof, an
aggregate of one million forty seven thousand seven hundred fifty five
(1,047,755) shares of Common Stock may be issued pursuant to the Plan, plus an
automatic annual increase on the first day of each of the Company's fiscal years
beginning in 2006 and ending in 2015 equal to the lesser of (i) two percent (2%)
of the shares of Common Stock outstanding on the last day of the immediately
preceding fiscal year or (ii) such lesser number of shares of Common Stock as
determined by the Committee (collectively, the "Shares"). Notwithstanding the
foregoing, the maximum aggregate number of Shares that may be issued pursuant to
Incentive Stock Options under the Plan shall not exceed one million forty seven
thousand seven hundred fifty five (1,047,755) (subject to adjustments as
provided in Section 16 hereof), and such number shall not be subject to annual
adjustment as described in the preceding sentence.
Such Shares may be in whole or in part authorized and unissued or
held by the Company as treasury shares. If any grant under the Plan expires or
terminates unexercised, becomes unexercisable or is forfeited as to any Shares,
or is tendered or withheld as to any shares in payment of the exercise price of
the grant or the taxes payable with respect to the exercise, then such
unpurchased, forfeited, tendered or withheld Shares shall thereafter be
available for further grants under the Plan.
Without limiting the generality of the foregoing provisions of this
Section 4 or the generality of the provisions of Sections 3, 6 or 18 or any
other section of this Plan, the Committee may, at any time or from time to time,
and on such terms and conditions (that are consistent with and not in
contravention of the other provisions of this Plan) as the Committee may, in its
sole discretion, determine, enter into agreements (or take other actions with
respect to
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the options) for new options containing terms (including exercise prices) more
(or less) favorable than the outstanding options.
5. Participation.
Participation in the Plan shall be limited to those directors
(including Non-Employee Directors), officers (including non-employee officers)
and employees of, and other individuals performing services for, the Company and
its Subsidiaries selected by the Committee (including participants located
outside the United States). Nothing in the Plan or in any grant thereunder shall
confer any right on a participant to continue in the service or employ as a
director or officer of or in the performance of services for the Company or a
Subsidiary or shall interfere in any way with the right of the Company or a
Subsidiary to terminate the employment or performance of services or to reduce
the compensation or responsibilities of a participant at any time. By accepting
any award under the Plan, each participant and each person claiming under or
through him or her shall be conclusively deemed to have indicated his or her
acceptance and ratification of, and consent to, any action taken under the Plan
by the Company, the Board or the Committee.
Incentive Stock Options or Non-qualified Stock Options, restricted
stock awards, restricted stock unit or deferred stock unit awards, performance
awards, or any combination thereof, may be granted to such persons and for such
number of Shares as the Committee shall determine (such individuals to whom
grants are made being sometimes herein called "optionees" or "grantees," as the
case may be). Determinations made by the Committee under the Plan need not be
uniform and may be made selectively among eligible individuals under the Plan,
whether or not such individuals are similarly situated. A grant of any type made
hereunder in any one year to an eligible participant shall neither guarantee nor
preclude a further grant of that or any other type to such participant in that
year or subsequent years.
6. Incentive and Non-qualified Options.
The Committee may from time to time grant to eligible participants
Incentive Stock Options, Non-qualified Stock Options, or any combination
thereof; provided that the Committee may grant Incentive Stock Options only to
eligible employees of the Company or its subsidiaries (as defined for this
purpose in Section 424(f) of the Code or any successor thereto). In any one
calendar year, the Committee shall not grant to any one participant options to
purchase a number of shares of Common Stock in excess of three hundred thousand
(300,000) (as adjusted pursuant to Section 16 hereof). The options granted shall
take such form as the Committee shall determine, subject to the following terms
and conditions.
It is the Company's intent that Non-qualified Stock Options granted
under the Plan not be classified as Incentive Stock Options, that Incentive
Stock Options be consistent with and contain or be deemed to contain all
provisions required under Section 422 of the Code and any successor thereto, and
that any ambiguities in construction be interpreted in order to effectuate such
intent. If an Incentive Stock Option granted under the Plan does not qualify as
such for any reason, then to the extent of such non-qualification, the stock
option represented thereby shall be
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regarded as a Non-qualified Stock Option duly granted under the Plan, provided
that such stock option otherwise meets the Plan's requirements for Non-qualified
Stock Options.
(a) Price. The price per Share deliverable upon the exercise of
each option ("exercise price") may not be less than 100% of the Fair Market
Value of a share of Common Stock as of the date of grant of the option, and in
the case of the grant of any Incentive Stock Option to an employee who, at the
time of the grant, owns more than 10% of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries, the exercise price
may not be less than 110% of the Fair Market Value of a share of Common Stock as
of the date of grant of the option, in each case unless otherwise permitted by
Section 422 of the Code or any successor thereto.
(b) Payment. Options may be exercised, in whole or in part, upon
payment of the exercise price of the Shares to be acquired. Unless otherwise
determined by the Committee, payment shall be made (i) in cash (including check,
bank draft, money order or wire transfer of immediately available funds), (ii)
by delivery of outstanding shares of Common Stock with a Fair Market Value on
the date of exercise equal to the aggregate exercise price payable with respect
to the options' exercise, (iii) by simultaneous sale through a broker reasonably
acceptable to the Committee of Shares acquired on exercise, as permitted under
Regulation T of the Federal Reserve Board or (iv) by any combination of the
foregoing.
In the event a grantee elects to pay the exercise price payable with
respect to an option pursuant to clause (ii) above, (A) only a whole number of
share(s) of Common Stock (and not fractional shares of Common Stock) may be
tendered in payment, (B) such grantee must present evidence acceptable to the
Company that he or she has owned any such shares of Common Stock tendered in
payment of the exercise price (and that such tendered shares of Common Stock
have not been subject to any substantial risk of forfeiture) for at least six
months prior to the date of exercise, and (C) Common Stock must be delivered to
the Company. Delivery for this purpose may, at the election of the grantee, be
made either by (1) physical delivery of the certificate(s) for all such shares
of Common Stock tendered in payment of the price, accompanied by duly executed
instruments of transfer in a form acceptable to the Company, or (2) direction to
the grantee's broker to transfer, by book entry, such shares of Common Stock
from a brokerage account of the grantee to a brokerage account specified by the
Company. When payment of the exercise price is made by delivery of Common Stock,
the difference, if any, between the aggregate exercise price payable with
respect to the option being exercised and the Fair Market Value of the shares of
Common Stock tendered in payment (plus any applicable taxes) shall be paid in
cash. No grantee may tender shares of Common Stock having a Fair Market Value
exceeding the aggregate exercise price payable with respect to the option being
exercised (plus any applicable taxes).
(c) Terms of Options. The term during which each option may be
exercised shall be determined by the Committee, but if required by the Code and
except as otherwise provided herein, no option shall be exercisable in whole or
in part more than ten years from the date it is granted, and no Incentive Stock
Option granted to an employee who at the time of the grant owns more than 10% of
the total combined voting power of all classes of stock of the Company or any of
its Subsidiaries shall be exercisable more than five years from the date it is
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granted. All rights to purchase Shares pursuant to an option shall, unless
sooner terminated, expire at the date designated by the Committee. The Committee
shall determine the date on which each option shall become exercisable and may
provide that an option shall become exercisable in installments. The Shares
constituting each installment may be purchased in whole or in part at any time
after such installment becomes exercisable, subject to such minimum exercise
requirements as may be designated by the Committee. Prior to the exercise of an
option and delivery of the Shares represented thereby, the optionee shall have
no rights as a stockholder with respect to any Shares covered by such
outstanding option (including any dividend or voting rights).
(d) Limitations on Grants. If required by the Code, the aggregate
Fair Market Value (determined as of the grant date) of Shares for which an
Incentive Stock Option is exercisable for the first time during any calendar
year under all equity incentive plans of the Company and its Subsidiaries (as
defined in Section 422 of the Code or any successor thereto) may not exceed
$100,000.
(e) Termination; Forfeiture.
(i) Death or Disability. If a participant ceases to be a
director, officer or employee of, or to perform other services for, the Company
or any Subsidiary due to death or Disability, all of the participant's options
shall become fully vested and exercisable and shall remain so for a period of
180 days from the date of such death or Disability, but in no event after the
expiration date of the options; provided that the participant does not engage in
Competition during such 180-day period unless he or she received written consent
to do so from the Board or the Committee; provided further that the Board or
Committee may extend such exercise period (and related non-competition period)
in its discretion, but in no event may such extended exercise period extend
beyond the expiration date of the options. Notwithstanding the foregoing, if the
Disability giving rise to the termination of employment is not within the
meaning of Section 22(e)(3) of the Code or any successor thereto, Incentive
Stock Options not exercised by such participant within 90 days after the date of
termination of employment will cease to qualify as Incentive Stock Options and
will be treated as Non-qualified Stock Options under the Plan if required to be
so treated under the Code.
(ii) Retirement. If a participant ceases to be a director,
officer or employee of, or to perform other services for, the Company or any
Subsidiary upon the occurrence of his or her Retirement, (A) all of the
participant's options that were exercisable on the date of Retirement shall
remain exercisable for, and shall otherwise terminate at the end of, a period of
90 days after the date of Retirement, but in no event after the expiration date
of the options; provided that the participant does not engage in Competition
during such 90 day period unless he or she receives written consent to do so
from the Board or the Committee; provided further that the Board or Committee
may extend such exercise period (and related non-competition period) in its
discretion, but in no event may such extended exercise period extend beyond the
expiration date of the options, and (B) all of the participant's options that
were not exercisable on the date of Retirement shall be forfeited immediately
upon such Retirement; provided, however, that such options may become fully
vested and exercisable in the discretion of the Committee. Notwithstanding the
foregoing, Incentive Stock Options not exercised by such
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participant within 90 days after Retirement will cease to qualify as Incentive
Stock Options and will be treated as Non-qualified Stock Options under the Plan
if required to be so treated under the Code.
(iii) Discharge for Cause. If a participant ceases to be a
director, officer or employee of , or to perform other services for, the Company
or a Subsidiary due to Cause, all of the participant's options shall expire and
be forfeited immediately upon such cessation, whether or not then exercisable.
(iv) Other Termination. Unless otherwise determined by the
Committee, if a participant ceases to be a director, officer or employee of, or
to otherwise perform services for, the Company or a Subsidiary for any reason
other than death, Disability, Retirement or Cause, (A) all of the participant's
options that were exercisable on the date of such cessation shall remain
exercisable for, and shall otherwise terminate at the end of, a period of 30
days after the date of such cessation, but in no event after the expiration date
of the options; provided that the participant does not engage in Competition
during such 30-day period unless he or she receives written consent to do so
from the Board or the Committee; provided further that the Board or Committee
may extend such exercise period (and related non-competition period) in its
discretion, but in no event may such extended exercise period extend beyond the
expiration date of the options, and (B) all of the participant's options that
were not exercisable on the date of such cessation shall be forfeited
immediately upon such cessation.
(v) Change in Control. If there is a Change in Control of the
Company and a participant is terminated from being a director, officer or
employee of, or from performing other services for, the Company or a Subsidiary
within one year after such Change in Control, all of the participant's options
shall become fully vested and exercisable upon such termination and shall remain
so for up to one year after the date of termination, but in no event after the
expiration date of the options. In addition, the Committee shall have the
authority to grant options that become fully vested and exercisable
automatically upon a Change in Control, whether or not the grantee is
subsequently terminated.
(f) Forfeiture. If a participant exercises any of his or her options
and, within one year thereafter, either (i) is terminated from the Company or a
Subsidiary for any of the reasons specified in the definition of "Cause" set
forth in Section 2(b), or (ii) engages in Competition without having received
written consent to do so from the Board or the Committee, then the participant
may, in the discretion of the Committee, be required to pay the Company the gain
represented by the difference between the aggregate selling price of the Shares
acquired upon the options' exercise (or, if the Shares were not then sold, their
aggregate Fair Market Value on the date of exercise) and the aggregate exercise
price of the options exercised (the "Option Gain"), without regard to any
subsequent increase or decrease in the Fair Market Value of the Common Stock. In
addition, the Company may, in its discretion, deduct from any payment of any
kind (including salary or bonus) otherwise due to any such participant an amount
equal to the Option Gain.
(g) Grant of Reload Options. The Committee may provide (either at
the time of grant or exercise of an option), in its discretion, for the grant to
a grantee who exercises all or
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any portion of an option ("Exercised Options") and who pays all or part of such
exercise price with shares of Common Stock, of an additional option (a "Reload
Option") for a number of shares of Common Stock equal to the sum (the "Reload
Number") of the number of shares of Common Stock tendered for the Exercised
Options plus, if so provided by the Committee, the number of shares of Common
Stock, if any, tendered by the grantee in connection with the exercise of the
Exercised Options to satisfy any federal, state or local tax withholding
requirements. The terms of each Reload Option, including the date of its
expiration and the terms and conditions of its exercisability and
transferability, shall be the same as the terms of the Exercised Option to which
it relates, except that (i) the grant date for each Reload Option shall be the
date of exercise of the Exercised Option to which it relates and (ii) the
exercise price for each Reload Option shall be the Fair Market Value of the
Common Stock on the grant date of the Reload Option.
7. [Intentionally Omitted].
8. Restricted Stock.
The Committee may at any time and from time to time grant Shares of
restricted stock under the Plan to such participants and in such amounts as it
determines. Each grant of Shares of restricted stock shall specify the
applicable restrictions on such Shares, the duration of such restrictions (which
shall be at least six months except as otherwise determined by the Committee or
provided in the third paragraph of this Section 8), and the time or times at
which such restrictions shall lapse with respect to all or a specified number of
Shares that are part of the grant.
The participant will be required to pay the Company the aggregate
par value of any Shares of restricted stock (or such larger amount as the Board
may determine to constitute capital under Section 154 of the Delaware General
Corporation Law, as amended, or any successor thereto) within ten days of the
date of grant, unless such Shares of restricted stock are treasury shares.
Unless otherwise determined by the Committee, certificates representing Shares
of restricted stock granted under the Plan will be held in escrow by the Company
on the participant's behalf during any period of restriction thereon and will
bear an appropriate legend specifying the applicable restrictions thereon, and
the participant will be required to execute a blank stock power therefor. Except
as otherwise provided by the Committee, during such period of restriction the
participant shall have all of the rights of a holder of Common Stock, including
but not limited to the rights to receive dividends and to vote, and any stock or
other securities received as a distribution with respect to such participant's
restricted stock shall be subject to the same restrictions as then in effect for
the restricted stock.
Except as otherwise provided by the Committee, if a participant
ceases to be a director, officer or employee of, or to otherwise perform
services for, the Company and its Subsidiaries due to death, Disability or
Retirement during any period of restriction, all restrictions on Shares of
restricted stock granted to such participant shall lapse. At such time as a
participant ceases to be a director, officer or employee of, or otherwise
performing services for, the Company or its Subsidiaries for any other reason,
all Shares of restricted stock granted to
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such participant on which the restrictions have not lapsed shall be immediately
forfeited to the Company.
If there is a Change in Control of the Company and a participant is
terminated from being a director, officer or employee of, or from performing
other services for, the Company or a subsidiary within one year after such
Change in Control, all restrictions on Shares of restricted stock granted to
such participant shall lapse. In addition, the Committee shall have the
authority to grant shares of restricted stock with respect to which all
restrictions shall lapse automatically upon a Change in Control, whether or not
the grantee is subsequently terminated.
9. Restricted Stock Units; Deferred Stock Units.
The Committee may at any time and from time to time grant restricted
stock units under the Plan to such participants and in such amounts as it
determines. Each grant of restricted stock units shall specify the applicable
restrictions on such units, the duration of such restrictions (which shall be at
least six months except as otherwise determined by the Committee or provided in
the third paragraph of this Section 9), and the time or times at which such
restrictions shall lapse with respect to all or a specified number of units that
are part of the grant.
Each restricted stock unit shall be equivalent in value to one share
of Common Stock and shall entitle the participant to receive from the Company at
the end of the vesting period (the "Vesting Period") applicable to such unit one
Share, unless the participant elects in a timely fashion to defer the receipt of
such Shares, as provided below. Restricted stock units may be granted without
payment of cash or consideration to the Company; provided that participants
shall be required to pay to the Company the aggregate par value of the Shares
received from the Company within ten days of the issuance of such Shares unless
such Shares are treasury shares.
Except as otherwise provided by the Committee, during the
restriction period the participant shall not have any rights as a shareholder of
the Company; provided that the participant shall have the right to receive
accumulated dividends or distributions with respect to the corresponding number
of shares of Common Stock underlying each restricted stock unit at the end of
the Vesting Period, unless such restricted stock units are converted into
deferred stock units, in which case such accumulated dividends or distributions
shall be paid by the Company to the participant at such time as the deferred
stock units are converted into Shares.
Except as otherwise provided by the Committee, if a participant
ceases to be a director, officer or employee of, or to otherwise perform
services for, the Company or any Subsidiary due to death, Disability or
Retirement during any period of restriction, all restrictions on restricted
stock units granted to such participant shall lapse. At such time as a
participant ceases to be a director, officer or employee of, or otherwise
performing services for, the Company or any Subsidiary for any other reason, all
restricted stock units granted to such participant on which the restrictions
have not lapsed shall be immediately forfeited to the Company.
If there is a Change in Control of the Company and a participant is
terminated from being a director, officer or employee of, or from performing
other services for, the
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Company or any Subsidiary within one year after such Change in Control, all
restrictions on restricted stock units granted to such participant shall lapse.
In addition, the Committee shall have the authority to grant restricted stock
units with respect to which all restrictions shall lapse automatically upon a
Change in Control, whether or not the grantee is subsequently terminated.
A participant may elect by written notice to the Company, which
notice must be made before the later of (i) the close of the tax year preceding
the year in which the restricted stock units are granted or (ii) 30 days of
first becoming eligible to participate in the Plan (or, if earlier, the last day
of the tax year in which the participant first becomes eligible to participate
in the plan) and on or prior to the date the restricted stock units are granted,
to defer the receipt of all or a portion of the Shares due with respect to the
vesting of such restricted stock units; provided that the Committee may impose
such additional restrictions with respect to the time at which a participant may
elect to defer receipt of Shares subject to the deferral election, and any other
terms with respect to a grant of restricted stock units to the extent the
Committee deems necessary to enable the participant to defer recognition of
income with respect to such units until the Shares underlying such units are
issued or distributed to the participant. Upon such deferral, the restricted
stock units so deferred shall be converted into deferred stock units. Except as
provided below, delivery of Shares with respect to deferred stock units shall be
made at the end of the deferral period set forth in the participant's deferral
election notice (the "Deferral Period"). Deferral Periods shall be no less than
one year after the vesting date of the applicable restricted stock units.
Except as otherwise provided by the Committee, during such Deferral
Period the participant shall not have any rights as a shareholder of the
Company; provided that, the participant shall have the right to receive
accumulated dividends or distributions with respect to the corresponding number
of shares of Common Stock underlying each deferred stock unit at the end of the
Deferral Period when such deferred stock units are converted into Shares.
Except as otherwise provided by the Committee, if a Participant
ceases to be a director, officer or employee of, or to otherwise perform
services for, the Company or any Subsidiary upon his or her death prior to the
end of the Deferral Period, the participant shall receive payment in Shares in
respect of such participant's deferred stock units which would have matured or
been earned at the end of such Deferral Period as if the applicable Deferral
Period had ended as of the date of such participant's death.
Except as otherwise provided by the Committee, if a participant
ceases to be a director, officer or employee of, or to otherwise perform
services for, the Company or any Subsidiary upon becoming disabled (as defined
under Section 409A(a)(2)(C) of the Code) or Retirement or for any other reason
except termination for Cause prior to the end of the Deferral Period, the
participant shall receive payment in Shares in respect of such participant's
deferred stock units at the end of the applicable Deferral Period or on such
accelerated basis as the Committee may determine, to the extent permitted by
regulations issued under Section 409A(a)(3) of the Code.
Except as otherwise provided by the Committee, if a participant
ceases to be a director, officer or employee of, or to otherwise perform
services for, the Company or any
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Subsidiary due to termination for Cause such participant shall immediately
forfeit any deferred stock units which would have matured or been earned at the
end of the applicable Deferral Period.
Except as otherwise provided by the Committee, in the event of a
Change in Control that also constitutes a "change in the ownership or effective
control of" the Company, or a change in the ownership of a substantial portion
of the Company's assets (in each case as determined under regulations issued
pursuant to Section 409A(a)(2)(A)(v) of the Code), a participant shall receive
payment in Shares in respect of such participant's deferred stock units which
would have matured or been earned at the end of the applicable Deferral Period
as if such Deferral Period had ended immediately prior to the Change in Control;
provided, however, that if an event that constitutes a Change in Control
hereunder does not constitute a "change in control" under Section 409A of the
Code (or the regulations promulgated thereunder), no payments with respect to
the deferred stock units shall be made under this paragraph to the extent such
payments would constitute an impermissible acceleration under Section 409A of
the Code.
10. Performance Awards.
Performance awards may be granted to participants at any time and
from time to time as determined by the Committee. The Committee shall have
complete discretion in determining the size and composition of performance
awards granted to a participant. The period over which performance is to be
measured (a "performance cycle") shall commence on the date specified by the
Committee and shall end on the last day of a fiscal year specified by the
Committee. A performance award shall be paid no later than the 15th day of the
third month following the completion of a performance cycle. Performance awards
may include (i) specific dollar-value target awards (ii) performance units, the
value of each such unit being determined by the Committee at the time of
issuance, and/or (iii) performance Shares, the value of each such Share being
equal to the Fair Market Value of a share of Common Stock.
The value of each performance award may be fixed or it may be
permitted to fluctuate based on a performance factor (e.g., return on equity)
selected by the Committee.
The Committee shall establish performance goals and objectives for
each performance cycle on the basis of such criteria and objectives as the
Committee may select from time to time, including, without limitation, the
performance of the participant, the Company, one or more of its Subsidiaries or
divisions or any combination of the foregoing. During any performance cycle, the
Committee shall have the authority to adjust the performance goals and
objectives for such cycle for such reasons as it deems equitable.
The Committee shall determine the portion of each performance award
that is earned by a participant on the basis of the Company's performance over
the performance cycle in relation to the performance goals for such cycle. The
earned portion of a performance award may be paid out in Shares, cash, Other
Company Securities, or any combination thereof, as the Committee may determine.
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A participant must be a director, officer or employee of, or
otherwise perform services for, the Company or its Subsidiaries at the end of
the performance cycle in order to be entitled to payment of a performance award
issued in respect of such cycle; provided, however, that except as otherwise
determined by the Committee, if a participant ceases to be a director, officer
or employee of, or to otherwise perform services for, the Company and its
Subsidiaries upon his or her death, Retirement, or Disability prior to the end
of the performance cycle, the participant shall earn a proportionate portion of
the performance award based upon the elapsed portion of the performance cycle
and the Company's performance over that portion of such cycle.
In the event of a Change in Control, a participant shall earn no
less than the portion of the performance award that the participant would have
earned if the applicable performance cycle(s) had terminated as of the date of
the Change in Control.
11. Withholding Taxes.
(a) Participant Election. Unless otherwise determined by the
Committee, a participant may elect to deliver shares of Common Stock (or have
the Company withhold shares acquired upon exercise of an option or deliverable
upon grant or vesting of restricted stock, as the case may be) to satisfy, in
whole or in part, the amount the Company is required to withhold for taxes in
connection with the exercise of an option or the delivery of restricted stock
upon grant or vesting, as the case may be. Such election must be made on or
before the date the amount of tax to be withheld is determined. Once made, the
election shall be irrevocable. The fair market value of the shares to be
withheld or delivered will be the Fair Market Value as of the date the amount of
tax to be withheld is determined. In the event a participant elects to deliver
or have the Company withhold shares of Common Stock pursuant to this Section
11(a), such delivery or withholding must be made subject to the conditions and
pursuant to the procedures set forth in Section 6(b) with respect to the
delivery or withholding of Common Stock in payment of the exercise price of
options.
(b) Company Requirement. The Company may require, as a condition to
any grant or exercise under the Plan or to the delivery of certificates for
Shares issued hereunder, that the grantee make provision for the payment to the
Company, either pursuant to Section 11(a) or this Section 11(b), of federal,
state or local taxes of any kind required by law to be withheld with respect to
any grant or delivery of Shares. The Company, to the extent permitted or
required by law, shall have the right to deduct from any payment of any kind
(including salary or bonus) otherwise due to a grantee, an amount equal to any
federal, state or local taxes of any kind required by law to be withheld with
respect to any grant or delivery of Shares under the Plan.
12. Written Agreement; Vesting.
Unless the Committee determines otherwise, each employee to whom a
grant is made under the Plan shall enter into a written agreement with the
Company that shall contain such provisions, including without limitation vesting
requirements, consistent with the provisions of the Plan, as may be approved by
the Committee. Unless the Committee determines otherwise and except as otherwise
provided in Sections 6, 7, 8, 9 and 10 in connection with a Change in
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Control or certain occurrences of termination, no grant under this Plan may be
exercised, and no restrictions relating thereto may lapse, within six months of
the date such grant is made.
13. Transferability.
Unless the Committee determines otherwise, no award granted under
the Plan shall be transferable by a participant other than by will or the laws
of descent and distribution or to a participant's Family Member by gift or a
qualified domestic relations order as defined by the Code. Unless the Committee
determines otherwise, an option may be exercised only by the optionee or grantee
thereof; by his or her Family Member if such person has acquired the option by
gift or qualified domestic relations order; by the executor or administrator of
the estate of any of the foregoing or any person to whom the option is
transferred by will or the laws of descent and distribution; or by the guardian
or legal representative of any of the foregoing; provided that Incentive Stock
Options may be exercised by any Family Member, guardian or legal representative
only if permitted by the Code and any regulations thereunder. All provisions of
this Plan shall in any event continue to apply to any award granted under the
Plan and transferred as permitted by this Section 13, and any transferee of any
such award shall be bound by all provisions of this Plan as and to the same
extent as the applicable original grantee.
14. Listing, Registration and Qualification.
If the Committee determines that the listing, registration or
qualification upon any securities exchange or under any law of Shares subject to
any option, performance award, restricted stock unit, deferred stock unit or
restricted stock grant is necessary or desirable as a condition of, or in
connection with, the granting of same or the issue or purchase of Shares
thereunder, no such option may be exercised in whole or in part, no such
performance award may be paid out, and no Shares may be issued, unless such
listing, registration or qualification is effected free of any conditions not
acceptable to the Committee.
15. Transfer of Employee.
The transfer of an employee from the Company to a Subsidiary, from a
Subsidiary to the Company, or from one Subsidiary to another shall not be
considered a termination of employment; nor shall it be considered a termination
of employment if an employee is placed on military or sick leave or such other
leave of absence which is considered by the Committee as continuing intact the
employment relationship.
16. Adjustments.
In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, distribution of
assets, or any other change in the corporate structure or shares of the Company,
the Committee shall make such adjustment as it deems appropriate in the number
and kind of Shares or other property available for issuance under the Plan
(including, without limitation, the total number of Shares available for
issuance under the Plan pursuant to Section 4), in the number and kind of
options, Shares, restricted stock units, deferred stock units or other property
covered by grants previously made under the Plan,
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and in the exercise price of outstanding options. Any such adjustment shall be
final, conclusive and binding for all purposes of the Plan. In the event of any
merger, consolidation or other reorganization in which the Company is not the
surviving or continuing corporation or in which a Change in Control is to occur,
all of the Company's obligations regarding awards that were granted hereunder
and that are outstanding on the date of such event shall, on such terms as may
be approved by the Committee prior to such event, be (a) canceled in exchange
for cash or other property (but, with respect to vested deferred stock units,
only if such merger, consolidation, other reorganization, or Change in Control
constitutes a "change in ownership or control" of the Company or a "change in
the ownership of a substantial portion" of the Company's assets, as determined
pursuant to regulations issued under Section 409A(a)(2)(A)(v) of the Code) or
(b) assumed by the surviving or continuing corporation.
Without limitation of the foregoing, in connection with any
transaction of the type specified by clause (iii) of the definition of a Change
in Control in Section 2(c), the Committee may, in its discretion, (i) cancel any
or all outstanding options under the Plan in consideration for payment to the
holders thereof of an amount equal to the portion of the consideration that
would have been payable to such holders pursuant to such transaction if their
options had been fully exercised immediately prior to such transaction, less the
aggregate exercise price that would have been payable therefor, or (ii) if the
amount that would have been payable to the option holders pursuant to such
transaction if their options had been fully exercised immediately prior thereto
would be equal to or less than the aggregate exercise price that would have been
payable therefor, cancel any or all such options for no consideration or payment
of any kind. Payment of any amount payable pursuant to the preceding sentence
may be made in cash or, in the event that the consideration to be received in
such transaction includes securities or other property, in cash and/or
securities or other property in the Committee's discretion.
17. Amendment and Termination of the Plan.
The Board of Directors or the Committee, without approval of the
stockholders, may amend or terminate the Plan, except that no amendment shall
become effective without prior approval of the stockholders of the Company if
stockholder approval would be required by applicable law or regulations or by
any listing requirement of the principal stock exchange on which the Common
Stock is then listed.
18. Amendment or Substitution of Awards under the Plan.
The terms of any outstanding award under the Plan may be amended
from time to time by the Committee in its discretion in any manner that it deems
appropriate, including, but not limited to, acceleration of the date of exercise
of any award and/or payments thereunder or of the date of lapse of restrictions
on Shares (but only to the extent permitted by regulations issued under Section
409A(a)(3) of the Code); provided that, except as otherwise provided in Section
16, no such amendment shall adversely affect in a material manner any right of a
participant under the award without his or her written consent, and provided
further that the Committee shall not reduce the exercise price of any options
awarded under the Plan without approval of the stockholders of the Company. The
Committee may, in its discretion, permit holders of awards under the Plan to
surrender outstanding awards in order to exercise or realize rights under other
15
awards, or in exchange for the grant of new awards, or require holders of awards
to surrender outstanding awards as a condition precedent to the grant of new
awards under the Plan, but only if such surrender, exercise, realization,
exchange, or grant (a) would not constitute a distribution of deferred
compensation for purposes of Section 409A(a)(3) of the Code or (b) constitutes a
distribution of deferred compensation that is permitted under regulations issued
pursuant to Section 409A(a)(3) of the Code.
19. Commencement Date; Termination Date.
The date of commencement of the Plan shall be the date on which the
Company's Registration Statement on Form S-1 (File No. 333-119111) is declared
effective by the Securities and Exchange Commission.
Unless previously terminated upon the adoption of a resolution of
the Board terminating the Plan, the Plan shall terminate at the close of
business on the ten year anniversary of the date on which the Company's
Registration Statement on Form S-1 (File No. 333-119111) is declared effective
by the Securities and Exchange Commission. No termination of the Plan shall
materially and adversely affect any of the rights or obligations of any person,
without his or her written consent, under any grant of options or other
incentives theretofore granted under the Plan.
20. Severability. Whenever possible, each provision of the Plan shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of the Plan is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of the Plan.
21. Governing Law. The Plan shall be governed by the corporate laws of the
State of Delaware, without giving effect to any choice of law provisions that
might otherwise refer construction or interpretation of the Plan to the
substantive law of another jurisdiction.
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