EXHIBIT 10.1
FIRST ACCEPTANCE CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I
INTRODUCTION
1.1 ESTABLISHMENT OF PLAN. First Acceptance Corporation, a Delaware
corporation (the "Company") with its principal offices located in Nashville,
Tennessee, adopts the following employee stock purchase plan for its eligible
employees. This Plan shall be known as the First Acceptance Corporation Employee
Stock Purchase Plan.
1.2 PURPOSE. The purpose of this Plan is to provide an opportunity for
eligible employees of the Employer to become shareholders in the Company. It is
believed that broad-based employee participation in the ownership of the
business will help to achieve the unity of purpose conducive to the continued
growth of the Employer and to the mutual benefit of its employees and
shareholders.
1.3 QUALIFICATION. This Plan is intended to be an employee stock
purchase plan which qualifies for favorable Federal income tax treatment under
Section 423 of the Code and is intended to comply with the provisions thereof,
including the requirement of Section 423(b)(5) of the Code that all Employees
granted options to purchase Stock under the Plan have the same rights and
privileges with respect to such options.
1.4 RULE 16B-3 COMPLIANCE. This Plan is intended to comply with Rule
16b-3 under the Securities Exchange Act of 1934, and should be interpreted in
accordance therewith.
ARTICLE II
DEFINITIONS
As used herein, the following words and phrases shall have the meanings
specified below:
2.1 BOARD OF DIRECTORS. The Board of Directors of the Company.
2.2 CLOSING MARKET PRICE. The closing price of the Stock as reported in
the consolidated trading of the New York Stock Exchange or such market or
exchange on which the Stock is then traded on the date specified; provided that
if there should be any material alteration in the present system of reporting
sales prices of such Stock, or if such Stock should no longer be listed on the
New York Stock Exchange or any other market or exchange, the market value of the
Stock as of a particular date shall be determined in such a method as shall be
specified by the Plan Administrator.
2.3 CODE. The Internal Revenue Code of 1986, as amended from time to
time.
2.4 COMMENCEMENT DATE. The first day of each Option Period. The first
Commencement Date shall be February 1, 2005. Thereafter, Option Periods shall
begin on each July 1 and January 1.
2.5 CONTRIBUTION ACCOUNT. The account established on behalf of a
Participant to which shall be credited the amount of the Participant's
contribution, pursuant to Article V.
2.6 EFFECTIVE DATE. February 1, 2005.
2.7 EMPLOYEE. Any person employed by the Employer for a period of six
(6) months.
2.8 EMPLOYER. The Company and any corporation (i) which is a Subsidiary
of the Company, (ii) which is authorized by the Board of Directors to adopt this
Plan with respect to its Employees, and (iii) which adopts this Plan. The term
"Employer" shall include any corporation into which an Employer may be merged or
consolidated or to which all or substantially all of its assets may be
transferred, provided that the surviving or transferee corporation would qualify
as a subsidiary under Section 2.18 hereof and that such corporation does not
affirmatively disavow this Plan.
2.9 EXERCISE DATE. The last trading date of each Option Period on the
New York Stock Exchange or such market or exchange on which the Stock is then
traded.
2.10 EXERCISE PRICE. The price per share of the Stock to be charged to
Participants at the Exercise Date, as determined in Section 6.3.
2.11 FIVE-PERCENT SHAREHOLDER. An Employee who owns five percent (5%)
or more of the total combined voting power or value of all classes of stock of
the Company or any Subsidiary thereof. In determining this five percent test,
shares of stock which the Employee may purchase under outstanding options, as
well as stock attributed to the Employee under Section 424(d) of the Code, shall
be treated as stock owned by the Employee in the numerator, but shares of stock
which may be issued under options shall not be counted in the total of
outstanding shares in the denominator.
2.12 GRANT DATE. The first trading date of each Option Period on the
New York Stock Exchange or such market or exchange on which the Stock is then
traded.
2.13 OPTION PERIOD. The first Option Period shall begin on February 1,
2005 and end on June 30, 2005. Thereafter, Option Periods shall be successive
six (6) month periods commencing on July 1 and ending on December 31 and
commencing on January 1 and ending on June 30.
2.14 PARTICIPANT. Any Employee of an Employer who has met the
conditions for eligibility as provided in Article IV and who has elected to
participate in the Plan.
2.15 PLAN. First Acceptance Corporation Employee Stock Purchase Plan.
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2.16 PLAN ADMINISTRATOR. The committee composed of one or more
individuals to whom authority is delegated by the Board of Directors to
administer the Plan. The initial committee shall be the Compensation Committee
of the Board of Directors.
2.17 STOCK. Those shares of common stock of the Company which are
reserved pursuant to Section 6.1 for issuance upon the exercise of options
granted under this Plan.
2.18 SUBSIDIARY. Any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
granting of the option, each of the corporations other than the last corporation
in the chain owns stock possessing fifty percent (50%) or more of the combined
voting power of all classes of stock in one of the other corporations in such
chain.
ARTICLE III
SHAREHOLDER APPROVAL
3.1 SHAREHOLDER APPROVAL REQUIRED. This Plan must be approved by the
shareholders of the Company within the period beginning twelve (12) months
before and ending twelve (12) months after its adoption by the Board of
Directors.
3.2 SHAREHOLDER APPROVAL FOR CERTAIN AMENDMENTS. Without the approval
of the shareholders of the Company, no amendment to this Plan shall increase the
number of shares reserved under the Plan, other than as provided in Section
10.3. Approval by shareholders must occur within one (1) year of such amendment
or such amendment shall be void ab initio, comply with applicable provisions of
the corporate charter and bylaws of the Company, and comply with Delaware law
prescribing the method and degree of shareholder approval required for issuance
of corporate stock or options.
ARTICLE IV
ELIGIBILITY AND PARTICIPATION
4.1 CONDITIONS. Each Employee shall become eligible to become a
Participant on the Commencement Date next following the date on which he is
employed by the Employer for a period of six (6) months. No Employee who is a
Five-Percent Shareholder shall be eligible to participate in the Plan.
Notwithstanding anything to the contrary contained herein, no individual who is
not an Employee shall be granted an option to purchase Stock under the Plan.
4.2 APPLICATION FOR PARTICIPATION. Each Employee who becomes eligible
to participate shall be furnished a summary of the Plan and an enrollment form.
If such Employee elects to participate hereunder, he shall complete such form
and file it with his Employer no later than fifteen (15) days prior to the next
Commencement Date. The completed enrollment form shall indicate the amount of
Employee contributions authorized by the Employee. If no new enrollment form is
filed by a Participant in advance of any Option Period after the initial Option
Period, that Participant shall be deemed to have elected to continue to
participate with the same contribution previously elected (subject to the limit
of 15% of base pay). If any Employee does
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not elect to participate in any given Option Period, he may elect to participate
on any future Commencement Date so long as he continues to meet the eligibility
requirements.
4.3 DATE OF PARTICIPATION. All Employees who elect to participate shall
be enrolled in the Plan commencing with the first pay date after the
Commencement Date following their submission of the enrollment form. Upon
becoming a Participant, the Participant shall be bound by the terms of this
Plan, including any amendments whenever made.
4.4 ACQUISITION OR CREATION OF SUBSIDIARY. If the stock of a
corporation is acquired by the Company or another Employer so that the acquired
corporation becomes a Subsidiary, or if a Subsidiary is created, the Subsidiary
in either case shall automatically become an Employer and its Employees shall
become eligible to participate in the Plan on the first Commencement Date after
the acquisition or creation of the Subsidiary, as the case may be.
Notwithstanding the foregoing, the Board of Directors may by appropriate
resolutions (i) provide that the acquired or newly created Subsidiary shall not
be a participating Employer, (ii) specify that the acquired or newly created
Subsidiary will become a participating Employer on a Commencement Date other
than the first Commencement Date after the acquisition or creation, or (iii)
attach any condition whatsoever to eligibility of the employees of the acquired
or newly created Subsidiary, except to the extent such condition would not
comply with Section 423 of the Code.
ARTICLE V
CONTRIBUTION ACCOUNT
5.1 EMPLOYEE CONTRIBUTIONS. The enrollment form signed by each
Participant shall authorize the Employer to deduct from the Participant's
compensation an after-tax amount during each payroll period not less than one
percent (1%) nor more than an amount which is fifteen percent (15%) of the
Participant's base pay on the Commencement Date. A Participant's base pay shall
be determined before subtracting any elective deferrals to a qualified plan
under Section 401(k) of the Code, salary reduction contributions to a cafeteria
plan under Section 125 of the Code or elective deferrals to a nonqualified
deferred compensation plan. The dollar amount deducted each payday shall be
credited to the Participant's Contribution Account. Participant contributions
will not be permitted to commence at any time during the Option Period other
than on the Commencement Date. Unless otherwise determined by the Plan
Administrator with respect to an Option Period, no interest will accrue on any
contributions or on the balance in a Participant's Contribution Account.
5.2 MODIFICATION OF CONTRIBUTION RATE. No change shall be permitted in
a Participant's amount of withholding except upon a Commencement Date, and then
only if the Participant files a new enrollment form with the Employer at least
fifteen (15) days in advance of the Commencement Date designating the desired
withholding rate. Notwithstanding the foregoing, a Participant may notify the
Employer at any time (except during the periods from June 21 through June 30 and
December 22 through December 31) that he wishes to discontinue his
contributions. This notice shall be in writing and on such forms as provided by
the Employer and shall become effective as of a date provided on the form not
more than fifteen (15) days following its receipt by the Employer. The
Participant shall become eligible to recommence contributions on the next
Commencement Date.
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5.3 WITHDRAWAL OF CONTRIBUTIONS. A Participant may elect to withdraw
the balance of his Contribution Account at any time during the Option Period
prior to the Exercise Date (except during the periods from June 21 through June
30 and December 22 through December 31). The option granted to a Participant
shall be canceled upon his withdrawal of the balance in his Contribution
Account. This election to withdraw must be in writing on such forms as may be
provided by the Employer. If contributions are withdrawn in this manner, further
contributions during that Option Period will be discontinued in the same manner
as provided in Section 5.2, and the Participant shall become eligible to
recommence contributions on the next Commencement Date.
5.4 LIMITATIONS ON CONTRIBUTIONS. During each Option Period, the total
contributions by a Participant to his Contribution Account shall not exceed
fifteen percent (15%) of the Participant's base pay for the Option Period. If a
Participant's total contributions should exceed this limit, the excess shall be
returned to the Participant after the end of the Option Period, without
interest.
ARTICLE VI
ISSUANCE AND EXERCISE OF OPTIONS
6.1 RESERVED SHARES OF STOCK. The Company shall reserve one hundred
thousand (100,000) shares of Stock for issuance upon exercise of the options
granted under this Plan.
6.2 ISSUANCE OF OPTIONS. On the Grant Date each Participant shall be
deemed to receive an option to purchase Stock with the number of shares and
Exercise Price determined as provided in this Article VI, subject to the maximum
limits specified in Section 6.6(a). All such options shall be automatically
exercised on the following Exercise Date, except for options which are canceled
when a Participant withdraws the balance of his Contribution Account or which
are otherwise terminated under the provisions of this Plan.
6.3 DETERMINATION OF EXERCISE PRICE. The Exercise Price of the options
granted under this Plan for any Option Period shall be the lesser of:
(i) one hundred percent (100%) of the Closing Market Price of
the Stock on the Exercise Date; or
(ii) one hundred percent (100%) of the Closing Market Price of
the Stock on the Grant Date.
6.4 PURCHASE OF STOCK. On an Exercise Date, all options shall be
automatically exercised, except that the options of a Participant who has
terminated employment pursuant to Section 7.1 or who has withdrawn all his
contributions shall expire. The Contribution Account of each Participant shall
be used to purchase the maximum number of shares of Stock, determined up to
three decimal places, determined by dividing the Exercise Price into the balance
of the Participant's Contribution Account.
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6.5 TERMS OF OPTIONS. Options granted under this Plan shall be subject
to such amendment or modification as the Employer shall deem necessary to comply
with any applicable law or regulation, including but not limited to Section 423
of the Code, and shall contain such other provisions as the Employer shall from
time to time approve and deem necessary; provided, however, that any such
provisions shall comply with Section 423 of the Code.
6.6 LIMITATIONS ON OPTIONS. The options granted hereunder are subject
to the following limitations:
(a) The maximum number of shares of Stock which may be
purchased by any Participant on an Exercise Date shall be three
thousand (3,000) shares. This maximum number of shares shall be
adjusted upon the occurrence of an event described in Section 10.3.
(b) No Participant shall be permitted to accrue the right to
purchase during any calendar year Stock under this Plan (or any other
Plan of the Employer or a Subsidiary which is qualified under Section
423 of the Code) having a market value of greater than twenty-five
thousand dollars ($25,000.00) (as determined on the Grant Date for the
Option Period during which each such share of Stock is purchased) as
provided in Section 423(b)(8) of the Code.
(c) No option may be granted to a Participant if the
Participant immediately after the option is granted would be a
Five-Percent Shareholder.
(d) No Participant may assign, transfer or otherwise alienate
any options granted to him under this Plan, otherwise than by will or
the laws of descent and distribution, and such options must be
exercised during the Participant's lifetime only by him.
6.7 PRO-RATA REDUCTION OF OPTIONED STOCK. If the total number of shares
of Stock to be purchased under option by all Participants on an Exercise Date
exceeds the number of shares of Stock remaining authorized for issuance under
Section 6.1, a pro-rata allocation of the shares of Stock available for issuance
will be made among Participants in proportion to their respective Contribution
Account balances on the Exercise Date, and any money remaining in the
Contribution Accounts shall be returned to the Participants.
6.8 STATE SECURITIES LAWS. Notwithstanding anything to the contrary
contained herein, the Company shall not be obligated to issue shares of Stock to
any Participant if to do so would violate any State securities law applicable to
the sale of Stock to such Participant. In the event that the Company refrains
from issuing shares of Stock to any Participant in reliance on this Section, the
Company shall return to such Participant the amount in such Participant's
Contribution Account that would otherwise have been applied to the purchase of
Stock.
ARTICLE VII
TERMINATION OF PARTICIPATION
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7.1 TERMINATION OF EMPLOYMENT. Any Employee whose employment with the
Employer is terminated during the Option Period prior to the Exercise Date for
any reason except death, disability or retirement at or after age 65 shall cease
being a Participant immediately. The balance of that Participant's Contribution
Account shall be paid to such Participant as soon as practical after his
termination. The option granted to such Participant shall be null and void.
7.2 DEATH. If a Participant should die while employed by the Employer,
no further contributions on behalf of the deceased Participant shall be made.
The legal representative of the deceased Participant may elect to withdraw the
balance in said Participant's Contribution Account by notifying the Employer in
writing prior to the Exercise Date in the Option Period during which the
Participant died (except during the periods from June 21 through June 30 and
December 22 through December 31). In the event no election to withdraw is made
on or before the June 20 or December 21 preceding the Exercise Date, the balance
accumulated in the deceased Participant's Contribution Account shall be used to
purchase shares of Stock in accordance with Section 6.4.
7.3 RETIREMENT. If a Participant should retire from the employment of
the Employer at or after attaining age 65, no further contributions on behalf of
the retired Participant shall be made. The Participant may elect to withdraw the
balance in his Contribution Account by notifying the Employer in writing prior
to the Exercise Date in the Option Period during which the Participant retired
(except during the periods from June 21 through June 30 and December 22 through
December 31). In the event no election to withdraw is made on or before the June
20 or December 21 preceding the Exercise Date, the balance accumulated in the
retired Participant's Contribution Account shall be used to purchase shares of
Stock in accordance with Section 6.4.
7.4 DISABILITY. If a Participant should terminate employment with the
Employer on account of disability, as determined by reference to the definition
of "disability" in the Employer's long-term disability plan, no further
contributions on behalf of the disabled Participant shall be made. The
Participant may elect to withdraw the balance in his Contribution Account by
notifying the Employer in writing prior to the Exercise Date in the Option
Period during which the Participant became disabled (except during the periods
from June 21 through June 30 and December 22 through December 31). In the event
no election to withdraw is made on or before the June 20 or December 21
preceding the Exercise Date, the balance accumulated in the disabled
Participant's Contribution Account shall be used to purchase shares of Stock in
accordance with Section 6.4.
ARTICLE VIII
OWNERSHIP OF STOCK
8.1 STOCK CERTIFICATES. As soon as practical after the Exercise Date,
the Plan Administrator will, in its sole discretion, either credit a share
account maintained for the benefit of each Participant or issue certificates to
each Participant for the number of shares of Stock purchased under the Plan by
such Participant during an Option Period. Such determination by the Plan
Administrator shall apply equally to all shares of Stock purchased during the
Option Period. Certificates may be issued, at the request of a Participant, in
the name of the Participant, jointly in the name of the Participant and a member
of the Participant's family, to the Participant
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as custodian for the Participant's child under the Gift to Minors Act, or to the
legal representative of a deceased Participant. No certificate shall be issued
for fractional shares of Stock, and any such fractional share shall be converted
into cash based upon the Closing Market Price on the date a certificate is
issued to the Participant.
8.2 PREMATURE SALE OF STOCK. If a Participant (or former Participant)
sells or otherwise disposes of any shares of Stock obtained under this Plan:
(i) prior to two (2) years after the Grant Date of the option
under which such shares were obtained, or
(ii) prior to one (1) year after the Exercise Date on which
such shares were obtained,
that Participant (or former Participant) must notify the Employer immediately in
writing concerning such disposition.
8.3 RESTRICTIONS ON SALE. The Plan Administrator may, in its sole
discretion, place restrictions on the sale or transfer of shares of Stock
purchased under the Plan during any Option Period by notice to all Participants
of the nature of such restrictions given in advance of the Commencement Date of
such Option Period. The restrictions may prevent the sale, transfer or other
disposition of any shares of Stock purchased during the Option Period for a
period of up to two years from the Grant Date, subject to such exceptions as the
Plan Administrator may determine (e.g., termination of employment with the
Employer). If certificates are issued pursuant to Section 8.1 for shares that
are restricted, the certificates shall contain an appropriate legend disclosing
the nature and duration of the restriction. Any such restrictions and exceptions
determined by the Plan Administrator shall be applicable equally to all shares
of Stock purchased during the Option Period for which the restrictions are first
applicable. In addition, such restrictions and exceptions shall remain
applicable during subsequent Option Periods unless otherwise determined by the
Plan Administrator. If the Plan Administrator should change or eliminate the
restrictions for a subsequent Option Period, notice of such action shall be
given to all Participants.
8.4 TRANSFER OF OWNERSHIP. A Participant who purchases shares of Stock
under this Plan shall be transferred at such time substantially all of the
rights of ownership of such shares of Stock in accordance with the Treasury
regulations promulgated under Section 423 of the Code as in effect on the
Effective Date. Such rights of ownership shall include the right to vote, the
right to receive declared dividends, the right to share in the assets of the
Employer in the event of liquidation, the right to inspect the Employer's books
and the right to pledge or sell such Stock subject to the restrictions in the
Plan.
ARTICLE IX
ADMINISTRATION AND AMENDMENT
9.1 ADMINISTRATION. The Plan Administrator shall (i) administer the
Plan, (ii) keep records of the Contribution Account balance of each Participant,
(iii) keep records of the share
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account balance of each Participant, (iv) interpret the Plan, (v) determine all
questions arising as to eligibility to participate, amount of contributions
permitted, determination of the Exercise Price, and all other matters of
administration, and (vi) determine whether to place restrictions on the sale and
transfer of Stock and the nature of such restrictions, as provided in Section
8.3. The Plan Administrator shall have such duties, powers and discretionary
authority as may be necessary to discharge the foregoing duties, and may
delegate any or all of the foregoing duties to any individual or individuals
(including officers or other Employees who are Participants). The Board of
Directors shall have the right at any time and without notice to remove or
replace any individual or committee of individuals serving as Plan
Administrator. All determinations by the Plan Administrator shall be conclusive
and binding on all persons. Any rules, regulations, or procedures that may be
necessary for the proper administration or functioning of this Plan that are not
covered in this Plan document shall be promulgated and adopted by the Plan
Administrator.
9.2 AMENDMENT. The Board of Directors of the Employer may at any time
amend the Plan in any respect, including termination of the Plan, without notice
to Participants. If the Plan is terminated, all options outstanding at the time
of termination shall become null and void and the balance in each Participant's
Contribution Account shall be paid to that Participant. Notwithstanding the
foregoing, no amendment of the Plan as described in Section 3.2 shall become
effective until and unless such amendment is approved by the shareholders of the
Company.
ARTICLE X
MISCELLANEOUS
10.1 EXPENSES. The expenses of administering the Plan shall be paid by
the Participants except as determined by the Plan Administrator in its sole
discretion.
10.2 NO CONTRACT OF EMPLOYMENT. Nothing in this Plan shall be construed
to constitute a contract of employment between an Employer and any Employee or
to be an inducement for the employment of any Employee. Nothing contained in
this Plan shall be deemed to give any Employee the right to be retained in the
service of an Employer or to interfere with the right of an Employer to
discharge any Employee at any time, with or without cause, regardless of the
effect which such discharge may have upon him as a Participant of the Plan.
10.3 ADJUSTMENT UPON CHANGES IN STOCK. The aggregate number of shares
of Stock reserved for purchase under the Plan as provided in Section 6.1, and
the calculation of the Exercise Price as provided in Section 6.3, shall be
adjusted by the Plan Administrator (subject to direction by the Board of
Directors) in an equitable manner to reflect changes in the capitalization of
the Company, including, but not limited to, such changes as result from merger,
consolidation, reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, combination of shares, exchange of shares
and change in corporate structure. If any adjustment under this Section 10.3
would create a fractional share of Stock or a right to acquire a fractional
share of Stock, such fractional share shall be disregarded and the number of
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shares available under the Plan and the number of shares covered under any
options granted pursuant to the Plan shall be the next lower number of shares,
rounding all fractions downward.
10.4 EMPLOYER'S RIGHTS. The rights and powers of any Employer shall not
be affected in any way by its participation in this Plan, including but not
limited to the right or power of any Employer to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
10.5 LIMIT ON LIABILITY. No liability whatever shall attach to or be
incurred by any past, present or future shareholders, officers or directors, as
such, of the Company or any Employer, under or by reason of any of the terms,
conditions or agreements contained in this Plan or implied therefrom, and any
and all liabilities of any and all rights and claims against the Company, an
Employer, or any shareholder, officer or director as such, whether arising at
common law or in equity or created by statute or constitution or otherwise,
pertaining to this Plan, are hereby expressly waived and released by every
Participant as a part of the consideration for any benefits under this Plan;
provided, however, no waiver shall occur, solely by reason of this Section 10.5,
of any right which is not susceptible to advance waiver under applicable law.
10.6 GENDER AND NUMBER. For the purposes of the Plan, unless the
contrary is clearly indicated, the use of the masculine gender shall include the
feminine, and the singular number shall include the plural and vice versa.
10.7 GOVERNING LAW. The validity, construction, interpretation,
administration and effect of this Plan, and any rules or regulations promulgated
hereunder, including all rights or privileges of any Participants hereunder,
shall be governed exclusively by and in accordance with the laws of the State of
Delaware, except that the Plan shall be construed to the maximum extent possible
to comply with Section 423 of the Code and the Treasury regulations promulgated
thereunder.
10.8 HEADINGS. Any headings or subheadings in this Plan are inserted
for convenience of reference only and are to be ignored in the construction of
any provisions hereof.
10.9 SEVERABILITY. If any provision of this Plan is held by a court to
be unenforceable or is deemed invalid for any reason, then such provision shall
be deemed inapplicable and omitted, but all other provisions of this Plan shall
be deemed valid and enforceable to the full extent possible under applicable
law.
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