Exhibit 10.3
CREXUS INVESTMENT CORP.
2009 EQUITY INCENTIVE PLAN
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Section
1.
Purpose of the Plan
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The
purpose of the Plan is to aid the Company and its Affiliates in
attracting, rewarding, and retaining employees, non-employee
directors or other service providers and to motivate such
employees, non-employee directors or other Persons who perform
services for the Company or an Affiliate to stimulate their efforts
toward the Company’s continued success, long-term growth and
profitability by providing incentives through the granting of
Awards. The Company expects that it will benefit from the added
interest which such key employees, non-employee directors or other
service providers will have in the welfare of the Company as a
result of their proprietary interest in the Company’s
success.
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Section
2.
Definitions
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The
following capitalized terms used in the Plan have the respective
meanings set forth in this Section:
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(a)
Act : The Securities Exchange Act of 1934, as amended, or
any successor thereto.
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(b)
Affiliate : Any entity directly or indirectly controlling,
controlled by, or under common control with, the Company or any
other entity designated by the Board in which the Company or
stockholder of the Company has an interest.
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(c)
Award : An Option, Stock Appreciation Right, Restricted
Shares, Dividend Equivalent Right, or Other Share-Based Award
granted pursuant to the Plan.
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(d)
Beneficial Owner : A “beneficial owner,” as such
term is defined in Rule 13d-3 and 13d-5 under the Act (or any
successor rule thereto).
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(e)
Board : The Board of Directors of the Company.
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(f)
Change in Control : The occurrence of any of the following
events:
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i.
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any “person,”
including a “group” (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act), but excluding the Company,
any entity controlling, controlled by or under common control with
the Company, any trustee, fiduciary or other person or entity
holding securities under any employee benefit plan or trust of the
Company or any such entity, and, with respect to any particular
Participant, the Participant and any “group” (as such
term is used in Section 13(d)(3) of the Exchange Act) of which the
Participant is a member), is or becomes the “beneficial
owner” (as defined in Rule 13(d)(3) under the Exchange Act),
directly or indirectly, of securities of the Company representing
50% or more
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of either (A) the combined voting
power of the Company’s then outstanding securities or (B) the
then outstanding Shares (in either such case other than as a result
of an acquisition of securities directly from the
Company);
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ii.
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any consolidation or merger of
the Company where the shareholders of the Company, immediately
prior to the consolidation or merger, would not, immediately after
the consolidation or merger, beneficially own (as such term is
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, shares representing in the aggregate 50% or more of the
combined voting power of the securities of the corporation issuing
cash or securities in the consolidation or merger (or of its
ultimate parent corporation, if any);
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iii.
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there shall occur (A) any sale,
lease, exchange or other transfer (in one transaction or a series
of transactions contemplated or arranged by any party as a single
plan) of all or substantially all of the assets of the Company,
other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at
least 50% of the combined voting power of the voting securities of
which are owned by “persons” (as defined above) in
substantially the same proportion as their ownership of the Company
immediately prior to such sale or (B) the approval by shareholders
of the Company of any plan or proposal for the liquidation or
dissolution of the Company; or
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iv.
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the members of the Board at the
beginning of any consecutive 24-calendar-month period (the
“Incumbent Directors”) cease for any reason other than
due to death to constitute at least a majority of the members of
the Board; provided that any Director whose election, or nomination
for election by the Company’s shareholders, was approved or
ratified by a vote of at least a majority of the members of the
Board then still in office who were members of the Board at the
beginning of such 24-calendar-month period, shall be deemed to be
an Incumbent Director.
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Notwithstanding the foregoing,
for any Awards that constitute a nonqualified deferred compensation
plan within the meaning of Section 409A(d) of the Code and provide
for an accelerated payment in connection with a Change in Control,
Change in Control shall have the same meaning as set forth in any
regulations, revenue procedure, revenue rulings or other
pronouncements issued by the Secretary of the United States
Treasury pursuant to Section 409A of the Code, applicable to such
plans.
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(g)
Code : The Internal Revenue Code of 1986, as amended, or any
successor thereto.
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(h)
Committee : The Compensation Committee of the Board or such
other committee as may be appointed by the Board in accordance with
Section 4 of the Plan. The Board may exercise any power or right of
the Committee; provided, that, the Board may not grant any Award
that is intended to be performance-based compensation under Section
162(m) of the Code.
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(i)
Company : CreXus Investment Corp., a Maryland
corporation.
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(j)
Dividend Equivalent Right : a right awarded under Section 8
of the Plan to receive (or have credited) the equivalent value of
dividends paid on common stock of the Company.
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(k)
Effective Date : The date the initial public offering of
shares of the Company’s common stock.
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(l)
Fair Market Value : On a given date, (i) if there should be
a public market for the Shares on such date, the closing price of
the Shares as reported on such date on the Composite Tape of the
principal national securities exchange on which such Shares are
listed or admitted to trading, or, if the Shares are not listed or
admitted on any national securities exchange, the closing price on
such date as quoted on the National Association of Securities
Dealers Automated Quotation System (or such market in which such
prices are regularly quoted) (the “NASDAQ”), or, if no
sale of Shares shall have been reported on the Composite Tape of
any national securities exchange or quoted on the NASDAQ on such
date, then the immediately preceding date on which sales of the
Shares have been so reported or quoted shall be used; provided
that, in the event of an initial public offering of the Shares of
the Company, the Fair Market Value on the date of such initial
public offering shall be the price at which the initial public
offering was made, and (ii) if there should not be a public market
for the Shares on such date, the Fair Market Value shall be the
value established by the Committee in its sole discretion, in
accordance with any applicable requirements of Section 409(A) of
the Code.
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(m)
Group : A “group” as such term is used in
Sections 13(d) and 14(d) of the Act, acting in concert.
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(n)
ISO : An Option that is also an incentive stock option, as
described in Section 422 of the Code, granted pursuant to Section
6(c) of the Plan.
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(o)
Management Agreement : The Management Agreement between the
Company and the Manager, dated as of August 31, 2009, as the same
may be amended from time to time.
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(p)
Manager : Fixed Income Discount Advisory Company, a Delaware
corporation, or any successor or assign.
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(q)
Option : An option to purchase Shares granted pursuant to
Section 6 of the Plan.
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(r)
Option Price : The purchase price per Share under the terms
of an Option, as determined pursuant to Section 6(a) of the
Plan.
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(s)
Other Share-Based Awards : Awards granted pursuant to
Section 9 of the Plan.
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(t)
Participant : Members of the Board, employees of, or any
Person who performs services for, the Company, the Manager or an
Affiliate of either the Company or the Manager (whether as a
consultant, advisor or otherwise) who is selected by the Committee
or designated by the Manager to participate in the Plan.
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(u)
Person : A “person,” as such term is used for
purposes of Section 13(d) or 14(d) of the Act (or any successor
section thereto).
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(v)
Plan : The 2009 Equity Incentive Plan.
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(w)
Restricted Shares : An Award of Shares to a Participant
under Section 9 that may be subject to certain restrictions and a
risk of forfeiture.
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(x)
RSU : A restricted share unit, granted pursuant to Section 9
of the Plan, which represents the right to receive a
Share.
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(y)
Shares : Shares of common stock of the Company, subject to
adjustment pursuant to Section 10 of the Plan.
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(z)
Stock Appreciation Right : A stock appreciation right
granted in connection with or independent of the grant of an
Option, pursuant to Section 7 of the Plan.
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Section
3. Shares
Subject to the Plan
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Subject
to this Section 3, and subject to adjustments as provided in
Section 10, the total number of Shares that may be issued with
respect to Awards granted under the Plan, in the aggregate, may not
exceed 2.5% of the authorized number of Shares of the Company on
the Effective Date; provided, however, that no Award may cause the
total number of Shares subject to all outstanding Awards to exceed
an amount equal to (i) 2.5% of the number of Shares outstanding on
a fully diluted basis (assuming, if applicable, the exercise of all
outstanding options and the conversion of all warrants and
convertible securities into Shares) at the time of the Award less
(ii) 250,000 Shares. The Shares that may be used hereunder may
consist, in whole or in part, of unissued Shares or previously
issued Shares that have been reacquired by the Company, as
determined by the Chief Financial Officer of the Company (or the
Chief Financial Officer’s designee) from time to time, unless
otherwise determined by the Committee. The issuance of Shares upon
the exercise or payment of an Award shall reduce the total number
of Shares available under the Plan, as applicable. Shares which are
subject to Awards that terminate, lapse or are cancelled may again
be used to satisfy Awards under the Plan. If the Option Price of
any Option granted under the Plan is satisfied by delivering Shares
to the
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Company in accordance with the
terms of Section 6(b) of the Plan (including a through a net
settlement), only the number of Shares issued net of the Shares
delivered shall be deemed delivered for purposes of determining the
maximum number of Shares available under the Plan. If, in
accordance with the terms of the Plan, a Participant pays the
Option Price for an Option or satisfies any tax withholding
requirement with respect to any taxable event arising as a result
of this Plan by either tendering previously owned Shares or having
the Company withhold Shares, then such Shares shall not be deemed
to have been delivered for purposes of determining the maximum
number of Shares available under the Plan. Shares subject to
Dividend Equivalent Rights, other than Dividend Equivalent Rights
based directly on the dividends payable with respect to Shares
subject to Options, shall be subject to the limitation of this
Section 3. If any Dividend Equivalent Rights or Other Share-Based
Awards under Section 9 are paid out in cash, then the underlying
Shares may again be made the subject of Awards under the Plan. For
purposes of Section 422(b)(1) of the Code, the maximum number of
Shares which may be issued under the Plan pursuant to ISOs is as
set forth in the first sentence of this Section 3 above, without
regard to the adjustments above resulting from Awards that
terminate, lapse or are cancelled, from Shares used to satisfy the
Option Price of any Option, from Shares used to satisfy any tax
withholding obligation or from Awards settled in cash. In addition,
in no event shall a Participant receive an Award or Awards during
any one (1) calendar year covering in the aggregate more than two
hundred thousand (200,000) Shares (whether such Award or Awards may
be settled in Shares, cash or any combination of Shares and
cash).
Section
4.
Administration
The
Plan shall be administered by the Committee, which may delegate its
duties and powers in whole or in part as it determines, including
to a subcommittee consisting of at least two individuals who are
intended to qualify as “non-employee directors” within
the meaning of Rule 16b-3 under the Act (or any successor rule
thereto) and “outside directors” within the meaning of
Section 162(m) of the Code. The Committee may grant Awards under
this Plan only to Participants; provided that Awards may also, in
the discretion of the Committee, be made under the Plan in
assumption of, or in substitution for, outstanding awards
previously granted by the Company or its Affiliates or a company
that becomes an Affiliate. The number of Shares underlying such
substitute Awards shall be counted against the aggregate number of
Shares available for Awards under the Plan. The Committee is
authorized to interpret the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, and to make any
other determinations that it deems necessary or desirable for the
administration of the Plan. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan in
the manner and to the extent the Committee deems necessary or
desirable. Any decision of the Committee in the interpretation and
administration of the Plan, as described herein, shall lie within
its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned (including, but not limited to,
Participants and their beneficiaries or successors). The Committee
shall have the full power and authority to establish the terms and
conditions of any Award consistent with the provisions of the Plan
and to waive any such terms and conditions at any time, in its sole
discretion (including, without limitation, accelerating or waiving
any vesting conditions and/or accelerating any payment). No member
of the Committee shall be personally liable for any action,
determination or interpretations taken or made in good faith with
respect to this Plan or Awards made hereunder, and all members of
the Committee shall be fully
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indemnified and protected by the
Company in respect of any such action, determination or
interpretation.
Section
5.
Limitations
No
Award may be granted under the Plan after the tenth anniversary of
the earlier of (i) the stockholders adopt the Plan or (ii) the date
the Board adopts the Plan, but Awards theretofore granted may
extend beyond that date and will continue to be governed by the
terms of the Plan.
Section
6. Terms and
Conditions of Options
Options
granted under the Plan shall be, as determined by the Committee,
non-qualified stock options or ISOs for United States federal
income tax purposes (or other types of Options in jurisdictions
outside the United States), as evidenced by the related Award, and
shall be subject to the foregoing, the following terms and
conditions, and to such other terms and conditions, not
inconsistent therewith, as the Committee shall
determine:
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(a)
Option Price ; Exercisability . Any Option granted
under the Plan shall have an Option Price of not less than the Fair
Market Value of one Share on the date the Option is granted, and
shall be vested and exercisable in installments at such time and
upon such terms and conditions, as may be determined by the
Committee, but in no event shall an Option be exercisable more than
ten years after the date it is granted.
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(b)
Exercise of Options . Except as otherwise provided in the
Plan or in an Award, an Option may be exercised for all, or from
time to time any part, of the Shares for which it is then
exercisable. For purposes of this Section 6 of the Plan, the
exercise date of an Option shall be the later of the date a notice
of exercise is received by the Company and, if applicable, the date
payment is received by the Company pursuant to clauses (i) through
(vi) in the following sentence. Except as otherwise provided in an
Award, the purchase price for the Shares as to which an Option is
exercised shall be paid in full at the
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