HEARUSA, INC.
AMENDED AND RESTATED
2007 INCENTIVE COMPENSATION PLAN
RECITALS
WHEREAS, HearUSA, Inc. desires to encourage high
levels of performance by those individuals who are key to the
success of the Company, to attract new individuals who are highly
motivated and who will contribute to the success of the Company and
to encourage such individuals to remain as Directors, officers
and/or employees of the Company and its subsidiaries by increasing
their proprietary interest in the Company’s growth and
success;
WHEREAS, the Plan was originally adopted by the
Board of Directors and subsequently approved by the shareholders on
June 11, 2007;
WHEREAS, pursuant to the authority granted to it
under section 9.8 hereof, on February 25, 2008, the
Compensation Committee approved an amendment to this Plan to permit
the Compensation Committee to exercise its discretion with regard
to establishing post-termination option exercise periods under
section 9.5;
WHEREAS, on February 23, 2009, subject to
approval of the shareholders of the Company, the Board of Directors
approved amendments to this Plan to increase the number of shares
of common stock available for awards under the plan from 2,500,000
to 4,500,000; to increase the maximum number of shares that may be
covered by grant(s) to any one person during a year from 250,000 to
750,000; and to revise the types of performance criteria that may
be the basis for a performance-based award under the
Plan.
NOW, THEREFORE, the Company hereby sets forth
this HearUSA, Inc. Amended and Restated 2007 Incentive Compensation
Plan to read as follows:
1.1. Purpose. The purpose of the Plan is
to assist the Company in attracting and retaining selected
individuals to serve as Directors, officers and employees of the
Company or any of its subsidiaries or affiliates who will
contribute to the Company’s success and to achieve long-term
objectives which will inure to the benefit of all shareholders of
the Company through the additional incentive inherent in the
ownership of the Company’s common stock.
The following
terms shall have the meanings indicated.
2.1. “Award” means Options,
Stock Appreciation Rights, Restricted Stock Awards and Restricted
Stock Units.
2.2.
“Board” means the board of directors of the
Company.
2.3. “Cause” means conviction
of a felony involving moral turpitude or the failure to
satisfactorily perform assigned duties after notice to cure has
been given.
2.4 “Change of Control” means
a “Change in the Ownership of the Company”, a
“Change in Effective Control of the Company”, or a
“Change in the Ownership of a Substantial Portion of the
Assets of the Company”, all as defined below. To qualify as a
“Change in Control”, the occurrence of the event must
be objectively determinable and any requirement that any other
person, such as a plan administrator or board of directors
compensation committee, certify the occurrence of a Change in
Control must be strictly ministerial and not involve any
discretionary authority.
A “Change
in the Ownership of the Company” occurs on the date that any
one person, or more than one person acting as a group acquires
ownership of stock of the Company that, together with stock held by
such person or group, constitutes more than 50 percent of the
total fair market value or total voting power of the stock of the
Company. However, if any one person, or more than one person acting
as a group, is considered to own more than 50 percent of the
total fair market value or total voting power of the stock of the
Company, the acquisition of additional stock by the same person or
persons is not considered to cause a “Change in the Ownership
of the Company”. An increase in the percentage of stock owned
by any one person, or persons acting as a group, as a result of a
transaction in which the Company acquires its stock in exchange for
property will be treated as an acquisition of stock for purposes of
this section. This definition applies only when there is a transfer
of stock of the Company (or issuance of stock of the Company) and
stock in the Company remains outstanding after the transaction.
Persons will not be considered to be acting as a group solely
because they purchase or own stock of the same corporation at the
same time, or as a result of the same public offering. However,
persons will be considered to be acting as a group if they are
owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of stock, or similar business transaction
with the Company. If a person, including an entity, owns stock in
both corporations that enter into a merger, consolidation, purchase
or acquisition of stock, or similar transaction, such shareholder
is considered to be acting as a group with other shareholders in a
corporation prior to the transaction giving rise to the change and
not with respect to the ownership interest in the other
corporation.
A “Change
in the Effective Control of the Company” occurs only on the
date that either—
( 1 )
Any one person, or more than one person acting as a group, acquires
(or has acquired during the 12-month period ending on the date of
the most recent acquisition by such person or persons) ownership of
stock of the Company possessing 35 percent or more of the
total voting power of the stock of the Company; or
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( 2 ) A
majority of members of the Company’s board of directors is
replaced during any 12-month period by directors whose appointment
or election is not endorsed by a majority of the members of the
Company’s board of directors prior to the date of the
appointment or election.
Persons will
not be considered to be acting as a group solely because they
purchase or own stock of the same corporation at the same time, or
as a result of the same public offering. However, persons will be
considered to be acting as a group if they are owners of a
corporation that enters into a merger, consolidation, purchase or
acquisition of stock, or similar business transaction with the
Company. If a person, including an entity, owns stock in both
corporations that enter into a merger, consolidation, purchase or
acquisition of stock, or similar transaction, such shareholder is
considered to be acting as a group with other shareholders in a
corporation only with respect to the ownership in that corporation
prior to the transaction giving rise to the change and not with
respect to the ownership interest in the other
corporation.
A “Change
in the Ownership of a Substantial Portion of the Assets of the
Company” occurs on the date that any one person, or more than
one person acting as a group, acquires (or has acquired during the
12-month period ending on the date of the most recent acquisition
by such person or persons) assets from the Company that have a
total gross fair market value equal to or more than 40 percent of
the total gross fair market value of all of the assets of the
Company immediately prior to such acquisition or acquisitions. For
this purpose, gross fair market value means the value of the assets
of the Company, or the value of the assets being disposed of,
determined without regard to any liabilities associated with such
assets. Persons will not be considered to be acting as a group
solely because they purchase assets of the same corporation at the
same time. However, persons will be considered to be acting as a
group if they are owners of a corporation that enters into a
merger, consolidation, purchase or acquisition of assets, or
similar business transaction with the corporation. If a person,
including an entity shareholder, owns stock in both corporations
that enter into a merger, consolidation, purchase or acquisition of
assets, or similar transaction, such shareholder is considered to
be acting as a group with other shareholders in a corporation only
to the extent of the ownership in that corporation prior to the
transaction giving rise to the change and not with respect to the
ownership interest in the other corporation.
2.5. “Closing Price” means
the closing price per Share on the American Stock Exchange or other
exchange on which Shares are traded.
2.6. “Code” means the
Internal Revenue Code of 1986, as amended.
2.7. “Committee” means the
compensation committee of the Board.
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2.8. “Company” means HearUSA,
Inc., a Delaware corporation.
2.9. “Director” means a
member of the Board.
2.10. “Disability” means
total and permanent disability within the meaning of
Section 22(e)(3) of the Code, which, as of the date hereof,
means being unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of no less than
12 months.
2.11. “Exchange Act” means
the Securities Exchange Act of 1934, as amended.
2.12. “Grant Limitation”
means the maximum number of Shares with respect to which Awards may
be granted to any Participant during any calendar year as set forth
in Section 3.4.
2.13. “Holder” means the
holder of a Stock Appreciation Right.
2.14. “Incentive Stock
Option” means an Option which qualifies as an incentive
stock option under Section 422 of the Code.
2.15. “Issue” means all
descendants, whether natural or adopted, of a Holder, an Optionee
or a Permitted Transferee.
2.16. “Non Employee Director”
means a non-employee director within the meaning of Rule 16b-3
promulgated under the Exchange Act.
2.17. “Nonqualified Stock
Option” means an Option which is not an Incentive Stock
Option.
2.18. “Option” means an
Incentive Stock Option and a Nonqualified Stock Option granted
pursuant to Article 5.
2.19. “Optionee” means the
recipient of an Option.
2.20. “Outside Director”
means an outside director within the meaning of Section 162(m) of
the Code.
2.21. “Participant” means a
person who has received an Award or to whom an Award has been
transferred.
2.22. “Permitted Assignee”
means (i) the spouse, parent, issue, spouse of issue, or issue
of spouse, of a Holder or an Optionee, (ii) a trust for the
benefit of one or more persons described in clause (i) or for
the benefit of a Holder or Optionee, as the case may be, or
(iii) an entity in which a Holder, Optionee or a person
described in clauses (i) or (ii) is a beneficial
owner.
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2.23. “Plan” means this
HearUSA, Inc. Amended and Restated 2007 Incentive Compensation
Plan.
2.24. “Restricted Shares”
means restricted Shares issued pursuant to
Article 7.
2.25. “Restricted Stock
Agreement” means a restricted stock agreement granted
pursuant to Article 7.
2.26. “Restricted Stock
Award” means a restricted stock award granted pursuant to
Article 7.
2.27. “Restricted Stock Unit”
means a restricted stock unit granted pursuant to
Article 8.
2.28. “Restricted Stock Unit
Agreement” means a restricted stock unit agreement
described in Article 8.
2.29. “Share” means a share
of common stock of the Company.
2.30. “Share Limitation”
means the aggregate number of Shares authorized for Awards as
described in Section 3.1.
2.31. “Stock Appreciation
Right” means a stock appreciation right granted pursuant
to Article 6.
2.32. “Stock Option
Agreement” means a stock option agreement described in
Article 5.
2.33. “Tax Election” means a
written election of a Holder or an Optionee, or a Permitted
Assignee, to have Shares withheld to satisfy withholding taxes as
described in Section 10.1.
3.1 Number of Shares. Subject to the
adjustment provisions of Section 9.9, the Share Limitation
shall be 4,500,000 Shares. No Options to purchase fractional Shares
shall be granted or issued under the Plan. For purposes of this
Section 3.1, the Shares that shall be counted toward the Share
Limitation shall include all Shares:
(1) issued
or issuable pursuant to Options that have been or may be
exercised;
(2) issued or issuable pursuant to Stock
Appreciation Rights;
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(3) issued as, or subject to issuance as
Restricted Stock Awards; and
(4) issued as, or subject to issuance as
Restricted Stock Units.
3.2 Shares Subject to Terminated Awards.
The Shares covered by any unexercised portions of terminated
Options granted under Article 5, Shares forfeited as provided
in Section 7.2(a) and Shares subject to any Awards which are
otherwise surrendered by the Participant without receiving any
payment or other benefit with respect thereto may again be subject
to new Awards under the Plan. In the event the purchase price of an
Option is paid in whole or in part through the delivery of Shares,
the number of Shares issuable in connection with the exercise of
the Option shall not again be available for the grant of Awards
under the Plan. Shares subject to Options, or portions thereof,
which have been surrendered in connection with the exercise of
share appreciation rights shall not again be available for the
grant of Awards under the Plan.
3.3 Character of Shares. Shares delivered
under the Plan may be authorized and unissued Shares, treasury
Shares acquired by the Company, or both.
3.4 Limitations on Grants to Individual
Participant. Subject to the adjustment provisions of
Section 9.9 the Grant Limitation shall be 750,000 Shares. If
an Award is canceled, the Shares with respect to such canceled
Award shall continue to be counted toward the Grant Limitation for
the year granted.
ELIGIBILITY AND
ADMINISTRATION
4.1 Awards to Employees and Directors.
(a) Participants who are eligible to receive Awards shall
consist of such key employees and Directors of the Company or any
of its subsidiaries or affiliates as the Committee shall select
from time to time. The Committee’s designation of a
Participant in any year shall not require the Committee to
designate such person to receive Awards or grants in any other
year. The designation of a Participant to receive Awards or grants
under one portion of the Plan shall not require the Committee to
include such Participant under other portions of the
Plan.
(b) No Option which is intended to qualify
as an Incentive Stock Option may be granted to any employee who, at
the time of such grant, owns, directly or indirectly (within the
meaning of sections 422(b)(6) and 424(d) of the Code), shares
possessing more than ten percent (10%) of the total combined voting
power of all classes of shares of the Company or any of its
subsidiaries or affiliates, unless at the time of such grant,
(i) the option price is fixed at not less than 110% of the
Closing Price (as defined below) of the Shares subject to such
Option, determined on the date of the grant, and (ii) the
exercise of such Option is prohibited by its terms after the
expiration of five (5) years from the date such Option is
granted. Incentive Stock Options may only be granted to employees
of the Company or its subsidiaries.
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4.2 Administration. (a) The Plan
shall be administered by the Committee. Unless otherwise determined
by the Board, each member of the Committee shall be a Non- Employee
Director and an Outside Director. In no event shall the Committee
consist of fewer than two Directors. The Directors may remove from,
add members to, or fill vacancies in the Committee.
Any Award to a member of the Committee shall be
on terms consistent with Awards made to other non-employee
Directors who are not members of the Committee, except where the
Award is approved or ratified by the Board (excluding persons who
are also members of the Committee).
(b) The Committee is authorized, subject to
the provisions of the Plan, to establish such rules and regulations
as it may deem appropriate for the conduct of meetings and proper
administration of the Plan. All actions of the Committee shall be
taken by majority vote of its members. The Committee is also
authorized, subject to the provisions of the Plan, to make
provisions in various Awards pertaining to a Change of Control of
the Company and to amend or modify existing Awards; provided,
however, that the Committee may not, without first obtaining the
approval of the shareholders of the Company, reprice any
outstanding Option then exercisable for a price above the then
current market price of the Shares to provide for a lower exercise
price.
(c) Subject to the provisions of the Plan,
the Committee shall have authority, in its sole discretion, to
interpret the provisions of the Plan and, subject to the
requirements of applicable law, including Rule 16b-3 of the
Exchange Act, to prescribe, amend, and rescind rules and
regulations relating to it as it may deem necessary or advisable.
All decisions made by the Committee pursuant to the provisions of
the Plan shall be final, conclusive and binding on all persons,
including the Company, its shareholders, Directors and employees,
and Plan participants.
5.1 Grant of Options. The Committee shall
determine, within the limitations of the Plan, the Directors and
employees of the Company and its subsidiaries and affiliates to
whom Options are to be granted under the Plan, the number of Shares
that may be purchased under each such Option and the option price,
and shall designate such Options at the time of the grant as either
Incentive Stock Options or Nonqualified Stock Options. An Option is
the right to purchase Shares at a specified price.
All Options granted pursuant to this
Article 5 shall be authorized by the Committee and shall be
evidenced in writing by Stock Option Agreements in such form and
containing such terms and conditions as the Committee shall
determine which are not inconsistent with the provisions of the
Plan, and, with respect to any Stock Option Agreement granting
Options which are intended to qualify as Incentive Stock Options,
are not inconsistent with Section 422 of the Code. Granting of
an Option pursuant to the Plan shall impose no obligation on the
Optionee to exercise such option. Any individual who is granted an
Option pursuant to this Article 5 may hold more than one
Option at the same time and may hold both Incentive Stock Options
and Nonqualified Stock Options at the same time. To the extent that
any Option does not qualify as an Incentive Stock Option (whether
because of its provisions, the time or manner of its exercise or
otherwise) such Option or the portion thereof which does not so
qualify shall constitute a separate Nonqualified Stock
Option.
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5.2 Option Price. Subject to
Section 4.1(b), the option price per each Share purchasable
under any Option granted pursuant to this Article 5 shall not
be less than 100% of the Closing Price of such Share on the date of
the grant of such Option or, if the market was closed on the date
in question, then the closing price on the next trading day
immediately following the day in question. If the Shares are traded
on more than one market or exchange, then the Closing Price shall
be determined by reference to the primary market or exchange where
the Shares trade.
5.3 Other Provisions. Options granted
pursuant to this Article 5 shall be made in accordance with
the terms and provision of Article 9 and any other applicable
terms and provisions of the Plan.
STOCK APPRECIATION
RIGHTS
6.1 Grant and Exercise. Stock
Appreciation Rights may be granted in conjunction with all or part
of any Option granted under the Plan provided such rights are
granted at the time of the grant of such Option. A Stock
Appreciation Right is the right to receive cash or Shares, as
provided in this Article 6. It may be the right to receive
cash or Shares, in lieu of the purchase of Shares under a related
Option or it may be a free standing stock appreciation right
unrelated to any Option. A Stock Appreciation Right or applicable
portion thereof shall terminate and no longer be exercisable upon
the termination or exercise of a related Option, and a Stock
Appreciation Right granted with respect to less than the full
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