Exhibit 10.5
VERSO PAPER CORP.
2009 LONG-TERM CASH AWARD PROGRAM
FOR EXECUTIVES
Effective as of January 1,
2009
1. Plan and Program . Verso
Paper Corp. (the “ Company ”) has previously
adopted the Verso Paper Corp. Senior Executive Bonus Plan (the
“ Plan ”) pursuant to which the Company may pay
bonuses to key employees of the Company and its subsidiaries
selected by the Compensation Committee of the Company’s Board
of Directors (the “ Compensation Committee ”).
This Verso Paper Corp. 2009 Long-Term Cash Award Program for
Executives (this “ Program ”) provides that the
executive officers selected to participate in this Program (the
“ Participants ”) shall be eligible to receive
cash bonuses pursuant to the Plan upon the Company’s
attainment of the performance targets described herein. Unless
otherwise noted, capitalized terms used but not defined in this
Program shall have the meanings set forth in the Plan.
2. Purpose . This Program is
intended to provide an incentive for superior work and to motivate
the Participants toward even higher achievement and business
results, to tie their goals and interests to those of the Company
and its stockholders, and to enable the Company to attract and
retain highly qualified executives.
3. Performance Awards
.
(a) Performance Cycle . The
“ Performance Cycle ” shall be the period
beginning on January 1, 2009, and ending on December 31,
2011, unless earlier terminated in accordance with the Plan or this
Program.
(b) Eligibility . All
Participants are executive officers of the Company or a Subsidiary
(as defined in the Verso Paper Corp. 2008 Incentive Award Plan (the
“ Incentive Plan ”)) who have been selected by
the Compensation Committee to participate in this Program. With
respect to the Performance Cycle, each Participant shall be
eligible to receive a maximum long-term cash performance award (a
“ Performance Award ”) determined by the
Compensation Committee, subject to the terms and conditions of the
Plan and such other terms and conditions as are set forth
herein.
(c) Vesting; Payment
.
(i) Subject to Section 3(e),
each Performance Award will be eligible to become vested upon the
achievement of performance objectives over the Performance Cycle as
follows:
(A) Up to 25% of each Performance
Award shall be eligible to become vested based upon achievement of
the Annual EBITDA Target for calendar year 2009, as set forth in
Schedule A (the “ 2009 Tranche
”);
(B) Up to 25% of each Performance
Award shall be eligible to become vested based upon achievement of
the Annual EBITDA Target for calendar year 2010, as set forth in
Schedule A (the “ 2010 Tranche
”);
(C) Up to 25% of each Performance
Award shall be eligible to become vested based upon achievement of
the Annual EBITDA Target for calendar year 2011, as set forth in
Schedule A (the “ 2011 Tranche ” and,
together with the 2009 Tranche and the 2010 Tranche, the “
Annual Tranches ”); and
(D) Up to the remaining 25% of the
Performance Award shall be eligible to become vested based upon
achievement of the Performance-Cycle EBITDA Target with respect to
calendar years 2009-2011, as set forth in Schedule A (the
“ Performance-Cycle Tranche ”).
(ii) The Administrator shall in good
faith make the determination as to whether the respective Annual
EBITDA Targets and the Performance-Cycle EBITDA Target have been
met, and shall determine the extent, if any, to which each Annual
Tranche or the Performance-Cycle Tranche, as applicable, has become
vested, on any such date following December 31 of the
applicable calendar year as the Administrator, in its sole
discretion, shall determine; provided, however, that, with respect
to each calendar year, such date shall not be later than the 120th
day following December 31 of such calendar year (each such
date so determined by the Administrator, a “ Determination
Date ”).
(iii) Subject to Section 3(e),
the vested portion of each Annual Tranche and the Performance-Cycle
Tranche shall be payable in cash as soon as reasonably practicable
after the Determination Date immediately following the completion
of the Performance Cycle, but in any event within the period
required by Section 409A (as defined below) such that it
qualifies as a “short-term deferral” pursuant to
Treasury Regulation Section 1.409A-1(b)(4) (or any successor
thereto) and prior to the first meeting of the Company’s
stockholders at which members of the Board of Directors of the
Company are to be elected that occurs in 2012. Any then unvested
portion of the Performance Award shall thereupon be
forfeited.
(iv) For purposes of this
Program:
(A) “ Annual EBITDA
Target ” with respect to a given calendar year shall mean
an amount of EBITDA equal to the Annual EBITDA Target for such
calendar year set forth in Schedule A .
(B) “ Performance-Cycle
EBITDA Target ” with respect to the Performance Cycle
shall mean an amount of EBITDA equal to the Performance-Cycle
EBITDA Target for such period set forth in Schedule A
.
(C) “ EBITDA ”
shall mean the “Adjusted EBITDA” as such term is
defined on the date hereof in the Indenture dated as of
August 1, 2006, relating to the 11-3/8% Senior Subordinated
Notes due 2016 issued by Verso Paper Holdings LLC and Verso Paper
Inc.
(d) Change in Control .
Unless otherwise provided by the Compensation Committee, in the
event of a Change in Control (as defined in the Incentive Plan),
the Company shall require that this Program be assumed by the
successor or survivor corporation, or a parent or subsidiary
thereof, and the Performance Awards shall continue to be eligible
to become vested and payable in accordance with the terms and
conditions of this Program, subject to such equitable adjustments,
if any, as the Administrator shall determine to be
appropriate.
(e) Termination of Employment
. Notwithstanding anything herein to the contrary, except as
otherwise provided below, in no event shall a Participant receive
payment of his or her Performance Award following the date of such
Participant’s termination of employment with the Company or
any Subsidiary for any reason; provided, however, that subject to
Section 8:
(i) In the event of a
Participant’s death, Disability, Retirement (as defined
below), or termination of employm
