Exhibit 10.2
Assisted Living Concepts, Inc.
DIRECTOR TANDEM STOCK OPTION/STOCK APPRECIATION RIGHTS AWARD
AGREEMENT
Director:
Number of Stock Options/SARs:
Grant Date:
Exercise Price:
This Tandem Stock Option/Stock
Appreciation Rights Award Agreement (the “ Award
Agreement ”) is entered into as of
, between Assisted Living Concepts, Inc. (“ ALC
”) and Director. In consideration of the mutual promises and
covenants made in this Award Agreement and the mutual benefits to
be derived from this Award Agreement, ALC and the Director agree as
follows:
THIS AWARD IS SUBJECT TO ALL TERMS
AND CONDITIONS OF THE PLAN AND THIS AWARD AGREEMENT, INCLUDING,
WITHOUT LIMITATION, THE DISPUTE RESOLUTION PROVISIONS SET FORTH IN
SECTION 17 OF THIS AWARD AGREEMENT. BY SIGNING YOUR NAME BELOW, YOU
WILL HAVE CONFIRMED YOUR ACCEPTANCE OF THE TERMS AND CONDITIONS OF
THIS AWARD AGREEMENT.
1.
Definitions. Capitalized terms used in this Award Agreement
that are not defined in this Award Agreement have the meanings as
used or defined in the Assisted Living Concepts, Inc. 2006 Omnibus
Incentive Compensation Plan (the “Plan”). As used in
this Award Agreement, the following terms have the meanings set
forth below:
“ Business Day ”
means a day that is not a Saturday, a Sunday or a day on which
banking institutions are legally permitted to be closed in the City
of New York.
“ Committee ”
means the Compensation/Nominating/Governance Committee of the
Board, or such other committee of the Board as may be designated by
the Board from time to time to administer the Plan.
“ Common Stock ”
means Class A common stock of ALC, par value $0.01 per
share.
“ Fair Market Value
” means the closing market price per Share as reported on the
New York Stock Exchange (or other relevant exchange) on the
applicable date or, in the event there shall be no public market
for the Shares on the applicable date, the fair market value of the
Shares as determined in good faith by the Committee.
“ Share ” means a
share of Common Stock.
2.
Grant of Award . This Award Agreement sets forth the terms
and conditions of an award (the “ Award ”) under
the Plan to the Director as of the Grant Date of:
a. Stock Options . The
right and option (the “ Stock Options ”) to
purchase up to
Shares at the Exercise Price per Share. Each Stock Option is a
Nonqualified Stock
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Option.
Unless earlier terminated pursuant to the terms of this Award
Agreement, the Stock Options shall expire on the fifth anniversary
of the Grant Date.
b. Stock Appreciation
Rights . Each Stock Option includes a stock appreciation right
(“ SAR ”) at the price per Share equal to the
Exercise Price. The SAR constitutes an unfunded and unsecured
promise of ALC to deliver (or cause to be delivered) to Director a
whole number of Shares, cash or a combination of Shares and cash at
the time such SAR vests and is exercised, as provided herein, equal
in value to the excess, if any, of the Fair Market Value per Share
over the Exercise Price per Share of the SAR. Fractional shares
will not be delivered and the number of Shares to be delivered upon
any exercise by you of SARs subject to this Award shall be rounded
down to the nearest whole Share. The Committee has sole discretion
to deliver such value in Shares, cash, or a combination of Shares
and cash. Until such delivery, Director has only the rights of a
general unsecured creditor and no rights as a stockholder of ALC.
Unless earlier terminated pursuant to the terms of this Award
Agreement, the SARs shall expire on the fifth anniversary of the
Grant Date.
c. Tandem Stock Option/Stock
Appreciation Rights . An SAR with respect to a Share shall
vest, become exercisable, and terminate at the same times and under
the same terms as the Stock Option such Share is subject to. The
exercise of a Stock Option with respect to any Share shall cause
the related SAR to automatically terminate and the exercise of an
SAR with respect to any Share shall cause the related Stock Option
to automatically terminate. Only one Stock Option or one SAR, and
not both, may be exercised with respect to any Share that is
subject to a Stock Option under this Award Agreement. The tandem
Stock Option and SAR rights with respect to a Share are referred to
in this Award Agreement as the “ Stock Option/SAR
.”
d. Exercisability Subject to
Time Vesting . Unless earlier terminated, the Stock
Options/SARs shall become exercisable as follows: one-third of the
Shares covered thereby (rounded up to the next whole Share) on
, an additional one-third of such Shares (rounded up to the next
whole Share) on
, and the remainder of such Shares on
, subject in each case to the prior termination of the Stock
Option/SAR.
e. Exercisability Upon
Death, Disability or Change of Control . Notwithstanding the
foregoing, the Stock Options/SARs, to the extent outstanding, shall
become immediately vested and fully exercisable upon (a) a
Change of Control or (b) a Termination of Service due to death
or Disability. For purposes of this Award Agreement,
Disability means permanent and total disability as
determined under ALC’s long-term disability plan applicable
to ALC’s Executive Officers. For purposes of this Award
Agreement, Termination of Service means the Director’s
ceasing to be a member of the Board and ceasing to be employed
with, or to perform services for, ALC or any of its Subsidiaries or
Affiliates. A participant who has ceased being a member of the
Board but who continues to be employed by, or to perform services
for, a Subsidiary or an Affiliate shall also be deemed to incur a
Termination of Service if (i) the participant’s
employment with, or performance of services for, ALC and any of its
Subsidiaries or Affiliates terminates or (ii), if the participant
is employed by a Subsidiary or Affiliate, the Subsidiary or
Affiliate ceases to be such a Subsidiary or an Affiliate, as the
case may be, and the participant does not immediately thereafter
become an employee of, or service-provider for, ALC or another
Subsidiary or Affiliate. Temporary absences from employment because
of illness, vacation or leave of absence and transfers among ALC
and its Subsidiaries and Affiliates shall not be considered
Terminations of Service.
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f. Suspension or Termination
of Stock Options/SARs . If at any time (including after a
notice of exercise has been delivered) the Committee, including any
administrator authorized pursuant to Section 3(e) of the Plan (any
such person, an “ Authorized Officer ”),
reasonably believes that Director has committed an act of
misconduct as described in this Section, the Committee or
Authorized Officer may suspend the Director’s right to
exercise any Stock Option/SAR pending a determination of whether an
act of misconduct has been committed. If the Committee or an
Authorized Officer determines Director has committed an act of
embezzlement, fraud, dishonesty, nonpayment of any obligation owed
to ALC, breach of fiduciary duty or deliberate disregard of ALC
rules resulting in loss, damage or injury to ALC, or if Director
makes an unauthorized disclosure of any ALC trade secret or
confidential information, engages in any conduct constituting
unfair competition, or induces a customer to breach a contract with
ALC, neither Director nor his or her estate shall be entitled to
exercise any Stock Option/SAR whatsoever. In addition, if Director
is designated an “executive officer” by the Board and
if the Committee determines that Director engaged in an act of
embezzlement, fraud or breach of fiduciary duty during
Director’s employment that contributed to an obligation to
restate ALC’s financial statements (“ Contributing
Misconduct ”), Director shall be required to repay ALC,
in cash and upon demand, the Option Proceeds (as defined below)
resulting from the sale or other disposition (including to ALC) of
Shares issued or issuable upon exercise of a Stock Option or SAR if
the sale or disposition was effected during the twelve-month period
following the first public issuance or filing with the Securities
and Exchange Commission of the financial statements required to be
restated. The term “ Option Proceeds ” means,
with respect to any sale or other disposition (including to ALC) of
Shares issued or issuable upon exercise of a Stock Option or SAR,
an amount determined appropriate by the Committee to reflect the
effect of the restatement on ALC’s stock price, up to the
amount equal to the number of Shares sold or disposed of multiplied
by the difference between the market value per Share at the time of
such sale or disposition and the exercise price. The return of
Option Proceeds is in addition to and separate from any other
relief available to ALC due to the executive officer’s
Contributing Misconduct. Any determination by the Committee with
respect to the foregoing shall be final, conclusive and binding on
all interested parties.
3.
The Plan. This Award is made pursuant to the Plan, all the
terms of which are hereby incorporated in this Award Agreement. In
the event of any conflict between the terms of the Plan and the
terms of this Award Agreement, the terms of this Award Agreement
shall govern; provided , however , that,
notwithstanding the foregoing, it is understood that the provisions
of Section 6(i)(vi)(D) of the Plan, including but not limited
to the concept of “negative discretion,” shall not be
applicable to the Stock Options/SARs.
4.
Exercise of the Stock Options .
a. Stock Options as to which the
Director is vested, which have become exercisable, and which have
not terminated may be exercised by delivery to the Secretary of ALC
of a written or electronic notice, complying with the applicable
procedures established by the Committee or ALC, stating the number
of whole Shares to be purchased pursuant to this Award Agreement
and the date on which the Director wants to exercise the Stock
Option and accompanied by payment of the full purchase price of the
Shares to be purchased.
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