Exhibit 10.3
FORM OF
AWARD AGREEMENT
2008 Long-Term Equity-Based Compensation Program
Assisted Living Concepts, Inc.
TANDEM
STOCK OPTION/STOCK APPRECIATION RIGHTS AWARD AGREEMENT
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Employee:
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[EMPLOYEE NAME] |
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Number of Stock
Options/SARs:
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[NUMBER OF
OPTIONS/SARS] |
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Grant Date:
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March 29, 2008 |
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Exercise
Price:
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$5.89 |
This Tandem Stock Option/Stock
Appreciation Rights Award Agreement (the “Award
Agreement”) is entered into as of March 29, 2008,
between Assisted Living Concepts, Inc. (“ALC”) and
Employee. 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 Employee 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.
“Determination Date”
means the date during the first quarter of 2009, as determined by
the Committee, on which the Committee determines whether
Performance Goals with respect to the Performance Period have been
achieved.
“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
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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.
“Performance Period”
means the period from January 1, 2008 through
December 31, 2008.
“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 Employee as of the Grant Date of:
a. Stock Options . The
right and option (the “Stock Options”) to purchase up
to [ NUMBER OF OPTIONS/SARS ] Shares at
the Exercise Price per Share. Each Stock Option is a Nonqualified
Stock 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 Employee 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, Employee 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. Award Subject to
Performance-Based Vesting . Except as otherwise provided in any
individual employment agreement between you and ALC or any of its
Affiliates (an “Employment Agreement”), the vesting of
your rights with respect to Stock Options/SARs is contingent on the
attainment of performance goals set forth on Exhibit A to this
Award Agreement (the “Performance Goals”). Accordingly,
unless otherwise provided in your Employment Agreement, your rights
with respect to Stock Options/SARs subject to this Award Agreement
will not become vested on the Determination Date unless the
Committee determines that the Performance Goals with respect to the
Performance Period have been attained.
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Furthermore, pursuant to Section 6 and except as otherwise
provided in your Employment Agreement, in order for your rights
with respect to any Stock Option or SAR to become vested on the
Determination Date, you must be employed by ALC or an Affiliate on
the Determination Date. If, on the Determination Date, the
Committee determines in its sole discretion that your rights with
respect to any Stock Options/SARs under this Award Agreement remain
unvested, your rights with respect to such Stock Options/SARs shall
immediately terminate, and you will be entitled to no further
payments or benefits with respect thereto.
e. Number of Vested Stock
Options/SARs Dependent Upon Level of Performance . If the
Committee determines that the threshold level Performance Goal
specified in Exhibit A has been attained for the Performance
Period, the Committee will then determine the whole number of Stock
Options/SARs that vest on the Determination Date, up to the maximum
number listed on the first page of this Award Agreement, using the
formula set forth in Exhibit A.
f. Exercisability Subject to
Time Vesting . Unless earlier terminated, any Stock
Options/SARs that the Committee determines to be vested as of the
Determination Date shall become exercisable as follows: one-third
of the Shares covered thereby (rounded up to the next whole Share)
on March 29, 2009, an additional one-third of such Shares
(rounded up to the next whole Share) on March 29, 2010, and
the remainder of such Shares on March 29, 2011, subject in
each case to the prior termination of the Stock Option/SAR.
g. 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 Employment due to
death or Disability. For purposes of this Award Agreement,
Disability means (1) “Disability” as defined in your
Employment Agreement, or (2) if there is no such employment or
similar agreement or it does not define “Disability,”
permanent and total disability as determined under ALC’s
long-term disability plan applicable to Employee. For purposes of
this Award Agreement, Termination of Employment means the
termination of Employee’s employment with, or performance of
services for, ALC and any of its Subsidiaries or Affiliates. A
participant employed by, or performing services for, a Subsidiary
or an Affiliate shall also be deemed to incur a Termination of
Employment if 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
Employment.
h. 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 Employee has committed an act of misconduct as
described in this Section, the Committee or Authorized Officer may
suspend the Employee’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
Employee 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 Employee makes an unauthorized disclosure of
any ALC trade secret or confidential
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information, engages in any conduct constituting unfair
competition, or induces a customer to breach a contract with ALC,
neither Employee nor his or her estate shall be entitled to
exercise any Stock Option/SAR whatsoever. In addition, if Employee
is designated an “executive officer” by the Board and
if the Committee determines that Employee engaged in an act of
embezzlement, fraud or breach of fiduciary duty during
Employee’s employment that contributed to an obligation to
restate ALC’s financial statements (“Contributing
Misconduct”), Employee 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 a
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