EXHIBIT 10.42
FORM OF [NON-QUALIFIED] [INCENTIVE] STOCK
OPTION AWARD AGREEMENT
[SEABRIGHT INSURANCE HOLDINGS, INC. LETTERHEAD]
______ __, ____
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Re: Grant of [NON-QUALIFIED] [INCENTIVE] Stock Option
Dear ____________:
SeaBright Insurance Holdings, Inc. (the "Company") is pleased to advise
you that, pursuant to the Company's 2005 Long-Term Equity Incentive Plan (the
"Plan"), the Committee has granted to you an option (the "Option") to acquire
shares of Common Stock, as set forth below, subject to the terms and conditions
set forth herein:
Number of Option Shares:
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Date of Grant:
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Exercise Price per Option Share:
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Vesting Dates of Option Shares:
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Expiration Date of All Option Shares:
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[THE OPTION IS NOT INTENDED TO BE AN "INCENTIVE STOCK OPTION" WITHIN
THE MEANING OF SECTION 422 OF THE CODE.] [THE OPTION IS INTENDED TO BE AN
"INCENTIVE STOCK OPTION" WITHIN THE MEANING OF SECTION 422 OF THE CODE. IF THE
OPTION DOES NOT QUALIFY AS SUCH FOR ANY REASON, THEN TO THE EXTENT OF SUCH
NON-QUALIFICATION, THE OPTION SHALL BE REGARDED AS A NON-QUALIFIED STOCK
OPTION.]
Any capitalized terms used herein and not defined herein have the
meaning set forth in the Plan.
1. Option.
(a) Term. Subject to the terms and conditions set forth herein, the
Company hereby grants to you (or such other persons as permitted by paragraph 5)
an Option to purchase the Option Shares at the exercise price per Option Share
set forth above in the introductory paragraph of this letter agreement (the
"Exercise Price"), payable upon exercise as set forth in paragraph 1(b) below.
The Option shall expire at the close of business on the date set forth above in
the introductory paragraph of this letter agreement (the "Expiration Date"),
which is the tenth anniversary of the date of grant set forth above in the
introductory paragraph of this letter agreement (the "Grant Date"), subject to
earlier expiration as provided under the Plan should your employment or service
with the Company or a Subsidiary terminate. The Exercise Price and the number
and kind of shares of Common Stock or other property for which the Option may be
exercised shall be subject to adjustment as provided under the Plan. For
purposes of this letter agreement, "Option Shares" mean (i) all shares of Common
Stock issued or issuable upon the exercise of the Option and (ii) all shares of
Common Stock issued with respect to the Common Stock referred to in clause (i)
above by way of stock dividend or stock split or in connection with any
conversion, merger, consolidation or recapitalization or other reorganization
affecting the Common Stock.
(b) Payment of Option Price. Subject to paragraph 2 below, the Option
may be exercised in whole or in part upon payment of an amount (the "Option
Price") equal to the product of (i) the Exercise Price and (ii) the number of
Option Shares to be acquired. Payment of the Option Price shall be made as
provided under the Plan.
2. Exercisability/Vesting and Expiration.
(a) Normal Vesting. The Option granted hereunder may be exercised only
to the extent it has become vested. The Option shall vest in as indicated by the
vesting dates of Option Shares set forth in the introductory paragraph of this
letter agreement.
(b) Normal Expiration. In no event shall any part of the Option be
exercisable after the Expiration Date.
(c) Effect on Vesting and Expiration of Employment Termination.
Notwithstanding paragraphs 2(a) and (b) above, the special vesting and
expiration rules set forth in the Plan shall apply if your employment or service
with the Company or a Subsidiary terminates prior to the Option becoming fully
vested and/or prior to the Expiration Date.
3. Procedure for Exercise. You may exercise all or any portion of the
Option, to the extent it has vested and is outstanding, at any time and from
time to time prior to the Expiration Date, by delivering written notice to the
Company in the form attached hereto as Exhibit A, together with payment of the
Option Price in accordance with the provisions set forth in the Plan. The Option
may not be exercised for a fraction of an Option Share.
4. Withholding of Taxes.
(a) Participant Election. Unless otherwise determined by the Committee,
you may elect to deliver shares of Common Stock (or have the Company withhold
Option Shares
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acquired upon exercise of the Option) to satisfy, in whole or in part, the
amount the Company is required to withhold for taxes in connection with the
exercise of the Option. Such election must be made on or before the date the
amount of tax to be withheld is determined. Once made, the election shall be
irrevocable. The fair market value of the shares to be withheld or delivered
will be the Fair Market Value as of the date the amount of tax to be withheld is
determined.
(b) Company Requirement. The Company, to the extent permitted or
required by law, shall have the right to deduct from any payment of any kind
(including salary or bonus) otherwise due to you, an amount equal to any
federal, state or local taxes of any kind required by law to be withheld with
respect to the delivery of Option Shares under this letter agreement.
5. Transferability of Option. You may transfer the Option granted
hereunder only by will or the laws of descent and distribution or to any of your
Family Members by gift or a qualified domestic relations order as defined by the
Code. Unless the context requires otherwise, references herein to you are deemed
to include any permitted transferee under this paragraph 5. The Option may be
exercised only by you; by your Family Member if such person has acquired the
Option by gift or qualified domestic relations order; by the executor or
administrator of the estate of any of the foregoing or any person to whom the
Option is transferred by will or the laws of descent and distribution; or by the
guardian or representative of any of the foregoing; provided that Incentive
Stock Options may be exercised by any guardian or legal representative only if
permitted by the Code and any regulations thereunder.
6. Conformity with Plan. The Option is intended to conform in all
respects with, and is subject to all applicable provisions of, the Plan (which
is incorporated herein by reference). Inconsistencies between this letter
agreement and the Plan shall be resolved in accordance with the terms of the
Plan. By executing and returning the enclosed copy of this letter agreement, you
acknowledge your receipt of this letter agreement and the Plan and agree to be
bound by all of the terms of this letter agreement and the Plan.
7. Rights of Participants. Nothing in this letter agreement shall
interfere with or limit in any way the right of the Company to terminate your
employment or other performance of services at any time (with or without Cause),
nor confer upon you any right to continue in the employ or as a director or
officer of, or in the performance of other services for, the Company or a
Subsidiary for any period of time, or to continue your present (or any other)
rate of compensation or level of responsibility. Nothing in this letter
agreement shall confer upon you any right to be selected again as a Plan
participant.
8. Amendment or Substitution of Option. The terms of the Option may be
amended from time to time by the Committee in its discretion in any manner that
it deems appropriate (including, but not limited to, acceleration of the date of
exercise of the Option); provided that no such amendment shall adversely affect
in a material manner any of your rights under the award without your written
consent.
9. Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this letter agreement by or on
behalf of any of the
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parties hereto shall bind and inure to the benefit of the respective successors
and permitted assigns of the parties hereto whether so expressed or not.
10. Severability. Whenever possible, each provision of this letter
agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this letter agreement is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this letter agreement.
11. Counterparts. This letter agreement may be executed simultaneously
in two or more counterparts, each of which shall constitute an original, but all
of which taken together shall constitute one and the same letter agreement.
12. Descriptive Headings. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
13. Governing Law. THE VALIDITY, CONSTRUCTION, INTERPRETATION,
ADMINISTRATION AND EFFECT OF THE PLAN, AND OF ITS RULES AND REGULATIONS, AND
RIGHTS RELATING TO THE PLAN AND TO THIS LETTER AGREEMENT, SHALL BE GOVERNED BY
THE SUBSTANTIVE LAWS, BUT NOT THE CHOICE OF LAW RULES, OF THE STATE OF DELAWARE.
14. Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this letter agreement shall
be in writing and shall be deemed to have been given when (i) delivered
personally, (ii) mailed by certified or registered mail, return receipt
requested and postage prepaid, (iii) sent by facsimile or (iv) sent by reputable
overnight courier, to the recipient. Such notices, demands and other
communications shall be sent to you at the address specified in this letter
agreement and to the Company at 0000 0xx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxxxx
00000, Attn: ____________, or to such other address or to the attention of such
other person as the recipient party has specified by prior written notice to the
sending party.
15. Entire Agreement. This letter agreement and the terms of the Plan
constitute the entire understanding between you and the Company, and supersede
all other agreements, whether written or oral, with respect to your acquisition
of the Option Shares.
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SIGNATURE PAGE TO STOCK OPTION AWARD AGREEMENT
Please execute the extra copy of this letter agreement in the space
below and return it to the Company to confirm your understanding and acceptance
of the agreements contained in this letter agreement.
Very truly yours,
SEABRIGHT INSURANCE HOLDINGS, INC.
By:
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Name:
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Title:
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Enclosures: Extra copy of this letter agreement
Copy of the Plan
The undersigned hereby acknowledges having read this letter agreement
and the Plan and hereby agrees to be bound by all provisions set forth herein
and in the Plan.
OPTIONEE
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Dated as of:
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EXHIBIT A
FORM OF LETTER TO BE USED TO EXERCISE STOCK OPTION
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Date
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Attention:
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I wish to exercise the stock option granted on _________ and evidenced
by a Stock Option Award Agreement dated as of ___________, to acquire _________
shares of Common Stock of _________, at an option price of $_______ per share.
In accordance with the provisions of paragraph 1 of the Stock Option Award
Agreement, I wish to make payment of the exercise price (please check all that
apply):
[ ] in cash
[ ] by delivery of shares of Common Stock held by me
[ ] by simultaneous sale through a broker
Please issue a certificate for these shares in the following name:
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Name
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Address
Very truly yours,
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Signature
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Typed or Printed Name
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Social Security Number
