EXHIBIT 10.1

 

AMERICAN SAFETY INSURANCE HOLDINGS, LTD.

2007 INCENTIVE STOCK PLAN

 

 

1.  Purpose and Effective Date.

American Safety Insurance Holdings, Ltd. (the “Company”) has established this
2007 Incentive Stock Plan (the “Plan”) to facilitate the retention and continued
motivation of key employees, consultants and directors of the Company and its
subsidiaries and to align more closely their interests with those of the Company
and its stockholders. The Plan shall be effective on the date it is approved by
the stockholders of the Company (the “Effective Date”) and no further awards
shall be made under the Plan subsequent to the tenth anniversary of the
Effective Date.

The Plan will serve as the successor to the Company’s existing 1998 Incentive
Stock Option Plan, (the “Predecessor Plan”). All outstanding awards under the
Predecessor Plan as of the Effective Date will remain outstanding awards under
the Predecessor Plan. Each such outstanding award will continue to be governed
by the express terms and conditions of the agreements evidencing such award. No
provision of this Plan shall be deemed to affect or otherwise modify the rights
or obligations of the holders of such awards under the Predecessor Plan with
respect to their acquisition of shares of the Company’s common stock thereunder.
However, no further awards shall be made under the Predecessor Plan following
the Effective Date.

2.  Administration. The Plan shall be administered by the Compensation Committee
of the Company’s Board of Directors (the “Committee”) or such other committee
consisting solely of independent directors as the Board may designate. The
Committee has the authority and responsibility for the interpretation,
administration and application of the provisions of the Plan, and the
Committee’s interpretations of the Plan, and all actions taken by it, and
determinations made by it, shall be binding on all persons. No Board or
Committee member shall be personally liable for any determination, decision or
action made in good faith with respect to the Plan.

Subject to the terms of the Plan, the Committee may delegate to the Chief
Executive Officer of the Company the authority to grant awards, and to make any
or all of the determinations reserved to the Committee with respect to awards
that have been granted, to any individual who, at the time of such grant or
other determination, (a) is not an officer or director of the Company required
to file reports under Section 16 of the Securities Exchange Act of 1934 with
respect to Common Stock of the Company and (b) is otherwise eligible to
participate in the Plan under Section 4 hereof.

3.  Shares Subject to Plan. A total of 2,000,000 shares of Common Stock of the
Company (“Shares”) may be issued pursuant to the Plan. Shares may be authorized
but unissued Shares or Shares reacquired by the Company and held in its
treasury. Grants of awards under the Plan will reduce the number of Shares
available thereunder by the maximum number of Shares obtainable under such
grants. If all or any portion of the Shares otherwise subject to any grant under
the Plan are not delivered or do not vest for any reason including, but not
limited to, the cancellation, expiration or termination of any option right or
unit, the settlement of any award in cash, the forfeiture of any restricted
stock, or the repurchase of any Shares by the Company from a participant for the
cost of the participant’s investment in the Shares, such number of Shares shall
be available again for issuance under the Plan.

 

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Notwithstanding the foregoing, Shares tendered (either actually or through
attestation) to pay the option exercise price, Shares withheld for the payment
of withholding taxes and Shares and other awards repurchased by the Company from
a person using proceeds from the exercise of awards by that person shall not
return to the share reserve, and the determination of the number of Shares used
in connection with stock-settled stock appreciation rights shall be based on the
number of Shares with respect to which the rights were based and not just the
number of Shares delivered upon settlement. Shares issued in connection with
awards that are assumed, converted or substituted pursuant to a merger or an
acquisition shall reduce the share reserve. The number of Shares covered by or
specified in the Plan and the number of Shares and the purchase price for Shares
under any outstanding awards, may be adjusted proportionately by the Committee
for any increase or decrease in the number of issued Shares or any change in the
value of the Shares resulting from a subdivision or consolidation of Shares,
reorganization, recapitalization, spin-off, payment of stock dividends on the
Shares, any other increase or decrease in the number of issued Shares made
without receipt of consideration by the Company, or the payment of an
extraordinary cash dividend.

4.  Eligibility. All key employees, active consultants and directors of the
Company and its subsidiaries are eligible to be selected to receive a grant
under the Plan by the Committee. The Committee may condition eligibility under
the Plan or participation under the Plan and any grant or exercise of an award
under the Plan on such conditions, limitations or restrictions as the Committee
determines to be appropriate for any reason. The maximum number of Shares with
respect to which incentive stock options, nonqualified stock options and stock
appreciation rights may be granted to any one person in any calendar year shall
not exceed 100,000.

5.  Awards. The Committee may grant awards under the Plan to eligible persons in
the form of incentive stock options (within the meaning of section 422 of the
Internal Revenue Code of 1986, as amended (the “Code)), nonqualified stock
options, stock grants, stock units, restricted stock, stock appreciation rights
and performance shares and units. The Committee shall establish the number of
Shares subject to each such grant and the terms thereof, including any
adjustment for reorganization or dividends, subject to the following:

(a)   All awards granted under the Plan shall be evidenced by agreements in such
form and containing such terms and conditions not inconsistent with the Plan as
the Committee shall prescribe.

(b) The exercise price of any option or stock appreciation right shall not be
less than the fair market value of a corresponding number of Shares as of the
date of grant. For purposes of the Plan, “fair market value” shall mean the
closing price for a Share on the date of grant as reported by the principal
securities exchange on which the Shares are traded or, if there is no such sale
on the relevant date, then on the last previous day on which a sale was
reported. If the Shares are not listed for trading on a national securities
exchange, the fair market value of the Shares shall be determined by the
Committee in good faith and in accordance with a reasonable valuation method as
determined under Section 409A of the Code and the rules and regulations
promulgated thereunder. The maximum term on options or stock appreciation rights
shall not exceed ten (10) years.

 

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(c) Options and stock appreciation rights shall vest over a minimum of three
years (and shall vest no more quickly than ratably), and all other awards shall
have a minimum vesting or holding period of three years, provided that (i)
awards that are issued in connection with mergers and acquisitions may have
vesting and holding periods that are

the same as any awards that they are replacing or otherwise as deemed
appropriate by the Committee and (ii) a vesting or holding period may be reduced
as a result of death, disability, retirement, a merger or sale, termination of
employment or other extraordinary event. In the absence of an extraordinary
event, the vesting and holding restrictions applicable to an award shall not be
reduced or otherwise waived.

(d) No more than 1,000,000 of the Shares may be awarded in a form other than
options or stock appreciation rights.

(e) No option may be repriced by amendment, substitution or cancellation and
regrant, unless authorized by the stockholders. Adjustments pursuant to
Section 3 above shall not be considered repricing.

(f) When issuing performance shares or units, performance measures may include:
stock price, earnings per share, net earnings, operating earnings, return on
assets, shareholder return, return on equity, growth in assets, revenue, cash
flow, market share, relative performance to a group of companies comparable to
the Company, and strategic business criteria consisting of one or more
objectives based on the Company’s meeting specified goals relating to revenue,
market penetration, business expansion, costs or acquisitions or divestitures,
subject to a performance period of no less than two calendar or fiscal years.

(g) All awards shall be settled on the effective date of the exercise of such
award by one or a combination of the following means: (i) in cash, by certified
check, bank cashier’s check or wire transfer; (ii) in Shares owned by the award
recipient for at least six months prior to the date of exercise and valued at
their fair market value on the effective date of such exercise; or (iii) subject
to the approval of the Committee, such other provision as the Committee may from
time to time authorize.

(h) Shares granted from the Plan may be used as a form of payment for
compensation, grants or rights earned or due under other Company plans or
arrangements.

6.  Amendment of the Plan. The Board or the Committee may from time to time
suspend, terminate, revise or amend the Plan or the terms of any grant in any
respect whatsoever, provided that, without the approval of the stockholders of
the Company, no such revision or amendment may increase the number of Shares
subject to the Plan, change the provisions of Section 5(a), (d) or (e) above, or
expand those eligible for grants under the Plan.

7. Miscellaneous.It is intended that any compensation, benefits or other
remuneration which is provided pursuant to or in connection with the Plan which
is considered to be nonqualified deferred compensation subject to Section 409A
of the Code shall be provided and paid in a manner, and at such time and in such
form, as complies with the applicable requirements of Section 409A of the Code
to avoid the unfavorable tax consequences provided therein for non-compliance.
The Committee is authorized to amend any Agreement and to amend or declare void
any election by a Participant as may be determined by it to be necessary or
appropriate to evidence or further evidence required compliance with Section
409A of the Code. The Plan shall be governed by the laws of Bermuda.

 

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