exv10w1






Exhibit 10.1




AMENDED AND RESTATED FIRST ACCEPTANCE CORPORATION

EMPLOYEE STOCK PURCHASE PLAN




Article I

INTRODUCTION



     1.1 Establishment of Plan. First Acceptance Corporation, a Delaware corporation (the
“Company”) with its principal offices located in Nashville, Tennessee, adopts the following
employee stock purchase plan for its eligible employees. This Plan shall be known as the Amended
and Restated First Acceptance Corporation Employee Stock Purchase Plan.



     1.2 Purpose. The purpose of this Plan is to provide an opportunity for eligible employees of
the Employer to become shareholders in the Company. It is believed that broad-based employee
participation in the ownership of the business will help to achieve the unity of purpose conducive
to the continued growth of the Employer and to the mutual benefit of its employees and
shareholders.



     1.3 Qualification. This Plan is intended to be an employee stock purchase plan which
qualifies for favorable Federal income tax treatment under Section 423 of the Code and is intended
to comply with the provisions thereof, including the requirement of Section 423(b)(5) of the Code
that all Employees granted options to purchase Stock under the Plan have the same rights and
privileges with respect to such options.



     1.4 Rule 16b-3 Compliance. This Plan is intended to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, and should be interpreted in accordance therewith.



Article II

DEFINITIONS




     As used herein, the following words and phrases shall have the meanings specified below:



     2.1 Board of Directors. The Board of Directors of the Company.



     2.2 Closing Market Price. The closing price of the Stock as reported in the consolidated
trading of the New York Stock Exchange or such market or exchange on which the Stock is then traded
on the date specified; provided that if there should be any material alteration in the present
system of reporting sales prices of such Stock, or if such Stock should no longer be listed on the
New York Stock Exchange or any other market or exchange, the market value of the Stock as of a
particular date shall be determined in such a method as shall be specified by the Plan
Administrator.



     2.3 Code. The Internal Revenue Code of 1986, as amended from time to time.



 









 





     2.4 Commencement Date. The first day of each Option Period. The first Commencement Date
shall be February 1, 2005. Thereafter, Option Periods shall begin on each July 1 and January 1.



     2.5 Contribution Account. The account established on behalf of a Participant to which shall
be credited the amount of the Participant’s contribution, pursuant to Article V.



     2.6 Effective Date. February 1, 2005.



     2.7 Employee. Any person employed by the Employer for a period of six (6) months.



     2.8 Employer. The Company and any corporation (i) which is a Subsidiary of the Company, (ii)
which is authorized by the Board of Directors to adopt this Plan with respect to its Employees, and
(iii) which adopts this Plan. The term “Employer” shall include any corporation into which an
Employer may be merged or consolidated or to which all or substantially all of its assets may be
transferred, provided that the surviving or transferee corporation would qualify as a subsidiary
under Section 2.18 hereof and that such corporation does not affirmatively disavow this Plan.



     2.9 Exercise Date. The last trading date of each Option Period on the New York Stock Exchange
or such market or exchange on which the Stock is then traded.



     2.10 Exercise Price. The price per share of the Stock to be charged to Participants at the
Exercise Date, as determined in Section 6.3.



     2.11 Five-Percent Shareholder. An Employee who owns five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or any Subsidiary thereof.
In determining this five percent test, shares of stock which the Employee may purchase under
outstanding options, as well as stock attributed to the Employee under Section 424(d) of the Code,
shall be treated as stock owned by the Employee in the numerator, but shares of stock which may be
issued under options shall not be counted in the total of outstanding shares in the denominator.



     2.12 Grant Date. The first trading date of each Option Period on the New York Stock Exchange
or such market or exchange on which the Stock is then traded.



     2.13 Option Period. The first Option Period shall begin on February 1, 2005 and end on June
30, 2005. Thereafter, Option Periods shall be successive six (6) month periods commencing on July
1 and ending on December 31 and commencing on January 1 and ending on June 30.



     2.14 Participant. Any Employee of an Employer who has met the conditions for eligibility as
provided in Article IV and who has elected to participate in the Plan.



     2.15 Plan. Amended and Restated First Acceptance Corporation Employee Stock Purchase Plan.



2









 





     2.16 Plan Administrator. The committee composed of one or more individuals to whom authority
is delegated by the Board of Directors to administer the Plan. The initial committee shall be the
Compensation Committee of the Board of Directors.



     2.17 Stock. Those shares of common stock of the Company which are reserved pursuant to
Section 6.1 for issuance upon the exercise of options granted under this Plan.



     2.18 Subsidiary. Any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of the option, each of the
corporations other than the last corporation in the chain owns stock possessing fifty percent (50%)
or more of the combined voting power of all classes of stock in one of the other corporations in
such chain.



Article III

SHAREHOLDER APPROVAL




     3.1 Shareholder Approval Required. This Plan must be approved by the shareholders of the
Company within the period beginning twelve (12) months before and ending twelve (12) months after
its adoption by the Board of Directors.



     3.2 Shareholder Approval for Certain Amendments. Without the approval of the shareholders of
the Company, no amendment to this Plan shall increase the number of shares reserved under the Plan,
other than as provided in Section 10.3. Approval by shareholders must occur within one (1) year of
such amendment or such amendment shall be void ab initio, comply with applicable provisions of the
corporate charter and bylaws of the Company, and comply with Delaware law prescribing the method
and degree of shareholder approval required for issuance of corporate stock or options.



Article IV

ELIGIBILITY AND PARTICIPATION




     4.1 Conditions. Each Employee shall become eligible to become a Participant on the
Commencement Date next following the date on which he is employed by the Employer for a period of
six (6) months. No Employee who is a Five-Percent Shareholder shall be eligible to participate in
the Plan. Notwithstanding anything to the contrary contained herein, no individual who is not an
Employee shall be granted an option to purchase Stock under the Plan.



     4.2 Application for Participation. Each Employee who becomes eligible to participate shall be
furnished a summary of the Plan and an enrollment form. If such Employee elects to participate
hereunder, he shall complete such form and file it with his Employer no later than fifteen (15)
days prior to the next Commencement Date. The completed enrollment form shall indicate the amount
of Employee contributions authorized by the Employee. If no new enrollment form is filed by a
Participant in advance of any Option Period after the initial Option Period, that Participant shall
be deemed to have elected to continue to participate with the same contribution previously elected
(subject to the limit of 15% of base pay). If any Employee does



3









 




not elect to participate in any given Option Period, he may elect to participate on any future
Commencement Date so long as he continues to meet the eligibility requirements.




     4.3 Date of Participation. All Employees who elect to participate shall be enrolled in the
Plan commencing with the first pay date after the Commencement Date following their submission of
the enrollment form. Upon becoming a Participant, the Participant shall be bound by the terms of
this Plan, including any amendments whenever made.



     4.4 Acquisition or Creation of Subsidiary. If the stock of a corporation is acquired by the
Company or another Employer so that the acquired corporation becomes a Subsidiary, or if a
Subsidiary is created, the Subsidiary in either case shall automatically become an Employer and its
Employees shall become eligible to participate in the Plan on the first Commencement Date after the
acquisition or creation of the Subsidiary, as the case may be. Notwithstanding the foregoing, the
Board of Directors may by appropriate resolutions (i) provide that the acquired or newly created
Subsidiary shall not be a participating Employer, (ii) specify that the acquired or newly created
Subsidiary will become a participating Employer on a Commencement Date other than the first
Commencement Date after the acquisition or creation, or (iii) attach any condition whatsoever to
eligibility of the employees of the acquired or newly created Subsidiary, except to the extent such
condition would not comply with Section 423 of the Code.



Article V

CONTRIBUTION ACCOUNT




     5.1 Employee Contributions. The enrollment form signed by each Participant shall authorize
the Employer to deduct from the Participant’s compensation an after-tax amount during each payroll
period not less than one percent (1%) nor more than an amount which is fifteen percent (15%) of the
Participant’s base pay on the Commencement Date. A Participant’s base pay shall be determined
before subtracting any elective deferrals to a qualified plan under Section 401(k) of the Code,
salary reduction contributions to a cafeteria plan under Section 125 of the Code or elective
deferrals to a nonqualified deferred compensation plan. The dollar amount deducted each payday
shall be credited to the Participant’s Contribution Account. Participant contributions will not be
permitted to commence at any time during the Option Period other than on the Commencement Date.
Unless otherwise determined by the Plan Administrator with respect to an Option Period, no interest
will accrue on any contributions or on the balance in a Participant’s Contribution Account.



     5.2 Modification of Contribution Rate. No change shall be permitted in a Participant’s amount
of withholding except upon a Commencement Date, and then only if the Participant files a new
enrollment form with the Employer at least fifteen (15) days in advance of the Commencement Date
designating the desired withholding rate. Notwithstanding the foregoing, a Participant may notify
the Employer at any time (except during the periods from June 21 through June 30 and December 22
through December 31) that he wishes to discontinue his contributions. This notice shall be in
writing and on such forms as provided by the Employer and shall become effective as of a date
provided on the form not more than fifteen (15) days following its receipt by the Employer. The
Participant shall become eligible to recommence contributions on the next Commencement Date.



4









 





     5.3 Withdrawal of Contributions. A Participant may elect to withdraw the balance of his
Contribution Account at any time during the Option Period prior to the Exercise Date (except during
the periods from June 21 through June 30 and December 22 through December 31). The option granted
to a Participant shall be canceled upon his withdrawal of the balance in his Contribution Account.
This election to withdraw must be in writing on such forms as may be provided by the Employer. If
contributions are withdrawn in this manner, further contributions during that Option Period will be
discontinued in the same manner as provided in Section 5.2, and the Participant shall become
eligible to recommence contributions on the next Commencement Date.



     5.4 Limitations on Contributions. During each Option Period, the total contributions by a
Participant to his Contribution Account shall not exceed fifteen percent (15%) of the Participant’s
base pay for the Option Period. If a Participant’s total contributions should exceed this limit,
the excess shall be returned to the Participant after the end of the Option Period, without
interest.



Article VI

ISSUANCE AND EXERCISE OF OPTIONS




     6.1 Reserved Shares of Stock. The Company shall reserve four hundred thousand (400,000)
shares of Stock for issuance upon exercise of the options granted under this Plan.



     6.2 Issuance of Options. On the Grant Date each Participant shall be deemed to receive an
option to purchase Stock with the number of shares and Exercise Price determined as provided in
this Article VI, subject to the maximum limits specified in Section 6.6(a). All such options shall
be automatically exercised on the following Exercise Date, except for options which are canceled
when a Participant withdraws the balance of his Contribution Account or which are otherwise
terminated under the provisions of this Plan.



     6.3 Determination of Exercise Price. The Exercise Price of the options granted under this
Plan for any Option Period shall be the lesser of:




     (i) one hundred percent (100%) of the Closing Market Price of the Stock on the Exercise
Date; or




     (ii) one hundred percent (100%) of the Closing Market Price of the Stock on the Grant
Date.



     6.4 Purchase of Stock. On an Exercise Date, all options shall be automatically exercised,
except that the options of a Participant who has terminated employment pursuant to Section 7.1 or
who has withdrawn all his contributions shall expire. The Contribution Account of each Participant
shall be used to purchase the maximum number of shares of Stock, determined up to three decimal
places, determined by dividing the Exercise Price into the balance of the Participant’s
Contribution Account.



5









 





     6.5 Terms of Options. Options granted under this Plan shall be subject to such amendment or
modification as the Employer shall deem necessary to comply with any applicable law or regulation,
including but not limited to Section 423 of the Code, and shall contain such other provisions as
the Employer shall from time to time approve and deem necessary; provided, however, that any such
provisions shall comply with Section 423 of the Code.



     6.6 Limitations on Options. The options granted hereunder are subject to the following
limitations:




     (a) The maximum number of shares of Stock which may be purchased by any Participant on
an Exercise Date shall be three thousand (3,000) shares. This maximum number of shares
shall be adjusted upon the occurrence of an event described in Section 10.3.




     (b) No Participant shall be permitted to accrue the right to purchase during any
calendar year Stock under this Plan (or any other Plan of the Employer or a Subsidiary which
is qualified under Section 423 of the Code) having a market value of greater than
twenty-five thousand dollars ($25,000.00) (as determined on the Grant Date for the Option
Period during which each such share of Stock is purchased) as provided in Section 423(b)(8)
of the Code.




     (c) No option may be granted to a Participant if the Participant immediately after the
option is granted would be a Five-Percent Shareholder.




     (d) No Participant may assign, transfer or otherwise alienate any options granted to
him under this Plan, otherwise than by will or the laws of descent and distribution, and
such options must be exercised during the Participant’s lifetime only by him.



     6.7 Pro-Rata Reduction of Optioned Stock. If the total number of shares of Stock to be
purchased under option by all Participants on an Exercise Date exceeds the number of shares of
Stock remaining authorized for issuance under Section 6.1, a pro-rata allocation of the shares of
Stock available for issuance will be made among Participants in proportion to their respective
Contribution Account balances on the Exercise Date, and any money remaining in the Contribution
Accounts shall be returned to the Participants.



     6.8 State Securities Laws. Notwithstanding anything to the contrary contained herein, the
Company shall not be obligated to issue shares of Stock to any Participant if to do so would
violate any State securities law applicable to the sale of Stock to such Participant. In the event
that the Company refrains from issuing shares of Stock to any Participant in reliance on this
Section, the Company shall return to such Participant the amount in such Participant’s Contribution
Account that would otherwise have been applied to the purchase of Stock.



6









 





Article VII

TERMINATION OF PARTICIPATION




     7.1 Termination of Employment. Any Employee whose employment with the Employer is terminated
during the Option Period prior to the Exercise Date for any reason except death, disability or
retirement at or after age 65 shall cease being a Participant immediately. The balance of that
Participant’s Contribution Account shall be paid to such Participant as soon as practical after his
termination. The option granted to such Participant shall be null and void.



     7.2 Death. If a Participant should die while employed by the Employer, no further
contributions on behalf of the deceased Participant shall be made. The legal representative of the
deceased Participant may elect to withdraw the balance in said Participant’s Contribution Account
by notifying the Employer in writing prior to the Exercise Date in the Option Period during which
the Participant died (except during the periods from June 21 through June 30 and December 22
through December 31). In the event no election to withdraw is made on or before the June 20 or
December 21 preceding the Exercise Date, the balance accumulated in the deceased Participant’s
Contribution Account shall be used to purchase shares of Stock in accordance with Section 6.4.



     7.3 Retirement. If a Participant should retire from the employment of the Employer at or
after attaining age 65, no further contributions on behalf of the retired Participant shall be
made. The Participant may elect to withdraw the balance in his Contribution Account by notifying
the Employer in writing prior to the Exercise Date in the Option Period during which the
Participant retired (except during the periods from June 21 through June 30 and December 22 through
December 31). In the event no election to withdraw is made on or before the June 20 or December 21
preceding the Exercise Date, the balance accumulated in the retired Participant’s Contribution
Account shall be used to purchase shares of Stock in accordance with Section 6.4.



     7.4 Disability. If a Participant should terminate employment with the Employer on account of
disability, as determined by reference to the definition of “disability” in the Employer’s
long-term disability plan, no further contributions on behalf of the disabled Participant shall be
made. The Participant may elect to withdraw the balance in his Contribution Account by notifying
the Employer in writing prior to the Exercise Date in the Option Period during which the
Participant became disabled (except during the periods from June 21 through June 30 and December 22
through December 31). In the event no election to withdraw is made on or before the June 20 or
December 21 preceding the Exercise Date, the balance accumulated in the disabled Participant’s
Contribution Account shall be used to purchase shares of Stock in accordance with Section 6.4.



Article VIII

OWNERSHIP OF STOCK




     8.1 Stock Certificates. As soon as practical after the Exercise Date, the Plan Administrator
will, in its sole discretion, either credit a share account maintained for the benefit of each
Participant or issue certificates to each Participant for the number of shares of Stock purchased
under the Plan by such Participant during an Option Period. Such determination by



7









 




the Plan Administrator shall apply equally to all shares of Stock purchased during the Option
Period. Certificates may be issued, at the request of a Participant, in the name of the
Participant, jointly in the name of the Participant and a member of the Participant’s family, to
the Participant as custodian for the Participant’s child under the Gift to Minors Act, or to the
legal representative of a deceased Participant. No certificate shall be issued for fractional
shares of Stock, and any such fractional share shall be converted into cash based upon the Closing
Market Price on the date a certificate is issued to the Participant.




     8.2 Premature Sale of Stock. If a Participant (or former Participant) sells or otherwise
disposes of any shares of Stock obtained under this Plan:




     (i) prior to two (2) years after the Grant Date of the option under which such shares
were obtained, or




     (ii) prior to one (1) year after the Exercise Date on which such shares were obtained,


that Participant (or former Participant) must notify the Employer immediately in writing concerning
such disposition.




     8.3 Restrictions on Sale. The Plan Administrator may, in its sole discretion, place
restrictions on the sale or transfer of shares of Stock purchased under the Plan during any Option
Period by notice to all Participants of the nature of such restrictions given in advance of the
Commencement Date of such Option Period. The restrictions may prevent the sale, transfer or other
disposition of any shares of Stock purchased during the Option Period for a period of up to two
years from the Grant Date, subject to such exceptions as the Plan Administrator may determine
(e.g., termination of employment with the Employer). If certificates are issued pursuant
to Section 8.1 for shares that are restricted, the certificates shall contain an appropriate legend
disclosing the nature and duration of the restriction. Any such restrictions and exceptions
determined by the Plan Administrator shall be applicable equally to all shares of Stock purchased
during the Option Period for which the restrictions are first applicable. In addition, such
restrictions and exceptions shall remain applicable during subsequent Option Periods unless
otherwise determined by the Plan Administrator. If the Plan Administrator should change or
eliminate the restrictions for a subsequent Option Period, notice of such action shall be given to
all Participants.



     8.4 Transfer of Ownership. A Participant who purchases shares of Stock under this Plan shall
be transferred at such time substantially all of the rights of ownership of such shares of Stock in
accordance with the Treasury regulations promulgated under Section 423 of the Code as in effect on
the Effective Date. Such rights of ownership shall include the right to vote, the right to receive
declared dividends, the right to share in the assets of the Employer in the event of liquidation,
the right to inspect the Employer’s books and the right to pledge or sell such Stock subject to the
restrictions in the Plan.



8









 





Article IX

ADMINISTRATION AND AMENDMENT




     9.1 Administration. The Plan Administrator shall (i) administer the Plan, (ii) keep records
of the Contribution Account balance of each Participant, (iii) keep records of the share account
balance of each Participant, (iv) interpret the Plan, (v) determine all questions arising as to
eligibility to participate, amount of contributions permitted, determination of the Exercise Price,
and all other matters of administration, and (vi) determine whether to place restrictions on the
sale and transfer of Stock and the nature of such restrictions, as provided in Section 8.3. The
Plan Administrator shall have such duties, powers and discretionary authority as may be necessary
to discharge the foregoing duties, and may delegate any or all of the foregoing duties to any
individual or individuals (including officers or other Employees who are Participants). The Board
of Directors shall have the right at any time and without notice to remove or replace any
individual or committee of individuals serving as Plan Administrator. All determinations by the
Plan Administrator shall be conclusive and binding on all persons. Any rules, regulations, or
procedures that may be necessary for the proper administration or functioning of this Plan that are
not covered in this Plan document shall be promulgated and adopted by the Plan Administrator.



     9.2 Amendment. The Board of Directors of the Employer may at any time amend the Plan in any
respect, including termination of the Plan, without notice to Participants. If the Plan is
terminated, all options outstanding at the time of termination shall become null and void and the
balance in each Participant’s Contribution Account shall be paid to that Participant.
Notwithstanding the foregoing, no amendment of the Plan as described in Section 3.2 shall become
effective until and unless such amendment is approved by the shareholders of the Company.



Article X

MISCELLANEOUS




     10.1 Expenses. The expenses of administering the Plan shall be paid by the Participants
except as determined by the Plan Administrator in its sole discretion.



     10.2 No Contract of Employment. Nothing in this Plan shall be construed to constitute a
contract of employment between an Employer and any Employee or to be an inducement for the
employment of any Employee. Nothing contained in this Plan shall be deemed to give any Employee
the right to be retained in the service of an Employer or to interfere with the right of an
Employer to discharge any Employee at any time, with or without cause, regardless of the effect
which such discharge may have upon him as a Participant of the Plan.



     10.3 Adjustment Upon Changes in Stock. The aggregate number of shares of Stock reserved for
purchase under the Plan as provided in Section 6.1, and the calculation of the Exercise Price as
provided in Section 6.3, shall be adjusted by the Plan Administrator (subject to direction by the
Board of Directors) in an equitable manner to reflect changes in the capitalization of the Company,
including, but not limited to, such changes as result from merger,



9









 




consolidation, reorganization, recapitalization, stock dividend, dividend in property other than
cash, stock split, combination of shares, exchange of shares and change in corporate structure. If
any adjustment under this Section 10.3 would create a fractional share of Stock or a right to
acquire a fractional share of Stock, such fractional share shall be disregarded and the number of
shares available under the Plan and the number of shares covered under any options granted pursuant
to the Plan shall be the next lower number of shares, rounding all fractions downward.




     10.4 Employer’s Rights. The rights and powers of any Employer shall not be affected in any
way by its participation in this Plan, including but not limited to the right or power of any
Employer to make adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all
or any part of its business or assets.



     10.5 Limit on Liability. No liability whatever shall attach to or be incurred by any past,
present or future shareholders, officers or directors, as such, of the Company or any Employer,
under or by reason of any of the terms, conditions or agreements contained in this Plan or implied
therefrom, and any and all liabilities of any and all rights and claims against the Company, an
Employer, or any shareholder, officer or director as such, whether arising at common law or in
equity or created by statute or constitution or otherwise, pertaining to this Plan, are hereby
expressly waived and released by every Participant as a part of the consideration for any benefits
under this Plan; provided, however, no waiver shall occur, solely by reason of this Section 10.5,
of any right which is not susceptible to advance waiver under applicable law.



     10.6 Gender and Number. For the purposes of the Plan, unless the contrary is clearly
indicated, the use of the masculine gender shall include the feminine, and the singular number
shall include the plural and vice versa.



     10.7 Governing Law. The validity, construction, interpretation, administration and effect of
this Plan, and any rules or regulations promulgated hereunder, including all rights or privileges
of any Participants hereunder, shall be governed exclusively by and in accordance with the laws of
the State of Delaware, except that the Plan shall be construed to the maximum extent possible to
comply with Section 423 of the Code and the Treasury regulations promulgated thereunder.



     10.8 Headings. Any headings or subheadings in this Plan are inserted for convenience of
reference only and are to be ignored in the construction of any provisions hereof.



     10.9 Severability. If any provision of this Plan is held by a court to be unenforceable or is
deemed invalid for any reason, then such provision shall be deemed inapplicable and omitted, but
all other provisions of this Plan shall be deemed valid and enforceable to the full extent possible
under applicable law.




10