Document:

EXHIBIT 10.18
	 

	 
		

	 

	 
		GREENLIGHT CAPITAL RE, LTD.
	 

	 
		SECOND AMENDED AND RESTATED
	 

	 
		2004 STOCK INCENTIVE PLAN
	 

	 
		

	 

	 
		1.
	 

	 
		Purposes.
	 

	 
		(a)
	 

	 
		Eligible Award Recipients.  The persons eligible to receive
		Awards are the Employees, Directors and Consultants of the Company and its
		Affiliates.  
	 

	 
		(b)
	 

	 
		Available Awards.  The purpose of the Plan is to provide a
		means by which eligible Employees, Directors and Consultants may be given an
		opportunity to benefit from increases in value of the Shares through the
		granting of the following awards:  (i) stock options, (ii) stock bonuses
		and (iii) restricted stock (collectively, “Awards”).  The Plan
		was initially adopted on August 12, 2004, was initially amended and restated
		effective as of August 15, 2005 and was further amended and restated effective
		as of February 14, 2007.
	 

	 
		(c)
	 

	 
		General Purpose.  The Company, by means of the Plan, seeks to
		retain the services of the group of persons eligible to receive Awards, to
		secure and retain the services of new members of this group and to provide
		incentives for such persons to exert maximum efforts for the success of the
		Company and its Affiliates.
	 

	 
		2.
	 

	 
		Definitions.
	 

	 
		(a)
	 

	 
		“Affiliate” means any subsidiary of the
		Company or any entity selected by the Board to participate in this Plan.
	 

	 
		(b)
	 

	 
		“Agreement” means a written agreement
		between the Company and a Participant evidencing the terms and conditions of an
		individual Award.  Each Award Agreement shall be subject to the terms and
		conditions of the Plan (and in the event of any inconsistency between the terms
		of an Agreement and the Plan, the terms of the Plan will override).
	 

	 
		(c)
	 

	 
		“Award” has the meaning set forth in
		Section 1(b) of the Plan.
	 

	 
		(d)
	 

	 
		“Board” means the board of directors of
		the Company.
	 

	 
		(e)
	 

	 
		“Cause” means, if the Participant is a party to an
		employment agreement or other agreement for services with the Company or its
		Affiliates and such agreement provides for a definition of Cause, the
		definition therein contained, or, if no such agreement or definition exists, it
		shall mean a Participant’s (i) material breach of any of such
		Participant’s covenants or obligations under any applicable employment
		agreement or agreement for services or non-compete agreement;
		(ii) continued failure after written notice from the Company or any
		applicable Affiliate to satisfactorily perform assigned job responsibilities or
		to follow the reasonable instructions of such Participant’s superiors,
		including, without limitation, the Board; (iii) commission of a crime
		constituting a criminal offense or felony (or its equivalent) under the laws of
		any jurisdiction in which the Company or any applicable Affiliate conducts its
		business or other crime involving moral turpitude; or (iv) material
		violation of any material law or
	 

	 
		
 

	 

	 
		2
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		regulation (including, without limitation, the Foreign Corrupt Practices
		Act or any similar non-U.S. statute) or any policy or code of conduct adopted
		by the Company or engaging in any other form of misconduct which, if it were
		made public, could reasonably be expected to adversely affect the business
		reputation or affairs of the Company or of an Affiliate.  The Board or
		Committee, in good faith, shall determine all matters and questions relating to
		whether a Participant has been discharged for Cause.  
	 

	 
		(f)
	 

	 
		“Change in Control” means the occurrence of one of the
		following events:
	 

	 
		(i)
	 

	 
		any “person” or “group” becomes the “beneficial
		owner” (as such terms are used in Rule 13d-3 promulgated under the
		U.S. Securities Exchange Act of 1934, as amended, except that a person or group
		shall be deemed to have “beneficial ownership” of all securities that
		such person or group has the right to acquire, whether such right is
		exercisable immediately or only after the passage of time), directly or
		indirectly, of 51% or more of the Shares (measured by voting power rather than
		number of shares); provided, however, that an event described in
		this paragraph (i) shall not be deemed to be a Change in Control if any of
		following becomes such a beneficial owner: (A) any tax-qualified, broad-based
		employee benefit plan sponsored or maintained by the Company or any
		majority-owned subsidiary, (B) any Company underwriter temporarily holding
		securities pursuant to an offering of such securities, or (C) any person or
		group pursuant to a Non-Qualifying Transaction (as defined in paragraph (ii));
		or
	 

	 
		(ii)
	 

	 
		the Company consolidates or merges with or into any other person or group
		or sells, assigns, conveys, transfers, leases or otherwise disposes of all or
		substantially all of its assets and the assets of the Company’s direct and
		indirect subsidiaries (on a consolidated basis) to any other person or group,
		in either one transaction or a series of related transactions which occur
		within six months, other than a consolidation or merger or disposition of
		assets: (A) of or by the Company into or to a 100% owned subsidiary of the
		Company, or (B) pursuant to a transaction in which the outstanding Shares
		are changed into or exchanged for securities or other property with the effect
		that the beneficial owners of the outstanding Shares immediately prior to such
		transaction, beneficially own, directly or indirectly, at least a majority of
		the Shares (measured by voting power rather than number of shares) of the
		surviving corporation or the person or group to whom the Company’s assets
		are transferred immediately following such transaction (any transaction which
		satisfies the criteria specified in (A) or (B) above shall be deemed to be a
		“Non-Qualifying Transaction”). 
	 

	 
		(g)
	 

	 
		“Code” means the U.S. Internal Revenue
		Code of 1986, as amended, and the regulations promulgated thereunder.
	 

	 
		(h)
	 

	 
		“Committee” means the Board, unless and
		until a committee of one or more members of the Board is appointed by the Board
		in accordance with Section 3(c) of the Plan.
	 

	 
		(i)
	 

	 
		“Company” means Greenlight Capital Re,
		Ltd., its successors and assigns.
	 

	 
		(j)
	 

	 
		“Consultant” means any person, including
		an advisor, who is engaged by the Company or an Affiliate to render consulting
		or advisory services and who is not either an Employee or Director.
	 

	 
		
 

	 

	 
		

	 

	 
		3
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		(k)
	 

	 
		“Continuous Service” means that the
		Participant’s service with the Company or an Affiliate, whether as an
		Employee, Director or Consultant, has not been interrupted or terminated.
		 The Participant’s Continuous Service shall not be deemed to have
		terminated merely because of a change in the capacity in which the Participant
		renders service to the Company or an Affiliate as an Employee, Consultant or
		Director or a change in the entity for which the Participant renders such
		service, provided that there is no interruption or termination of the
		Participant’s Continuous Service.  For example, a change in status
		from an Employee of the Company to a Consultant of an Affiliate or a Director
		will not constitute an interruption of Continuous Service.  The Board or
		the Committee, in its sole discretion, may determine whether Continuous Service
		shall be considered interrupted.
	 

	 
		(l)
	 

	 
		“Covered Employee” means the chief
		executive officer and the four (4) other highest compensated officers of the
		Company for whom total compensation is required to be reported to shareholders
		under the Exchange Act, as determined for purposes of Section 162(m) of the
		Code.
	 

	 
		(m)
	 

	 
		“Director” means a member of the Board or
		any member of the board of directors of any Affiliate.
	 

	 
		(n)
	 

	 
		“Disability” means, if the Participant is
		a party to an employment agreement or other agreement for services with the
		Company or its Affiliates and such agreement provides for a definition of
		Disability, the definition therein contained, or, if no such agreement or
		definition exists, it shall mean the failure of any Participant to perform his
		or her duties due to physical or mental incapacity as determined by the
		Committee.
	 

	 
		(o)
	 

	 
		“Effective Date” shall mean August 12, 2004.
	 

	 
		(p)
	 

	 
		“Employee” means any person employed by
		the Company or an Affiliate.  
	 

	 
		(q)
	 

	 
		“Event” has the meaning set forth in Section 11(a) of
		the Plan.
	 

	 
		(r)
	 

	 
		“Exchange Act” means the U.S. Securities
		Exchange Act of 1934, as amended.
	 

	 
		(s)
	 

	 
		“Fair Market Value” per share as of a
		particular date shall mean the last reported sale price (on the day immediately
		preceding such date) of the Shares on any national securities exchange or
		national market system upon which price quotations for the Company’s
		Shares are regularly available; provided, however, that at any
		time that the Shares of the Company are not traded on a public exchange, Fair
		Market Value per share shall mean, as of any date, except as may otherwise be
		provided in an Award Agreement, the fair market value on such date as
		determined in good faith by the Board.
	 

	 
		(t)
	 

	 
		“Foreign Corrupt Practices Act” means the U.S. Foreign
		Corrupt Practices Act.
	 

	 
		(u)
	 

	 
		“Initial Public Offering” means the consummation of the
		first public offering of the Shares pursuant to a registration statement filed
		with, and declared effective by, the applicable regulatory and/or governing
		body.
	 

	 
		
 

	 

	 
		

	 

	 
		4
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		(v)
	 

	 
		“Non-Employee Director” means a Director who serves on
		the Board and who is a “non-employee director” within the meaning of
		Rule 16b-3 and who is also an “outside director” within the meaning
		of Section 162(m) of the Code.
	 

	 
		(w)
	 

	 
		“Officer” means a person who is an officer
		of the Company within the meaning of Section 16 of the Exchange Act.
	 

	 
		(x)
	 

	 
		“Option” means a non-qualified stock
		option to purchase Shares which is not intended to be an “incentive stock
		option” within the meaning of Section 422 of the Code.
	 

	 
		(y)
	 

	 
		“Option Agreement” means a written
		agreement between the Company and an Optionee evidencing the terms and
		conditions of an individual Option grant.  Option Agreements shall be
		subject to the terms and conditions of the Plan and need not be identical (and
		may include a term to the effect that, in the event of any inconsistency
		between the terms of an Option Agreement and the Plan, the terms of the Plan
		will prevail);
	 

	 
		(z)
	 

	 
		“Optionee” means a person holding an
		Option granted pursuant to the Plan.
	 

	 
		(aa)
	 

	 
		“Participant” means a person holding an
		Award granted pursuant to the Plan.
	 

	 
		(bb)
	 

	 
		“Plan” means the Greenlight Capital Re,
		Ltd. Amended and Restated 2004 Stock Incentive Plan.
	 

	 
		(cc)
	 

	 
		 “Rule 16b-3” means Rule 16b-3
		promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect
		from time to time.
	 

	 
		(dd)
	 

	 
		“Sarbanes-Oxley Act of 2002” means that certain U.S.
		federal legislation adopted on July 30, 2002, as amended or supplemented from
		time to time, or any U.S. federal statute or regulation adopted by the U.S.
		Securities and Exchange Commission in effect that has replaced, amended or
		supplemented or will replace, amend or supplement such statute, and any
		reference in this Plan to a provision of the Sarbanes-Oxley Act of 2002 or a
		rule or regulation promulgated thereunder or in connection therewith means such
		provision, rule or regulation as amended or supplemented from time to time or
		any provision of a federal law, or any federal rule or regulation, from time to
		time in effect that has replaced such provision, rule or regulation.
	 

	 
		(ee)
	 

	 
		“SEC” means the U.S. Securities and
		Exchange Commission.
	 

	 
		(ff)
	 

	 
		“Securities Act” means the U.S. Securities
		Act of 1933, as amended.
	 

	 
		(gg)
	 

	 
		“Shares” means the Class A ordinary shares
		of the Company, $0.10 par value per share.
	 

	 
		3.
	 

	 
		Administration.
	 

	 
		(a)
	 

	 
		Administration.  The Plan shall be administered by the Board
		and, if and when appointed, the Committee.
	 

	 
		
 

	 

	 
		

	 

	 
		5
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		(b)
	 

	 
		Powers of Committee.  The Committee shall have the power,
		subject to, and within the limitations of, the express provisions of the Plan:
	 

	 
		(i)
	 

	 
		To determine from time to time which of the persons eligible under the
		Plan shall be granted Awards; when and how each Award shall be granted; what
		type or combination of types of Awards shall be granted; the provisions of each
		Award granted (which need not be identical), including the time or times when a
		person shall be permitted to receive Shares pursuant to an Award; and the
		number of Shares with respect to which an Award shall be granted to each such
		person.
	 

	 
		(ii)
	 

	 
		To construe and interpret the Plan and Awards granted under it, and to
		establish, amend and revoke rules and regulations for its administration.
		 The Committee, in the exercise of this power, may correct any defect,
		omission or inconsistency in the Plan or in any Award Agreement, in a manner
		and to the extent it shall deem necessary or expedient to make the Plan fully
		effective, but it may not do so to the extent that such correction materially
		prejudices the recipients of any Awards.  The Committee shall expressly
		have the authority to adopt any modifications, procedures and sub-plans as may
		be necessary or desirable to comply with provisions of the law of foreign
		countries in which the Company or its Affiliates may operate to assure the
		viability of the benefits from Awards granted to Participants employed or
		providing services in such countries and to meet the objectives of the Plan.
		 If, in connection with the adoption of a sub-plan of the Plan, approval
		is required from any applicable agency of any other country or jurisdiction,
		the Committee shall have the authority to seek such approval and the adoption
		of the sub-plan shall be conditioned on such approval being obtained.
	 

	 
		(iii)
	 

	 
		Generally, to exercise such powers and to perform such acts as the Board
		deems necessary or expedient to promote the best interests of the Company which
		are not in conflict with the provisions of the Plan.
	 

	 
		(c)
	 

	 
		Delegation to Committee.  The entire Board may comprise the
		Committee or the Board may delegate administration of the Plan to a Committee
		which, if required under applicable law, shall consist of two (2) or more
		Non-Employee Directors.  In such event, the term “Committee”
		shall apply to any person or persons to whom such authority has been delegated.
		 Furthermore, unless a Committee has been appointed by the Board, any
		reference to the Committee in the Plan shall mean the Board.  If
		administration is delegated to a Committee, the Committee shall have, in
		connection with the administration of the Plan, the powers theretofore
		possessed by the Board (and references in this Plan to the Board shall
		thereafter be to the Committee) subject, however, to such resolutions, not
		inconsistent with the provisions of the Plan, as may be adopted from time to
		time by the Board.  The Board may abolish the Committee at any time and
		re-vest in the Board the administration of the Plan.  The Board may also
		(A) delegate to a committee of one or more members of the Board who are not
		“outside directors” within the meaning of Section 162(m) of the Code
		the authority to grant Awards to eligible persons who are either (1) not then
		Covered Employees and are not expected to be Covered Employees at the time of
		recognition of income resulting from such Award or (2) not persons with respect
		to whom the Company wishes to comply with Section 162(m) of the Code or (B)
		delegate to a committee of one or more members of the Board who are not
		“non-employee directors” within the meaning of Rule 16b-3 the
		authority to grant Awards to eligible persons who are not then subject to
		Section 16 of the Exchange Act.
	 

	 
		
 

	 

	 
		

	 

	 
		6
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		(d)
	 

	 
		Effect of Committee’s Decision.  All determinations,
		interpretations and constructions made by the Committee in good faith shall not
		be subject to review by any person and shall be final, binding and conclusive
		on all persons.  Members of the Committee and any officer or employee of
		the Company or any Affiliate acting at the direction of the Committee shall (as
		far as permitted by applicable law) not be personally liable for any action or
		determination taken or made in good faith with respect to the Plan, and shall,
		to the extent permitted by law, be fully indemnified by the Company with
		respect to any such action or determination.
	 

	 
		4.
	 

	 
		Shares Subject to the Plan.
	 

	 
		Subject to the provisions of Section 11, the total number of Shares that
		shall be available for the grant of Awards under the Plan shall not exceed in
		the aggregate 2,000,000 Shares.  If any Award shall for any reason expire
		or otherwise terminate, in whole or in part, without having been exercised or
		realized in full, the Shares not acquired under such Award shall again become
		available to be made subject to Awards under the Plan.  The Shares subject
		to the Plan may be authorized but unissued shares or shares reacquired by the
		Company in any manner.
	 

	 
		5.
	 

	 
		Eligibility.
	 

	 
		(a)
	 

	 
		Eligibility for Options.  Options may be granted to
		Employees, Directors and Consultants.
	 

	 
		(b)
	 

	 
		Section 162(m) Limitation.  Subject to the provisions of
		Section 11, no Employee shall be eligible to be granted Options to acquire more
		than 500,000 Shares during any calendar year.  
	 

	 
		(c)
	 

	 
		Consultants.
	 

	 
		(i)
	 

	 
		At any time that the Shares are not publicly traded, a Consultant shall
		not be eligible for the grant of an Award if, at the time of grant, either the
		offer or the sale of the Company’s securities to such Consultant is not
		exempt under Rule 701 of the Securities Act (“Rule
		701”) because of the nature of the services that the Consultant is
		providing to the Company, or because the Consultant is not a natural person, or
		as otherwise provided by Rule 701, unless the Committee determines that such
		grant need not comply with the requirements of Rule 701 and will satisfy
		another exemption under the Securities Act as well as comply with the
		securities laws of all other relevant jurisdictions.  
	 

	 
		(ii)
	 

	 
		At any time that Shares are publicly traded, a Consultant shall not be
		eligible for the grant of an Award if, at the time of grant, a Form S-8
		Registration Statement under the Securities Act (“Form
		S-8”) is not available to register either the offer or the sale of
		the Company’s securities to such Consultant because of the nature of the
		services that the Consultant is providing to the Company, or because the
		Consultant is not a natural person, or as otherwise provided by the rules
		governing the use of Form S-8, unless the Company determines both (A) that such
		grant either (1) shall be registered in another manner under the Securities Act
		(e.g., on a Form S-3 Registration Statement) or (2) does not require
		registration under the
	 

	 
		
 

	 

	 
		

	 

	 
		7
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		Securities Act in order to comply with the requirements of the Securities
		Act, if applicable, and (B) that such grant complies with the securities laws
		of all other relevant jurisdictions.
	 

	 
		(iii)
	 

	 
		Rule 701 and Form S-8 generally are available to Consultants and advisors
		only if (a) they are natural persons; (b) they provide bona fide services to
		the issuer, its parent, its majority-owned subsidiaries or majority-owned
		subsidiaries of the issuer’s parent; and (c) the services are not in
		connection with the offer or sale of securities in a capital-raising
		transaction, and do not directly or indirectly promote or maintain a market for
		the issuer’s securities.
	 

	 
		6.
	 

	 
		Option Provisions.
	 

	 
		Each Option shall be in such form and shall contain such terms and
		conditions as the Committee shall deem appropriate.  The provisions of
		separate Options need not be identical, but each Option shall include (through
		incorporation of provisions hereof by reference in the Option or otherwise) the
		substance of each of the following provisions:
	 

	 
		(a)
	 

	 
		Term.  No Option shall be exercisable after the expiration of
		ten (10) years from the date it was granted.
	 

	 
		(b)
	 

	 
		Exercise Price of an Option.  The exercise price of each
		Option shall be established by the Committee but shall be not less than one
		hundred percent (100%) of the Fair Market Value of the Shares subject to the
		Option on the date the Option is granted (and not less than the par value of
		the Shares).
	 

	 
		(c)
	 

	 
		Consideration.  The purchase price of Shares acquired
		pursuant to an Option shall be paid, to the extent permitted by applicable
		statutes and regulations, either (i) in cash or cashiers’ check at the
		time the Option is exercised or (ii) at the discretion of the Committee at the
		time of the grant of the Option or subsequently (A) by delivery to the Company
		of other Shares having an aggregate Fair Market Value equal to the exercise
		price to be satisfied by their delivery or (B) in any other form of legal
		consideration that may be acceptable to the Committee, including, without
		limitation, a “cashless” exercise program established with a broker
		that does not violate the Sarbanes-Oxley Act of 2002.  Unless otherwise
		specifically provided in the Option, the purchase price of Shares acquired
		pursuant to an Option that is paid by delivery to the Company of other Shares
		acquired, directly or indirectly from the Company, shall be paid only by Shares
		that have been held by the Optionee for more than six (6) months (or such
		longer or shorter period of time required to avoid a charge to earnings for
		financial accounting purposes).
	 

	 
		(d)
	 

	 
		Transferability of Options.  An Option shall be transferable
		to the extent provided in the Option Agreement.  If the Option does not
		provide for transferability, then the Option shall not be transferable except
		by will or by the laws of descent and distribution and shall be exercisable
		during the lifetime of the Optionee only by the Optionee.  Notwithstanding
		the foregoing, the Optionee may, by delivering written notice to the Company,
		in a form satisfactory to the Company, designate a third party who, in the
		event of the death or incapacity of the Optionee, shall thereafter be entitled
		to exercise the Option.
	 

	 
		
 

	 

	 
		

	 

	 
		8
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		(e)
	 

	 
		Vesting.  The total number of Shares subject to an Option
		may, but need not, vest and become exercisable in periodic installments that
		may, but need not, be equal.  The Option may be subject to such other
		terms and conditions on the time or times when it may be exercised (which may
		be based on performance or other criteria) as the Committee may deem
		appropriate.  The vesting provisions of individual Options may vary.
		 The provisions of this Section 6(e) are subject to any Option provisions
		governing the minimum number of Shares as to which an Option may be exercised.
		 No Option may be exercised for a fraction of a Share.
	 

	 
		(f)
	 

	 
		Termination of Continuous Service. Unless otherwise provided in an
		Option Agreement, in the event an Optionee’s Continuous Service terminates
		(other than upon the Optionee’s death or Disability), all unvested Options
		shall terminate and the Optionee may exercise his or her vested Options, but
		only within such period of time ending on the earlier of (i) the date
		three (3) months following the termination of the Optionee’s Continuous
		Service, or (ii) the expiration of the term of the Option as set forth in the
		Option Agreement; provided, that, if the termination of
		Continuous Service is by the Company for Cause, all outstanding Options
		(whether or not vested) shall immediately terminate and cease to be
		exercisable.  If, after termination, the Optionee does not exercise his or
		her Option within the time specified in the Option Agreement, the Option shall
		terminate.
	 

	 
		(g)
	 

	 
		Disability of Optionee.  Unless otherwise provided in an
		Option Agreement, in the event that an Optionee’s Continuous Service
		terminates as a result of the Optionee’s Disability, all unvested Options
		shall terminate and the Optionee (or a person designated to exercise the Option
		upon the Optionee’s Disability pursuant to Section 6(d)) may exercise his
		or her vested Options, but only within such period of time ending on the
		earlier of (i) the date twelve (12) months following such termination or (ii)
		the expiration of the term of the Option as set forth in the Option Agreement.
		 If, after termination, the Optionee does not exercise his or her Option
		within the time specified herein, the Option shall terminate.
	 

	 
		(h)
	 

	 
		Death of Optionee.  Unless otherwise provided in an Option
		Agreement, in the event an Optionee’s Continuous Service terminates as a
		result of the Optionee’s death, then all unvested Options shall terminate
		and the vested Options may be exercised by the Optionee’s estate, by a
		person who acquired the right to exercise the Option by bequest or inheritance
		or by a person designated to exercise the Option upon the Optionee’s death
		pursuant to Section 6(d), but only within the period ending on the earlier of
		(i) the date twelve (12) months following the date of death or (ii) the
		expiration of the term of such Option as set forth in the Option Agreement.
		 If, after death, the Option is not exercised within the time specified
		herein, the Option shall terminate.
	 

	 
		(i)
	 

	 
		Change in Control.  Unless otherwise provided in an Option
		Agreement and except as otherwise provided in the Plan, a Change in Control
		shall not effect any Options granted under the Plan.  
	 

	 
		7.
	 

	 
		Provisions of Awards Other Than Options.
	 

	 
		(a)
	 

	 
		Stock Bonus Awards.  Each Agreement evidencing a stock bonus
		shall be in such form and shall contain such terms and conditions as the
		Committee shall deem appropriate.  The terms and conditions of such
		Agreements may change from time to time, and the terms and
	 

	 
		
 

	 

	 
		

	 

	 
		9
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		conditions of separate Agreements need not be identical, but each such
		Agreement shall include (through incorporation of provisions hereof by
		reference in the Agreement or otherwise) the substance of each of the following
		provisions:  
	 

	 
		(i)
	 

	 
		Consideration.  A stock bonus may be awarded in consideration
		for past services actually rendered to the Company or an Affiliate.
	 

	 
		(ii)
	 

	 
		Vesting.  Shares awarded under the stock bonus Agreement may,
		but need not, be subject to a share repurchase option in favor of the Company
		in accordance with a vesting schedule to be determined by the Committee.
	 

	 
		(iii)
	 

	 
		Termination of Participant’s Continuous Service.  In the
		event a Participant’s Continuous Service terminates, the Company may
		reacquire, for par value, any or all of the Shares held by the Participant
		which have not vested as of the date of termination under the terms of the
		applicable Agreement.
	 

	 
		(iv)
	 

	 
		Transferability.  Shares under the applicable Agreement shall
		be transferable by the Participant only upon such terms and conditions as are
		set forth in the Agreement, as the Committee shall determine in its discretion,
		so long as the Shares awarded under the Agreement remains subject to the terms
		of the Agreement.
	 

	 
		(b)
	 

	 
		Restricted Stock Awards.  Each such Agreement evidencing a
		grant of restricted Shares shall be in such form and shall contain such terms
		and conditions as the Committee shall deem appropriate.  The terms and
		conditions of such Agreements may change from time to time, and the terms and
		conditions of separate Agreements need not be identical, but each such
		Agreement shall include (through incorporation of provisions hereof by
		reference in the Agreement or otherwise) the substance of each of the following
		provisions:
	 

	 
		(i)
	 

	 
		Purchase Price.  The purchase price of Awards of restricted
		Shares shall be determined by the Committee, which shall in no event be less
		than the par value per share.
	 

	 
		(ii)
	 

	 
		Consideration.  The purchase price of Shares acquired
		pursuant to the applicable Agreement shall be paid either:  (i) in cash at
		the time of purchase; (ii) at the discretion of the Committee, according to a
		deferred payment or other similar arrangement with the Participant to the
		extent it does not violate the Sarbanes-Oxley Act of 2002 or any other
		applicable law; or (iii) in any other form of legal consideration that may be
		acceptable to the Committee in its discretion.
	 

	 
		(iii)
	 

	 
		Vesting.  Restricted Shares shall vest in accordance with a
		vesting schedule to be determined by the Committee under the applicable
		Agreement and may, but need not, be subject to a share repurchase option in
		favor of the Company.
	 

	 
		(iv)
	 

	 
		Termination of Participant’s Continuous Service.  In the
		event a Participant’s Continuous Service terminates, the Company may
		repurchase or otherwise reacquire, for par value, any or all of the Shares held
		by the Participant which have not vested as of the date of termination under
		the terms of the applicable Agreement.
	 

	 
		
 

	 

	 
		

	 

	 
		10
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		(v)
	 

	 
		Transferability.  Restricted Shares under the Agreement shall
		be transferable by the Participant only upon such terms and conditions as are
		set forth in the Agreement, as the Committee shall determine in its discretion,
		so long as Shares awarded under the Agreement remain subject to the terms of
		the Agreement.
	 

	 
		8.
	 

	 
		Covenants of the Company
	 

	 
		(a)
	 

	 
		Availability of Shares.  During the terms of the Awards, the
		Company shall keep available at all times the number of Shares required to
		satisfy such Awards.
	 

	 
		(b)
	 

	 
		Securities Law Compliance.  The Company shall seek to obtain
		from each regulatory commission or agency having jurisdiction over the Plan
		such authority as may be required to grant Awards and to issue and sell Shares
		upon exercise of the Awards; provided, however, that this
		undertaking shall not require the Company to register under the Securities Act
		or any other applicable law of the United States or otherwise the Plan, any
		Awards or any Shares issued or issuable pursuant to any such Awards.  If,
		after reasonable efforts, the Company is unable to obtain from any such
		regulatory commission or agency the authority which counsel for the Company
		deems necessary for the lawful issuance and sale of Shares under the Plan, the
		Company shall be relieved from any liability for failure to issue and sell
		Shares upon grant or exercise of such Awards unless and until such authority is
		obtained.
	 

	 
		9.
	 

	 
		Use of Proceeds from Stock.
	 

	 
		Proceeds from the sale of Shares pursuant to the grant or exercise of
		Awards shall constitute general funds of the Company.
	 

	 
		10.
	 

	 
		Miscellaneous.
	 

	 
		(a)
	 

	 
		Acceleration of Exercisability and Vesting.  The Committee
		shall have the power to accelerate the time at which an Award may first be
		exercised or the time during which an Award or any part thereof will vest in
		accordance with the Plan, notwithstanding the provisions in the Award stating
		the time at which it may first be exercised or the time during which it will
		vest.  
	 

	 
		(b)
	 

	 
		Shareholder Rights.  No Participant shall be deemed to be the
		holder of, or to have any of the rights of a holder with respect to, any Shares
		subject to such Award unless and until such Participant has satisfied all
		requirements for exercise of the Award pursuant to its terms and has become the
		registered holder of such shares.
	 

	 
		(c)
	 

	 
		No Employment or other Service Rights.  Nothing in the Plan
		or any instrument executed or Award granted pursuant thereto shall confer upon
		any Participant any right to continue to serve the Company or an Affiliate in
		the capacity in effect at the time the Award was granted or shall affect the
		right of the Company or an Affiliate to terminate (i) the employment of an
		Employee with or without notice and with or without Cause, (ii) the service of
		a Consultant with or without notice and with or without Cause or (iii) the
		service of a Director pursuant to the Memorandum and Articles of Association of
		the Company or an Affiliate, and any applicable
	 

	 
		
 

	 

	 
		

	 

	 
		11
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		provisions of the corporate law of the jurisdiction in which the Company
		or the Affiliate is incorporated, as the case may be.
	 

	 
		(d)
	 

	 
		Investment Assurances.  The Company may require a
		Participant, as a condition of exercising or acquiring Shares under any Award,
		(i) to give written assurances satisfactory to the Company as to the
		Participant’s knowledge and experience in financial and business matters
		and/or to employ a purchaser representative reasonably satisfactory to the
		Company who is knowledgeable and experienced in financial and business matters
		and that he or she is capable of evaluating, alone or together with the
		purchaser representative, the merits and risks of exercising the Award; (ii) to
		give written assurances satisfactory to the Company stating that the
		Participant is acquiring Shares subject to the Award for the Participant’s
		own account and not with any present intention of selling or otherwise
		distributing the Shares; and (iii) to execute a Shareholders’ Agreement or
		such other documentation as the Company may require.  The foregoing
		requirements, and any assurances given pursuant to such requirements, shall be
		inoperative if (1) the issuance of the Shares upon the exercise or acquisition
		of Shares under the Award has been registered under a then currently effective
		registration statement under the Securities Act or (2) as to any particular
		requirement, a determination is made by counsel for the Company that such
		requirement need not be met in the circumstances under the then applicable
		securities laws.  The Company may, upon advice of counsel to the
		Company, place legends on stock certificates issued under the Plan as such
		counsel deems necessary or appropriate in order to comply with applicable
		securities laws, including, but not limited to, legends restricting the
		transfer of the Shares.
	 

	 
		(e)
	 

	 
		Withholding Obligations.  The Company shall have the right to
		deduct from any compensation paid to the Participant pursuant to the Plan the
		amount of taxes required by law to be withheld therefrom, or to require the
		Participant to pay the Company in cash such amount required to be withheld.
		 To the extent provided by the terms of an Award Agreement, the
		Participant may satisfy any foreign, federal, state or local tax withholding
		obligation relating to the exercise or acquisition of Shares under an Award by
		any of the following means (in addition to the Company’s right to withhold
		or to direct the withholding from any compensation paid to the Participant by
		the Company or by an Affiliate) or by a combination of such means:  (i)
		tendering a cash payment; (ii) authorizing the Company to withhold Shares from
		the Shares otherwise issuable to the Participant as a result of the exercise or
		acquisition of Shares under the Award; provided, however, that no
		Shares are withheld with a value exceeding the minimum amount of tax required
		to be withheld by law; or (iii) delivering to the Company or to an Affiliate,
		owned and unencumbered Shares not acquired from the Company with a Fair Market
		Value equal to the amount of tax liability to be satisfied by their delivery.
	 

	 
		11.
	 

	 
		Adjustments Upon Changes in Stock.
	 

	 
		(a)
	 

	 
		Capitalization Adjustments. In the event of any dividend or other
		distribution (whether in the form of cash, Shares, other securities, or other
		property), recapitalization, reclassification, stock split, reverse stock
		split, reorganization, merger, consolidation, split-up, spin-off, combination,
		repurchase, liquidation, dissolution, or sale, transfer, exchange or other
		disposition of all or substantially all of the assets or stock of the Company,
		or exchange of Shares or other securities of the Company, issuance of warrants
		or other rights to purchase Shares or other securities of the Company, or other
		similar corporate transaction or event (an “Event”), and
	 

	 
		
 

	 

	 
		

	 

	 
		12
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		in the Committee’s opinion, such event affects the Shares such that
		an adjustment is determined by the Committee to be appropriate in order to
		prevent dilution or enlargement of the benefits or potential benefits intended
		to be made available under the Plan or with respect to an Award, then the
		Committee shall, in such manner as it may deem equitable, without limitation,
		adjust any or all of the following: (i)  the number and kind of Shares (or
		other securities or property) with respect to which Awards may be granted or
		awarded; (ii) the number and kind of Shares (or other securities or property)
		subject to all or any outstanding Awards; and (iii) the grant or exercise price
		with respect to all or any outstanding Awards.  The Committee’s
		determination under this Section 11(a) shall be final, binding and conclusive.
	 

	 
		(b)
	 

	 
		Termination of Awards.  Unless otherwise provided in an Award
		Agreement, upon the occurrence of an Event, or other similar corporate event or
		transaction in which outstanding Awards are not to be assumed by the surviving
		entity or otherwise continued following such an Event or other similar
		corporate event or transaction, the Committee may, in its discretion, terminate
		any outstanding Award without a Participant’s consent and (i) provide for
		the purchase of any such Award for an amount of cash equal to the amount that
		could have been attained upon the exercise of such Award or realization of the
		Participant’s rights had such Award been currently exercisable or payable
		or fully vested (based on the Fair Market Value of the shares on the date of
		such termination) or the replacement of such Award with other rights or
		property selected by the Committee in its sole discretion and/or
		(ii) provide that such Award shall be exercisable (whether or not vested)
		as to all shares covered thereby for at least thirty (30) days prior to
		such Event or other similar corporate event or transaction but will terminate
		at the end of that period.
	 

	 
		(c)
	 

	 
		Future Transactions.  The existence of the Plan, the Award
		Agreements and the Award granted hereunder shall not affect or restrict in any
		way the right or power of the Company or the shareholders of the Company to
		make or authorize any adjustment, recapitalization, reorganization or other
		change in the Company’s capital structure or its business, any merger or
		consolidation of the Company, any issue of stock or of options, warrants or
		rights to purchase stock or of bonds, debentures, preferred or prior preference
		stocks whose rights are superior to or affect the Shares or the rights thereof
		or which are convertible into or exchangeable for Shares, or the dissolution or
		liquidation of the Company, or any sale or transfer of all or any part of its
		assets or business, or any other corporate act or proceeding, whether of a
		similar character or otherwise.
	 

	 
		12.
	 

	 
		Amendment of the Plan and Awards.
	 

	 
		(a)
	 

	 
		Amendment of Plan.  The Board at any time, and from time to
		time, may amend the Plan.  However, except as provided in Section 11
		relating to adjustments upon changes in Shares, no amendment shall be effective
		unless approved by the stockholders of the Company to the extent stockholder
		approval is necessary to satisfy any applicable law or any national securities
		exchange listing requirements.
	 

	 
		(b)
	 

	 
		Stockholder Approval.  The Board may, in its sole discretion,
		submit any other amendment to the Plan for stockholder approval, including, but
		not limited to, amendments to the Plan intended to satisfy the requirements of
		Section 162(m) of the Code and the regulations
	 

	 
		
 

	 

	 
		

	 

	 
		13
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		thereunder regarding the exclusion of performance-based compensation from
		the limit on corporate deductibility of compensation paid to certain executive
		officers.
	 

	 
		(c)
	 

	 
		Contemplated Amendments.  It is expressly contemplated that
		the Board may amend the Plan in any respect the Board deems necessary or
		advisable to provide eligible Employees with the maximum benefits provided or
		to be provided under the provisions of the Code and the regulations promulgated
		thereunder and/or to bring the Plan into compliance therewith.
	 

	 
		(d)
	 

	 
		No Impairment of Rights.  Subject to Section 11, rights under
		any Award granted before amendment of the Plan shall not be impaired by any
		amendment of the Plan unless (i) the Company requests the consent of the
		Participant and (ii) the Participant consents in writing.
	 

	 
		(e)
	 

	 
		Amendment of Awards.  Subject to Section 11, the Board at any
		time, and from time to time, may amend the terms of any one or more Awards;
		provided, however, that the rights under any Award shall not be
		impaired by any such amendment unless (i) the Company requests the consent of
		the Participant and (ii) the Participant consents in writing.
	 

	 
		13.
	 

	 
		Termination or Suspension of the Plan.
	 

	 
		(a)
	 

	 
		Plan Term.  The Committee may suspend or terminate the Plan
		at any time.  Unless sooner terminated, the Plan shall terminate on the
		day before the tenth (10th) anniversary of the date the Plan is adopted by the
		Board or approved by the stockholders of the Company, whichever is earlier.
		 No Awards may be granted under the Plan while the Plan is suspended or
		after it is terminated.
	 

	 
		(b)
	 

	 
		No Impairment of Rights.  Subject to Section 11, suspension
		or termination of the Plan shall not impair rights and obligations under any
		Award granted while the Plan is in effect except with the written consent of
		the Participant.
	 

	 
		14.
	 

	 
		Repurchase Right.  
	 

	 
		(a)
	 

	 
		Options.  Prior to an Initial Public Offering, to the extent
		permitted by applicable law, if any Participant (i) resigns or terminates his
		Continuous Service for any reason or (ii) is discharged by the Company for any
		reason, the Company shall have the right (but not the obligation) within ninety
		(90) days following such termination, or such shorter period if required by
		applicable law, to elect to purchase some or all of the Participant’s
		outstanding and vested Options held by the Participant upon such termination
		for an amount in cash, equal to the number of Shares subject to such Option
		multiplied by the difference between (1) the Fair Market Value of one Share on
		the date the Company elects to purchase such Option and (2) the exercise price
		per Share of the Option.
	 

	 
		(b)
	 

	 
		Shares.  Prior to an Initial Public Offering, to the extent
		permitted by applicable law, if any Participant (i) resigns or terminates his
		Continuous Service for any reason or (ii) is discharged by the Company for any
		reason, the Company shall have the right (but not the obligation) within ninety
		(90) days following such termination, or such shorter period if required by
		applicable law, to elect to purchase some or all of the Shares acquired by the
		Participant as a result of the grant or exercise of Awards under the Plan, at
		their then current Fair Market Value.
	 

	 
		
 

	 

	 
		

	 

	 
		14
	 

	 
		

	 

	 
	 
		

	 

	 
		

	 

	 
		(c)
	 

	 
		Closing.  In the event the Company elects to purchase Options
		and/or Shares pursuant to this Section 14, the selling Participant shall sell
		and the Company shall purchase the Options and/or Shares as soon as
		administratively feasible following the exercise of the Company’s rights
		under this Section 14, but in any event no later than ninety (90) days
		thereafter.
	 

	 
		15.
	 

	 
		Section 409A of the Code.  
	 

	 
		This Plan is intended to comply with Section 409A of the Code and shall
		be administered, construed and interpreted in accordance with such intent.
		 To the extent that an Award, issuance and/or payment under the Plan is
		subject to Section 409A of the Code, it shall be awarded and/or issued or paid
		in a manner that will comply with Section 409A of the Code, including proposed,
		temporary or final regulations or any other guidance issued by the U.S.
		Secretary of the Treasury and the Internal Revenue Service with respect thereto
		(the “Guidance”).  Any provision of this Plan that would cause
		an Award, issuance and/or payment to fail to satisfy Section 409A of the Code
		shall have no force and effect until amended by the Committee, with or without
		the consent of any Participant, to comply with Section 409A of the Code (which
		amendment may be retroactive to the extent permitted by the Guidance).
	 

	 
		16.
	 

	 
		Effective Date of Plan.
	 

	 
		The Plan shall become effective as of the Effective Date.  
	 

	 
		17.
	 

	 
		Choice of Law.
	 

	 
		The laws of the Cayman Islands shall govern all questions concerning the
		construction, validity and interpretation of this Plan.
	 

	 
		
 

	 

	 
		

	 

	 
		15EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT, dated as of January  16,  2007, between Clarke American Corp., a Delaware corporation (‘‘CAC’’ or the ‘‘Company’’) and Peter A. Fera, Jr. (the ‘‘Executive’’).

WHEREAS, on October  31,  2005, Security Printing, Inc. and CA Investment Corp. (both predecessor companies of CAC, and CA Investment Corp. a wholly owned subsidiary of M&F Worldwide Corp. (‘‘Parent’’)) and the Executive entered into an Employment Agreement (the ‘‘Original Employment Agreement’’) pursuant to which the Executive agreed to serve as Senior Vice President and Chief Financial Officer, effective as of December  15,  2005 (the ‘‘Original Effective Date’’); and

WHEREAS, the Company and the Executive wish to modify the terms of employment set forth in the Original Employment Agreement effective as of the Effective Date (as hereinafter defined).

Accordingly, the Company and the Executive hereby agree as follows:

1.     Employment, Duties and Acceptance.

1.1    Employment, Duties.    The Company hereby employs the Executive for the Term (as defined in Section 2.1), to render exclusive and full-time services to the Company as Senior Vice President and Chief Financial Officer or in such other executive position as may be mutually agreed upon by the Company and the Executive, and to perform such other duties consistent with such position as may be assigned to the Executive by the Chief Executive Officer of the Company.

1.2    Acceptance.    The Executive hereby accepts such employment and agrees to render the services described above. During the Term, the Executive agrees to serve the Company faithfully and to the best of the Executive’s ability, to devote the Executive’s entire business time, energy and skill to such employment, and to use the Executive’s best efforts, skill and ability to promote the Company’s interests. The Executive further agrees to accept election, and to serve during all or any part of the Term, as an officer or director of the Company and of any subsidiary or affiliate of the Company, without any compensation therefor other than that specified in this Agreement, if elected to any such position by the shareholders or by the Board of Directors (the ‘‘Board’’) or of any subsidiary or affiliate, as the case may be.

1.3    Location.    The duties to be performed by the Executive hereunder shall be performed primarily at the offices of the Company in San Antonio, Texas, subject to reasonable travel requirements on behalf of the Company.

2.     Term of Employment; Certain Post-Term Benefits.

2.1    The Term.    This Agreement and the term of the Executive’s employment under this Agreement (the ‘‘Term’’) shall become effective as of January  1,  2007 (the ‘‘Effective Date’’) and will continue for a period of one year (the final date of the one year period being referred to herein as the ‘‘Termination Date’’), subject to earlier termination pursuant to Section 4.

2.2    End-of-Term Provisions.    Prior to the end of the Term, the Company and the Executive shall meet to discuss whether the Term should be extended. The Company shall have the right at any time, however, to give written notice of non-renewal of the Term.

2.3    Non-renewal of Term.    The Term shall end earlier than the Termination Date provided in Section 2.1 or any extended termination date provided in Section 2.2, in either case if sooner terminated pursuant to Section 4. Non-extension of the Term shall not be deemed to be a termination of this Agreement by the Company, and the Executive shall not be entitled to receive severance benefits or any other payment pursuant to this Agreement.

3.     Compensation; Benefits.

3.1    Salary.    As compensation for all services to be rendered pursuant to this Agreement, the Company agrees to pay the Executive a base salary, payable in accordance with the Company’s normal payroll practices, at the annual rate of not less than $350,000 (effective 

1

January 1, 2007) less such deductions or amounts to be withheld as required by applicable law and regulations (the ‘‘Base Salary’’). In the event that the Company, in its sole discretion, from time to time determines to increase the Base Salary, such increased amount shall, from and after the effective date of the increase, constitute ‘‘Base Salary’’ for purposes of this Agreement; provided, that, prior to January 1, 2007, the Base Salary shall be at the same rate as in effect pursuant to the Original Employment Agreement.

3.2    Incentive Compensation.

3.2.1    Annual Bonus.    For fiscal year 2006, the Executive’s bonus, if any, shall be determined by the Board in its sole discretion in accordance with the Company bonus plan in which the Executive participates in effect on the date hereof and the terms of the Original Employment Agreement. Commencing with the 2007 fiscal year, the Executive will be eligible to receive a bonus with respect to 2007 and each later fiscal year ending during the Term computed in accordance with the provisions hereafter. If, with respect to any such fiscal year, the Company achieves ‘‘Consolidated EBITDA’’ (as defined below) of at least the percentage set forth in the table below of its business plan for such fiscal year, such bonus shall be the percentage set forth in the table below of Base Salary with respect to the fiscal year for which the bonus (any such bonus, an ‘‘Annual Bonus’’) was earned:

							
	Percentage of Consolidated
EBITDA in Business Plan			Percentage of
Base Salary
	89.9% and below			Nil
	90 – 94.9					67.5	

%

	95 – 99.9					71.25	

	100 – 105					78.75	

	105.1 – 110					82.5	

	110.1 – 115					86.25	

	115.1 – 120					90	

	120.1 – 125					93.75	

	125.1 – 130					97.5	

	130.1 – 135					101.25	

	135.1 – 140					105	

	140.1 – 145					108.75	

	145.1 and over					112.5	

	

An Annual Bonus if earned in accordance with this Agreement shall be paid no later than the fifteenth day of the third month next following the year with respect to which such bonus was earned, provided that, except as otherwise specifically provided in this Agreement, as a condition precedent to any bonus entitlement the Executive must remain in employment with the Company at the time that the Annual Bonus is paid. Notwithstanding the foregoing, to the extent that Section 162(m) of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’), may be applicable, such Annual Bonus shall be subject to, and contingent upon, such shareholder approval as is necessary to cause the Annual Bonus to qualify as ‘‘performance-based compensation’’ under Section 162(m) of the Code and the regulations promulgated thereunder as well as approval of this Section 3.2.1 by the Compensation Committee of Parent’s board of directors.

For the purposes of this Agreement, ‘‘Consolidated EBITDA’’ means for any fiscal year of the Company, consolidated net income for such fiscal year plus, without duplication and to the extent reflected as a charge in the statement of such consolidated net income for such fiscal year, the sum of (i) income tax expense, (ii) interest expense, amortization or write-off of debt discount and debt issuance costs and commissions (to the extent not already captured in interest expense), discounts and other fees and charges associated with indebtedness, (iii) depreciation and amortization expense (excluding amounts of prepaid incentives under customer contracts), (iv) any extraordinary non-cash expenses or losses, (v) any costs and 

2

expenses incurred in connection with the acquisition of the Company by Parent or an affiliate, (vi) any auditing, legal, reporting or administrative expenses incurred by the Company in complying with the Sarbanes-Oxley Act of 2002, as amended, or other reporting obligations required by securities laws applicable to publicly traded corporations (except to the extent such expenses are of a type historically charged to the business in the ordinary course), and (vii) all restructuring costs and minus (i) to the extent included in the statement of such consolidated net income for such period, the sum of (a) interest income, (b) any extraordinary or non-recurring income or gains (including, whether or not otherwise includable as a separate item in the statement of such consolidated net income for such period, gains on the sales of assets outside of the ordinary course of business), and (c) income tax credits (to the extent not netted from income tax expense) and (ii) any cash payments made during such period in respect of items described in clause (iv) above subsequent to the fiscal quarter in which the relevant non-cash expenses or losses were reflected as a charge in the statement of consolidated net income, all as determined on a consolidated basis, all of the foregoing to be determined by the Board or the Compensation Committee of Parent’s board of directors, as applicable, with a view to consistency with management projections disclosed as presented to Parent in the Confidential Management Presentation dated August 2005. For the purposes of determining compensation milestones for any fiscal year, Consolidated EBITDA will be adjusted by the Board or the Compensation Committee of Parent’s board of directors, as applicable, as appropriate for material acquisitions or dispositions of any business or assets of or by the Company or its subsidiaries for such fiscal year and thereafter.

3.2.2    Long Term Incentive Plan.    During the Term, the Executive shall participate in the Company’s Long Term Incentive Plan (‘‘LTIP’’). The Executive will receive 10% of the ‘‘LTIP bonus pool,’’ as defined in and in accordance with the LTIP (which will include a provision that the LTIP bonus pool will be 20% of Consolidated EBITDA achieved by the Company in excess of the target Consolidated EBITDA). If the Term is extended, the Executive shall participate in a new Long Term Incentive Plan that shall commence after the LTIP ends. Notwithstanding the foregoing, to the extent that Section 162(m) of the Code may be applicable, the LTIP (and any subsequent Long Term Incentive Plan) shall be subject to, and contingent upon, such shareholder approval as is necessary to cause the LTIP to qualify as ‘‘performance-based compensation’’ under Section 162(m) of the Code and the regulations promulgated thereunder.

3.3    Business Expenses.    The Company shall pay or reimburse the Executive for all reasonable expenses actually incurred or paid by the Executive during the Term in the performance of the Executive’s services under this Agreement, upon presentation of expense statements or vouchers or such other supporting information as the Company customarily may require of its officers provided, however, that the maximum amount available for such expenses during any period may be fixed in advance by the Board.

3.4    Vacation.    During the Term, the Executive shall be entitled to a vacation period or periods of four (4) weeks taken in accordance with the vacation policy of the Company during each year of the Term. Vacation time not used by the end of a year shall be forfeited.

3.5    Fringe Benefits.    During the Term, the Executive shall be entitled to all benefits for which the Executive shall be eligible under any qualified pension plan, 401(k) plan, group insurance or other so-called ‘‘fringe’’ benefit plan which Clarke American provides to its executive employees generally.

4.    Termination.

4.1    Death.    If the Executive dies during the Term, the Term shall terminate forthwith upon the Executive’s death. The Company shall pay to the Executive’s estate: (i) any Base Salary earned but not paid; and (ii) a pro rated Annual Bonus based on the number of days of the fiscal year worked by the Executive. The Executive shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement.

3

4.2    Disability.    If, during the Term the Executive is unable to perform his duties hereunder due to a physical or mental incapacity for a period of 6 months within any 12 month period (hereinafter a ‘‘Disability’’), the Company shall have the right at any time thereafter to terminate the Term upon sending written notice of termination to the Executive. If the Company elects to terminate the Term by reason of Disability, the Company shall pay to the Executive promptly after the notice of termination: (i) any Base Salary earned but not paid, and (ii) a pro rated Annual Bonus based on the number of days of the fiscal year worked by the Executive until the date of the notice of termination, in each case less any other benefits payable to the Executive under any disability plan provided for hereunder or otherwise furnished to the Executive by the Company. The Executive shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement.

4.3    Cause.    The Company may at any time by written notice to the Executive terminate the Term for ‘‘Cause’’ (as defined below) and, upon such termination, this Agreement shall terminate and the Executive shall be entitled to receive no further amounts or benefits hereunder, except for any Base Salary earned but not paid prior to such termination. For the purposes of this Agreement, ‘‘Cause’’ means: (i) continued neglect by the Executive of the Executive’s duties hereunder, (ii) conviction of the Executive of any felony or any lesser crime or offense involving the property of the Company or any of its subsidiaries or affiliates, (iii) willful misconduct by the Executive in connection with the performance of any material portion of the Executive’s duties hereunder, (iv) commission of any act of fraud, personal dishonesty, disloyalty or defalcation, or usurpation of a Company opportunity, (v) any act that has a material adverse effect upon the reputation of and/or the public confidence in the company, or (vi) failure to comply with a reasonable order, policy or rule that constitutes material insubordination.

4.4    Termination by Company without Cause.    If the Executive’s employment is terminated by the Company without Cause (other than by reason of death or Disability), the Executive shall receive: (i) as severance pay, an amount equal to 18 months of Base Salary payable ratably in accordance with the Company’s normal payroll practices, (ii) continuation for a 12-month period following the date of termination of group health plan benefits to the extent authorized by and consistent with 29 U.S.C. § 1161 et seq. (commonly known as ‘‘COBRA’’), with the cost of the regular premium for such benefits shared in the same relative proportion by the Company and the Employee as in effect on the date of termination, (iii) pro-rated Annual Bonus for the year in which termination occurred if the Executive would have been eligible to receive such bonus hereunder (including due to satisfaction by the Company of performance milestones) had the Executive been employed at the time such Annual Bonus is normally paid, which pro-rated Annual Bonus will be paid at the time and in the manner such Annual Bonus is paid to other executives receiving such bonus payment, and (iv) Annual Bonus for the year prior to the year in which the Executive is so terminated if at the time of termination the Executive has earned an Annual Bonus payment for such prior year and has not yet been paid such due to such termination, which prior year Annual Bonus will be paid at the time and in the manner such prior year Annual Bonus is paid to other executives receiving such prior year Annual Bonus. The Executive shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement.

4.5    Termination by Executive.    The Executive is required to provide the Company with 60 days’ prior written notice of termination. Upon termination of employment by the Executive, the Executive shall receive any Base Salary earned but not paid prior to such termination and shall have no further rights to any compensation (including any Base Salary or Annual Bonus) or any other benefits under this Agreement.

4.6    Release.    Notwithstanding any other provision of this Agreement to the contrary, the Executive acknowledges and agrees that any and all payments, other than payment of any accrued and unpaid Base Salary to which the Executive is entitled under this Section 4 are conditioned upon and subject to the Executive’s execution of a general waiver and release, in such form as may be prepared by the Company, of all claims, except for such matters covered by provisions of this Agreement which expressly survive the termination of this Agreement.

4

4.7    Section 409A.    Notwithstanding the foregoing provisions of this Section 4, if any payments or benefits due to the Executive hereunder would cause the application of an accelerated or additional tax under Section 409A of the Code such payments or benefits shall be restructured in a manner which does not cause such an accelerated or additional tax. Without limiting the application of the preceding sentence, any payment of money due hereunder which is delayed in order to avoid the application of Section 409A of the Code (e.g., a six-month delay in the commencement of severance pay, if necessary, if at the time of the Executive’s termination of employment he is a ‘‘specified employee,’’ as defined in Section 409A of the Code) shall be paid as soon as possible without causing the application of Section 409A.

5.     Protection of Confidential Information; Restrictive Covenants.

5.1    From the Effective Date, the Company will share with Executive confidential and trade secret information regarding not only the Company but also its subsidiaries and affiliates. In view of the fact that the Executive’s work for the Company will bring the Executive into close contact with many confidential affairs of the Company not readily available to the public, trade secret information and plans for future developments, the Executive agrees:

5.1.1    To keep and retain in the strictest confidence all confidential matters of the Company, including, without limitation, ‘‘know how’’, trade secrets, customer lists, pricing policies, operational methods, technical processes, formulae, inventions and research projects, other business affairs of the Company, and any information whatsoever concerning any director, officer, employee, shareholder, partner, customer or agent of the Company or their respective family members learned by the Executive heretofore or hereafter, and not to disclose them to anyone outside of the Company, either during or after the Executive’s employment with the Company, except in the course of performing the Executive’s duties hereunder or with the Company’s express written consent. The foregoing prohibitions shall include, without limitation, directly or indirectly publishing (or causing, participating in, assisting or providing any statement, opinion or information in connection with the publication of) any diary, memoir, letter, story, photograph, interview, article, essay, account or description (whether fictionalized or not) concerning any of the foregoing, publication being deemed to include any presentation or reproduction of any written, verbal or visual material in any communication medium, including any book, magazine, newspaper, theatrical production or movie, or television or radio programming or commercial; and

5.1.2    To deliver promptly to the Company on termination of the Executive’s employment by the Company, or at any time the Company may so request, all memoranda, notes, records, reports, manuals, drawings, blueprints and other documents (and all copies thereof), including data stored in computer memories or on other media used for electronic storage or retrieval, relating to the Company’s business and all property associated therewith, which the Executive may then possess or have under the Executive’s control, and not retain any copies, notes or summaries.

5.2    In support of Executive’s commitments to maintain the confidentiality of the Company’s confidential and trade secret information, during (i) the Term, and (ii) for a period of two years following termination of the Executive’s employment for any reason, the Executive shall not in the United States and in any non-US jurisdiction where the Company may then do business: (a) directly or indirectly, enter the employ of, or render any services to, any person, firm or corporation engaged in any business competitive with the business of the Company or of any of its subsidiaries or affiliates; (b) engage in such business on the Executive’s own account; and the Executive shall not become interested in any such business, directly or indirectly, as an individual, partner, shareholder, director, officer, principal, agent, employee, trustee, consultant, or in any other relationship or capacity; (c) directly or indirectly, solicit, encourage or cause any client, customer or supplier of the Company to cease doing business with the Company, or to reduce the amount of business such client, customer or supplier does with the Company or (d) directly or indirectly, solicit or encourage to cease to work with the Company, or directly or indirectly hire, any person who is an employee of or consultant then under contract with the Company or who 

5

was an employee of or consultant then under contract with the Company within the six month period preceding such activity without the Company’s written consent.

5.3    If the Executive commits a breach, or threatens to commit a breach, of any of the provisions of Sections 5.1 or 5.2 hereof, the Company shall have the following rights and remedies:

5.3.1    The right and remedy to have the provisions of this Agreement specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company;

5.3.2    The right and remedy to require the Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments or other benefits derived or received by the Executive as the result of any transactions constituting a breach of any of the provisions of the preceding paragraph, and the Executive hereby agrees to account for and pay over such benefits to the Company. Each of the rights and remedies enumerated above shall be independent of the other, and shall be severally enforceable, and all of such rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company under law or in equity; and

5.3.3    In addition to any other remedy which may be available (i) at law or in equity, or (ii) pursuant to any other provision of this Agreement, the payments by the Company of Base Salary and the regular premium for group health benefits pursuant to Section 4.4 will cease as of the date on which such violation first occurs. In addition, if the Executive breaches any of the covenants contained in Sections 5.1 and 5.2 and the Company obtains injunctive relief with respect thereto, the period during which the Executive is required to comply with that particular covenant shall be extended by the same period that the Executive was in breach of such covenant prior to the effective date of such injunctive relief.

5.4    If any of the covenants contained in Sections 5.1 or 5.2, or any part thereof, hereafter are held by a court to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants, which shall be given full effect, without regard to those portions found invalid.

5.5    If any of the covenants contained in Sections 5.1 or 5.2, or any part thereof, are held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration and/or area of such provision and, in its reduced form, said provision shall then be enforceable.

5.6    The Executive agrees (whether during or after the Executive’s employment with the Company) not to issue, circulate, publish or utter any false or disparaging statements, remarks or rumors about the Company or its affiliates or the officers, directors, managers, customers, partners, or shareholders of the Company or its affiliates unless giving truthful testimony under subpoena.

5.7    For purposes of this Section 5 only, the term ‘‘Company’’ includes the Company and its subsidiaries and affiliates.

6.     Inventions and Patents.

6.1    The Executive agrees that all processes, technologies and inventions (collectively, ‘‘Inventions’’), including new contributions, improvements, ideas and discoveries, whether patentable or not, conceived, developed, invented or made by him during the Term shall belong to the Company, provided that such Inventions grew out of the Executive’s work with the Company or any of its subsidiaries or affiliates, are related in any manner to the business (commercial or experimental) of the Company or any of its subsidiaries or affiliates or are conceived or made on the Company’s time or with the use of the Company’s facilities or materials. The Executive shall further: (a) promptly disclose such Inventions to the Company; 

6

(b) assign to the Company, without additional compensation, all patent and other rights to such Inventions for the United States and foreign countries; (c) sign all papers necessary to carry out the foregoing; and (d) give testimony in support of the Executive’s inventorship.

6.2    If any Invention is described in a patent application or is disclosed to third parties, directly or indirectly, by the Executive within two years after the termination of the Executive’s employment by the Company, it is to be presumed that the Invention was conceived or made during the Term.

6.3    The Executive agrees that the Executive will not assert any rights to any Invention as having been made or acquired by the Executive prior to the date of this Agreement, except for Inventions, if any, disclosed to the Company in writing prior to the date hereof.

7.     Intellectual Property.

The Company shall be the sole owner of all the products and proceeds of the Executive’s services hereunder, including, but not limited to, all materials, ideas, concepts, formats, suggestions, developments, arrangements, packages, programs and other intellectual properties that the Executive may acquire, obtain, develop or create in connection with and during the Term, free and clear of any claims by the Executive (or anyone claiming under the Executive) of any kind or character whatsoever (other than the Executive’s right to receive payments hereunder). The Executive shall, at the request of the Company, execute such assignments, certificates or other instruments as the Company may from time to time deem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend its right, title or interest in or to any such properties.

8.     Notices.

All notices, requests, consents and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, sent by overnight courier or mailed first class, postage prepaid, by registered or certified mail (notices mailed shall be deemed to have been given on the date mailed), as follows (or to such other address as either party shall designate by notice in writing to the other in accordance herewith):

If to the Company, to:

Clarke American Corp.
10931 Laureate Dr.
San Antonio, TX 78249
 Attn: Chief Executive Officer

If to the Executive, to:

Peter A. Fera, Jr.

9.     Governing Law; Dispute Resolution.    This Agreement shall be governed by and construed in accordance with the laws of the State of Texas without regard to conflicts of laws provisions. Any controversy or claim arising out of or relating to Section 5 of this Agreement (or the breach thereof) shall be settled by a federal court located in Bexar County, Texas; additionally each of the parties hereto specifically waives any objection that it may otherwise have to the jurisdiction or venue of any such courts or that such courts are an inconvenient forum and acknowledges that service of process may be made by mailing a copy thereof in accordance with the provisions of Section 8. Any controversy or claim arising out of or related to any other provision of this Agreement shall be settled by final, binding and non-appealable arbitration in Bexar County, Texas by a single arbitrator. Subject to the following provisions, the arbitration shall be conducted in accordance with the applicable rules of JAMS then in effect. Any award entered by the arbitrator shall be final, binding and non-appealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction. This arbitration provision shall be specifically enforceable. The arbitrator shall have no authority to modify any provision of this Agreement or to award a remedy for a dispute involving this Agreement other than a benefit specifically provided under or by 

7

virtue of the Agreement. Each party shall be responsible for its own expenses relating to the conduct of the arbitration or litigation (including reasonable attorneys’ fees and expenses) and shall share the fees of JAMS and the arbitrator, if applicable, equally.

10.    General.

10.1    JURY TRIAL WAIVER.    THE PARTIES EXPRESSLY AND KNOWINGLY WAIVE ANY RIGHT TO A JURY TRIAL IN THE EVENT ANY ACTION ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE EXECUTIVE’S EMPLOYMENT WITH THE COMPANY IS LITIGATED OR HEARD IN ANY COURT.

10.2    Continuation of Employment.    Unless the parties otherwise agree in writing, continuation of the Executive’s employment with the Company beyond the expiration of the Term shall be deemed an employment at will and shall not be deemed to extend any of the provisions of this Agreement, and Executive’s employment may thereafter be terminated ‘‘at will’’ by the Executive or the Company and Executive will be entitled to fringe benefits which the Executive is eligible to receive for so long as the Executive continues to be employed with the Company.

10.3    Headings.    The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

10.4    Entire Agreement.    This Agreement sets forth the entire agreement and understanding of the parties relating to the Executive’s employment by the Company, and supersedes all prior agreements, arrangements and understandings, written or oral, relating to the Executive’s employment by the Company including effective as of the Effective Date, the Original Employment Agreement, and the Executive’s offer letter dated April  26,  2005. No representation, promise or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.

10.5    Assignment.    This Agreement, and the Executive’s rights and obligations hereunder, may not be assigned by the Executive. The Company may assign its rights, together with its obligations, hereunder (i) to any affiliate or (ii) to third parties in connection with any sale, transfer or other disposition of all or substantially all of the business or assets of the Company; in any event the obligations of the Company hereunder shall be binding on its successors or assigns, whether by merger, consolidation or acquisition of all or substantially all of its business or assets.

10.6    Waiver.    This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived, only by a written instrument executed by all of the parties hereto, or in the case of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by either party of the breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement.

11.    Subsidiaries and Affiliates.

11.1    As used herein, the term ‘‘subsidiary’’ shall mean any corporation or other business entity controlled directly or indirectly by the corporation or other business entity in question, and the term ‘‘affiliate’’ shall mean and include any corporation or other business entity directly or indirectly controlling, controlled by or under common control with the corporation or other business entity in question.

8

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

		CLARKE AMERICAN CORP.

			
		By: 	/s/ Charles T. Dawson                            

Name: Charles T. Dawson
Title: President & CEO

		/s/ Peter A. Fera, Jr.                                  

Peter A. Fera, Jr.

9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}]]