Document:

Exhibit 10.17

 

 

CHECKSMART FINANCIAL HOLDINGS CORP.

 

2006 MANAGEMENT EQUITY INCENTIVE PLAN

 

EFFECTIVE AS OF MAY 1, 2006

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page No.
    
	
 
    	
 
    	
 
    
	
SECTION 1.
    	
PURPOSE
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 2.
    	
ADMINISTRATION
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 3.
    	
ELIGIBILITY
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 4.
    	
SHARES   SUBJECT TO PLAN
    	
2
    
	
 
    	
 
    	
 
    
	
 
    	
a.
    	
Basic   Limitation
    	
2
    
	
 
    	
b.
    	
Additional   Shares
    	
2
    
	
 
    	
 
    	
 
    
	
SECTION 5.
    	
AWARDS
    	
2
    
	
 
    	
 
    	
 
    
	
 
    	
a.
    	
Types   of Awards
    	
2
    
	
 
    	
b.
    	
Award   Agreements
    	
2
    
	
 
    	
c.
    	
No   Rights as a Shareholder
    	
2
    
	
 
    	
 
    	
 
    
	
SECTION 6.
    	
OPTIONS
    	
3
    
	
 
    	
 
    	
 
    
	
 
    	
a.
    	
Grant   of Options
    	
3
    
	
 
    	
b.
    	
Options   Award Agreement
    	
3
    
	
 
    	
c.
    	
Method   of Exercise
    	
3
    
	
 
    	
 
    	
 
    
	
SECTION 7.
    	
STOCK   APPRECIATION RIGHTS
    	
3
    
	
 
    	
 
    	
 
    
	
 
    	
a.
    	
Generally
    	
3
    
	
 
    	
b.
    	
Stock   Appreciation Rights Award Agreement
    	
3
    
	
 
    	
 
    	
 
    
	
SECTION 8.
    	
RESTRICTED   STOCK
    	
4
    
	
 
    	
 
    	
 
    
	
 
    	
a.
    	
Generally
    	
4
    
	
 
    	
b.
    	
Restricted   Stock Award Agreement
    	
4
    
	
 
    	
c.
    	
Voting   Rights
    	
4
    
	
 
    	
d.
    	
Section 83(b) Election
    	
4
    
	
 
    	
 
    	
 
    
	
SECTION 9.
    	
RESTRICTED   STOCK UNITS
    	
4
    
	
 
    	
 
    	
 
    
	
 
    	
a.
    	
Generally
    	
4
    
	
 
    	
b.
    	
Settlement   of Restricted Stock Units
    	
4
    
	
 
    	
 
    	
 
    
	
SECTION 10.
    	
DIVIDEND   EQUIVALENT RIGHTS
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
a.
    	
Generally
    	
5
    
	
 
    	
b.
    	
Settlement   of Dividend Equivalent Rights
    	
5
    
	
 
    	
 
    	
 
    
	
SECTION 11.
    	
PAYMENT   FOR SHARES
    	
5
    
	
 
    	
 
    	
 
    
	
 
    	
a.
    	
General   Rule
    	
5
    
	
 
    	
b.
    	
Surrender   of Shares
    	
5
    
	
 
    	
c.
    	
Services   Rendered
    	
5
    
	
 
    	
d.
    	
Promissory   Note
    	
5
    
	
 
    	
e.
    	
Net   Exercise
    	
5
    
	
 
    	
f.
    	
Exercise/Sale
    	
6
    
	
 
    	
g.
    	
Discretion   of Board
    	
6
    
	
 
    	
 
    	
 
    
	
SECTION 12.
    	
TERMINATION   OF SERVICE
    	
6
    

 

i

 

	
 
    	
a.
    	
Termination   of Service
    	
6
    
	
 
    	
b.
    	
Leave   of Absence
    	
6
    
	
 
    	
 
    	
 
    
	
SECTION 13.
    	
ADJUSTMENT   OF SHARES
    	
6
    
	
 
    	
 
    	
 
    
	
 
    	
a.
    	
General
    	
6
    
	
 
    	
b.
    	
Mergers   and Consolidations
    	
6
    
	
 
    	
 
    	
 
    
	
SECTION 14.
    	
SECURITIES   LAW REQUIREMENTS
    	
7
    
	
 
    	
 
    	
 
    
	
SECTION 15.
    	
GENERAL   TERMS
    	
7
    
	
 
    	
 
    	
 
    
	
 
    	
a.
    	
Nontransferability   of Awards
    	
7
    
	
 
    	
b.
    	
Restrictions   on Transfer of Shares
    	
8
    
	
 
    	
c.
    	
Compliance   with Section 409A of the Code
    	
8
    
	
 
    	
d.
    	
Withholding   Requirements
    	
8
    
	
 
    	
e.
    	
No   Retention Rights
    	
8
    
	
 
    	
f.
    	
Unfunded   Plan
    	
8
    
	
 
    	
 
    	
 
    
	
SECTION 16.
    	
DURATION   AND AMENDMENTS
    	
9
    
	
 
    	
 
    	
 
    
	
 
    	
a.
    	
Term   of the Plan
    	
9
    
	
 
    	
b.
    	
Right   to Amend or Terminate the Plan
    	
9
    
	
 
    	
c.
    	
Effect   of Amendment or Termination
    	
9
    
	
 
    	
d.
    	
Modification,   Extension and Assumption of Awards
    	
9
    
	
 
    	
e.
    	
Initial   Public Offering
    	
9
    
	
 
    	
 
    	
 
    
	
SECTION 17.
    	
DEFINITIONS
    	
9
    
	
 
    	
 
    	
 
    
	
 
    	
a.
    	
“Affiliate”
    	
9
    
	
 
    	
b.
    	
“Award”
    	
10
    
	
 
    	
c.
    	
“Board”
    	
10
    
	
 
    	
d.
    	
“Change   of Control”
    	
10
    
	
 
    	
e.
    	
“Code”
    	
10
    
	
 
    	
f.
    	
“Company”
    	
10
    
	
 
    	
g.
    	
“Fair   Market Value”
    	
10
    
	
 
    	
h.
    	
“Initial   Public Offering”
    	
10
    
	
 
    	
i.
    	
“Option”
    	
10
    
	
 
    	
j.
    	
“Participant”
    	
10
    
	
 
    	
k.
    	
“Person”
    	
10
    
	
 
    	
l.
    	
“Plan”
    	
10
    
	
 
    	
m.
    	
“Recapitalization”
    	
10
    
	
 
    	
n.
    	
“Restricted   Stock”
    	
10
    
	
 
    	
o.
    	
“Restricted   Stock Unit”
    	
11
    
	
 
    	
p.
    	
“Securities   Act”
    	
11
    
	
 
    	
q.
    	
“Service”
    	
11
    
	
 
    	
r.
    	
“Shares”
    	
11
    
	
 
    	
s.
    	
“Stock   Appreciation Right”
    	
11
    
	
 
    	
t.
    	
“Stockholders   Agreement”
    	
11
    
	
 
    	
u.
    	
“Subsidiary”
    	
11
    
	
 
    	
 
    	
 
    	
 
    
	
SECTION 18.
    	
MISCELLANEOUS
    	
11
    
	
 
    	
 
    	
 
    
	
 
    	
a.
    	
Choice   of Law
    	
11
    
	
 
    	
b.
    	
Adoption
    	
11
    

 

ii

 

CHECKSMART FINANCIAL HOLDINGS CORP.

 

2006 MANAGEMENT EQUITY INCENTIVE PLAN

 

SECTION 1. PURPOSE.

 

The purpose of the Plan is to attract and retain the best available personnel, to provide additional incentive to persons who provide services to the Company and its Subsidiaries, and to promote the success of the Company’s business.  Unless the context otherwise requires, capitalized terms used herein are defined in Section 17.

 

SECTION 2. ADMINISTRATION.

 

The Plan shall be administered by the Board.  The Board shall have full authority and sole discretion to take any actions it deems necessary or advisable for the administration and operation of the Plan, subject to the terms and conditions of the Plan, including, without limitation, the right to construe and interpret the provisions of the Plan or any Award, to provide for any omission in the Plan, to resolve any ambiguity or conflict under the Plan or any Award, to accelerate vesting of or otherwise waive any requirements applicable to any Award, to extend the term or any period of exercisability of any Award, to modify the purchase price or exercise price under any Award, to establish terms or conditions applicable to any Award and to review any decisions or actions made or taken by the Board.  All decisions, interpretations and other actions of the Board shall be final and binding on all Participants and other persons deriving their rights from a Participant.  Notwithstanding anything to the contrary herein, no action taken by the Board shall adversely affect in any material respect the rights granted to any Participant under any outstanding Award without the Participant’s written consent.

 

SECTION 3. ELIGIBILITY

 

The Board is authorized to grant Awards to employees and consultants(1) of the Company or any Subsidiary of the Company.  Employees who have been granted Awards shall be Participants in the Plan with respect to such Awards.  Non-employee members of the Board of Directors of the Company shall not be eligible to receive Awards under the Plan.

 

(1)  Note that any non-employees given grants under the Plan will receive different accounting treatment.

 

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SECTION 4. SHARES SUBJECT TO PLAN.

 

a.     Basic Limitation.  Subject to the following provisions of this Section 4 and Section 13, the maximum number of Shares that may be issued pursuant to Awards under the Plan is 162,791 Shares.  Shares may only be authorized but unissued Shares and, may not be treasury Shares.  Where an Award is granted in tandem, the number of Shares charged against the Basic Limitation shall be the maximum number of Shares that may be issued pursuant to the Award.

 

b.     Additional Shares.  In the event that any outstanding Award expires, is cancelled or otherwise terminated, any rights to acquire Shares allocable to the unexercised or unvested portion of such Award shall again be available for the purposes of the Plan.  In the event that Shares issued under the Plan are reacquired by the Company pursuant to any forfeiture provision, such Shares shall again be available for the purposes of the Plan.  In the event a Participant pays for any Award through the delivery of previously acquired Shares, the number of Shares available shall be increased by the number of Shares delivered by the Participant.

 

SECTION 5. AWARDS.

 

a.     Types of Awards.  The Board may, in its sole discretion, make Awards of one or more of the following:  Options, Stock Appreciation Rights, Restricted Stock and Restricted Stock Units.  The Company shall make Awards directly or cause one or more of its Subsidiaries to make Awards; provided, however, that the Company shall be responsible for causing any such Subsidiary to comply with the terms of any Award and the Plan.  Awards may be granted singly or in tandem.

 

b.     Award Agreements.  Each Award made under the Plan shall be evidenced by a written agreement between the Participant and the Company, and no Award shall be valid without any such agreement.  An Award shall be subject to all applicable terms and conditions of the Plan and to any other terms and conditions which the Board in its sole discretion deems appropriate for inclusion in the Award agreement provided such terms and conditions are not inconsistent with the Plan.  Accordingly, in the event of any conflict between the provisions of the Plan and any such agreement, the provisions of the Plan shall prevail.  Each agreement evidencing an Award shall provide, in addition to any terms and conditions required to be provided in such agreement pursuant to any other provision of this Plan, the following terms:

 

(i)            Number of Shares.  The number of Shares subject to the Award, if any, which number shall be subject to adjustment in accordance with Section 13 of the Plan.

 

(ii)           Price.  Where applicable, each agreement shall designate the price, if any, to acquire any Shares underlying the Award, which price shall be payable in a form described in Section 11 and subject to adjustment pursuant to Section 13.

 

(iii)          Vesting.  Each agreement shall specify the dates and events on which all or any installment of the Award shall be vested and nonforfeitable.

 

c.     No Rights as a Shareholder.  A Participant, or a transferee of a Participant, shall have no rights as a shareholder with respect to any Shares covered by an Award until Shares are actually issued in the name of such person (or if Shares will be held in street name, to a broker who will

 

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hold such Shares on behalf of such person), except as set forth in Section 8(d) or as may be set forth in the Award agreement.

 

SECTION 6. OPTIONS.

 

a.     Grant of Options.  The Board may, in its sole discretion, grant Options. All Options shall be nonqualified stock options.  The Plan does not provide for the grant of “incentive stock options” within the meaning of Section 422 of the Code.

 

b.     Options Award Agreement.  Each agreement evidencing an Award of Options shall contain the following information, which shall be determined by the Board, in its sole discretion:

 

(i)            Exercise Price.  Each agreement shall state the per share exercise price, which shall not be less than the Fair Market Value of a Share on the date of grant unless such Option otherwise would satisfy Section 409A of the Code.

 

(ii)           Exercisability.  Each agreement shall specify the dates and events when all or any installment of the Option becomes exercisable.

 

(iii)          Term.  Each agreement shall state the term of each Option (including the circumstances under which such Option will expire prior to the stated term thereof), which shall not exceed ten years from the date of grant.

 

c.     Method of Exercise.  Options shall be exercised by the delivery of a notice of exercise to the Company or an agent designated by the Company in a form specified or accepted by the Board, or by complying with any alternative procedures which may be authorized by the Board, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.  As soon as practicable after receipt of written notification of exercise and full payment (including satisfaction of any applicable tax withholding), the Company shall deliver to the Participant evidence of book entry Shares, or upon the Participant’s request, Share certificates in an appropriate amount based upon the number of Shares purchased under the Option(s).  The Company, at its election and in its sole discretion, may settle any SARs requested to be exercised in Shares or cash.

 

SECTION 7. STOCK APPRECIATION RIGHTS.

 

a.     Generally.  The Board may, in its sole discretion, grant “Stock Appreciation Rights”.  A Stock Appreciation Right means a right to receive a payment in cash, Shares or a combination thereof, in the sole discretion of the Board, in an amount equal to the excess of (i) the Fair Market Value, or other specified valuation, of a number of Shares on the date the right is exercised over (ii) the Initial Base Value (as determined in any grant agreement).  If a Stock Appreciation Right is granted in tandem with or in substitution for an Option, the designated Fair Market Value in the Award agreement shall reflect the Fair Market Value of the Shares underlying the Awards on the date the Option is granted.

 

b.     Stock Appreciation Rights Award Agreement.  Each agreement evidencing an Award of Stock Appreciation Rights shall contain the following information, which shall be determined by the Board, in its sole discretion:

 

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(i)            Base Value.  Each agreement shall specify the base value of the Shares above which a Participant shall be entitled to share in the appreciation in the value of such Shares.  The per share Initial Base Value shall not be less than the Fair Market Value of a Share on the date of grant unless such Stock Appreciation Right otherwise would satisfy Section 409A of the Code

 

(ii)           Exercisability.  Each agreement shall specify how all or any portion of a Stock Appreciation Right shall be exercisable.

 

(iii)          Term.  Each agreement shall state the term of each Stock Appreciation Right (including the circumstances under which such Stock Appreciation Right will expire prior to the stated term thereof), which shall not exceed ten years from the date of grant.

 

SECTION 8. RESTRICTED STOCK

 

a.     Generally.  The Committee is hereby authorized to grant Shares that are subject to a risk of forfeiture and contain such other restrictions, including restrictions on transferability, as the Committee shall determine.  Each such share shall be known as a share of Restricted Stock.

 

b.     Restricted Stock Award Agreement.  Each agreement evidencing an Award of Restricted Stock shall specify the restriction period and such other such terms, including as to vesting, term and transfer restrictions, as determined by the Board, in its sole discretion.  If Restricted Stock will be granted or the restrictions shall have lapsed upon the achievement of performance goals over a performance period, such Award of Restricted Stock shall be referred to as “Performance Shares”.

 

c.     Voting Rights.  Unless otherwise determined by the Committee and set forth in a Participant’s award agreement, to the extent permitted or required by law, as determined by the Committee, Participants holding Shares of Restricted Stock granted hereunder shall have the right to exercise full voting rights with respect to those Shares during the period of restriction.

 

d.     Section 83(b) Election.  The Committee may provide in an award agreement that the Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election with respect to the Award under Section 83(b) of the Code.  If a Participant makes an election pursuant to Section 83(b) of the Code concerning a Restricted Stock Award, the Participant shall be required to file promptly a copy of such election with the Company.

 

SECTION 9. RESTRICTED STOCK UNITS.

 

a.     Generally.  The Board of Directors may, in its sole discretion, grant Restricted Stock Units, where in each case one Unit shall be a notional account representing one Share.

 

b.     Settlement of Restricted Stock Units.  Restricted Stock Units shall be settled in Shares unless the agreement evidencing the Award expressly provides for settlement of all or a portion of the Restricted Stock Units in cash equal to the value of the Shares that would otherwise be distributed in settlement of such units.  Shares distributed to settle a Restricted Stock Unit may be issued with or without payment or consideration therefor, except as may be required by

 

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applicable law or the Board of Directors in its sole discretion as set forth in the agreement evidencing the Award.  The Board of Directors may, in its sole discretion, establish a program to permit participants to defer payments and distributions made in respect of Restricted Stock Units.

 

SECTION 10. DIVIDEND EQUIVALENT RIGHTS.

 

a.     Generally.  The Board of Directors may, in its sole discretion, grant Dividend Equivalent Rights with respect to any Award.

 

b.     Settlement of Dividend Equivalent Rights.  Dividend Equivalent Rights may be settled in cash, Shares, additional Awards or other securities or property, all as provided in the Award agreement.  The Board of Directors may, in its sole discretion, establish a program to permit participants to defer payments and distributions made in respect Dividend Equivalent Rights.

 

SECTION 11. PAYMENT FOR SHARES.

 

a.     General Rule.  The exercise price of Options and/or the purchase price (if any) of Shares issuable under the Plan shall be payable in cash or personal check at the time when such Shares are purchased, except as otherwise provided in this Section 11.

 

b.     Surrender of Shares.  At the sole discretion of the Board, all or any part of the purchase price and any applicable withholding requirements may be paid by surrendering, or attesting to the ownership of Shares that have fully vested, and are already owned by the Participant.  Such Shares shall be surrendered to the Company in good form for transfer and shall be valued at their Fair Market Value on the date when the Option is exercised or payment is made.  The Participant shall not surrender, or attest to the ownership of, Shares in payment of any portion of the purchase price (or withholding) if such action would cause the Company or any Subsidiary thereof to recognize a compensation expense (or additional compensation expense) with respect to the applicable Award for financial reporting purposes, unless the Board consents thereto.

 

c.     Services Rendered.  At the sole discretion of the Board, and except as required by applicable law, Shares may be awarded under the Plan in consideration of services rendered to the Company or a Subsidiary thereof prior to or after the Award.

 

d.     Promissory Note.  At the sole discretion of the Board, all or a portion of the exercise price of Options and/or the purchase price (if any) of Shares issuable under the Plan and any applicable withholding requirements may be paid with a full-recourse promissory note.  However, the par value of the Shares, if newly issued, shall be paid in cash.  The Shares shall be pledged as security for payment of the principal amount of the promissory note and interest thereon.  The interest rate payable under the terms of the promissory note shall not be less than the minimum rate (if any) required to avoid the imputation of additional interest or the creation of original issue discount under the Code.  Subject to the foregoing, the Board (at its sole discretion) shall specify the term, interest rate, amortization requirements (if any) and other provisions of such note.

 

e.     Net Exercise.  At the sole discretion of the Board, payment of all or any portion of the purchase price under any Award under the Plan and any applicable withholding requirements may be made by reducing the number of Shares otherwise deliverable pursuant to the Award by

 

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the number of such Shares having a Fair Market Value equal to the purchase price.  For the avoidance of doubt, the Company will not withhold any amounts greater than the statutory minimum.

 

f.      Exercise/Sale.  At the sole discretion of the Board on or after an Initial Public Offering, at any time, payment may be made in whole or in part by the delivery (on a form prescribed by the Company) of an irrevocable direction (i) to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company, or (ii) to pledge Shares to a securities broker or lender approved by the Company as security for a loan, and to deliver all or part of the loan proceeds to the Company, in each case in payment of all or part of the purchase price and any withholding requirements.

 

g.     Discretion of Board.  Should the Board exercise its sole discretion to permit the Participant to pay the purchase price under an Award in whole or in part in accordance with Sections 11(b) through (f) above, it shall not be bound to permit such alternative method of payment for the remainder of any such Award or with respect to any other Award or Participant under the Plan.

 

SECTION 12. TERMINATION OF SERVICE.

 

a.     Termination of Service.  If a Participant’s Service terminates for any reason, then the Award shall be subject to termination, rights of repurchase, and the other provisions, set forth in the written agreement with the Participant governing such Award.

 

b.     Leave of Absence.  For purposes of this Section 12, Service shall be deemed to continue while a Participant is a bona fide leave of absence, if such leave is approved by the Company in writing or if continued crediting of service for this purpose is expressly required by the terms of such leave or by applicable law (as determined by the Board).

 

SECTION 13. ADJUSTMENT OF SHARES.

 

a.     General.  If there shall be a Recapitalization, an adjustment shall be made to each outstanding Award such that each such Award shall thereafter be exercisable or payable, as the case may be, in such securities, cash and/or other property as would have been received in respect of Shares subject to, or referenced by, such Award had such Award been exercised and/or settled in full immediately prior to such Recapitalization and such an adjustment shall be made successively each time any such change shall occur.  In addition, in the event of any Recapitalization, the Board will adjust, in a fair and equitable manner, the number of Shares that may be issued under the Plan, the number of Shares subject to outstanding Awards, and the exercise price or purchase price applicable to outstanding Awards to prevent dilution or enlargement of Participants’ rights under the Plan and outstanding Awards.  Should the vesting of any Award be conditioned upon the Company’s attainment of performance conditions, the Board may, in a fair and equitable manner, make such adjustments to the terms and conditions of such Awards and the criteria therein to recognize unusual and nonrecurring events affecting the Company or in response to changes in applicable laws, regulations or accounting principles.

 

b.     Mergers and Consolidations.  In the event that the Company is a party to a merger or consolidation, outstanding Awards shall be subject to the agreement of merger or consolidation.

 

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Subject to the terms of the applicable Award agreement, the agreement with respect to such merger or consolidation, without the Participants’ consent, may provide for:

 

(i)            The continuation or assumption of such outstanding Awards under the Plan by the Company (if it is the surviving entity) or by the surviving entity or its direct or indirect parent;

 

(ii)           The substitution by the surviving entity or its direct or indirect parent of share awards with substantially the same terms and economic value for such outstanding Awards;

 

(iii)          The acceleration of the vesting of or right to exercise such outstanding Awards immediately prior to or as of the date of the merger or consolidation, and the expiration of such outstanding Awards to the extent not timely exercised or purchased by the date of the merger or consolidation or other date thereafter designated by the Board, after reasonable advance written notice thereof to the holder of each such Award; or

 

(iv)          The cancellation of all or any portion of such outstanding Awards; provided that, with respect to vested “in-the-money” Awards, such cancellation must be made in exchange for a cash payment of the excess of the fair market value of the Shares subject to such outstanding Awards or portion thereof being canceled over the exercise price or purchase price, if any, with respect to such Awards or the portion thereof being canceled.

 

SECTION 14. SECURITIES LAW REQUIREMENTS.

 

Shares shall not be issued under the Plan unless the issuance and delivery of such Shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act, state or foreign securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded.  The Company shall not be obligated to file any registration statement under any applicable securities laws to permit the purchase or issuance of any Shares under the Plan, and accordingly any certificates for Shares may have an appropriate legend or statement of applicable restrictions endorsed thereon.  Each Participant and any person deriving its rights from any Participant shall, as a condition to the purchase or issuance of any Shares under the Plan, deliver to the Company an agreement or certificate containing such representations, warranties and covenants as the Company may deem necessary or appropriate to ensure that the issuance of Shares is not required to be registered under any applicable securities laws.

 

SECTION 15. GENERAL TERMS.

 

a.     Nontransferability of Awards.  No Award may be transferred, assigned, pledged or hypothecated by any Participant except in compliance with the terms of the agreement governing such Award.  The exercisability of an Option or other right to acquire Shares under the Plan by someone other than the Participant shall be governed by the agreement pursuant to which such Option or other right is granted.

 

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b.     Restrictions on Transfer of Shares.  Any Shares issued under the Plan shall be subject to such vesting and special forfeiture conditions, repurchase rights, rights of first offer and other transfer restrictions as the Board may determine.  Such restrictions shall be set forth in the applicable Award agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally.

 

c.     Compliance with Section 409A of the Code.  To the extent applicable, it is intended that this Plan and all Awards comply with the provisions of Section 409A of the Code and the Plan and all Awards shall be administered accordingly.  Notwithstanding anything in the Plan to the contrary, the Board shall have authority to amend the Plan and modify any Award to the extent necessary to fulfill this intent and any provision that would cause the Plan or any Award to fail to satisfy Section 409A of the Code shall have no force and effect unless and until amended or modified to comply with Section 409A of the Code.  Reference to Section 409A of the Code includes reference to any proposed, temporary or final regulations and any other guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

 

d.     Withholding Requirements.  As a condition to the receipt or purchase of Shares pursuant to an Award, a Participant shall make such arrangements as the Board may require for the satisfaction of any federal, state, local or foreign withholding obligations that may arise in connection with such receipt or purchase.  The Participant shall also make such arrangements as the Board may require for the satisfaction of any federal, state, local or foreign withholding obligations that may arise in connection with the disposition of Shares acquired pursuant to an Award.

 

e.     No Retention Rights.  Nothing in the Plan or in any Award granted under the Plan shall confer upon a Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Subsidiary thereof employing or retaining the Participant) or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her Service at any time and for any reason, with or without cause.

 

f.      Unfunded Plan.  Participants shall have no right, title or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Plan.  Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, nor a fiduciary relationship between the Company and any Participant, beneficiary, legal representative or any other person.  To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the rights of an unsecured general creditor of the Company.  All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts.  The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.

 

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SECTION 16. DURATION AND AMENDMENTS.

 

a.     Term of the Plan.  The Plan, as set forth herein, shall become effective on the date of its adoption by the Board of Directors of the Company, subject to (i) the approval of the holders of a majority of the Shares and (ii) any other shareholder approval required pursuant to the Stockholders Agreement.  If the requisite shareholder approvals set forth in the immediately preceding sentence to approve the Plan are not obtained within 12 months of its adoption by the Board of Directors of the Company, any Awards that have already been made shall be rescinded, and no additional Awards shall be made thereafter under the Plan.  The Plan shall terminate automatically on the day preceding the tenth anniversary of its adoption by the Board of Directors of the Company unless earlier terminated pursuant to Section 16(b) below.

 

b.     Right to Amend or Terminate the Plan.  The Board may amend, suspend or terminate the Plan at any time and for any reason; provided, however, that any amendment of the Plan (except as provided in Section 13) which increases the maximum number of Shares available for issuance under the Plan in the aggregate, changes the legal entity authorized to make Awards under this Plan from the Company (or its successor) to any other legal entity, shall be subject to:  (i) the approval of the holders of a majority of the Shares and (ii) any other shareholder approval required pursuant to the Stockholders Agreement.  Except as may be required by the Stockholders Agreement, approval of the holders of the Shares shall not be required for any other amendment of the Plan.

 

c.     Effect of Amendment or Termination.  Except as provided in Section 15(c) hereof, any amendment of the Plan shall not adversely affect in any respect any Participant’s rights under any Award previously made or granted under the Plan without the Participant’s consent.  No Shares shall be issued or sold under the Plan after the termination thereof, except pursuant to an Award granted prior to such termination.  The termination of the Plan shall not affect any Awards outstanding on the termination date.

 

d.     Modification, Extension and Assumption of Awards.  Within the limitations of the Plan, the Board may modify, extend or assume outstanding Awards or may provide for the cancellation of outstanding Awards in return for the grant of new Awards for the same or a different number of Shares and at the same or a different price.  The foregoing notwithstanding, except as provided in Section 15(c) hereof, no modification of an Award shall, without the consent of the Participant, impair the Participant’s rights or increase the Participant’s obligations under such Award or impair the economic value of any such Award.

 

e.     Initial Public Offering.  Prior to an Initial Public Offering, the Board may amend and restate this Plan to include such provisions as the Board determines in good faith necessary or appropriate as a result of the Company becoming, after an Initial Public Offering, a publicly-traded company, subject to Section 16(c) hereof.

 

SECTION 17. DEFINITIONS.

 

a.     “Affiliate” shall mean, with respect to any specified Person, (a) any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, such specified Person (for the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or

 

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indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise); provided, however, that neither the Company nor any of its Subsidiaries shall be deemed an Affiliate of any of the Stockholders (and vice  versa), and (b) if such specified Person is an investment fund, any other investment fund the primary investment advisor to which is the primary investment advisor to such specified Person.

 

b.     “Award” shall mean the grant of an Option, Stock Appreciation Right, Restricted Stock or Restricted Stock Unit under the Plan.

 

c.     “Board” shall mean the Board of Directors of the Company, as constituted from time to time, or if such Board of Directors has appointed a Compensation Committee, the Compensation Committee.

 

d.     “Change of Control” shall have the meaning ascribed to such term in the Stockholders Agreement.

 

e.     “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

f.      “Company” shall mean CheckSmart Financial Holdings Corp., a Delaware corporation.

 

g.     “Fair Market Value” shall mean, as of any date of determination, the Board’s good faith determination of the fair value of the Company Securities as of such date.

 

h.     “Initial Public Offering” shall mean the Company’s first Public Offering.  Public Offering shall mean an underwritten public offering and sale of shares of Common Stock for cash pursuant to an effective registration statement under the Securities Act, other than pursuant to a registration statement on Form S-4 or Form S-8 or any similar or successor form.

 

i.      “Option” shall mean an Option granted under the Plan and entitling the holder to purchase Shares.

 

j.      “Participant” shall mean an eligible individual to whom and Award is granted to under the Plan.

 

k.    “Person” shall mean any individual, partnership, corporation, company, association, trust, joint venture, limited liability company, unincorporated organization, entity or division, or any government, governmental department or agency or political subdivision thereof.

 

l.      “Plan” shall mean this CheckSmart Financial Holdings Corp. 2006 Management Equity Incentive Plan.

 

m.    “Recapitalization” shall mean an event or series of events affecting the capital structure of the Company including, but not limited to, stock dividends, stock splits, rights offers or recapitalizations through large, non-recurring cash dividends.

 

n.     “Restricted Stock” shall have the meaning described in Section 8(a).

 

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o.     “Restricted Stock Unit” shall have the meaning described in Section 9(a).

 

p.     “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

q.     “Service” shall mean service as an employee or consultant of the Company or any Subsidiary thereof.

 

r.     “Shares” shall mean shares of the Class A Common Stock of the Company, par value $.01 per share.

 

s.     “Stock Appreciation Right” shall have the meaning described in Section 7(a).

 

t.      “Stockholders Agreement” shall mean that certain Stockholders Agreement dated as of May 1, 2006, by and among the Company, Diamond Castle investment vehicles to be inserted], each Person executing the Stockholders Agreement and listed as a Rollover Holder on the signature pages hereto and each Person executing this Agreement and listed as a Management Holder on the signature pages of the Stockholders Agreement. or executing a Joinder Agreement as a Management Holder (as the same shall be amended, supplemented or modified from time to time).

 

u.     “Subsidiary” shall mean any Person as to which the Company owns or controls, directly or indirectly, more than 50% percent of the voting securities of such Person.

 

SECTION 18. MISCELLANEOUS

 

a.     Choice of Law.  All issues concerning the relative rights of the Company and any Participants with respect to each other shall be governed by the laws of the State of Delaware.  All other issues concerning the construction, validity and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts made and performed entirely within such state, without regard to the conflicts of laws rules of such state.  Any legal action or proceeding with respect to the Plan shall be brought in the courts of the United States for the Southern District of New York

 

b.     Adoption.  This Plan has been duly adopted by the Board of Directors of the Company as of May 1, 2006 and was approved by the stockholders of the Company as of May 1, 2006.

 

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AMENDMENT NO. 1 TO THE 2006 MANAGEMENT EQUITY INCENTIVE PLAN

 

This AMENDMENT NO. 1 to the CheckSmart Financial Holdings Corp. 2006 Management Equity Incentive Plan (the “Plan”) is made and entered into as of July 26, 2007 (this “Amendment”), by the Board of Directors (the “Board”) of CheckSmart Financial Holdings Corp. (the “Corporation”) and approved by the stockholders of the Corporation in accordance with Section 16(b) of the Plan.

 

RECITALS:

 

WHEREAS, the Plan was adopted by the Board on May 1, 2006 and approved by the stockholders of the Corporation on May 1, 2006; and

 

WHEREAS, the Corporation has retained authority to amend the Plan pursuant to Sections 15(c) and 16 thereof;

 

WHEREAS, the Corporation wishes to modify the requirements of the Plan upon a Recapitalization (as defined in the Plan) so as to comply with Section 409A of the Internal Revenue Code of 1986, as amended (“Code”); and

 

WHEREAS, the maximum number of shares permitted to be issued pursuant to awards under the Plan have almost been exhausted and the Corporation desires to issue additional shares; and

 

WHEREAS, the Board believes it to be in the best interests of the Corporation to increase the maximum number of shares permitted to be issued pursuant to awards under the Plan from the current 162,791 shares to 212,791 shares; and

 

WHEREAS, the Board believes it to be in the best interests of the Corporation to allow for the grant of options to directors of the Corporation; and

 

WHEREAS, the stockholders of the Corporation have approved this Amendment in accordance with Section 16(b) of the Plan.

 

NOW, THEREFORE, the Board of Directors of the Corporation amend the Plan as follows:

 

Section 1.  AMENDMENT TO THE PLAN.

 

(a)           Section 3 of the Plan is hereby amended and replaced in its entirety with the following:

 

“The Board is authorized to grant Awards to employees, directors and consultants of the Company or any Subsidiary of the Company.  Persons who have been granted Awards shall be Participants in the Plan with respect to such Awards.”

 

(b)           The first sentence of Section 4(a) of the Plan is hereby amended and replaced in its entirety with the following sentence:

 

“Subject to the following provisions of this Section 4 and Section 13, the maximum number of Shares that may be issued pursuant to Awards under the Plan is 212,791 Shares.”

 

(c)           Section 13(a) of the Plan is amended to read in its entirety as follows:

 

 

“a.           General.  If there shall be a Recapitalization, the Board shall substitute or adjust, in its sole discretion, to prevent dilution or enlargement of Participants’ rights under the Plan and outstanding Awards, (a) the number and kind of Shares or other securities that may be issued under the Plan or under particular forms of Awards, (b) the number and kind of Shares or other securities subject to outstanding Awards, (c) the exercise price, base price or purchase price applicable to outstanding Awards, (d) the grant of a Dividend Equivalent, and/or (e) other value determinations applicable to the Plan or outstanding Awards.  Should the vesting of any Award be conditioned upon the Company’s attainment of performance conditions, the Board may, in a fair and equitable manner, make such adjustments to the terms and conditions of such Awards and the criteria therein to recognize unusual and nonrecurring events affecting the Company or in response to changes in applicable laws, regulations or accounting principles.”

 

Section 2.               GENERAL PROVISIONS.

 

(a)           This Amendment may be executed in one or more counterparts, which may be delivered by facsimile transmission, all of which shall be considered one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart.

 

(b)           This Amendment shall be construed in accordance with and governed by the internal laws (without reference to choice or conflict of laws) of the State of New York.

 

(c)           On and after the date hereof each reference in the Plan to “this Plan”, “herein”, or words of like import shall mean and be a reference to the Plan as amended hereby.  No reference to this Amendment need be made in any instrument or document at any time referring to the Plan, a reference to the Plan in any of such to be deemed to be a reference to the Plan as amended hereby.

 

(d)           Except as specifically provided for in this Amendment, all other provisions of the Plan shall continue in full force and effect.

 

*    *    *    *    *

 

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IN WITNESS WHEREOF, the Board of Directors of the Corporation have executed this Amendment as of the date first above written.

 

 

	
 
    	
/s/   James H. Frauenberg, Sr.
    
	
 
    	
James   H. Frauenberg, Sr.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Andrew H. Rush
    
	
 
    	
Andrew   H. Rush
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Eugene Lockhart
    
	
 
    	
Eugene   Lockhart
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Lee Wright
    
	
 
    	
Lee   Wright
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Gary Wilson
    
	
 
    	
Gary   WilsonExhibit 10.9

 

FORM OF INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (this “Agreement”) is made and entered into as of [date] between Avast Software B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkeid), incorporated under the laws of the Netherlands (the “Company”), and [name] (“Indemnitee”). This Agreement shall supersede any prior indemnification agreement between the Company and the Indemnitee, which is hereby terminated.

 

WITNESSETH THAT:

 

WHEREAS, highly competent persons have become more reluctant to serve corporations as directors, officers or in other capacities unless they are provided with adequate protection through insurance or adequate indemnification against inordinate risks of claims and actions against them arising out of their service to and activities on behalf of the corporation;

 

WHEREAS, the board of directors of the Company (which includes both executive and non-executive directors) (the “Board”) has determined that, in order to attract and retain qualified individuals, the Company will attempt to maintain on an ongoing basis, at its sole expense, liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities. Although the furnishing of such insurance has been a customary and widespread practice among corporations and other business enterprises, the Company believes that, given current market conditions and trends, such insurance may be available to it in the future only at higher premiums and with more exclusions. At the same time, directors, officers, and other persons in service to corporations or business enterprises are being increasingly subjected to expensive and time-consuming litigation relating to, among other things, matters that traditionally would have been brought only against a corporation or business enterprise itself;

 

WHEREAS, the uncertainties relating to such insurance and to indemnification have increased the difficulty of attracting and retaining such persons;

 

WHEREAS, the Board has determined that the increased difficulty in attracting and retaining such persons is detrimental to the best interests of the Company’s stockholders and other stakeholders and that the Company should act to assure such persons that there will be increased certainty of such protection in the future;

 

WHEREAS, it is reasonable, prudent and necessary for the Company contractually to obligate itself to indemnify, and to advance expenses in accordance with the terms hereof on behalf of, such persons to the fullest extent permitted by applicable law so that they will serve or continue to serve the Company and its subsidiaries free from undue concern that they will not be so indemnified; [and]

 

WHEREAS, Indemnitee does not regard the protection available under the Company’s or its subsidiaries’ insurance as adequate in the present circumstances, and may not be willing to continue to serve as member of the Board, an officer or in any other capacity for the Company or its subsidiaries without adequate protection, and the Company desires Indemnitee to serve in such capacity. Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company or its subsidiaries on the condition that Indemnitee be so indemnified[.][; and

 

WHEREAS, Indemnitee is a representative of the Summit Funds and has certain rights to indemnification and/or insurance provided by the Summit Funds that the Company, Indemnitee and the Summit Funds intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided herein, with the Company’s acknowledgment and agreement to the foregoing being a material condition to Indemnitee’s willingness to serve as a member of the Board or in any other capacity for the Company and its subsidiaries.](1)

 

(1)  To be incorporated in Summit’s agreement.

 

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NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a member of the Board or an officer of the Company, and/or as a director or officer of any of the Company’s subsidiaries from and after the date hereof, the parties hereto agree as follows:

 

1. Indemnification of Indemnitee. The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time. In furtherance of the foregoing indemnification, and without limiting the generality thereof:

 

(a) Proceedings Other Than Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a) if, by reason of Indemnitee’s Corporate Status (as hereinafter defined), the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company. Pursuant to this Section 1(a), Indemnitee shall be indemnified against all Liabilities (as hereinafter defined) actually incurred and all Expenses (as hereinafter defined) actually and reasonably incurred by or on Indemnitee’s behalf, in connection with such Proceeding or any claim, issue or matter therein, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful.

 

(b) Proceedings by or in the Right of the Company. Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b) if, by reason of Indemnitee’s Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company. Pursuant to this Section 1(b), Indemnitee shall be indemnified against all Liabilities actually incurred and all Expenses actually and reasonably incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, if applicable law so provides, no indemnification against such Liabilities or Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that a court of competent jurisdiction determines that such indemnification may be made.

 

(c) Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by or on Indemnitee’s behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but fewer than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by or on Indemnitee’s behalf in connection with each successfully resolved claim, issue or matter.  For purposes of this Section and without limitation, the termination of any claim, issue or matter in a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

2. Additional Indemnity. In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee to the fullest extent permitted by law, against all Liabilities actually incurred and all Expenses actually and reasonably incurred by or on Indemnitee’s behalf if, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (including a Proceeding by or in the right of the Company or any of its subsidiaries). The only limitation that shall exist upon the Company’s obligations pursuant to this Section shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 12 hereof) to be unlawful.

 

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3. Contribution.

 

(a) Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed Proceeding in which the Company or any of its subsidiaries are jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall pay, in the first instance, the entire amount of any Liabilities actually incurred and Expenses actually and reasonably incurred related to such Proceeding without requiring Indemnitee to contribute to such payment and the Company and its subsidiaries hereby waive and relinquishe any right of contribution they may have against Indemnitee. The Company and its subsidiaries shall not enter into any settlement of any Proceeding in which the Company or any of its subsidiaries are jointly liable with Indemnitee (or would be if joined in such Proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

 

(b) Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed Proceeding in which the Company or any of its subsidiaries are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of Liabilities actually incurred and Expenses actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and its subsidiaries and all Board members, officers, employees or agents of the Company and its subsidiaries, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such Proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and its subsidiaries and all Board members, officers, employees or agents of the Company and its subsidiaries other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such Expenses and Liabilities, as well as any other equitable considerations which the law may require to be considered. The relative fault of the Company and its subsidiaries and all Board members, officers, employees or agents of the Company and its subsidiaries, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, (i) the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent the circumstances resulting in such Expenses or Liabilities, (ii) the degree to which their actions were motivated by intent to gain personal profit or advantage, (iii) the degree to which their liability is primary or secondary and (iv) the degree to which their conduct is active or passive.

 

(c) The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time, from any claims of contribution which may be brought by directors, officers, employees or agents of the Company and its subsidiaries, other than Indemnitee, who may be jointly liable with Indemnitee.

 

(d) To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for Liabilities actually incurred or Expenses actually and reasonably incurred, in connection with any claim relating to a Proceeding, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and its subsidiaries (and the directors, officers, employees and agents of the Company and its subsidiaries), on the one hand, and Indemnitee, on the other hand, as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company and its subsidiaries (and the directors, officers, employees and agents of the Company and its subsidiaries), on the one hand, and Indemnitee, on the other hand, in connection with such event(s) and/or transaction(s).

 

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4. Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of Indemnitee’s Corporate Status, a witness, or is made (or asked) to respond to discovery requests, in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by or on Indemnitee’s behalf in connection therewith.

 

5. Advancement of Expenses. Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within ten (10) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition or resolution of such Proceeding. Such statement or statements shall reasonably evidence the Expenses actually and reasonably incurred by Indemnitee and shall include or be preceded or accompanied by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined by a court of competent jurisdiction in a final judgment, not subject to appeal that Indemnitee is not entitled to be indemnified against such Expenses. Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free.

 

6. Procedures and Presumptions. It is the intent of the parties to this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the laws of the Netherlands and public policy of the Netherlands. Accordingly, the parties agree that the following procedures and presumptions shall apply to claims by Indemnitee for indemnification under this Agreement:

 

(a) To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such relevant documentation and information as is reasonably available to Indemnitee. Any payment for indemnification requested by the Indemnitee hereunder shall be made no later than ten (10) days after receipt of the written request of the Indemnitee; provided, however, that the written request of the Indemnitee shall constitute an undertaking providing that the Indemnitee undertakes to the fullest extent required by law to repay any indemnification payment if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Company.

 

(b) In any determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

 

(c) Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise (as hereinafter defined), including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Enterprise. In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement. Whether or not the foregoing provisions of this Section 6(c) are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and its subsidiaries. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence. In addition, the knowledge and/or actions, or failure to act, of any director, officer, employee or agent of the Company or any of its subsidiaries shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

(d) The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty. In the event that any Proceeding to which Indemnitee is a party is resolved in

 

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any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such Proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in Proceeding. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

 

(e) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or any of its subsidiaries or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful.

 

7. Non-Exclusivity; Survival of Rights; Insurance; Primacy of Indemnification; Subrogation.

 

(a) The rights of indemnification as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the governing documents of the Company or any of its subsidiaries, any agreement, a vote of stockholders, a resolution of directors or otherwise, of the Company. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in Indemnitee’s Corporate Status prior to such amendment, alteration or repeal. To the extent that a change in the laws of the Netherlands, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement, and without further action by the parties, the greater benefits so afforded by such change. In the event of any changes in any applicable law, statute, or rule which narrow the right of the Company to indemnify a member of its board of directors or any officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder. No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

 

(b) To the extent that the Company or its subsidiaries maintain an insurance policy or policies providing liability insurance for Board members, officers, employees, or agents or fiduciaries of the Company or its subsidiaries or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company or its subsidiaries, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any director, officer, employee, agent or fiduciary under such policy or policies. If, at the time of the receipt of a notice of a claim pursuant to the terms hereof, the Company or its subsidiaries has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall, and shall cause its subsidiaries to, thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies; provided that nothing in this Section 7(b) shall affect Indemnitee’s rights to be indemnified by the Company under this Agreement.

 

(c) [The Company hereby acknowledges that Indemnitee has certain rights to indemnification, advancement of expenses and/or insurance provided by certain of the Summit Funds and their affiliates. The Company hereby agrees that (i) the Company is the indemnitor of first resort, such that its obligations to Indemnitee are primary and any obligations of the Summit Funds and their affiliates to advance Expenses or to provide indemnification for the

 

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same Liabilities or Expenses incurred by Indemnitee are secondary, (ii) the Company shall be required to advance the full amount of Expenses actually and reasonably incurred by Indemnitee and shall be liable for the full amount of all Liabilities actually incurred and Expenses actually and reasonably incurred to the extent legally permitted and as required by this Agreement, or any agreement between the Company and the Indemnitee, without regard to any rights Indemnitee may have against the Summit Funds and their affiliates, and (iii) the Company irrevocably waives, relinquishes and releases the Summit Funds and their affiliates from any and all claims against the Summit Funds and their affiliates for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Summit Funds and their affiliates on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing, and the Summit Funds and their affiliates shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company.  The Summit Funds and their affiliates are intended third party beneficiaries of this Agreement.](2)

 

(d) [Except as provided in paragraph (c) above,] in the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee [(other than against the Summit Funds and their affiliates or their insurance)], who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

(d) [Except as provided in paragraph (c) above,] the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

 

(e) [Except as provided in paragraph (c) above,] the Company’s obligation to indemnify or advance Expenses hereunder to Indemnitee who is or was serving at the request of the Company or its subsidiaries as a director, officer, employee or agent of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement of Expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

 

8. Exception to Right of Indemnification. Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against Indemnitee:

 

(a) for which it has been established by a competent court in a final judgment, not subject to appeal that such claim results from willful (opzettelijk), intentionally reckless (bewust roekeloos) or seriously culpable (ernstig verwijtbaar) conduct by the Indemnitee; or

 

(b) for which payment has actually been made to or on behalf of Indemnitee under any insurance policy or other indemnity provision, except with respect to any excess beyond the amount paid under any insurance policy or other indemnity provision[, provided, that the foregoing shall not affect the rights of Indemnitee or the Summit Funds and their affiliates set forth in Section 7(c) hereof and is subject thereto]; or

 

(c) for an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of federal, state, provincial or local statutory law or common law; or

 

(d) in connection with any Proceeding (or any part of any Proceeding) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees or other indemnitees, unless (i) the

 

(2)  To be included in Summit’s agreement.

 

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Board authorized the Proceeding (or any part of any Proceeding) prior to its initiation, (ii) such Proceeding or part of a Proceeding is brought by Indemnitee to interpret or enforce this Agreement or any related indemnification obligations in a Company policy of insurance or the Company’s governing documents (unless a court of competent jurisdiction over such action determines, in a final judgment, not subject to appeal, that each of the material assertions or defenses asserted by Indemnitee in such action was made in bad faith or was frivolous) or (iii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law.

 

9. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Libilities or Expenses incurred by him in the investigation, defense, appeal or settlement of any Proceeding but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Liabilities or Expenses to which Indemnitee is entitled. Moreover, notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits or otherwise in defense of any or all claims, issues or matters relating in whole or in part to an indemnifiable event, occurrence or matter hereunder, including dismissal without prejudice, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred in connection with such defenses.

 

10. Duration of Agreement.

 

(a) This Agreement shall continue in effect in perpetuity regardless of whether Indemnitee continues to serve as a director Board member or officer of the Enterprise.

 

(b) This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and Indemnitee’s heirs, executors and administrators. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

(c) No legal action shall be brought and no cause of action shall be asserted by or in the right of the Company or any of its subsidiaries against Indemnitee, Indemnitee’s spouse, heirs, executors or personal or legal representatives after the expiration of two (2) years from the date of accrual of such cause of action, and any claim or cause of action of the Company or any of its subsidiaries shall be extinguished and deemed released unless asserted by the timely filing of a legal action within such two (2)-year period; provided, however, that if any shorter period of limitations is otherwise applicable to any such cause of action such shorter period shall govern.

 

11. Security. To the extent requested by Indemnitee and approved by the Board, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral. Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

 

12. Enforcement and Remedies of Indemnitee.

 

(a) The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as a Board member, an officer of the Company, and/or as a director or officer of any of the Company’s subsidiaries, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a Board member, an officer of the Company, and/or as a director or officer of any of the Company’s subsidiaries.

 

(b) In the event that advancement of Expenses or payment of any claim for indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request from Indemnitee therefor, Indemnitee shall be entitled to an adjudication in an appropriate court of Indemnitee’s entitlement to such indemnification

 

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subject to the provisions of Section 20 below. The Company shall not oppose Indemnitee’s right to seek any such adjudication.

 

(c) The Company shall be precluded from asserting in any Proceeding commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. The Company shall indemnify Indemnitee against any and all Expenses actually and reasonably incurred and, if requested by Indemnitee, shall (within ten (10) days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by law, such Expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company or any of its subsidiaries, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

 

(d) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

 

13. Definitions. For purposes of this Agreement:

 

(a) “Corporate Status” describes the status of a person who is or was a Board member, officer, employee, agent or fiduciary of the Company or any of its subsidiaries or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the request of the Company or any of its subsidiaries.

 

(b) “Enterprise” shall mean the Company and its subsidiaries, and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express request of the Company or any of its subsidiaries as a Board member, officer, employee, agent or fiduciary.

 

(c) “Expenses” shall include all attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees,  secretarial services and all other disbursements or expenses incurred in connection with any Proceeding or in establishing a right to indemnification under this Agreement. Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

(d) “Liabilities” shall mean damages, losses and liabilities of any type whatsoever including, but not limited to, any judgments, fines, Employee Retirement Income Security Act excise taxes and penalties, penalties and amounts paid in settlement (including all interest assessments and other charges paid or payable in connection with or in respect of such judgments, fines, penalties or amounts paid in settlement) of any Proceeding.

 

(e) “Proceeding” includes any actual, threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened, pending or completed proceeding, and any appeal thereof, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the Corporate Status of Indemnitee, by reason of any action taken by Indemnitee or of any inaction on Indemnitee’s part while acting in such Corporate Status, or by reason of the fact that Indemnitee is or was serving at the request of the Company or any of its subsidiaries as a Board member, officer, employee, agent or fiduciary of another

 

8

 

corporation, partnership, joint venture, trust or other Enterprise; in each case whether or not Indemnitee is acting or serving in any such capacity at the time any Expense or Liability is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement, or one initiated by an Indemnitee pursuant to Section 12 of this Agreement to enforce Indemnitee’s rights under this Agreement.

 

[(f) “Summit Fund” means Summit Partners Europe Private Equity Fund, L.P., Summit Investors I, LLC, Summit Investors I (UK), L.P. or any of their respective affiliates (including Summit Partners AVT Coöperatief U.A).](3)

 

14. Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable laws. In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

 

15. Modification and Waiver. No supplement, modification, waiver, termination or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

16. Notice By Indemnitee. Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder. The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.

 

17. Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent:

 

(a) If to Indemnitee, at the address set forth below Indemnitee’s signature hereto.

 

(b) If to the Company, at:

 

Avast Software B.V.

Trianon Office Building

Budejovicka 1518/13a

140 00, Prague 4

Czech Republic

Attention: Chief Executive Officer

 

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

 

18. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

(3)  To be incorporated in Summit’s agreement.

 

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19. Headings. The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

20. [Governing Law; Consent to Jurisdiction; Waivers. This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the Netherlands, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the appropriate court of the Netherlands or any court located in the city of London, England (each an “Applicable Court”), (ii) consent to submit to the exclusive jurisdiction of the Applicable Court in which the action or proceeding is brought for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Applicable Court in which the action or proceeding is brought, (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Applicable Court in which the action or proceeding is brought has been brought in an improper or inconvenient forum and (v) agree that service of process in any such action or proceeding may be effected by notice given pursuant to Section 17 of this Agreement, and otherwise waive service of process through the Hague Convention or any other applicable law; provided, however, that if (i) Indemnitee is named as a defendant, with respect to any action or proceeding arising out of or in connection with this Agreement, by the Company in an Applicable Court which is located in the Netherlands, (ii) Indemnitee makes a written request to the Company to discontinue the Netherlands action or proceeding, within sixty (60) days of such date on which Indemnitee receives notice of the action, in order to permit resolution in an Applicable Court located in the city of London, England and (iii) prior to making a written request to the Company, Indemnitee files an action or proceeding against the Company in an Applicable Court located in the city of London, England, then the Company agrees to dismiss the action or proceeding in the Applicable Court in the Netherlands and litigate in the Applicable Court in the city of London, England, subject to the other terms and conditions of this Section 20, and provided that,  such court is willing to accept jurisdiction over such action or proceeding.](4)

 

[Signature pages follow]

 

(4)  This version of this section to be included in Summit’s agreement.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement on and as of the day and year first above written.

 

 

	
 
    	
COMPANY
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

[SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT]

 

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INDEMNITEE
    
	
 
    	
 
    
	
 
    	
Name:
    	
 
    

 

 

	
 
    	
Address:
    
	
 
    	
 
    
	
 
    	
 
    

 

[SIGNATURE PAGE TO INDEMNIFICATION AGREEMENT]

 

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