Grant of Restricted Stock Units. In accordance with, and subject to, the terms and conditions of the Plan and this Agreement, the Company hereby confirms the grant on [Month] [day], [year] (the “Grant Date”) to the Grantee of [#,###] Restricted Stock Units. For Named Executive Officers disclosed in the Company’s Proxy Statement, Restricted Stock Units granted hereunder are intended to be Performance-Based Awards (as defined in the Plan) that satisfy the conditions for the Performance-Based Exception under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The Restricted Stock Units are notional units of measurement denominated in shares of common stock (i.e., one Restricted Stock Unit is equivalent in value to one share of common stock).
Terms and Conditions. It is understood and agreed that the Restricted Stock Units are subject to the following terms and conditions:
Restrictions. Except as otherwise provided in the Plan and this Agreement, neither this Award nor any Restricted Stock Units subject to this Award may be sold, assigned, pledged, exchanged, transferred, hypothecated or encumbered, other than to the Company as a result of forfeiture of the Restricted Stock Units.
Voting and Dividend Equivalent Rights. The Grantee shall not have any privileges of a stockholder of the Company with respect to the Restricted Stock Units or any shares that may be delivered hereunder, including without limitation any right to vote such shares or to receive dividends, unless and until such shares are delivered upon vesting of the Restricted Stock Units. Dividend equivalents shall be earned with respect to each Restricted Stock Unit that vests and the amount shall equal to the total dividends declared on a share, where the record date of the dividend is between the Grant Date
Vesting and Payment. Restricted Stock Units may only vest while the Grantee is actively employed by the Company or an Affiliate. The Restricted Stock Units shall vest (meaning the restriction period shall lapse and the Restricted Stock Units shall become free of the forfeiture provisions in this Agreement) on March [day], [year+3]. For Named Executive Officers disclosed in the Company’s Proxy Statement at any time during the vesting period, the vesting would also be contingent upon achievement of a three-year cumulative Adjusted Net Income performance target as approved by the Committee (Adjusted Net Income is defined as Xylem US GAAP Net Income adjusted for items as identified in the AIP& LTIP Default Guidelines for Potential Adjustments). Except as provided in subsection 2(i), upon vesting of the Restricted Stock Units, including vesting pursuant to subsections 2(d) or 2(e), the Company will deliver to the Grantee (i) one share for each vested Restricted Stock Unit, with any fractional shares resulting from proration pursuant to subsection 2(e) to be rounded to the nearest whole share, and (ii) an amount in cash attributable to dividend equivalents earned in accordance with subsection 2(b), less shares withheld in accordance with subsection 2(f).
Effect of Acceleration Event. Any unvested Restricted Stock Units shall vest in full upon an Acceleration Event.
Effect of Termination of Employment. Restricted Stock Units may only vest while the Grantee is actively employed by the Company or an Affiliate. If the Grantee's active employment is terminated for any reason, and such termination constitutes a “separation from service” within the meaning of Section 409A of the Code and any related regulations or other effective guidance promulgated thereunder (“Section 409A”), the following would apply to any unvested Restricted Stock Units on the date of the Grantee’s termination of employment:
Separation from Service due to Death or Disability (as defined below). Any unvested Restricted Stock Units shall immediately become 100% vested.
Separation from Service due to Retirement (as defined below). A prorated portion (as defined below) of any unvested Restricted Stock Units shall immediately vest.
Separation from Service other than Death, Disability and Retirement. Any unvested Restricted Stock Units shall automatically be forfeited.
Tax Withholding. In accordance with Article 15 of the Plan, the Company may make such provisions and take such actions as it may deem necessary for the withholding of all applicable taxes attributable to the Restricted Stock Units and any related dividend equivalents. Unless the Committee determines otherwise, the minimum statutory tax withholding required to be withheld upon delivery of the shares and payment of dividend equivalents shall be satisfied by withholding a number of shares having an aggregate Fair Market Value equal to the minimum statutory tax required to be withheld. If such withholding would result in a fractional share being withheld, the number of shares so withheld shall be rounded up to the nearest whole share. Notwithstanding the foregoing, the Grantee may elect to satisfy such tax withholding requirements by timely remittance of such amount by cash or check or such other method that is acceptable to the Company, rather than by withholding of shares, provided such election is made in accordance with such conditions and restrictions as the Company may establish. If FICA taxes are required to be withheld while the Award is outstanding, such withholding shall be made in a manner determined by the Company.
Grantee Bound by Plan and Rules. The Grantee hereby acknowledges receipt of a copy of the Plan and this Agreement and agrees to be bound by the terms and provisions thereof. The Grantee agrees to be bound by any rules and regulations for administering the Plan as may be adopted by the Committee prior to the date the Restricted Stock Units vest. Terms used herein and not otherwise defined shall be as defined in the Plan.
Governing Law. This Agreement is issued, and the Restricted Stock Units evidenced hereby are granted, in White Plains, New York, and shall be governed and construed in accordance with the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
Section 409A Compliance. To the extent applicable, it is intended that the Plan and this Agreement comply with the requirements of Section 409A, and the Plan and this Agreement shall be interpreted accordingly.
If it is determined that all or a portion of the Award constitutes deferred compensation for the purposes of Section 409A, and if the Grantee is a “specified employee,” as defined in Section 409A(a)(2)(B)(i) of the Code, at the time of the Grantee’s separation from service, then, to the extent required under Section 409A, any shares that would otherwise be distributed (along with the cash value of all dividend equivalents that would be payable) upon the Grantee’s separation
If it is determined that all or a portion of the Award constitutes deferred compensation for the purposes of Section 409A, upon an Acceleration Event that does not constitute a “change in the ownership” or a “change in the effective control” of the Company or a “change in the ownership of a substantial portion of a corporation’s assets” (as those terms are used in Section 409A), the Restricted Stock Units shall vest at the time of the Acceleration Event, but distribution of any Restricted Stock Units (or related dividend equivalents) that constitute deferred compensation for the purposes of Section 409A shall not be accelerated (i.e., distribution shall occur when it would have occurred absent the Acceleration Event).