XXXX CORPORATION
1993 STOCK OPTION AND STOCK GRANT PLAN
STOCK GRANT AGREEMENT
This Stock Grant Agreement is made as of the 2d day of
January, 2001, pursuant to the XXXX CORPORATION 1993 STOCK OPTION AND STOCK
GRANT PLAN, between XXXX CORPORATION (the "Company") and Xxxx X. Xxxxxx (the
"Employee") an officer or other key management level employee of the Company.
W I T N E S S E T H:
WHEREAS, the Compensation Committee of the Company's Board of
Directors (the "Committee"), by appropriate action, has, on January 2, 2001,
(the "Date of Grant"), made a grant to Employee (the "Grant") of Common Shares
of the Company ("Common Shares") under the XXXX CORPORATION 1993 STOCK OPTION
AND STOCK GRANT PLAN on the terms and conditions hereinafter set forth; and
WHEREAS, Employee has agreed to relinquish all unexercised
stock options granted to Employee which have a purchase price in excess of
$18.00;
NOW THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable consideration, the
parties hereto, intending to be legally bound hereunder, agree as follows:
1. Incorporation of Plan. The Grant is subject to all of the
terms and conditions of the XXXX CORPORATION 1993 STOCK OPTION AND STOCK GRANT
PLAN, as said Plan may be amended from time to time (the "Plan"), which terms
and conditions are incorporated herein by reference, made a part hereof, and
shall control in the event of any conflict with any other terms of this
Agreement. A copy of the present form of the Plan is attached hereto as Exhibit
A and incorporated herein by reference.
2. The Grant. The Grant is for an aggregate of 18,756 Common
Shares.
3. Vesting.
(a) Date of Vesting. Subject to earlier vesting as provided
below and in Section 6(c) of the Plan, the Common Shares subject to this
Grant shall vest in full on January 2, 2006, provided the Employee is then
still employed by the Company or by any "Related Corporation," as defined
below.
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(b) Performance Accelerated Vesting. The Committee has
established performance standards based on the achievement of certain
targets with respect to the Company's Profit Before Taxes, as defined
below ("PBT"). The Committee has set Cumulative Baseline PBT Targets
and Cumulative Stretch PBT Targets for 2002, 2003 and 2004 by which
performance will be measured and vesting determined. These Cumulative
PBT Targets are as follows:
2002 2003 2004
---- ---- ----
Baseline $24M $41M $57M
Stretch $35M $55M $73M
If the Cumulative Baseline PBT Target is exceeded at the end of any of
these years, vesting will be determined pursuant to the following
formula:
Actual Cumulative Cumulative Baseline
Vested = PBT for Year minus PBT Target for Year
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Percentage Cumulative Stretch Cumulative Baseline
PBT Target for Year minus PBT Target for Year
If the resulting percentage exceeds the percentage of shares previously
vested, the Employee shall become vested as of the anniversary date of
the Grant following the end of such year in an additional number of
shares so that the total number of shares in which Employee is vested
equals such new percentage, provided the Employee is still employed by
the Company or a Related Corporation on such anniversary date. Once
vested, such shares remain vested even though the vested percentage
determined under the formula set forth above may be lower in a
subsequent year.
(c) Vesting upon Change in Control. In the event of a
Change in Control, as defined below, the shares subject to this Grant
shall be vested in an amount equal to the greater of (i) 50 percent or
(ii) the vested percentage determined under (a) or (b) above prior to
the Change in Control, provided the Employee is still employed by the
Company or a Related Corporation on the date of such Change in Control.
(d) Definitions. For purposes of this Section, the
following words and phrases shall have the following meanings:
(1) "Change in Control" shall mean:
(i) any person (a "Person"), as such term is used
in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (other than (A) the
Company and/or its wholly-owned subsidiaries, (B) any ESOP or
other employee benefit plan of the Company, and any trustee or
other fiduciary in such capacity holding securities under such
plan, (C) any corporation owned, directly or indirectly, by
the shareholders of the Company in substantially the same
proportions as their ownership of stock of the Company or (D)
the Employee or any group of Persons of which Employee
voluntarily is a part), is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or
more of the combined voting power of the Company's then
outstanding securities, or such lesser percentage of voting
power, but not less than 15%, as the Board shall determine;
provided, however that a Change in Control shall not be deemed
to have occurred under the provisions of this subsection (i)
by reason of the beneficial ownership of voting securities by
members of the Xxxxxx Family (as defined below) unless and
until the beneficial ownership of all members of the Xxxxxx
Family (including any other individuals or entities who or
which, together with any member or members of the Xxxxxx
Family, are deemed under Sections 13(d) or 14(d) of the
Exchange Act to constitute a single Person) exceeds 50% of the
combined voting power of the Company's then outstanding
securities;
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(ii) during any two-year period beginning after
October 1, 1999, Directors of the Company in office at the
beginning of such period plus any new Director (other than a
Director designated by a Person who has entered into an
agreement with the Company to effect a transaction within the
purview of subsections (i) or (iii) hereof) whose election by
the Board, or whose nomination for election by the Company's
shareholders, was approved by a vote of at least two-thirds of
the Directors then still in office who either were Directors
at the beginning of the period or whose election or nomination
for election was previously so approved, shall cease for any
reason to constitute at least a majority of the Board; or
(iii) the Company's shareholders or the Board shall
approve (A) any consolidation or merger of the Company in
which the Company is not the continuing or surviving
corporation or pursuant to which the Company's voting common
shares (the "Voting Shares") would be converted into cash,
securities and/or other property, other than a merger of the
Company in which holders of Voting Shares immediately prior to
the merger have the same proportionate ownership of common
shares of the surviving corporation immediately after the
merger as they had in the Voting Shares immediately before,
(B) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all the assets or earning power of the Company,
or (C) the liquidation or dissolution of the Company.
As used in this Agreement, "members of the Xxxxxx
Family" shall mean the wife, children and descendants of such children
of the late Xxxxxx X. Xxxxxx, III, their respective spouses and
estates, any trusts or partnerships primarily for the benefit of any of
the foregoing and the administrators, executors, trustees and partners
of any such estates, trusts or partnerships.
Whether a Change in Control has occurred shall be
determined by the Committee, as it is constituted on the day proceeding
the date of the Change in Control.
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(2) "Profit Before Taxes" shall mean income from
operations excluding special items, minus interest expense, plus
interest income, minus other miscellaneous expense, plus other
miscellaneous income, less bonus expense. Special items for this
purpose may include, for example, expenses related to litigation or an
acquisition or changes in accounting regulations, provided, however,
that such expense is designated as a special item by the Board of
Directors following recommendation by the Chief Executive Officer.
Miscellaneous expense for this purpose may include, for example,
expenses from sales tax audits or the effects of currency exchange.
(3) "Related Corporation" shall mean a subsidiary or a
corporate parent of the Company as defined in section 424 of the
Internal Revenue Code of 1986, as amended (the "Code").
4. Delivery of Share Certificates. Upon the vesting of shares
subject to the Grant, the Company shall promptly issue certificates representing
the vested Common Shares to the Employee or to Employee's Beneficiary in
accordance with Section 6(d) of the Plan. Only full Common Shares shall be
issued, and any fractional Common Shares which might otherwise be issuable
pursuant to the Grant shall be forfeited. Such Common Shares shall be legended
with reference to restrictions on transfer of the Common Shares to the extent
the Company may require pursuant to Section 7 of the Plan.
5. Non-Transferability of Grant. Except as otherwise provided
in Section 6(e) of the Plan, the Grant shall not be assignable or transferable
by the Employee other than by will or by the laws of descent and distribution.
6. Designation of Beneficiary. The Employee shall have the
right to designate a Beneficiary or Beneficiaries to receive any Common Shares
which may become vested upon the Employee's death. The Employee must designate
such Beneficiary on the form furnished by the Company. The Employee may, at any
time, change his or her designation of Beneficiary by completing a new form, but
a designation of Beneficiary shall remain in effect until such new form is
received by the Company. If no properly designated Beneficiary survives the
Employee, the Employee's estate shall be the Beneficiary.
7. Rights as a Shareholder; Cash Bonus.
(a) No Rights as Shareholder until Common Shares
Issued. The Employee shall have no rights as a shareholder with respect
to any Common Shares covered by the Grant until the issuance of a stock
certificate to him or her representing such Common Shares.
(b) Cash Bonus. Notwithstanding Section 7(a),
however, for so long as an Employee's Grant remains outstanding and
unvested, the Company shall, to the extent provided in Section 6(b) of
the Plan, pay to the Employee a cash bonus equal to the dividends which
the Employee would have received from the Company had he or she
actually held the Common Shares represented by the unvested portion of
his or her Grant. Such payments shall be made within 60 days following
the end of each fiscal quarter of the Company with respect to any
dividends which may have been paid by the Company on its Common Shares
during such quarter, and will constitute wages subject to withholding
for Federal income tax purposes.
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8. Capital Adjustments, Corporate Transactions. The number of
Common Shares awarded under this Agreement shall be adjusted to reflect any
stock dividend, stock split, share combination, or similar change in the
capitalization of the Company. In the event of certain types of corporate
transactions, the Grant may be terminated, accelerated or otherwise modified by
the Committee as provided in Section 8 of the Plan.
9. Deferral. In accordance with the terms of the Xxxx
Corporation Supplemental Executive Benefits Plan, Employee, if a participant in
said Plan, may defer the income to be realized upon the vesting of the Common
Shares subject to this Grant by transferring this Grant to said Plan prior to
becoming vested in such Common Shares.
10. Withholding of Taxes. The obligation of the Company to
deliver Common Shares hereunder shall be subject to compliance with applicable
Federal, state and local income tax and employment tax and similar tax
withholding requirements. To meet this obligation, the Company may withhold the
amount necessary from the Employee's salary from the Company. The Employee,
however, subject to the discretion of the Committee, and subject to such
additional withholding rules ("Withholding Rules") as shall be adopted by the
Company, may be permitted by the Committee to satisfy such withholding taxes, in
whole or in part, by electing to have the Company withhold (or by returning to
the Company previously held Common Shares) Common Shares, which Common Shares
shall be valued, for this purpose, at their fair market value on the date on
which the value of such Common Shares is required to be included in income by
the Employee under section 83 of the Code (the "Determination Date"), provided,
however, that if Employee is subject to section 16(b) of the Securities Exchange
Act of 1934, any such amount of taxes required to be withheld automatically
shall be satisfied by withholding Common Shares. Such election must be made on
or before the Determination Date and must be in compliance with and subject to
any Withholding Rules.
11. Termination of Employment. If Employee's employment is
terminated by the Company and all Related Corporations, the Grant shall be
subject to Section 6(c) of the Plan.
12. Other Benefits. The issuance of the Common Shares subject
to this Grant to Employee shall be in addition to any other benefits or amounts
the Employee may be entitled to under (a) any Company plans, policies, or
procedures, or (b) any Change in Control Agreement the Employee has entered into
with the Company.
13. Amendment. No provisions of this Agreement may be modified
or amended unless such modification or amendment is agreed to in a written
instrument signed by the Employee and such officer or officers as may be
specifically designated by the Company to sign on its behalf.
14. Absence of Rights. Notwithstanding any provisions of this
Agreement or the Plan, the Company shall have the right, subject to the
provisions of any employment contract the Employee and the Company have entered
into, in its discretion, to retire the Employee at any time pursuant to its
retirement rules or otherwise to terminate Employee's employment at any time for
any reason whatsoever.
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15. Headings. The Section and Subsection headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. In the event of a conflict
between a heading and the content of a Section or Subsection, the content of the
Section or Subsection shall control.
16. Severability. If any clause, phrase, provision or portion of this Agreement
or the application thereof to any person or circumstance shall be invalid or
unenforceable under any law, such event shall not affect or render invalid or
unenforceable any other provision of this Agreement and shall not affect the
application of any clause, provision, or portion hereof to other persons or
circumstances.
17. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors,
assigns, heirs, executors, and administrators.
18. Notice. Any notice or other communications required or
permitted hereunder shall be in writing and shall be sufficiently given if hand
delivered or sent by registered or certified mail, postage prepaid: if to the
Company, at One Commerce Square, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000,
Attention: The Corporate Secretary; and if to Employee, at the address specified
after his or her name on the signature page hereof, or to such other address or
addresses as either such party may specify to the other in writing.
19. Entire Agreement. This Agreement sets forth the entire
understanding of the parties and supersedes all prior agreements, arrangements,
and communications, whether oral or written, pertaining to the subject matter
hereof.
20. Governing Law. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the United
States where applicable and otherwise by the laws of the Commonwealth of
Pennsylvania.
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IN WITNESS WHEREOF, this Stock Grant Agreement has been
executed as of the date first above written.
Attest: XXXX CORPORATION
[SEAL]
___________________ By:______________________________
Witness EMPLOYEE
___________________ _________________________________
Signature Signature
_________________________________
_________________________________
_________________________________
Address of Employee
(for the giving of notice)
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