SERVICE-BASED AND FINANCIAL PERFORMANCE-BASED RESTRICTED STOCK UNIT GRANT AGREEMENT
2007
Form
of RSU Agreement
SERVICE-BASED
AND FINANCIAL PERFORMANCE-BASED
RESTRICTED
STOCK UNIT GRANT AGREEMENT
THIS
AGREEMENT,
made as
of the ___ day of November, 2007 (the “Grant
Date”),
between MDC Partners Inc., a Canadian corporation (the “Corporation”),
and
________________ (the “Grantee”).
WHEREAS,
the Corporation has adopted the 2005 Stock Incentive Plan (the “Plan”)
for
the purpose of providing employees
and consultants of the Corporation and eligible non-employee
directors
of the
Corporation’s Board of Directors a proprietary interest in pursuing the
long-term growth, profitability and financial success of the Corporation (except
as otherwise expressly set forth herein, the capitalized terms used in this
Agreement shall have the same definitions set forth in the Plan).
WHEREAS,
the Human Resources & Compensation Committee (the “Committee”)
of the
Board of Directors has determined that it is in the best interests of the
Corporation to make the financial performance-based award set forth herein,
which award will vest in part based on the Grantee’s continued service to the
Company through the applicable vesting date, and in part based upon achievement
by the Corporation of specified financial growth targets during the calendar
years 2007 - 2009.
WHEREAS,
pursuant to the Plan, the Committee has determined to grant an Other Stock-Based
Award to the Grantee in the form of restricted units (“Restricted
Stock Units”)
of
Class A subordinate voting shares (the “Class
A Shares”),
subject to the terms, conditions and limitations provided herein, including
achievement of financial performance targets, and in the Plan;
NOW,
THEREFORE, the parties hereto agree as follows:
1. Grant
of Restricted Stock Unit.
1.1 The
Corporation hereby grants to the Grantee, on the terms and conditions set forth
in this Agreement, the number of Restricted Stock Units set forth under the
Grantee's name on the signature page hereto and in accordance with Section
1.2
(the “▇▇▇▇
▇▇▇ Award”).
Each
Restricted Stock Unit issued as part of the ▇▇▇▇ ▇▇▇ Award shall represent
the
right to receive one issued and outstanding share of the Class A Shares of
the
Corporation, but shall be subject to the restrictions, conditions and other
terms set forth in this Agreement and in the Plan.
1.2 The
Grantee's
rights with respect to all the Class A Shares underlying the ▇▇▇▇ ▇▇▇ Award
shall not vest and will remain forfeitable at all times prior to the Vesting
Date (as defined below). At any time, reference to the ▇▇▇▇ ▇▇▇ Award shall
be
deemed to be a reference to the Restricted Stock Units granted under Section
1.1
that have neither vested nor been forfeited pursuant to the terms of this
Agreement.
1.3 This
Agreement shall be construed in accordance with, and subject to, the terms
of
the Plan (the provisions of which are incorporated herein by
reference).
2. Rights
as Holder of Restricted Stock Units;
Non-Transferability.
With
respect to the ▇▇▇▇ ▇▇▇ Award, the Grantee shall have no rights as a stockholder
of the Corporation (including the right to vote or receive dividends) with
respect to any Class A Shares of the Corporation until the date of issuance
to
the Grantee of a certificate or other evidence of ownership representing such
Class A Shares in settlement thereof. In addition, dividend equivalents will
not
be paid or payable with respect to the ▇▇▇▇ ▇▇▇ Award subject to this Agreement.
Prior
to
the Vesting Date, the Grantee shall not be entitled to transfer, sell, pledge,
hypothecate or assign any portion of the ▇▇▇▇ ▇▇▇ Award (collectively, the
“Initial Transfer
Restrictions”).
Subsequent to the Vesting Date, the Grantee may only transfer, sell, pledge,
hypothecate or assign shares of Stock issued in satisfaction of the RSU Award
in
accordance with Section 3.5 of this Agreement (the “Stock
Ownership Transfer Restrictions”).
3. Vesting;
Lapse of Restrictions.
3.1 Service
Based Award.
The
Initial Transfer Restrictions with respect to 34% of the ▇▇▇▇ ▇▇▇ Award (the
“Service
Based Award”)
shall
lapse on the third (3rd)
anniversary of the Grant Date (the “Vesting
Date”)
so long
as the Grantee continues to be serving as an employee of the Corporation on
such
Vesting Date; provided,
that
the ▇▇▇▇ ▇▇▇ Award shall vest, and the Initial Transfer Restrictions with
respect to the ▇▇▇▇ ▇▇▇ Award shall lapse, if sooner, on the date of any one
of
the following “Permitted Acceleration Events” (also a Vesting Date): (i) the
occurrence of a Change in Control (as defined in Section 3.4 below); (ii) the
Grantee’s employment is terminated by the Corporation other than for “cause” or
for “good reason” (as such term is defined in the Grantee’s underlying
employment agreement); (iii) the Grantee’s death or disability; or (iv)
retirement at or after age 62 with the approval of the Committee.
3.2 Performance
Based Award.
(a) Organic
Growth Target Award.
In the
event that the Corporation achieves an Organic Growth Performance Factor of
at
least 25% as of [December 31, 2009], then the Initial Transfer Restrictions
will
lapse with respect to 33% of the ▇▇▇▇ ▇▇▇ Award (the “Organic
Growth Target Award”)
on
[March 15, 2010] (the “Vesting
Date”)
so long
as the Grantee continues to be employed by the Corporation on such Vesting
Date.
In the event that the Organic Growth Performance Factor is more than 1% but
less
than 25%, then the Initial Transfer Restrictions will lapse with respect to
a
pro-rata portion of the Organic Growth Target Award on the Vesting Date
determined based on the ratio the actual level of achievement of the Organic
Growth Performance Factor bears to 25%, so long as that the Grantee continues
to
be employed by the Corporation on such Vesting Date.
(b) Stock
Price Target Award.
In the
event that the Corporation achieves a Stock Price Performance Factor of at
least
15% as of [December 31, 2009], then the Initial Transfer Restrictions will
lapse
with respect to 33% of the ▇▇▇▇ ▇▇▇ Award (the “Stock
Price Target Award”)
on
[March 15, 2010] (the “Vesting
Date”)
so long
as the Grantee continues to be employed by the Corporation on such Vesting
Date.
In the event that the Stock Price Performance Factor is more than 1% but less
than 15%, then the Initial Transfer Restrictions will lapse with respect to
a
pro-rata portion of the Stock Price Target Award on the Vesting Date, determined
based on the ratio the actual level of achievement of the Stock Price
Performance Factor bears to 15%, so long as the Grantee continues to be employed
by the Corporation on such Vesting Date.
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(c) Notwithstanding
anything to the contrary set forth above, the Initial Transfer Restrictions
shall lapse with respect to the Organic Growth Target Award and the Stock Price
Target Award on the occurrence of a Permitted Acceleration Event. In addition,
in the event the Grantee (i) is terminated by the Corporation without Cause
or
(ii) dies or becomes Disabled, as defined below, the number of Restricted Stock
Units under the Performance Based Award in which the Grantee shall vest on
any
Vesting Date shall be the product of (a) the number of Restricted Stock Units
under the ▇▇▇▇ ▇▇▇ Award that would otherwise vest in accordance with Section
3.2(a) and 3.2(b) hereof on such date, if any and (b) a fraction, the numerator
of which shall be the number of full months of service completed by the Grantee
prior to his or her termination without Cause, death or Disability, as
applicable and after the Grant Date, and the denominator of which shall be
(x)
in the case of vesting as a result of achievement of the Organic Growth
Performance Factor or the Stock Price Performance Factor, the number of months
in the relevant performance period, as set forth in Section 3.4 hereof, or
(y)
in the case of a Permitted Acceleration Event as defined in Section 3.1, the
number of full months from the Grant Date to the applicable Vesting Date. Any
portion of the Performance Based Award that does not and, as a result of the
application of this Section 3.2(c) cannot, vest shall be forfeited and
automatically transferred to and reacquired by the Corporation at no cost to
the
Corporation, and neither the Grantee nor any heirs, executors, administrators
or
successors of such Grantee shall thereafter have any right or interest in such
Restricted Stock Units.
3.3 General
Termination Provisions.
Notwithstanding anything in this Agreement to the contrary, upon any termination
of a Grantee for Cause [or the resignation by the Grantee of his or her
employment without “good reason”] prior to the Vesting Date, the then-unvested
portion of the ▇▇▇▇ ▇▇▇ Award immediately shall be forfeited in its entirety
and
automatically transferred to and reacquired by the Corporation at no cost to
the
Corporation, and neither the Grantee nor any heirs, executors, administrators
or
successors of such Grantee shall thereafter have any right or interest in such
Restricted Stock Units. In addition, any portion of the ▇▇▇▇ ▇▇▇ Award that
is a
Performance Based Award that has not vested as of [March 16, 2010] shall be
forfeited on such date and automatically transferred to and reacquired by the
Corporation at no cost to the Corporation and neither the Grantee nor any heirs,
executors, administrators or successors of such Grantee shall thereafter have
any right or interest in such Restricted Stock Units.
3.4 Additional
Transfer Restrictions.
The
Grantee may not at any time prior to the Vesting Date, transfer, sell, pledge,
hypothecate or assign any portion of the ▇▇▇▇ ▇▇▇ Award. From and after the
Vesting Date, the Grantee may not transfer, sell, pledge, hypothecate or assign
any Class A Shares issued or issuable in connection with the ▇▇▇▇ ▇▇▇ Award
unless the Committee determines, with the advice of the General Counsel and/or
Chief Financial Officer of the Corporation, that Grantee has satisfied the
Corporation’s Stock
Ownership Guidelines,
as in
effect from time to time, and any transfer, sale, pledge, hypothecation or
assignment of any such Class A Shares would not cause Grantee to fail to satisfy
such Stock Ownership Guidelines. Notwithstanding the foregoing Stock Ownership
Transfer Restrictions, the Grantee will be permitted to sell a sufficient number
of Class A Shares to satisfy his applicable income tax liability in connection
with the lapse of the Initial Transfer Restrictions (or delivery of Class A
Shares in connection with such lapse of the Initial Transfer Restrictions)
on a
Vesting Date.
3.5 Certain
Definitions.
For
purposes of the foregoing, the following terms shall have the following
meanings:
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(a) “Organic
Growth Performance Factor”
means the percentage by which the [cumulative organic revenue growth of the
Corporation during the period from [January 1, 2007 through December 31, 2009]
exceeds the average organic revenue growth of the entities set forth on Schedule
A hereof (the “Peer
Group”)
during the same period], as determined by the Committee.
(b) “Stock
Price Performance Factor”
means the percentage by which the [cumulative appreciation in the stock price
of
the Corporation (“Stock
Price Growth”)
during the period from [January 1, 2007 through December 31, 2009] exceeds
the
average stock price appreciation of the Peer Group during the same period],
as
determined by the Committee.
(c) “Performance
Measure Components”
means,
collectively, the Organic Growth Performance Factor and the Stock Price
Performance Factor.
(d) “Cause”
means
the Grantee’s termination by reason of (i)
his continued or willful failure substantially to perform his duties for the
Corporation, (ii) his willful and serious misconduct in connection with the
performance of his duties for the Corporation, (iii) the Grantee’s conviction
of, or entering a plea of guilty or nolo contendere
to, a crime that constitutes a felony or a crime involving moral turpitude,
(iv)
his fraudulent or dishonest conduct or (v) his material breach of any of his
obligations or covenants under any written policies of the Corporation or any
written agreement between such Grantee and the Corporation.
(e) “Change
in Control”
shall have the meaning set forth in Section 2(b) of the Plan, provided that
the
reference to “twenty-five
percent (25%) or more of the combined voting power of MDC's then outstanding
voting securities”
in Section 2(b)(i) of the Plan shall, for purposes of this ▇▇▇▇ ▇▇▇ Award,
be
amended to read “fifty
percent (50%) or more of the combined voting power of MDC's then outstanding
voting securities”;
and, provided further, that the reference in Section 2(b)(iii)(A)(III)(3) to
“twenty five percent (25%) or more of the combined voting power of the Surviving
Corporation’s voting securities outstanding immediately following such
transaction” shall, for purposes of this ▇▇▇▇ ▇▇▇ Award, be amended to read
“fifty percent (50%) or more of the combined voting power of the Surviving
Corporation’s voting securities outstanding immediately following such
transaction”.
(f) “Disability”
shall
mean a mental or physical condition of the Grantee rendering him unable to
perform his duties for the Corporation for a period of six (6) consecutive
months or for 180 days within any consecutive 365-day period and which is
reasonably expected to continue indefinitely; provided
that if,
as of the date of determination, the Grantee is a party to an effective
employment agreement with a different definition of “Disability” or any
derivation of such term, the
definition of “Disability” (or its derivation) contained in such employment
agreement shall be substituted for the definition set forth above for all
purposes hereunder.
4. Delivery
of Shares.
(a) Certificates
(or an electronic "book entry") representing those Class A Shares issued in
settlement of Restricted Stock Units in respect of which the Initial Transfer
Restrictions have lapsed pursuant to Section 3 hereof shall be delivered to
the
Grantee as soon as practicable following the applicable Vesting
Date.
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(b) The
Grantee, or the executors or administrators of the Grantee's estate, as the
case
may be, may receive, hold, sell or otherwise dispose of those Class A Shares
of
the Corporation delivered to him or her pursuant to this Section 4 free and
clear of the Initial Transfer Restrictions, but subject to compliance with
the
Stock Ownership Transfer Restrictions and all applicable federal and state
securities laws.
5. No
Right to Continued Retention.
Nothing
in this Agreement or the Plan shall be interpreted or construed to confer upon
the Grantee any right with respect to continuance as an employee, nor shall
this
Agreement or the Plan interfere in any way with the right of the Corporation
to
terminate the Grantee's service as an employee at any time.
6. Adjustments
Upon Change in Capitalization.
If, by
operation of Section 10 of the Plan, the Grantee shall be entitled to new,
additional or different shares of stock or securities of the Corporation or
any
successor corporation or entity or other property, such new, additional or
different shares or other property shall thereupon be subject to all of the
conditions and restrictions which were applicable to the Restricted Stock Units
immediately prior to the event and/or transaction that gave rise to the
operation of Section 10 of the Plan.
7. Modification
of Agreement; Adjustment of Performance Measures by the
Committee.
(a) Except
as
set forth in the Plan and herein, this Agreement may be modified, amended,
suspended or terminated, and any terms or conditions may be waived, but only
by
a written instrument executed by the parties hereto. Notwithstanding the
foregoing, the Committee shall adjust the Performance Measure Components in
the
event that the Corporation acquires or disposes any material assets or
business.
(b) It
is the
parties' intent that the ▇▇▇▇ ▇▇▇ Grant and the potential issuance of Class
A
Shares hereunder shall comply with the provisions of Section 409A of the U.S.
Tax Code. Accordingly, notwithstanding any provision to the contrary contained
herein, the parties agree that this Agreement may be amended to conform to
their
intent as set forth in the preceding sentence and that they shall work together
in good faith to accomplish such amendment taking into account any regulations
or other guidance issued after the date of this Agreement under Tax Code Section
409A.
8. Severability.
Should
any provision of this Agreement be held by a court of competent jurisdiction
to
be unenforceable or invalid for any reason, the remaining provisions of this
Agreement shall not be affected by such holding and shall continue in full
force
and effect in accordance with their terms.
9. Governing
Law.
The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of New York without regard to its conflict
of laws principle, except to the extent that the application of New York law
would result in a violation of the Canadian Business Corporation
Act.
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10. Successors
in Interest.
This
Agreement shall inure to the benefit of and be binding upon any successor to
the
Corporation. This Agreement shall inure to the benefit of the Grantee's heirs,
executors, administrators and successors. All obligations imposed upon the
Grantee and all rights granted to the Corporation under this Agreement shall
be
binding upon the Grantee's heirs, executors, administrators and successors.
| MDC PARTNERS INC. | ||||
| By: | ||||
| Name: |
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ |
|||
| Title: | Chief Accounting Officer | |||
| MDC PARTNERS INC. | ||||
| By: | ||||
| Name: |
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
|||
| Title: | General Counsel | |||
| GRANTEE: | ||||
| By: | ||||
|
Name:
|
|
|||
|
|
||||
Number
of Restricted Stock Units Hereby
Granted:
6
Schedule
A
7