Exhibit 10.5
XXXXXX CDT INC.
PERFORMANCE SHARE AWARD AGREEMENT
THIS PERFORMANCE SHARE AWARD AGREEMENT (this "Agreement") is effective
February 22, 2006 (the "GRANT DATE") by and between Xxxxxx CDT Inc., a Delaware
corporation (the "COMPANY") and Xxxx Xxxxxx ("GRANTEE").
WHEREAS, the Grantee is an executive or management employee of the Company
and has been selected by the Compensation Committee (the "COMMITTEE") of the
Board of Directors of the Company (the "BOARD") to receive a grant of 50,000
performance share units ("PSUs") representing, subject to certain restrictions,
a certain number of shares (the "SHARES") of the Company's common stock, $0.01
par value per share (the "COMMON STOCK"), such number shall be based on the
attainment of performance objectives as provided below, and to enter into a
Performance Share Award Agreement in the form hereof;
NOW THEREFORE, the Company and the Grantee hereby agree as follows:
1. GRANT OF PSUs. The Company hereby grants to the Grantee on the Grant
Date 50,000 PSUs. Each PSU represents the right to receive between zero (0) and
one and one-half (1.5) of a Restricted Stock Unit ("RSU"), depending on the
attainment of Company performance objectives in accordance with Section 2 below.
Each RSU in turn represents the right to receive one (1) Share, which RSUs shall
vest and become nonforfeitable ("VEST") in accordance with Section 3 below. The
Company shall hold any awarded RSUs in book-entry form. The Grantee shall have
no direct or secured claim in any specific assets of the Company or the Shares
of Common Stock to be issued to Grantee under Section 5(a) hereof and will have
the status of a general unsecured creditor of the Company. The PSUs and RSUs are
granted under the Company's 2001 Long-Term Performance Incentive Plan (the
"PLAN") and shall be subject to the terms and conditions of the Plan.
Capitalized terms used in this Agreement without further definition shall have
the same meanings given to such terms in the Plan.
2. PERFORMANCE OBJECTIVES.
(a) Award Period; Performance Objectives. The award period ("AWARD
PERIOD") during which performance shall be measured is calendar year 2006. The
Committee has established performance objectives for such Award Period based on
the attainment of 2006 financial performance goals. The financial performance
goals are those the Committee has established for the Company's 2006 annual cash
incentive plan. If Company performance during the Award Period is at 100% of
targeted objectives, then the Grantee shall be entitled to receive one (1) RSU
for each PSU. If Company performance during the Award Period is at 80% of
targeted objectives, then the Grantee shall be entitled to receive one-half (.5)
of an RSU for each PSU. If Company performance during the Award Period is at
120% of targeted objectives, then the Grantee shall be entitled to receive one
and one-half (1.5) of an RSU for each PSU. The number
of RSUs shall be prorated for performance between the foregoing standards. If
Company performance during the Award Period is at less than 80% of targeted
objectives, then the Grantee shall not be entitled to receive any RSUs for the
PSUs, and this Performance Share Award and the PSUs shall have no value and
shall be deemed forfeited, cancelled and terminated. After the Award Period, the
Committee shall determine the number (if any) of RSUs to be awarded for each PSU
based on Company performance during the Award Period, which determination shall
be final, conclusive and binding (the date on which the Committee makes such
determination is the "PERFORMANCE DETERMINATION DATE", and the RSUs that are so
awarded are the "AWARDED RSUs"). This grant of PSUs is subject to shareholders
approving at the Company's 2006 annual meeting a Plan amendment authorizing an
increase in the number of awards individual participants may receive under the
Plan to an annual limit of 400,000. If shareholder approval is not obtained,
then PSUs granted hereunder shall not be deemed granted under the Plan, but
shall be subject to the terms and conditions of the Plan and of this Agreement
as if they had been granted under the Plan except that no RSUs or other Company
shares shall be awarded in connection with the PSUs granted hereunder. Instead,
each PSU shall represent the right to receive a cash equivalent to the RSUs that
would have otherwise been awarded hereunder.
(b) Death or Disability During Award Period. If prior to the
Performance Determination Date and while employed by the Company the Grantee
dies or becomes disabled (and leaves the Company) in accordance with any Company
disability policy then in effect, then the Grantee (or, as the case may be, the
person entitled by will or the applicable laws of descent and distribution)
shall, after the Award Period, be entitled to receive a prorated portion of the
RSUs that would otherwise (but for such death or disability) be awarded to the
Grantee after the Award Period pursuant to Section 2(a) above, such prorated
portion being a fraction whose numerator shall be the number of days of the
Grantee's employment by the Company during the Award Period prior to such death
or disability and the denominator of which shall be three hundred and sixty-five
(365). Such Awarded RSUs shall immediately Vest in full.
(c) Other Employment Termination During Award Period. If the Grantee
or the Company otherwise terminates the Grantee's employment during the Award
Period, any and all PSUs shall be forfeited, cancelled and terminated upon such
termination.
3. VESTING OF AWARDED RSUs.
(a) Generally. Subject to the acceleration of the Vesting pursuant
to Section 2(b) above or Section 3(b) or (d) below, or the forfeiture and
termination of the Awarded RSUs pursuant to Section 3(c) below, one-half (1/2)
of the Awarded RSUs shall Vest on the first anniversary of the Performance
Determination Date, and the remaining one-half (1/2) shall Vest on the second
anniversary of the Performance Determination Date. All Vested Awarded RSUs shall
be paid to the Grantee as provided in Section 5 hereof.
2
(b) Death, Disability or Retirement. If, after the award of the
Awarded RSUs and while employed by the Company, the Grantee dies or becomes
disabled (and leaves the Company) in accordance with any Company disability
policy then in effect or retires from employment with the Company under any
Company retirement plan then in effect, then any and all unvested Awarded RSUs
shall immediately Vest in full.
(c) Other Employment Termination. If the Grantee or the Company
otherwise terminates the Grantee's employment after the award of the Awarded
RSUs, any and all Awarded RSUs that are not Vested at such time shall be
forfeited, cancelled and terminated upon such termination.
(d) Change of Control. Immediately preceding the occurrence of a
Change in Control of the Company (as defined in Section 7(f) below), any and all
unvested Awarded RSUs shall immediately Vest in full, subject to any deferral
pursuant to an election under Section 5(b) hereof.
4. NO TRANSFER OR ASSIGNMENT OF PSUs OR AWARDED RSUs; RESTRICTIONS ON
SALE. Except as otherwise provided in this Agreement, the PSUs, the Awarded RSUs
and the rights and privileges conferred thereby shall not be sold, pledged or
otherwise transferred (whether by operation of law or otherwise) and shall not
be subject to sale under execution, attachment, levy or similar process until
the Shares underlying the Awarded RSUs are delivered to the Grantee or his
designated representative. The Grantee agrees not to sell any Shares at any time
when applicable laws or Company policies prohibit a sale. This restriction shall
apply as long as the Grantee is an employee of the Company.
5. DELIVERY OF SHARES.
(a) Issuance of Shares. As of the date(s) on which the Awarded RSUs
Vest, the Company shall issue to the Grantee a stock certificate (or register
Shares of Common Stock in book-entry form) representing a number of Shares of
Common Stock equal to the number of Awarded RSUs then vested.
(b) Withholding Taxes. At the time Shares of Common Stock are issued
to the Grantee, the Company shall satisfy the statutory Federal, state and local
withholding tax obligation (including the FICA and Medicare tax obligation)
required by law with respect to the distribution of Shares from one or more of
the following methods, as the Grantee elects: (i) the Company shall withhold
cash compensation then accrued and payable to Grantee of such required
withholding amount, (ii) the Grantee may tender a check or other payment of cash
to the Company of such required withholding amount, or (iii) by withholding from
Shares issuable to the Grantee hereunder having an aggregate fair market value
equal to the amount of such required withholding.
6. LEGALITY OF INITIAL ISSUANCE. No Shares shall be issued unless and
until the Company has determined that:
3
(a) It and the Grantee, at Company's expense, have taken any actions
required to register the Shares under the Securities Act of 1933, as amended, or
to perfect an exemption from the registration requirements thereof;
(b) Any applicable listing requirement of any stock exchange or
other securities market on which the Common Stock is listed has been satisfied;
and
(c) Any other applicable provision of state or federal law has been
satisfied.
7. MISCELLANEOUS PROVISIONS.
(a) Rights as a Stockholder. Neither the Grantee nor the Grantee's
representative shall have any rights as a stockholder with respect to any Shares
underlying the Awarded RSUs until the date that the Company is obligated to
deliver such Shares to the Grantee or the Grantee's representative.
(b) Dividends. Between the Performance Determination Date and the
date of Vesting of the Awarded RSUs (the "ACCRUAL PERIOD"), any dividends or
distributions payable with respect to the number of Shares equal to the number
of Awarded RSUs held by the Grantee shall be accumulated and deferred until the
Vesting of the Awarded RSUs. After such Vesting of the Awarded RSUs, the Company
shall promptly distribute to the Grantee all such dividends and distributions
accrued during the Accrual Period.
(c) No Retention Rights. Nothing in this Agreement shall confer upon
the Grantee any right to continue in the employment or service of the Company
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Company or of the Grantee, which rights are hereby
expressly reserved by each, to terminate his employment or service at any time
and for any reason, with or without cause.
(d) Employment by Subsidiary, etc.. For purposes of this Agreement,
employment by a parent or subsidiary of or a successor to the Company shall be
considered employment by the Company.
(e) Anti-Dilution. In the event that any change in the outstanding
Shares of Common Stock of the Company (including an exchange of Common Stock for
stock or other securities of another corporation) occurs by reason of a Common
Stock dividend or split, recapitalization, merger, consolidation, combination,
exchange of Shares or other similar corporate changes, other than for
consideration received by the Company therefore, the number of Awarded RSUs
hereunder, and the number of Shares distributable pursuant to Vested Awarded
RSUs, shall be appropriately adjusted by the Committee whose determination shall
be conclusive, final and binding; provided, however that fractional Shares shall
be rounded to the nearest whole share. In the event of any other change in the
Common Stock, the Committee shall in its sole discretion determine whether such
change equitably requires a change in the number or type of
4
Shares subject to Awarded RSUs and any adjustment made by the Committee shall be
conclusive, final and binding.
(f) Change in Control. A "CHANGE IN CONTROL" of the Company shall be
deemed to have occurred if any of the events set forth in any one of the
following subparagraphs shall occur:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the "EXCHANGE ACT")) (a "PERSON") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of more than 50% of either (y) the then-outstanding shares of common
stock of the Company (the "OUTSTANDING COMPANY COMMON STOCK") or (z) the
combined voting power of the then-outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"OUTSTANDING COMPANY VOTING SECURITIES"); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (1) any acquisition directly from the
Company, (2) any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (4) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (1) and (2) of subsection (iii) of this definition; or
(ii) individuals who, as of the date hereof, constitute the
Board (the "INCUMBENT BOARD") cease for any reason to constitute at least
a majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least
a majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board;
or
(iii) consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of
the assets of the Company (a "BUSINESS COMBINATION"), in each case,
unless, following such Business Combination, (1) all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of, respectively,
the then-outstanding shares of common stock and the combined voting power
of the then-outstanding voting securities entitled to vote generally in
the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, and (2) at least a
5
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent
Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(g) Incorporation of Plan. The provisions of the Plan are
incorporated by reference into these terms and conditions.
(h) Inconsistency. To the extent any terms and conditions herein
conflict with the terms and conditions of the Plan, the terms and conditions of
the Plan shall control.
(i) Notices. Any notice required by the terms of this Agreement
shall be given in writing and shall be deemed effective upon personal delivery,
upon deposit with the United States Postal Service, by registered or certified
mail, with postage and fees prepaid or upon deposit with a reputable overnight
courier. Notice shall be addressed to the Company at its principal executive
office and to the Grantee at the address that he most recently provided to the
Company.
(j) Entire Agreement; Amendments. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject matter
hereof. This Agreement supersedes any other agreements, representations or
understandings (whether oral or written and whether express or implied) which
relate to the subject matter hereof. The Committee shall have authority, subject
to the express provisions of the Plan, to interpret this Agreement and the Plan,
to establish, amend and rescind any rules and regulations relating to the Plan,
to modify the terms and provisions of this Agreement, and to make all other
determinations in the judgment of the Committee necessary or desirable for the
administration of the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in this Agreement in the
manner and to the extent it shall deem necessary or desirable to carry it into
effect. All action by the Committee under the provisions of this paragraph shall
be final, conclusive and binding for all purposes.
(k) Choice of Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, as such laws
are applied to contracts entered into and performed in such State, without
giving effect to the choice of law provisions thereof.
(l) Successors.
(i) This Agreement is personal to the Grantee and, except as
otherwise provided in Section 4 above, shall not be assignable by the Grantee
otherwise than by will or the laws of descent and distribution, without the
written consent of the Company. This Agreement shall inure to the benefit of and
be enforceable by the Grantee's legal representatives.
6
(ii) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. It shall not be assignable except
in connection with the sale or other disposition of all or substantially all the
assets or business of the Company.
(m) Severability. If any provision of this Agreement for any reason
should be found by any court of competent jurisdiction to be invalid, illegal or
unenforceable, in whole or in part, such declaration shall not affect the
validity, legality or enforceability of any remaining provision or portion
hereof, which remaining provision or portion hereof shall remain in full force
and effect as if this Agreement had been adopted with the invalid, illegal or
unenforceable provision or portion hereof eliminated.
(n) Headings. The headings, captions and arrangements utilized in
this Agreement shall not be construed to limit or modify the terms or meaning of
this Agreement.
(o) Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which shall constitute but one and the same instrument.
This Agreement is executed by the Company as of the date and year first
written above.
XXXXXX CDT INC.
By:_____________________________________
Title:__________________________________
The undersigned Grantee hereby acknowledges receipt of an executed
original of this Agreement and accepts the PSUs granted hereunder, and further
agrees to the terms and conditions hereinabove set forth.
____________________________________
____________________, Grantee
Date:___________________, 2006
7
