Exhibit 10.1
Lifeline Systems, Inc.
Restricted Stock Agreement
Granted Under 2000 Stock Incentive Plan
AGREEMENT made as of the 13th day of February, 2003 (the "Effective Date"),
between Lifeline Systems, Inc., a Massachusetts corporation (the "Company"), and
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For valuable consideration, receipt of which is acknowledged, the parties
hereto agree as follows:
1. Issuance of Shares.
The Company hereby issues to the Participant, subject to the terms and
conditions set forth in this Agreement and in the Company's 2000 Stock Incentive
Plan (the "Plan"), 36,000 shares (the "Shares") of common stock, $0.02 par
value, of the Company ("Common Stock"). The Company shall issue to the
Participant one or more certificates in the name of the Participant for that
number of Shares issued to the Participant. The Participant agrees that the
Shares shall be subject to forfeiture pursuant to Section 2 of this Agreement
and the restrictions on transfer set forth in Section 4 of this Agreement.
2. Forfeiture.
(a) In the event that the Participant ceases to be employed by the
Company for any reason or no reason, with or without cause (the "Employment
Termination Date"), prior to February 28, 2008 the Participant shall forfeit to
the Company, without compensation, all of the Unvested Shares (as defined
below).
"Unvested Shares" means the total number of Shares multiplied by the
Applicable Percentage at the Employment Termination Date. The "Applicable
Percentage" shall be (i) 100% during the period commencing on the Effective Date
and ending February 28, 2006: (ii) 66 2/3% during the period from March 1, 2006
through and including February 28, 2007; 33 1/3% during the period from March 1,
2007 through and including February 29, 2008; and zero on and after March 1,
2008.
(b) Notwithstanding subsection (a) above, in the event that the
Participant's employment is terminated pursuant to Section 11(iii) of that
certain Employment and Noncompetition Agreement effective as of April 2, 2003
(the "Employment Agreement"), any Unvested Shares that would otherwise cease to
be Unvested Shares pursuant to subsection (a) above within the twelve-month
period following such date of termination, shall cease to be Unvested Shares and
shall no longer be subject to forfeiture pursuant to subsection (a).
(c) Notwithstanding Section 8(c)(3) of the Plan, upon a Change in
Control Event resulting in consideration to the shareholders of the Company of
more than $20.95 (subject to appropriate adjustment in the event of any stock
split, reverse stock split, stock dividend, recapitalization, combination of
shares, reclassification of shares, spin-off or other similar change in
capitalization or event, or any distribution to holders of Common Stock other
than a normal cash dividend) per share of Common Stock (as valued by the Board
of Directors of the Company), any restrictions and conditions on the Shares
(including the forfeiture provisions of subsection (a)) shall automatically be
deemed terminated or satisfied. Upon a Change in Control Event resulting in
consideration which is not more than $20.95 (subject to appropriate adjustment
as described in the prior sentence) per share of Common Stock, such restrictions
and conditions shall remain in effect in accordance with their terms.
(d) For purposes of this Agreement, employment with the Company shall
include employment with a parent or subsidiary of the Company.
3. Forfeiture Procedure.
(a) At any time following an Employment Termination Date, the Company
may deliver or mail to the Participant (or his estate) a written notice of
forfeiture. Such notice shall specify the number of Shares to be forfeited by
the Participant (or his estate).
(b) Within 10 days after delivery to the Participant of the Company's
notice of forfeiture pursuant to subsection (a) above, the Participant (or his
estate) shall, pursuant to the provisions of the Joint Escrow Instructions
referred to in Section 5 below, tender to the Company at its principal offices,
for no consideration, the certificate or certificates representing the Shares to
be forfeited, duly endorsed in blank or with duly endorsed stock powers attached
thereto, all in form suitable for the transfer of such Shares to the Company.
(c) After the time at which any Shares are required to be delivered
to the Company for transfer to the Company pursuant to subsection (b) above, the
Company shall not pay any dividend to the Participant on account of such Shares
or permit the Participant to exercise any of the privileges or rights of a
stockholder with respect to such Shares, but shall, in so far as permitted by
law, treat the Company as the owner of such Shares.
4. Restrictions on Transfer. The Participant shall not sell, assign,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or
otherwise (collectively "transfer") any Shares, or any interest therein, that
are subject to forfeiture, except that the Participant may transfer such Shares
(i) to or for the benefit of any spouse, children, parents, uncles, aunts,
siblings, grandchildren and any other relatives approved by the Board of
Directors (collectively, "Approved Relatives") or to a trust established solely
for the benefit of the Participant and/or Approved Relatives, provided that such
Shares shall remain subject to this Agreement (including without limitation the
restrictions on transfer set forth in this Section 4 and the forfeiture
obligations set forth in Section 2) and such permitted transferee shall, as a
condition to such transfer, deliver to the Company a written instrument
confirming that such transferee shall be bound by all of the terms and
conditions of this Agreement or (ii) as part of the sale of all or substantially
all of the shares of capital stock of the Company (including pursuant to a
merger or consolidation), provided that, except as otherwise set forth in this
Agreement, the securities or other property received by the Participant in
connection with such transaction shall remain subject to this Agreement.
5. Escrow.
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The Participant shall, upon the execution of this Agreement, execute Joint
Escrow Instructions in the form attached to this Agreement as Exhibit A. The
Joint Escrow Instructions shall be delivered to the Clerk of the Company, as
escrow agent thereunder. The Participant shall deliver to such escrow agent a
stock assignment duly endorsed in blank, in the form attached to this Agreement
as Exhibit B, and hereby instructs the Company to deliver to such escrow agent,
on behalf of the Participant, the certificate(s) evidencing the Shares issued
hereunder. Such materials shall be held by such escrow agent pursuant to the
terms of such Joint Escrow Instructions.
6. Restrictive Legends.
All certificates representing Shares shall have affixed thereto a legend in
substantially the following form, in addition to any other legends that may be
required under federal or state securities laws:
"The shares of stock represented by this certificate are
subject to restrictions on transfer and a forfeiture
requirement set forth in a certain Restricted Stock
Agreement between the corporation and the registered owner
of these shares (or his predecessor in interest), and such
Agreement is available for inspection without charge at the
office of the Chief Financial Officer of the corporation."
7. Provisions of the Plan.
(a) This Agreement is subject to the provisions of the Plan, a copy
of which is furnished to the Participant with this Agreement.
(b) As provided in the Plan, upon the occurrence of an Acquisition
Event (as defined in the Plan), the forfeiture and other rights of the Company
hereunder shall inure to the benefit of the Company's successor and shall apply
to the cash, securities or other property which the Shares were converted into
or exchanged for pursuant to such Acquisition Event in the same manner and to
the same extent as they applied to the Shares under this Agreement. If, in
connection with an Acquisition Event, a portion of the cash, securities and/or
other property received upon the conversion or exchange of the Shares is to be
placed into escrow to secure indemnification or similar obligations, the mix
between the vested and unvested portion of such cash, securities and/or other
property that is placed into escrow shall be the same as the mix between the
vested and unvested portion of such cash, securities and/or other property that
is not subject to escrow.
8. Withholding Taxes; Section 83(b) Election.
(a) The Participant acknowledges and agrees that the Company has the
right to deduct from payments of any kind otherwise due to the Participant any
federal, state or local taxes of any kind required by law to be withheld with
respect to the issuance of the Shares to the Participant or the lapse of the
Company's right to reacquire the Shares upon the forfeiture thereof.
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(b) The Participant has reviewed with the Participant's own tax
advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contemplated by this Agreement. The Participant
is relying solely on such advisors and not on any statements or representations
of the Company or any of its agents. The Participant understands that the
Participant (and not the Company) shall be responsible for the Participant's own
tax liability that may arise as a result of this issuance of Shares or the
transactions contemplated by this Agreement. The Participant understands that it
may be beneficial in many circumstances to elect to be taxed at the time the
Shares are acquired rather than when and as the Company's right to reacquire the
Shares upon forfeiture expires by filing an election under Section 83(b) of the
Code with the I.R.S. within 30 days from the date of issuance.
THE PARTICIPANT ACKNOWLEDGES THAT IT IS THE PARTICIPANT'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO
MAKE THIS FILING ON THE PARTICIPANT'S BEHALF.
9. Miscellaneous.
(a) No Rights to Employment. The Participant acknowledges and agrees
that the vesting of the Shares pursuant to Section 2 hereof is earned only by
continuing service as an employee of the Company (not through the act of being
hired or acquiring shares hereunder). The Participant further acknowledges and
agrees that the transactions contemplated hereunder and the vesting schedule set
forth herein do not constitute an express or implied promise of continued
engagement as an employee or consultant for the vesting period, for any period,
or at all.
(b) Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, and each other provision of this Agreement shall be
severable and enforceable to the extent permitted by law.
(c) Waiver. Any provision for the benefit of the Company contained in
this Agreement may be waived, either generally or in any particular instance, by
the Board of Directors of the Company.
(d) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company and the Participant and their respective heirs,
executors, administrators, legal representatives, successors and assigns,
subject to the restrictions on transfer set forth in Section 4 of this
Agreement.
(e) Notice. All notices required or permitted hereunder shall be in
writing and deemed effectively given upon personal delivery or five days after
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party hereto at the address shown
beneath his or its respective signature to this Agreement, or at such other
address or addresses as either party shall designate to the other in accordance
with this Section 9(e).
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(f) Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
(g) Entire Agreement. This Agreement and the Plan constitute the
entire agreement between the parties with respect to the Shares, and supersede
all prior agreements and understandings, relating to the subject matter of this
Agreement. In the event of an inconsistency between this Agreement and the
Employment Agreement, the provisions of this Agreement shall govern.
(h) Amendment. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Participant.
(i) Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the internal laws of the Commonwealth of
Massachusetts without regard to any applicable conflicts of laws.
(j) Participant's Acknowledgments. The Participant acknowledges that
he or she: (i) has read this Agreement; (ii) has been represented in the
preparation, negotiation, and execution of this Agreement by legal counsel of
the Participant's own choice or has voluntarily declined to seek such counsel;
(iii) understands the terms and consequences of this Agreement; (iv) is fully
aware of the legal and binding effect of this Agreement; and (v) understands
that the law firm of ▇▇▇▇ and ▇▇▇▇ LLP, is acting as counsel to the Company in
connection with the transactions contemplated by the Agreement, and is not
acting as counsel for the Participant.
(k) In the event of any stock split, reverse stock split, stock
dividend, recapitalization, combination of shares, reclassification or shares,
spin-off or other similar change in capitalization or event, or any distribution
to holders of Common Stock other than a normal cash dividend, the vesting
schedule shall be appropriately adjusted as determined by the Board of
Directors.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Lifeline Systems, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: SVP Finance/Chief Financial Officer
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Address: c/o Lifeline Systems, Inc.
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Address: c/o Lifeline Systems, Inc.,
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Exhibit A
Lifeline Systems, Inc.
Joint Escrow Instructions
February 13 ,2003
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Clerk
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sir:
As Escrow Agent for Lifeline Systems, Inc., a Massachusetts corporation,
and its successors in interest under the Restricted Stock Agreement (the
"Agreement") of even date herewith, to which a copy of these Joint Escrow
Instructions is attached (the "Company"), and the undersigned person ("Holder"),
you are hereby authorized and directed to hold the documents delivered to you
pursuant to the terms of the Agreement in accordance with the following
instructions:
1. Appointment. Holder irrevocably authorizes the Company to deposit with
you any certificates evidencing Shares (as defined in the Agreement) to be held
by you hereunder and any additions and substitutions to said Shares. For
purposes of these Joint Escrow Instructions, "Shares" shall be deemed to include
any additional or substitute property. Holder does hereby irrevocably constitute
and appoint you as his attorney-in-fact and agent for the term of this escrow to
execute with respect to such Shares all documents necessary or appropriate to
make such Shares negotiable and to complete any transaction herein contemplated.
Subject to the provisions of this paragraph 1 and the terms of the Agreement,
Holder shall exercise all rights and privileges of a stockholder of the Company
while the Shares are held by you.
2. Closing of Forfeiture.
(a) Upon any required forfeiture of the Shares pursuant to the
Agreement, the Company shall give to Holder and you a written notice specifying
the number of Shares to be forfeited, as determined pursuant to the Agreement,
and the time for a closing hereunder (the "Closing") at the principal office of
the Company. Holder and the Company hereby irrevocably authorize and direct you
to close the transaction contemplated by such notice in accordance with the
terms of said notice.
(b) At the Closing, you are directed (i) to date the stock assignment
form or forms necessary for the transfer of the Shares, (ii) to fill in on such
form or forms the number of
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Shares being transferred, and (iii) to deliver same, together with the
certificate or certificates evidencing the Shares to be transferred, to the
Company.
3. Withdrawal. The Holder shall have the right to withdraw from this
escrow any Shares which are no longer subject to forfeiture.
4. Duties of Escrow Agent.
(a) Your duties hereunder may be altered, amended, modified or
revoked only by a writing signed by all of the parties hereto.
(b) You shall be obligated only for the performance of such duties as
are specifically set forth herein and may rely and shall be protected in relying
or refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact of Holder while acting in good faith and in
the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
(c) You are hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person or Company,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to any of the parties hereto or to any other person,
firm or Company by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
(d) You shall not be liable in any respect on account of the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver the Agreement or any documents or papers
deposited or called for hereunder.
(e) You shall be entitled to employ such legal counsel, including
▇▇▇▇ and ▇▇▇▇ LLP, and other experts as you may deem necessary properly to
advise you in connection with your obligations hereunder and may rely upon the
advice of such counsel.
(f) Your rights and responsibilities as Escrow Agent hereunder shall
terminate if (i) you cease to be Clerk of the Company or (ii) you resign by
written notice to each party. In the event of a termination under clause (i),
your successor as Clerk shall become Escrow Agent hereunder; in the event of a
termination under clause (ii), the Company shall appoint a successor Escrow
Agent hereunder.
(g) If you reasonably require other or further instruments in
connection with these Joint Escrow Instructions or obligations in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.
(h) It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you
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are authorized and directed to retain in your possession without liability to
anyone all or any part of said securities until such dispute shall have been
settled either by mutual written agreement of the parties concerned or by a
final order, decree or judgment of a court of competent jurisdiction after the
time for appeal has expired and no appeal has been perfected, but you shall be
under no duty whatsoever to institute or defend any such proceedings.
(i) These Joint Escrow Instructions set forth your sole duties with
respect to any and all matters pertinent hereto and no implied duties or
obligations shall be read into these Joint Escrow Instructions against you.
(j) The Company shall indemnify you and hold you harmless against any
and all damages, losses, liabilities, costs, and expenses, including attorneys'
fees and disbursements, for anything done or omitted to be done by you as Escrow
Agent in connection with this Agreement or the performance of your duties
hereunder, except such as shall result from your gross negligence or willful
misconduct.
5. Notice. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail with
postage and fees prepaid, addressed to each of the other parties thereunto
entitled at the following addresses, or at such other addresses as a party may
designate by ten days' advance written notice to each of the other parties
hereto.
COMPANY: Notices to the Company shall be sent to the address set
forth in the salutation hereto, Attn: Chairman of the
Board of Directors
HOLDER: Notices to Holder shall be sent to the address set forth
below Holder's signature below.
ESCROW AGENT: Notices to the Escrow Agent shall be sent to the address
set forth in the salutation hereto.
6. Miscellaneous.
(a) By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions, and you do not
become a party to the Agreement.
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(b) This instrument shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
Very truly yours,
Lifeline Systems, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: SVP Finance/Chief Financial Officer
HOLDER:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Address: c/o Lifeline Systems, Inc.
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Date Signed: February 13, 2003
ESCROW AGENT:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Exhibit B
(STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE)
FOR VALUE RECEIVED, I hereby sell, assign and transfer unto
__________________ (_________) shares of Common Stock, $0.02 par value per
share, of Lifeline Systems, Inc. (the "Corporation") standing in my name on the
books of the Corporation represented by Certificate(s) Number __________
herewith, and do hereby irrevocably constitute and appoint
______________________ attorney to transfer the said stock on the books of the
Corporation with full power of substitution in the premises.
Dated: ____________________
IN PRESENCE OF __________________________________
__________________________________
NOTICE: The signature(s) to this assignment must correspond with the name
as written upon the face of the certificate, in every particular, without
alteration, enlargement, or any change whatever and must be guaranteed by a
commercial bank, trust company or member firm of the Boston, New York or Midwest
Stock Exchange.
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