RESTRICTED STOCK AGREEMENT
THIS AGREEMENT, made effective as of this _____ day of September, 1999,
by and between Eagle Pacific Industries, Inc., a Minnesota corporation (the
"Company"), and __________ ____________ ("Employee").
W I T N E S S E T H:
WHEREAS, the Employee on the date hereof is the
________________________ of the Company; and
WHEREAS, the Company wishes to provide Employee the opportunity to
obtain a greater equity interest in the Company by granting Employee certain
performance-based cash bonuses in the form of restricted stock; and
WHEREAS, the Company's Board of Directors has authorized the grant of
restricted stock awards to Employee pursuant to this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
1. Restricted Stock Award. The Company hereby grants to Employee a
restricted stock award of _____ shares of the Company's Common Stock, subject to
the terms of this Agreement. The Company shall cause to be issued a stock
certificate representing such shares of Common Stock in Employee's name, and the
Company shall hold such shares until such time as the risks of forfeiture
described in Section 2 have lapsed. Until such risks of forfeiture have lapsed
or the shares subject to such restricted stock award have been forfeited
pursuant to Section 2 below, Employee shall be entitled to vote the shares
represented by such stock certificates and shall receive all dividends
attributable to such shares, but Employee shall not have any other rights as a
shareholder with respect to such shares.
2. Vesting of Restricted Stock.
a. The shares of Common Stock subject to the restricted stock
award shall remain forfeitable until vesting according to the following schedule
(the "vesting date"):
Cumulative
Vesting Date Percentage of Shares Vested
September ___, 2002 20%
September ___, 2003 50%
September ___, 2004 100%
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If Employee's employment with the Company is terminated for any reason,
including Employee's voluntary resignation or retirement but excluding death or
total disability, at any time prior to the vesting date for the restricted stock
award, Employee shall immediately forfeit all shares of Common Stock subject to
such award that have not vested. If Employee's employment is terminated by death
or total disability prior to the vesting date for the restricted stock award,
all risks of forfeiture on the shares of Common Stock subject to such award
shall immediately lapse.
b. At such time as the risks of forfeiture on such restricted
stock award lapse, the certificates representing the shares of Common Stock
shall be distributed to Employee. If the shares are forfeited, the certificates
representing such shares shall be cancelled.
3. Change of Control. Notwithstanding anything in this Agreement to the
contrary, all risks of forfeiture applicable to Employee's restricted stock
awards shall immediately lapse upon a "change of control." For purposes of this
Section 3, a "change of control" shall mean the occurrence of any of the
following events: (i) all or substantially all of the Company's assets, on a
consolidated basis, are sold as an entirety to any person or related group of
persons or there shall be consummated any consolidation or merger of the Company
(A) in which the Company is not the continuing or surviving company (other than
a consolidation or merger with a wholly-owned Subsidiary in which all shares of
Common Stock outstanding immediately prior to the effectiveness thereof are
changed into or exchanged for the same consideration) or (B) pursuant to which
the Common Stock would be converted into cash, securities or other property, in
any case, other than a sale of assets or consolidation or merger of the Company
in which the holders of the Common Stock immediately prior to the sale of assets
or consolidation or merger have, directly or indirectly, at least a majority of
the Common Stock of the transferee or continuing or surviving company
immediately after such sale of assets or consolidation or merger, (ii) any
"person" (as such term is used in Sections 13(d) and 14 (d) of the Exchange Act)
other than the Spell Group, is or becomes the beneficial owner (as defined in
Rules 13d-3 and 13d-5 of the Exchange Act provided that such person shall be
deemed to have "beneficial ownership" of all shares that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 35% of the total
voting power of the outstanding voting securities of the Company; or (iii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board cease for any reason to constitute a majority
of the Board, then in office.
4. General Provisions.
a. Employment; Rights as Shareholder. This Agreement shall not
confer on Employee any right with respect to continuance of employment by the
Company, nor will it interfere in any way with the right of the Company to
terminate such employment.
b. Securities Law Compliance. Employee may be required by the
Company, as a condition of the effectiveness of any restricted stock award, to
agree in writing that all Common Stock subject to such awards shall be held,
until such time that such Common Stock is registered and freely tradable under
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applicable state and federal securities laws, for Employee's own account without
a view to any further distribution thereof, that the certificates for such
shares shall bear an appropriate legend to that effect and that such shares will
be not transferred or disposed of except in compliance with applicable state and
federal securities laws.
c. Mergers, Recapitalizations, Stock Splits, Etc. In the event
of an increase or decrease in the number of shares of Common Stock resulting
from a subdivision or consolidation of shares or the payment of a stock dividend
or any other increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company, the number of shares
of Common Stock subject to each outstanding restricted stock award shall be
adjusted by the Board to reflect such change. Additional shares which may be
credited pursuant to such adjustment shall be subject to the same restrictions
as are applicable to the shares with respect to which the adjustment relates.
d. Shares Reserved. The Company shall at all times during the
term of Employee's restricted stock awards reserve and keep available such
number of shares as will be sufficient to satisfy the requirements of this
Agreement.
e. Withholding Taxes. In order to provide the Company with the
opportunity to claim the benefit of any income tax deduction which may be
available to it as from the grant of restricted stock awards to Employee under
this Agreement and to permit the Company to comply with all applicable federal
or state income tax laws or regulations, the Company may take such action as it
deems appropriate to insure that, if necessary, all applicable federal or state
payroll, income or other taxes are withheld from any amounts payable by the
Company to Employee. If the Company is unable to withhold such federal and state
taxes, for whatever reason, the Employee hereby agrees to pay to the Company an
amount equal to the amount the Company would otherwise be required to withhold
under federal or state law prior to the transfer of any certificates for the
shares of Common Stock subject to such restricted stock awards.
f. Amendment; Waiver. This Agreement may not be modified,
amended or waived in any manner except by an instrument in writing signed by
both parties hereto. The waiver by either party of compliance with any provision
of this Agreement by the other party shall not operate or be construed as a
waiver of any other provision of this Agreement, or of any subsequent breach by
such party of a provision of this Agreement.
g. Supersedes Previous Agreements. This Agreement supersedes
all prior or contemporaneous negotiations, commitments, agreements (written or
oral) and writings between the Company and Employee with respect to the subject
matter hereof. All such other negotiations, commitments, agreements and writings
will have no further force or effect, and the parties to any such other
negotiation, commitment, agreement or writing will have no further rights or
obligations thereunder.
h. Governing Law. All matters affecting this Agreement,
including the validity thereof, are to be governed by, interpreted and
construed in accordance with the laws of the State of Minnesota.
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i. Notices. Any notice hereunder by either party to the other
shall be given in writing by personal delivery, by telecopy (with confirmation
of transmission) or by certified mail, return receipt requested. If addressed to
Employee, the notice shall be delivered or mailed to Employee at the address
specified under Employee's signature hereto, or if addressed to the Company, the
notice shall be delivered or mailed to the Company at its executive offices to
the attention of its President. A notice shall be deemed given, if by personal
delivery or by telecopy, on the date of such delivery or, if by certified mail,
on the date shown on the applicable return receipt.
j. Headings. The headings of Sections and paragraphs
herein are included solely for convenience of reference and shall not
control the meaning or interpretation of any of the provisions of this
Agreement.
k. Scope of Agreement. This Agreement shall bind and inure
to the benefit of the Company and its successors and assigns and of Employee
and his successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
EAGLE PACIFIC INDUSTRIES, INC.
(the "Company")
By:_____________________________________
Its:________________________________
________________________________________
("Employee")
Address: ______________________________
______________________________
______________________________
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