Exhibit 99.1
PACCAR Inc
LONG TERM INCENTIVE PLAN
2006 RESTRICTED STOCK AWARD AGREEMENT
THIS 2006 RESTRICTED STOCK AWARD AGREEMENT (the "Agreement"), is
entered into as of this __ day of April 2006, (the "Award Date") between PACCAR
Inc, a Delaware corporation (the "Company"), and (key employee) (the
"Recipient").
WHEREAS, The Company has established the PACCAR Inc Long Term Incentive
Plan (the "LTIP") in order to provide key employees of the Company and its
subsidiaries with an opportunity to acquire shares of the Company's common
stock, par value $1 per share (the "Common Shares"); and
WHEREAS, the Compensation Committee of the Board of Directors charged
with administering the LTIP (the "Committee") has determined that it would be in
the best interests of the Company and its stockholders to grant the Restricted
Shares described in this Agreement to the Recipient as an inducement to enter
into or remain in the service of the Company and as an incentive for
extraordinary efforts during such service;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is agreed as follows:
1. Award. The Company hereby grants the Recipient (number) Common Shares
(the "Restricted Shares"), subject to the terms and conditions of the
LTIP and this Agreement (the "Award"). The provisions of the LTIP are
incorporated into this Agreement by this reference.
2. Rights as Stockholder. On and after the Award Date, and except to the
extent provided in the LTIP and this Agreement, the Recipient will be
entitled to all of the rights of a stockholder with respect to the
Restricted Shares, including the right to vote the Restricted Shares
and to receive dividends and other distributions payable with respect
to the Restricted Shares.
3. Performance Goal. The Committee established the amount of the Award and
a performance goal (the "Performance Goal") for the Award within the
first ninety (90) days of the calendar year. The Performance Goal is
based on the Company's return on sales over the Performance Period.
Return on sales will be measured by dividing total net
income (less preferred dividends) over the Performance Period by total
manufacturing sales (excluding financial services revenues) over the
Performance Period.
4. Performance Period. The period for the Performance Goal commences on
January 1 and ends on December 31, 2006 (the "Performance Period").
5. Performance Evaluation. Within thirty (30) days after the end of the
Performance Period, the Committee will certify in writing whether the
Performance Goal has been achieved. If the Performance Goal has been
achieved, the Award shall vest in accordance with the vesting
provisions of Section 6. If the Performance Goal was not achieved, the
Award shall be immediately forfeited (except as stated in Section
7(d)).
6. No Transfer before Vesting. Until the Performance Goal has been
satisfied and the Restricted Shares otherwise vest, the Restricted
Shares may not be transferred, pledged, alienated, attached or
otherwise encumbered; any purported pledge, alienation, attachment or
encumbrance shall be void and unenforceable against the Company; and no
attempt to transfer the unvested portion of the Award covering any of
the Restricted Shares or the Restricted Shares, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the purported
transferee with any interest or right in or with respect to such Award
or Restricted Shares. Notwithstanding the foregoing, the Restricted
Shares may be transferred by will or the laws of descent and
distribution or pursuant to a trust created for the benefit of the
Recipient or his family as provided Section 14 of the LTIP. The
restrictions set forth in the LTIP and this Agreement shall apply to
the Restricted Shares in the hands of any transferee.
7. Vesting.
(a) Conditions. The Award of Restricted Shares shall vest
according to the schedule set forth below in Section 7(b)
provided that the Committee certifies that the Performance
Goal has been achieved.
(b) Schedule. The restrictions set out in Section 6 above shall
lapse in accordance with the following schedule provided that
the Recipient has been continuously
2006 Performance-Based Annual
Restricted Stock Award Agreement - Page 2
employed by the Company in an LTIP-eligible position through
the applicable vesting date:
(1) one-fourth of the Award on February 1, 2007;
(2) an additional one-fourth on each succeeding first of
January, so as to be 100% vested on January 1, 2010.
(c) Retirement, Disability, Death. If the Committee certifies that
the Performance Goal has been achieved and Recipient's
employment with the Company subsequently terminates by reason
of Recipient's retirement on or after age 65, early retirement
(determined under the terms of the Company's defined benefit
plan) disability (determined under the Company's long-term
disability plan), or death, then the Restricted Shares will
continue to vest in accordance with the schedule set forth in
Section 7(b).
(d) Change in Control. Notwithstanding anything in this agreement
to the contrary, in the event of a Change in Control as
provided in Section 16.4 of the LTIP, whether or not the
Performance Goal has been satisfied, the Restricted Shares
shall immediately vest in full.
(e) Ownership. On the Vesting Date, Grantee shall own the vested
shares of Restricted Stock free and clear of all restrictions
imposed by this Agreement (except those imposed by Section
13).
8. Forfeiture of Restricted Shares. The Recipient's Restricted Shares that
have not vested in accordance with Section 6 shall be immediately and
irrevocably forfeited as follows:
(a) If the Performance Goal is not achieved, all Restricted Shares
will be immediately forfeited.
(b) If the Recipient resigns or is terminated by the Company
voluntarily or involuntarily other than by death, disability
or retirement as provided in Section 7 above, all Restricted
Shares will be immediately forfeited.
2006 Performance-Based Annual
Restricted Stock Award Agreement - Page 3
9. Terms and Conditions of Distribution. The Company is not required to
issue or deliver any certificates for the vested Shares before
completing the steps necessary to comply with applicable federal and
state securities laws (including any registration requirements and
regulations governing short swing trading of securities) and applicable
stock exchange rules and practices. The Company will use commercially
reasonable efforts to cause compliance with those laws, rules and
practices.
If the Recipient dies before the Company has distributed any vested
Shares, the Company will distribute certificates to the beneficiary or
beneficiaries the Recipient designated, in the proportions the
Recipient specified. To be effective, a beneficiary designation must be
made in writing and filed with the Company. If the Recipient failed to
designate a beneficiary or beneficiaries, the Company will distribute
certificates for the Common Shares to the Recipient's surviving spouse
or, if there is none, to his estate.
10. Stock Certificates. The Company will set up a book entry Restricted
Shares account for the Recipient with the Company's transfer agent for
the Restricted Shares as soon as practicable. The Company will
distribute share certificates to the Recipient or, if applicable, his
or her beneficiary, when the Restricted Stock becomes vested in
accordance with Section 6 of this Agreement.
11. Payment for Shares. The Committee has determined that the services
rendered by Recipient to the Company provided value equal to the $1.00
par value of the Vested Shares awarded and, therefore, no cash payment
to the Company is required.
12. Withholding of Tax. To the extent that the receipt of the Restricted
Shares or dividends results in income to the Employee for any federal
or state income tax purposes, no later than the date as of which such
tax withholding is first required, Recipient shall pay to the Company
any federal or state income tax required to be withheld with respect to
such amount. If the Recipient fails to do so, the Company will withhold
shares of common stock having a fair market value on the date of
withholding equal to the minimum tax withholding obligation.
2006 Performance-Based Annual
Restricted Stock Award Agreement - Page 4
13. Legality of Issuance; Restrictions on Transfer. No Vested Shares shall
be issued unless and until the Company has determined that:
(a) it and the Recipient have taken any actions required to
register the Common Shares under the Securities Act of 1933,
as amended (the "Securities Act") or to perfect an exemption
from the registration requirements thereof;
(b) any applicable listing requirement of any stock exchange on
which Common Shares are listed has been satisfied; and
(c) any other applicable provision of state or federal law has
been satisfied.
Regardless of whether the offering and sale of Common Shares under the
LTIP have been registered under the Securities Act or have been
registered or qualified under the securities laws of any state, the
Company may impose restrictions upon the sale, pledge or other transfer
of such Common Shares (including the placement of appropriate legends
on stock certificates) if, in the judgment of the Company and its
counsel, such restrictions are necessary or desirable in order to
achieve compliance with the Securities Act, the securities laws of any
state or any other law or with restrictions imposed by the Company's
underwriters.
14. No Registration Rights. The Company may, but shall not be obligated to,
register or qualify the issuance of Restricted Shares under the
Securities Act or any other applicable law. The Company shall not be
obligated to take any affirmative action in order to cause the issuance
of Restricted Shares under this Agreement to comply with any law.
15. Removal of Legends. If, in the opinion of the Company and its counsel,
any legend placed on a stock certificate representing Common Shares is
no longer required, the holder of such certificate shall be entitled to
exchange such certificate for a certificate representing the same
number of Common Shares but lacking such legend.
16. Investment Intent. In the event that the issuance of Restricted Shares
under the LTIP is not registered under
2006 Performance-Based Annual
Restricted Stock Award Agreement - Page 5
the Securities Act but an exemption is available which requires an
investment representation or other representation, the Recipient shall
represent and agree at the time of exercise that the Common Shares
being acquired upon exercising this option are being acquired for
investment, and not with a view to the sale or distribution thereof,
and shall make such other representations as are deemed necessary or
appropriate by the Company and its counsel.
17. No Employment Rights. Nothing in this Agreement shall be construed as
giving the Recipient the right to be retained as an employee. The
Company reserves the right to terminate the Recipient's service at any
time, with or without cause (subject to any employment agreement
between the Recipient and the Company).
18. Administration. The Committee administers the LTIP and this Agreement.
The Committee shall have sole discretion to interpret the LTIP and this
Agreement, amend and rescind rules relating to its implementation and
make all determinations necessary for administration of the LTIP and
this Agreement. The Recipient's rights under this Agreement are
expressly subject to the terms and conditions of the LTIP, including
continued shareholder approval of the LTIP, and to any guidelines the
Company adopts from time to time.
19. Entire Agreement. The Award is in all respects subject to the
provisions set forth in the LTIP to the same extent and with the same
effect as if the provisions of the LTIP were set forth fully herein. In
the event that the terms of this Award conflict with the terms of the
LTIP, the LTIP shall control. This Agreement is the entire Agreement
between the parties to it, and any and all prior oral and written
representations are merged into and superseded by this Agreement. This
Agreement may be amended only by written agreement between the
Recipient and the Company.
20. No Limitation on Rights of the Company. The award of Restricted Shares
does not and will not in any way affect the right or power of the
Company to make adjustments, reclassifications or changes in its
capital or business structure, or to merge, consolidate, dissolve,
liquidate, sell or transfer all or any part of its business or assets.
2006 Performance-Based Annual
Restricted Stock Award Agreement - Page 6
21. Share Adjustments. If there are any changes in the number or value of
shares of Common Shares by reason of stock dividends, stock splits,
reverse stock splits, recapitalizations, mergers or other events as
stated in Article 10 of the LTIP, the Board of Directors or Committee
may make such adjustments as it deems appropriate in order to prevent
dilution or enlargement of rights. This provision does not, however,
authorize the delivery of fractional Common Shares under the LTIP.
22. Notices. Any notice or other communication required or permitted under
the LTIP or this Agreement must be in writing and must be delivered
personally, sent by certified, registered or express mail, or sent by
overnight courier, at the sender's expense. Notice will be deemed given
when delivered personally or, if mailed, three days after the date of
deposit in the United States mail or, if sent by overnight courier, on
the regular business day following the date sent. Notice to the Company
should be sent to PACCAR Inc, Attention: Corporate Secretary. Notice to
the Recipient should be sent to his or her business address.
23. Data Privacy. By entering into this Agreement, Recipient:
(a) agrees to disclose certain personal data requested by the
Company to administer the LTIP and expressly consents to the
Company's processing such data for purposes of the
implementation or administration of the LTIP and this
Agreement;
(b) waives any data privacy rights Recipient may have with respect
to such data; and
(c) authorizes the Company and any of its authorized agents to
store and transmit such information in electronic form.
24. Successors. All obligations of the Company under this Agreement will be
binding on any successor to the Company, whether the existence of the
successor results from a direct or indirect purchase of all or
substantially all of the business and/or assets of the Company, or a
merger, consolidation, or other event.
25. Governing Law. To the extent not preempted by federal law, this
Agreement will be construed and enforced in accordance
2006 Performance-Based Annual
Restricted Stock Award Agreement - Page 7
with, and governed by, the laws of the State of Washington as such laws
are applied to contracts entered into and performed in such State.
26. Limitation on Rights; No Right to Future Awards; Extraordinary Item of
Compensation. By entering into this Agreement and accepting the grant
of an award evidenced hereby, Recipient acknowledges:
(a) that the LTIP is discretionary in nature and may be suspended
or terminated by the Company at any time;
(b) that the Award of Restricted Stock is a one-time benefit which
does not create any contractual or other right to receive
future awards, grants of stock options, or benefits in lieu
thereof;
(c) that all determinations with respect to any such future
Awards, including, but not limited to, the times when Awards
shall be made, the number of Common Shares to be awarded, and
the vesting of any Restricted Stock thereunder, will be at the
sole discretion of the Company;
(d) that the Recipient's participation in the LTIP is voluntary;
(e) that the value of the Award is an extraordinary item of
compensation which is outside the scope of the Recipient's
employment contract, if any;
(f) that the Award is not part of normal or expected compensation
for purposes of calculating any severance, resignation,
redundancy, end of service payments, bonuses, long-service
awards, pension or retirement benefits or similar payments;
and
(g) that the future value of the Commons Shares is unknown and
cannot be predicted with certainty.
2006 Performance-Based Annual
Restricted Stock Award Agreement - Page 8
I agree to the terms and conditions of this restricted stock agreement
and acknowledge having received the following documents:
o PACCAR Long Term Incentive Plan (Effective 4/25/2006)
o LTIP Administrative Guidelines Section 5.2 (Effective 01/26/06)
o Plan Information Statement (Effective 4/25/2006)
Recipient: PACCAR Inc
By:
----------------------------------- -----------------------------------
2006 Performance-Based Annual
Restricted Stock Award Agreement - Page 9
