RESTRICTED STOCK AGREEMENT
Exhibit 10.5
GRANTED TO:
DATE OF GRANT:
GRANTED PURSUANT TO: X.X. Xxxxx Arts & Crafts, Inc. 2007 Stock Incentive Plan
NUMBER OF SHARES:
VESTING SCHEDULE:
1. This Restricted Stock Agreement (the “Agreement”) is made and entered into as of
(the “Date of Grant”) between X.X. Xxxxx Arts & Crafts, Inc., a Pennsylvania
corporation (the “Company”), and , as a participant (the “Participant”) in the
X.X. Xxxxx Arts & Crafts, Inc. 2007 Stock Incentive Plan (the “Plan”), a copy of which is enclosed
herewith. Capitalized terms not defined herein shall have the meanings ascribed thereto in the
Plan.
2. The
Participant is granted ___ shares of Common Stock of the Company (the
“Restricted Stock”). The Restricted Stock is granted as provided for under the Plan and is subject
to the terms and conditions set forth in the Plan and this Agreement. The Restricted Stock granted
hereunder is a matter of separate inducement and is not in lieu of salary or other compensation for
the services of a Participant to the Company or any of its Affiliates.
3. This grant of Restricted Stock shall vest in accordance with the following schedule:
[In whole or in part, from immediate vesting to any daily, monthly or yearly vesting up to 10 years
and in combination with any or none of the performance measures permitted to be used under the
Plan, either individually or in any combination and with or without acceleration.]
4. The Restricted Stock granted hereunder shall be promptly issued and evidenced by a
certificate or certificates for such shares issued in the Participant’s name or by book entry at
the Company’s option. The Participant shall thereupon have all the rights of a shareholder with
respect to such shares, including, but not limited to, the right to vote such shares and to receive
all dividends and other distributions paid with respect to them; provided, however, that the shares
shall be subject to the restrictions on transferability in Paragraphs 5 and 6 below. Unless
otherwise provided in this Paragraph 3, the Company shall hold the certificate or certificates for
such shares until the date the restrictions on transferability are removed in accordance with
Paragraphs 5 and 7 below. The Company may, in its sole discretion and at any time prior to the date
the restrictions on transferability are removed in accordance with Paragraphs 5 and 7 below,
require (i) that the stock certificate or certificates representing such shares shall be imprinted
with a legend stating that the shares represented thereby are the restricted shares subject to the
terms and conditions of this Agreement and, as such, may not be sold, exchanged, transferred,
pledged, hypothecated or otherwise disposed of except in accordance with the terms of this
Agreement, and/or (ii) that the Participant shall, upon receipt of the certificate or certificates
therefor, deposit such certificate or certificates together with a stock power or other like
instrument of transfer, appropriately endorsed in blank, with an escrow agent designated by the
Company, which may be the Company, under a deposit agreement containing such terms and conditions
as the Company shall approve, with the expenses of such escrow to be borne by the Company.
5. If under Section 12 of the Plan the Participant, as the owner of the shares of the
Restricted Stock, shall be entitled to new, additional or different shares of stock or securities,
(i) the Company may require that the certificate or certificates for, or other evidences of, such
new, additional or different shares or securities, together with a stock power or other instrument
of transfer appropriately endorsed, shall be imprinted with a legend as provided in Paragraph 3
above, be deposited by the Participant under the deposit agreement provided for therein, and (ii)
such certificate or certificates for, or other evidences of, such new, additional or different
shares or securities shall be subject to the restrictions on transferability as provided in
Paragraphs 6 and 7 below.
6. The shares of the Restricted Stock shall be subject to restrictions on transferability.
Subject to Paragraph 8 through 11, inclusive below, such restrictions shall be removed from such
shares according to the vesting schedule set forth above. Notwithstanding anything contained in
this Agreement to the contrary, if there is a Change in Control of the Company, all unvested shares
of Restricted Stock granted under this Agreement shall become fully vested immediately upon the
occurrence of the Change in Control and such vested shares of Restricted Stock shall be paid out or
settled, as applicable, within 60 days upon the occurrence of the Change in Control, subject to
requirements of applicable laws and regulations. The Committee shall have full discretion,
notwithstanding anything herein or in this Agreement to the contrary, with respect to an
outstanding Award of Restricted Stock, upon the merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company, to provide that the
securities of another entity may be substituted hereunder for the shares of Common Stock and to
make equitable adjustment with respect thereto.
7. During the period when the Restricted Stock is subject to the restrictions on
transferability, none of the shares of the Restricted Stock subject to such restrictions shall be
sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of except by will or the
laws of descent and distribution. Any attempt by the Participant to dispose of any shares of the
Restricted Stock in any such manner shall result in the immediate forfeiture of such shares.
8. If the Participant’s employment is terminated due to death or Disability all unvested
shares of Restricted Stock held by the Participant on the date of the Participant’s termination of
employment due to death or the date of the termination of his or her employment related to
Disability, as the case may be, shall immediately become vested as of such date.
9. If a Participant’s employment is terminated by the Company for Cause, all shares of
Restricted Stock, earned or exercisable, held by the Participant on the date of the termination of
his or her employment for Cause shall immediately be forfeited by such Participant as of such date.
10. If a Participant’s employment is terminated for any reason, including, without limitation,
retirement, other than for Cause or other than due to death or Disability, all unvested shares of
Restricted Stock held by the Participant on the date of the termination of his or her employment
shall immediately be forfeited by such Participant as of such date.
11. Notwithstanding anything contained in this Agreement to the contrary, the Committee may,
in its discretion, provide that any or all unvested shares of Restricted Stock held by the
Participant on the date of the Participant’s death and/or the date of the termination of the
Participant’s employment shall immediately become vested as of such date.
12. All payments or distributions of an Award made pursuant to this Agreement shall be net of
any amounts required to be withheld pursuant to applicable federal, state and local tax withholding
requirements. If the Company proposes or is required to distribute Common Stock pursuant to This
Agreement, it may require the Participant receiving such Common Stock to remit to it or to the
Affiliate
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that employs such Participant an amount sufficient to satisfy such tax withholding
requirements prior to the delivery of any certificates for such Common Stock. In lieu thereof, the
Company or the Affiliate employing the Participant shall have the right to withhold the amount of
such taxes from any other sums due or to become due from the Company or the Affiliate, as the case
may be, to the Participant receiving Common Stock, as the Committee shall prescribe. The Committee
may, in its discretion, and subject to such rules as the Committee may adopt (including any as may
be required to satisfy applicable tax and/or non-tax regulatory requirements), permit a Participant
to pay all or a portion of the federal, state and local withholding taxes arising in connection
with this Award consisting of shares of Common Stock by electing to have the Company withhold
shares of Common Stock having a Fair Market Value equal to the amount of tax to be withheld, such
tax calculated at rates required by statute or regulation.
13. If the Company, in its sole discretion, shall determine that it is necessary, to comply
with applicable securities laws, the certificate or certificates representing any shares of Common
Stock delivered to the Participant under this Agreement shall bear an appropriate legend in form
and substance, as determined by the Company, giving notice of applicable restrictions on transfer
under or with respect to such laws.
14. The Participant covenants and agrees with the Company that if, with respect to any shares
of Common Stock delivered to the Participant pursuant to this Agreement, there does not exist a
registration statement on an appropriate form under the Securities Act of 1933, as amended (the
“Act”), which registration statement shall have become effective and shall include, or shall be
accompanied by, as applicable, a prospectus that is current with respect to the shares of Common
Stock subject to this Agreement, (i) he or she takes the shares of Common Stock for his or her own
account and not with a view to the resale or distribution thereof, (ii) any subsequent offer for
sale or sale of any such shares shall be made either pursuant to (x) a registration statement on an
appropriate form under the Act, which registration statement shall have become effective and shall
be current with respect to the shares being offered and sold, or (y) a specific exemption from the
registration requirements of the Act, but in claiming such exemption, the Participant shall, prior
to any offer for sale or sale of such shares, obtain a favorable written opinion from counsel for
or approved by the Company as to the applicability of such exemption and (iii) the certificate or
certificates evidencing such shares shall bear a legend to the effect of the foregoing.
15. For purposes of this Paragraph 15, (i) if there is an employment agreement or at will
offer letter between the Participant and the Company or any of its Affiliates in effect containing
non-competition provisions, then such provisions shall govern the Participant’s non-competition
obligations; or (ii) if non-competition provisions are not included in such employment agreement or
at will offer letter or if there is no employment agreement or at will offer letter between the
Participant and the Company or any of its Affiliates in effect, then the following provisions of
this Paragraph 15 shall govern the Participant’s non-competition obligations. In consideration of
the grant of the Restricted Stock to the Participant, the receipt and sufficiency of which are
hereby acknowledged, the Participant agrees that for a period of six (6) months after termination
of the Participant’s employment (the “Non-Compete Period”), the Participant shall not directly or
indirectly own any interest in, manage, control, participate in, consult with, render services for,
or in any manner engage in any business competing with the businesses of the Company or its
Affiliates, as such businesses exist or are in process on the date of the termination of
Participant’s employment, within any geographical area in which the Company or its Affiliates
engage or actively plan to engage in such businesses. Nothing herein shall prohibit Participant
from being a passive owner of not more than 2% of the outstanding stock of any class of a
corporation which is publicly traded, so long as Participant has no direct or indirect active
participation in the business of such corporation. During the Non-Compete Period, the Participant
shall not directly or indirectly through another person or entity (i) induce or attempt to induce
any employee of the Company or any Affiliate to leave the employ of the Company or such Affiliate,
or in any way interfere with the relationship between the Company, its
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Affiliates and any employee thereof, (ii) hire an employee of the Company or any of its
Affiliates, or (iii) induce or attempt to induce any customer, supplier, licensee, licensor,
franchisee or other business relation of the Company or any of its Affiliates to cease doing
business with the Company or such Affiliate, or in any way interfere with the relationship between
any such customer, supplier, licensee, licensor, franchisee, or business relation and the Company
or any of its Affiliates (including, without limitation, making any negative statements or
communications about the Company or its Affiliates).The provisions of this Paragraph 15 will be
enforced to the fullest extent permitted by the law in the state in which Participant resides or is
employed at the time of the enforcement of the provision. If, at the time of enforcement of this
Paragraph 15, a court shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the maximum duration, scope
or area reasonable under such circumstances shall be substituted for the stated duration, scope or
area and that the court shall be allowed to revise the restrictions contained herein to cover the
maximum period, scope and area permitted by law. Participant agrees that the restrictions contained
in this Paragraph 15 are reasonable. In the event of the breach or a threatened breach by
Participant of any of the provisions of this Paragraph 15, the Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to any court of law or
equity of competent jurisdiction for specific performance and/or injunctive or other relief in
order to enforce or prevent any violations of the provisions hereof (without posting a bond or
other security). In addition, in the event of an alleged breach or violation by Participant of this
Paragraph 15, the Non-Compete Period shall be tolled until such breach or violation has been duly
cured.
16. This Agreement is subject to all terms, conditions, limitations and restrictions contained
in the Plan, which shall be controlling in the event of any conflicting or inconsistent provisions.
In the event, however, of any conflict between the provisions of this Agreement or the Plan and the
provisions of an employment or change-in-control agreement between the Company and the Participant,
as applicable, the provisions of the latter shall prevail.
17. This Agreement is not a contract of employment, as applicable, and the terms of the
Participant’s employment shall not be affected hereby or by any agreement referred to herein except
to the extent specifically so provided herein or therein. Nothing herein shall be construed to
impose any obligation on the Company to continue the Participant’s employment, and it shall not
impose any obligation on the Participant’s part to remain in the employ of the Company or any of
its Affiliates. This Agreement shall be governed by and construed in accord with the laws of the
Commonwealth of Pennsylvania, excluding principles of conflicts of law.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date written above.
| X.X. XXXXX ARTS & CRAFTS, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
ACCEPTED:
By:
[Insert the name of the Participant]
[Insert the name of the Participant]
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