Tollgrade Communications, Inc. 2006 Long-Term Incentive Compensation Plan STOCK APPRECIATION RIGHTS AGREEMENT
Exhibit 10.16
Tollgrade Communications, Inc.
2006 Long-Term Incentive Compensation Plan
2006 Long-Term Incentive Compensation Plan
This Stock Appreciation Rights Agreement (“Agreement”), dated as of March 25, 2010, is entered
into between Tollgrade Communications, Inc., a Pennsylvania corporation (the “Company”), and Xxxxxx
X. Xxxxxxx (the “Grantee”).
WHEREAS, the Board of Directors of the Company has determined that it would be in the best
interests of the Company to make the grant provided for herein, and the Grantee desires to accept
such grant, upon and subject to the terms and conditions described herein; and
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows:
1. Grant of SARs. The Company hereby confirms the grant to the Grantee on March 23,
2010 (the “Date of Grant”) of 250,000 Stock Appreciation Rights (the “SARs”) in accordance with the
terms hereof with respect to an equal number of shares of common stock of the Company, par value
$.20 per share (the “Common Stock”), each SAR relating to one share of Common Stock, at a xxxxx
xxxxx of $6.31 per share (the “Xxxxx Xxxxx”), under and subject to the terms and conditions of the
Company’s 2006 Long-Term Incentive Compensation Plan, as amended and restated (the “Plan”) and this
Agreement. The Plan is incorporated herein by reference and made a part hereof as though set forth
in full herein. Terms which are capitalized herein but which are not defined herein have the same
meaning as in the Plan unless the context otherwise requires. The Grantee accepts the SARs and
agrees to be bound by the terms and conditions of this Agreement and the Plan with respect to the
Award described herein.
2. SARs. Each SAR represents the right, upon the vesting of such SAR in accordance
with Section 3 hereof, to receive an amount payable in cash which is equal to the Stock
Appreciation (as defined herein). For purposes of this Agreement, the “Stock Appreciation” for
each SAR is the excess, if any, of the Fair Market Value of a share of Common Stock on the date of
exercise (which, as provided in Section 4, shall be the Vesting Date) over the Xxxxx Xxxxx. No
shares of Common Stock shall be issued to the Grantee at the time the Award is made, nor shall any
shares of Common Stock be issued to the Grantee at the time any SARs are exercised pursuant to the
provisions hereof. The Grantee shall not be, nor have any of the rights or privileges of, a
shareholder of the Company with respect to any SARs. The Grantee shall not have any interest in any
fund or specific assets of the Company by reason of this Award, and upon the vesting of such Award
the Grantee shall be an unsecured creditor of the Company.
3. Vesting and Forfeiture. (a) Subject to Section 3(b), the SARs awarded under this
Agreement shall vest on the date of closing of a Corporate Transaction (the “Vesting Date”),
subject in all respects to the occurrence of such closing. As used herein, a “Corporate
Transaction” shall mean a transaction which results in a Change in Control of the Company pursuant
to clause (a), (b)(ii) or (b)(iii) of the Plan, subject to the last paragraph of Section 2.7 of the
Plan.
(b) If, prior to the Vesting Date, the Grantee (i) is removed from the Company’s Board of
Directors for cause, (ii) voluntarily steps down from serving as the Chairman of the Company’s
Board of Directors, (iii) resigns from the Board of Directors (other than pursuant to the majority
voting standard described in the Board’s Guidelines on Corporate Governance Issues) or elects not
to stand for re-election, or (iv) resigns from the Board of Directors pursuant to such majority
voting standard and such resignation is accepted by the Board of Directors, then upon the
effectiveness of any of such events all SARs covered by this Agreement will be forfeited to the
Company.
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4. Exercise Procedures. (a) All vested SARs shall automatically be deemed to be
exercised on the Vesting Date, provided that the Fair Market Value of a share of Common Stock on
the Vesting Date is greater than the Xxxxx Xxxxx. Upon such exercise, the Company shall deliver to
the Grantee a cash payment in an amount equal to the number of vested SARs times the Stock
Appreciation (as defined in Section 2 above). Upon exercise of each SAR, the SAR will terminate
and cease to be outstanding.
(b) SARs may only be exercised as provided herein if the Fair Market Value of a share of
Common Stock on the Vesting Date is greater than the Xxxxx Xxxxx. In the event the Fair Market
Value of a share of Common Stock on the Vesting Date is not greater than the Xxxxx Xxxxx, the SARs
shall not be exercised and shall instead be forfeited on the Vesting Date.
5. Termination of SARs. The SARs shall have a term of ten years from the Date of Grant
and shall terminate at the expiration of that period, unless the SARs are terminated or forfeited
at an earlier date pursuant to the provisions of this Agreement or the Plan.
6. Withholding of Taxes. All obligations of the Company under this Agreement shall
be subject to the rights of the Company as set forth in the Plan to withhold amounts required to be
withheld for any taxes, if applicable. Grantee acknowledges that he has been advised to consult
with a tax advisor concerning the tax consequences of exercising the SARs.
7. Interpretation of Plan and Agreement. This Agreement is an Award Agreement
referred to in Section 7.3 of the Plan. This Agreement is made pursuant to the terms of the Plan,
the terms of which are incorporated herein by reference, and shall in all respects be interpreted
in accordance therewith. If there is any conflict between the Plan and this Agreement, the
provisions of the Plan shall control. However, there may be provisions in this Agreement not
contained in the Plan, which provisions shall nonetheless be effective. In addition, to the extent
that provisions of the Plan are expressly modified for purposes of this Agreement pursuant to
authorization in the Plan, the provisions of this Agreement shall control. Any dispute or
disagreement which shall arise under or in any way relate to the construction or interpretation of
the Plan or this Agreement shall be resolved by the Appropriate Administrator, and the decision of
the Appropriate Administrator shall be final, binding and conclusive for all purposes.
8. Effect of Agreement on Rights of Company and the Grantee. This Agreement does not
confer any rights on the Grantee to continue as a Director of the Company or as Chairman of the
Company’s Board of Directors.
9. Binding Effect. This Agreement shall be binding upon the successors and assigns of
the Company and upon the legal representatives, heirs and legatees of the Grantee.
10. Entire Agreement. This Agreement and the Plan constitute the entire agreement
between the parties and supersedes all prior agreements and understandings, oral or written,
between the parties with respect to the subject matter of this Agreement.
11. Amendment. This Agreement may be amended only a written instrument signed by the
Company and the Grantee.
12. Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania, except for its conflicts of laws.
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IN WITNESS WHEREOF, the Company and the Grantee have executed this Agreement as of the date
first written above.
| TOLLGRADE COMMUNICATIONS, INC. |
||||
| By: | /s/ Xxxxxxxx X. Xxxxxx | |||
| Name: Xxxxxxxx X. Xxxxxx | ||||
| Title: General Counsel and Secretary | ||||
WITNESS: |
|||
/s/ Xxxxxx X’Xxxxx
|
/s/ Xxxxxx X. Xxxxxxx | ||
| Xxxxxx X. Xxxxxxx |
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