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EXHIBIT 10.1
STOCK APPRECIATION RIGHTS AGREEMENT
BY AND BETWEEN
THE COMPANY AND XXXXX X. XXXXXXX
DATED AS OF OCTOBER 13, 1999
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STOCK APPRECIATION RIGHTS AGREEMENT
THIS STOCK APPRECATION RIGHTS AGREEMENT (the "Agreement"), made and
entered into as of this 13th day of October, 1999, by and between The Cronos
Group, a limited liability company organized and existing under the laws of
Luxembourg (the "Company") and XXXXX X. XXXXXXX ("Grantee");
W I T N E S S T H:
WHEREAS, at its meeting held on June 4, 1999 in Hamburg, Germany, the
Compensation Committee of the Board of Directors ("Board") of the Company
resolved to issue to Grantee, who is the Chief Financial Officer of the Company,
an option (the "Stock Option") to purchase Two Hundred Thousand (200,000) shares
of the authorized but unissued Common Stock of the Company, at an exercise price
of $4.375 per share; and
WHEREAS, at its meeting held on August 4, 1999, in New York, the Board
approved the grant of the Stock Option to Grantee, and authorized and directed
that the grant of the Stock Option be submitted to the shareholders of the
Company for their approval at the 1999 annual meeting; and
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WHEREAS the annual meeting of shareholders was scheduled to be held on
October 26, 1999, in Luxembourg; and
WHEREAS, on September 21, 1999, Interpool, Inc. ("Interpool") a
competitor of the Company, transmitted to the Company its proposal, subject to
numerous conditions, to acquire the Company by merger with Interpool's 50%-owned
subsidiary, Container Applications International, Inc., for $5.00 per share in
cash for all of the outstanding shares of Common Stock of the Company; and
WHEREAS, by letter dated October 8, 1999, the Company advised Interpool
that the Board of the Company had unanimously rejected the Interpool proposal as
inadequate and as not in the best interest of the Company or its shareholders;
and
WHEREAS, the Board has engaged First Union Securities, Inc. ("First
Union") to explore the strategic alternatives available to the Company in light
of the Interpool proposal; and
WHEREAS, in light of the importance of Grantee to the management of the
Company, in light of the importance of maintaining stability and continuity in
the management of the Company, and because the grant of the Stock Option to
Grantee has been deferred, the Board has resolved to award
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Grantee stock appreciation rights in lieu of the Stock Option on the terms and
conditions set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms shall be
defined as follows:
"Award" refers to the number of Share Units granted to Grantee.
"Award Payment" refers to the cash payment, before withholding,
to be made by the Company to Grantee for Exercised Share Units pursuant to the
provisions of Section 6 hereof.
"Board" refers to the Board of Directors of the Company.
"Cause" refers (i) to the willful non-performance of, or willful
misconduct in the performance of, Grantee's duties to the Company, and/or (ii)
to other willful misconduct constituting moral turpitude.
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"Change in Control" refers to:
(a) The acquisition by any Person of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended) of 20% or more of the Common Stock then outstanding, but
shall not include any such acquisition by:
(i) The Company;
(ii) Any Subsidiary of the Company;
(iii) Any employee benefit plan of the Company or of any
Subsidiary of the Company;
(iv) Any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan;
(v) Any Person who becomes the beneficial owner of 20%
or more of the shares of Common Sock then outstanding as a result of a reduction
in the number of shares of Common Stock outstanding due to the repurchase of
shares of Common Stock by the Company unless and until such Person, after
becoming aware that such Person has become the beneficial owner of 20% or more
of the then outstanding shares of Common Stock, acquires beneficial ownership of
additional shares of Common Stock representing 1% or more of the
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shares of Common Stock then outstanding, whereupon a Change in Control shall be
deemed to have occurred; or
(vi) The situation where individuals who, as of the date
that this Agreement is approved by the Board, and subsequently elected members
of the Board whose election is approved or recommended by at least a majority of
such current Board members or their successors whose election was so approved or
recommended (other than any subsequently elected Board members whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board), cease for any reason to constitute at least a majority of the
Board.
"Committee" refers to the Compensation Committee of the Board,
any successor committee thereto or any other committee appointed by the Board to
supervise this Agreement.
"Common Stock" refers to the Common Stock of the Company, par
value $2 per share, or such other class or kind of shares or other securities as
may be applicable under Section 8 hereof.
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"Company" refers to The Cronos Group, a Luxembourg holding
company, or any successor to substantially all its business. For purposes of
this Agreement, all references to the "Company," where this Agreement calls for
a payment to Grantee, shall refer to the then Subsidiary of the Company that is
Grantee's employer for tax purposes.
"Exercise Date" refers to the date of receipt by the Company of
an Exercise Notice or, if such date is not a business day, then the first
business day occurring after the date of receipt of the Exercise Notice.
"Date of Grant" refers to October 13, 1999.
"Designated Beneficiary" refers to the Person designated, in
accordance with Section 12 hereof, by Grantee to receive payment for Grantee's
Share Units.
"Exercise Notice" refers to a notice substantially in form of
Exhibit A hereto.
"Exercised Share Units" refers to the number of Share Units
submitted for payment by Grantee or an Exercising Party pursuant to Section 5
hereof.
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"Exercising Party" refers to the Designated Beneficiary or, if
there is no Designated Beneficiary, to the executor, administrator, or other
Person or Persons who acquire Share Units from Grantee by will or by the laws of
descent and distribution.
"Fair Market Value" refers to the closing sales price of the
Common Stock as reported on the NASDAQ National Market on the applicable
Exercise Date or, if there were no sales on such Exercise Date, the average of
the highest and the lowest quoted selling prices on said market for the
preceding business day on which sales of Common Stock did occur.
"Xxxxx Xxxxx" refers to $4.375.
"Hardship" refers to an emergency or any other unusual or
unexpected situation affecting Grantee's (or, if Grantee has died, the
Exercising Party's) financial affairs, including, but not limited to, illness or
accident involving Grantee or his dependents (or, if the Grantee has died, the
Exercising Party's dependents) which, in the opinion of the Committee, presents
a severe economic hardship to such Persons.
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"Payment Date" refers to the date on which Grantee first becomes
entitled to receive payment for all or any portion of the Share Units as
provided for in Section 7 hereof.
"Permanent Disability" refers to a physical or mental impairment
rendering Guarantee substantially unable to function as an officer of the
Company or a Subsidiary, as the case may be, for any period of six consecutive
months. Any dispute as to whether Grantee is subject to a Permanent Disability
shall be resolved by a physician mutually acceptable to Grantee and the
Committee, whose decision shall be final and binding upon Grantee and the
Company.
"Person" refers to any individual, firm, corporation, limited
liability company, partnership, or other entity.
"Share Unit Account" refers to the account maintained by the
Company with respect to the Award made to Grantee pursuant to Section 3 hereof.
"Share Unit" refers to the equivalent of one share of Common
Stock.
"Subsidiary" refers to (i) a corporation or other entity with
respect to which the Company, directly or indirectly, has the power, whether
through the
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ownership of voting securities, by contract or otherwise, to elect at least a
majority of the members of such corporation's board of directors or analogous
governing body, or (ii) any other corporation or other entity in which the
Company, directly or indirectly, has an equity or similar interest and which the
Committee designates as a Subsidiary for purposes of the Plan.
2. GRANT OF SHARE UNITS
The Company hereby grants to Grantee, effective the Date of
Grant, Two Hundred Thousand (200,000) Share Units. The grant of the Share Units
to Grantee entitles Grantee or an Exercising Party, as the case may be, to
receive cash payments from the Company in amounts and on the terms and
conditions hereinafter set forth.
3. SHARE UNIT ACCOUNT
The Company shall record in a separate account (the "Share Unit
Account") the number of Share Units granted to Grantee. The Company shall debit
Grantee's Share Unit Account from time-to-time with all Exercised Share Units,
effective the Exercise Date of such Exercised Share Units, and shall credit
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or debit, as appropriate, Grantee's Share Unit Account with any adjustments
required pursuant to Section 8 hereof.
4. TIME OF EXERCISE OF AWARD
(a) The Award shall become exercisable over a period of three
(3) years, as follows. Conditional upon Grantee's continuous employment by the
Company or a Subsidiary following the Date of Grant to the relevant anniversary
date, and subject to the following subsections of this Section 4, Grantee shall
have the right to exercise one-third (1/3) of the Award on each of the first
three anniversaries of the Date of Grant. Any portion of the Award that Grantee
has the right to exercise but elects not to exercise shall remain available for
exercise by Grantee under the terms of this Agreement, subject to the provisions
of Section 10 hereof.
(b) Subject to the provisions of subsection (c) below, if
Grantee resigns from the Company or a Subsidiary, then Grantee may exercise the
Award, as to any portion thereof that Grantee has the right to exercise as of
the date of resignation pursuant to the provisions of subsection (a) above,
within ninety (90) days from the date of such resignation. If Grantee does not
exercise
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the Award within the time specified herein, then the Award and the Share Units
granted thereunder shall lapse and terminate.
(c) If Grantee resigns from the Company or a Subsidiary within
twelve (12) months following a Change in Control, then and in such event the
Award shall become fully exercisable. In such event, Grantee may exercise the
Award at any time within ninety (90) days from the date of such resignation. If
Grantee does not exercise the Award within the time specified herein, then the
Award and the Share Units granted thereunder shall lapse and terminate.
(d) If Grantee is terminated by the Company or a Subsidiary
without Cause, then and in such event the Award shall become fully exercisable.
In such event, Grantee may exercise the Award at any time within ninety (90)
days from the date of such termination. If Grantee does not exercise the Award
within the time specified herein, then the Award and the Share Units granted
thereunder shall lapse and terminate.
(e) If Grantee is terminated by the Company or a Subsidiary for
Cause, then and in such event the Award, to the extent Grantee has not exercised
the Award prior to the date of such termination, shall lapse and terminate.
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(f) In the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, then
and in such event the Award shall become fully exercisable. The Board of
Directors shall provide written notification of such proposed transaction to
Grantee (or, in the event of his death, to the Exercising Party) at least
fifteen (15) days prior to such proposed transaction, and the Award and the
Share Units then in the Share Unit Account, to the extent that the Award is not
fully exercised during such fifteen (15)-day period, shall lapse and terminate
immediately prior to such proposed transaction.
(g) In the event of the proposed dissolution or liquidation of
the Company, then and in such event the Award shall become fully exercisable.
The Board of Directors shall provide written notification of such proposed
transaction to Grantee (or, if he is not then living, to the Exercising Party)
within fifteen (15) days prior to such transaction, and the Award and the Share
Units then in the Share Unit Account, to the extent that the Award is not fully
exercised during such fifteen (15)-day period, shall lapse and terminate
immediately prior to such proposed transaction.
(h) In the event that Grantee becomes subject to a Permanent
Disability while employed by the Company or a Subsidiary, then and
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in such event the Award shall become fully exercisable by Grantee or by his
legal representative at any time within ninety (90) days from the date of
determination that the Grantee is subject to a Permanent Disability. If Grantee
or his legal representative does not exercise the Award within the time
specified herein, then the Award and the Share Units granted thereunder shall
lapse and terminate.
(i) In the event of the death of Grantee while employed by the
Company or a Subsidiary, then and in such event the Award shall become fully
exercisable by the Exercising Party at any time within ninety (90) days from the
date of Grantee's death. If the Exercising Party does not exercise the Award
within the time specified herein, then the Award and the Share Units granted
thereunder shall lapse and terminate.
5. METHOD OF EXERCISE
The Award shall be exercised by the delivery of a written
Exercise Notice, in the form included as Exhibit A hereto, by Grantee, or in the
case of Grantee's death, the Exercising Party, to the Company at its principal
place of business, stating the election to exercise the Award and the number of
Share Units in respect of which the Award is being exercised (the "Exercised
Share Units"). In no event shall the Award be exercised for fewer than 25,000
Share Units or, if
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less, the total number of Share Units then remaining in Grantee's Share Unit
Account.
6. AWARD PAYMENT
The Award Payment shall be the amount determined as follows:
(i) by multiplying the excess, if any, of the Fair Market Value
of a share of Common Stock of the Company on the Exercise Date over the Xxxxx
Xxxxx by
(ii) the number of Exercised Share Units.
7. PAYMENT FOR EXERCISED SHARE UNITS
(a) Subject to the following subsections of this Section 7, the
Award Payment shall be made by the Company to Grantee (or the Exercising Party,
as the case may be) within ten (10) business days after the Exercise Date. The
Company shall have the right to withhold from the Award Payment such amounts as
the Company deems necessary or appropriate to satisfy any federal, state, local,
or foreign withholding tax requirement, including, but not limited to,
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income tax, FICA withholding, and excise tax. Grantee shall be obligated to pay
any and all taxes of any kind which may be imposed on Grantee or result from the
exercise of the Award during the Grantee's lifetime or at death.
(b) Grantee may elect to receive his Award Payment in any number
of equal annual installments, not to exceed four (4), commencing on the Payment
Date, as specified by Grantee in the Exercise Notice, provided that such written
election (which shall be irrevocable except as provided in subsection (c) below)
shall be made not later than December 31, 1999.
(c) In the event of a Change in Control, any election pursuant
to Subsection (b) above shall be automatically revoked as to any then unpaid
installments and full payment shall be made within ten (10) business days of the
date of the event giving rise to the Change in Control.
(d) In the event an election is made to receive the Award
Payment in installments, each succeeding installment shall be paid on the
anniversary date of the Payment Date.
(e) Anything to the contrary notwithstanding in this Section 7,
the Committee may, in its sole discretion, at the request of Grantee or an
Exercising Party made after Grantee's death, and in the event of Hardship,
accelerate
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payment of benefits payable to Grantee or the Exercising Party, as the case may
be.
8. ADJUSTMENT OF SHARE UNITS UPON CHANGES IN CAPITALIZATION
The number of Share Units covered by this Agreement and the
Xxxxx Xxxxx shall be proportionately adjusted in the event of a subdivision of
the outstanding Common Stock of the Company, a declaration of a dividend payable
in Common Stock of the Company, a declaration of a dividend payable in a form
other than Common Stock of the Company in an amount that has a material effect
on the price of the Common Stock of the Company, a combination or consolidation
of the outstanding Common Stock of the Company (by reclassification or
otherwise) into a lesser number of shares of Common Stock, a recapitalization of
the Company, a spin-off, stock split, reverse stock split, or any other increase
or decrease in the number of issued and outstanding shares of Common Stock of
the Company effected without receipt of consideration by the Company; provided,
however, that the conversion of any convertible securities of the Company shall
not be deemed to have been "effected without receipt of consideration." Except
as expressly provided herein, no issuance by the Company of shares of stock of
any class or securities convertible into shares of stock of any
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class shall affect, and no adjustment by reason thereof shall be made with
respect to, the number of Share Units subject to the Award or the Xxxxx Xxxxx.
9. TRANSFER OF SHARE UNITS
Unless sooner terminated pursuant to the provisions of Sections
4 or 10 hereof,
(a) The Award shall be exercisable during Grantee's lifetime
only by Grantee and may not be transferred or assigned;
(b) The Award is transferable by Grantee upon Grantee's death by
will or by the laws of descent and distribution; and
(c) In the event of Grantee's death, the Exercising Party may
exercise any portion of the Award, as permitted by Section 4 hereof, that is
exercisable at the time of Grantee's death and that has not previously been
exercised by Grantee, provided that any such exercise must be made pursuant to
the provisions of Section 5 above.
(d) Other than as explicitly permitted by this Agreement,
Grantee's right to payment for Exercised Share Units shall not be subject in any
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manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, attachment, or garnishment by creditors of Grantee.
10. TERMINATION OF AWARD
To the extent not earlier terminated by exercise in full in
accordance with this Agreement, the Award and the Share Units granted thereunder
shall terminate on the earliest to occur of the following dates:
(a) October 12, 2009; or
(b) As specified in Section 4 hereof.
11. RIGHTS AS SHAREHOLDER
Neither Grantee nor any Exercising Party will be deemed to be a
holder of any shares of Common Stock or have any rights as a shareholder of the
Company with respect to the Award or the Share Units.
12. DESIGNATION OF BENEFICIARY
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Grantee may at any time designate a beneficiary to receive
payment of his Award in the event of his death. Such designation shall be in
writing, signed by Grantee and delivered to the Company. Such designation may be
revoked at any time in writing by Grantee, in which case, a new designation may
be made.
13. MODIFICATION, EXTENSION AND RENEWAL
The Board may modify, extend, or renew the Award or accept an
exchange of the Award (to the extent not theretofore exercised) for the granting
of a new stock award in substitution therefor. However, notwithstanding the
foregoing provisions of this Section 13 or any other provision of this
Agreement, there shall be no modification, extension, or renewal of the Award
without the written consent of Grantee which would in any way alter or impair
any right of Grantee with respect to the Award or under this Agreement.
14. GRANTEE'S EMPLOYMENT
This Agreement provides Grantee no guarantee of continuing
employment with the Company or any Subsidiary. The terms of Grantee's
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employment with the Company or any Subsidiary are set forth in Grantee's
employment agreement.
15. UNFUNDED OBLIGATION
It is the intention of the Company and Grantee that the
obligation of the Company to make any Award Payment under this Agreement be
unfunded for tax and all other purposes. Grantee has the status of a general
unsecured creditor of the Company with respect to the making of any Award
Payment by the Company to Grantee. Prior to the making of any Award Payment for
any Exercised Share Units by the Company to Grantee under this Agreement,
nothing contained herein shall give Grantee any rights that are greater than
those of a general unsecured creditor of the Company.
16. DISPUTE RESOLUTION
Should any dispute or controversy arising from or related to
this Agreement arise between the parties that the parties are incapable of
resolving themselves through good faith negotiation, then such dispute or
controversy shall be submitted for resolution by J.A.M.S. ("JAMS") in San
Francisco, California,
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or at such other location as is agreed upon by the parties. Any dispute shall
first be submitted to JAMS for mediation pursuant to the mediation services
provided by JAMS. Should the dispute between the parties not be successfully
mediated by JAMS within 90 days of its submission (subject to any extension
agreed to by the parties) then and in such event the dispute shall be submitted
for binding arbitration by JAMS pursuant to the rules and practices of JAMS.
Unless agreed to by the parties, the representative of JAMS who attempts to
mediate any dispute between the parties shall not be the representative of JAMS
who arbitrates the dispute. Judgment upon any award by the arbitrator(s) may be
entered in any court having jurisdiction thereof. It is agreed that the
prevailing party in any such arbitration or other action arising from or
relating to this Agreement shall be entitled to reimbursement of its or his
reasonable costs and expenses, including attorneys' fees. Each party consents to
the exercise over it or him of personal jurisdiction by the arbitrator(s)
selected by JAMS to resolve any dispute hereunder.
17. NOTICES
(a) Any notice, demand or communication required or permitted to
be given by any provision of this Agreement shall be deemed properly given if
given in writing or by electronic mail and either delivered through a
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commercially-recognized overnight delivery service or, if sent by electronic
mail or telecopier, to the party or to an officer of the party to whom the same
is directed, addressed as follows:
(i) If to Cronos, to: The Cronos Group
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Chief Executive Officer
Fax: (000) 000-0000
Email: xxx@xxxxxx.xxx
(ii) If to Grantee, to: Xxxxx X. Xxxxxxx
Xxx Xxxxxx Xxxxx
Xxxxxxx Xxx, Xxxxxxxxx Xxxxxxx
Xxxxxxxxx XX00XX Xxxxxxx
Fax: 000 00 0000 000 000
Email: xxx@xxxxxx.xxx
(b) Any party identified above may change the address to which
notices are to be given hereunder by giving notice to the other party in the
manner herein provided.
(c) All notices, demands, and requests shall be deemed to have
been given on the business day on which it was delivered by hand or commercial
messenger or air courier service to such party, at his or its address specified
above, or, if sent by facsimile or electronic mail, when electronically
confirmed. Any facsimile transmission or electronic mail not sent on a business
day, or not
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sent during the hours of 8:30 a.m. to 5:00 p.m. on a business day of the
recipient, shall be deemed sent on the next business day.
18. ENTIRE AGREEMENT
This Agreement (with its exhibit) represents the entire
agreement of the parties with respect to the subject matter hereof, and
supersedes in their entirety all prior agreements and undertakings of the
parties with respect to the subject matter hereof, and may not be modified
except by means of a writing signed by a duly authorized representative of the
Company and by Grantee. This Agreement shall be governed by and construed
strictly in accordance with its terms and by the laws of State of California.
19. BINDING AGREEMENT
This Agreement shall be binding on the Company, its successors
and assigns, and Grantee and his executors, administrators, heirs, successors,
and assigns.
20. COUNTERPARTS
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This Agreement may be executed in several counterparts, all of
which together shall constitute one agreement binding upon all parties hereto,
notwithstanding that all parties have not signed the same counterpart.
IN WITNESS WHEREOF, the Company and Grantee have executed this
Agreement as of the day and year first above written.
THE CRONOS GROUP
By /s/ XXXXXX X. XXXXX
----------------------------------
Xxxxxx X. Xxxxx
Chief Executive Officer
And /s/ XXXXXXX XXXXX
---------------------------------
Xxxxxxx Xxxxx
Director & Chair
Compensation Committee
/s/ XXXXX X. XXXXXXX
-----------------------------
Xxxxx X. Xxxxxxx
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