SMITH INTERNATIONAL, INC. RESTRICTED STOCK UNIT AGREEMENT
EXHIBIT 10.4
XXXXX INTERNATIONAL, INC.
RESTRICTED STOCK UNIT AGREEMENT
RESTRICTED STOCK UNIT AGREEMENT
THIS
RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is made and entered into by and
between Xxxxx International, Inc., a Delaware corporation (the
“Company”) and «Full_Legal_Name», an
individual and employee of the Company (“Grantee”), on the «Grant_Date» day of «Grant_Date», 2005
(the “Grant Date”), subject to the terms and provisions of the Xxxxx International, Inc., 1989
Long-Term Incentive Compensation Plan, as amended and restated effective January 1, 2005 (the
“Plan”). The Plan is hereby incorporated herein in its entirety by this reference. Capitalized
terms not otherwise defined in this Agreement shall have the meaning given to such terms in the
Plan.
WHEREAS, Grantee is an employee of the Company, and in connection therewith, the Company
desires to grant to Grantee restricted stock units
(“Units”), subject to the terms and conditions
of this Agreement and the Plan, with a view to increasing Grantee’s interest in the Company’s
success and growth; and
WHEREAS, Grantee desires to be the holder of such Units subject to the terms and conditions of
this Agreement;
NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements contained
herein, and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:
1. Grant of Units. Subject to the terms and conditions of this Agreement and the Plan, the
Company hereby grants to Grantee «Shares_Granted» («Shares_Granted») Units. On any date, the
value of each Unit shall be the Fair Market Value of one share of the Company’s Common Stock
(“Share”), $1.00 par value, as determined pursuant to the Plan. Each Unit represents an unsecured
promise of the Company to deliver Shares to the Grantee pursuant to the terms and conditions of the
Plan and this Agreement. As a holder of Units, the Grantee has only the rights of a general
unsecured creditor of the Company.
2. Transfer Restrictions. Grantee shall not sell, assign, transfer, exchange, pledge,
encumber, gift, devise, hypothecate or otherwise dispose of
(collectively, “Transfer”) any Units
granted hereunder. Any purported Transfer of Units in breach of this Agreement shall be void and
ineffective, and shall not operate to Transfer any interest or title in the purported transferee.
3. Vesting and Payment of Units.
(a) Vesting Generally. Grantee’s interest in the Units granted hereunder shall vest
in accordance with the following schedule, conditioned on Grantee’s continued employment with the
Company as of each such vesting date (the “Vesting Date”), except as provided in Section 4
hereof.
| Vesting Date | Vested % | |||
«Vest_Date1»
|
25 | % | ||
«Vest_Date2»
|
25 | % | ||
«Vest_Date3»
|
25 | % | ||
«Vest_Date4»
|
25 | % | ||
Total
|
100 | % | ||
(b) Settlement of Units. Subject to Section 6 hereof, the Company shall grant
to Grantee within thirty (30) days after each Vesting Date, or such other date upon which Units
become vested as provided in this Agreement, a number of Shares equal to the number of such vested
Units (provided Grantee has not terminated employment prior to such Vesting Date), unless otherwise
provided under Section 4 hereof. Each vested Unit shall thus be exchanged by the Company
for one Share, and such Unit shall be cancelled as of the effective time of such exchange as
reflected on the Company’s stock records. All Shares delivered to or on behalf of Grantee in
exchange for vested Units shall be free of any further vesting, transfer or other restrictions,
except as may otherwise be required by securities law or other applicable law as determined by the
Company.
(c) Dividends, Splits and Voting Rights. If the Company (i) declares a stock dividend
or makes a distribution on Common Stock in Shares, (ii) subdivides or reclassifies outstanding
Shares into a greater number of Shares or
66
(iii) combines or reclassifies outstanding Shares into a
smaller number of Shares, then the number of Units granted under this Agreement shall be
proportionately increased or reduced, as applicable, so as to prevent the enlargement or dilution
of Grantee’s rights and duties hereunder. The determination of the Compensation and Benefits
Committee (the “Committee”) of the Company’s Board of Directors regarding such adjustments shall be
binding. Until such time as Shares are actually delivered to Grantee in exchange for vested Units
pursuant to Section 3(b) (above), Grantee shall have no voting, dividend or other ownership
rights in such Shares.
4. Forfeiture.
(a) Termination Due to Death or Disability. If Grantee’s employment with the Company
is terminated due to death or Disability of the Grantee, then, in either such event, all
outstanding Units hereunder shall become fully vested as of such termination date and payable to
Grantee in Shares within thirty (30) days of such date.
For purposes of this Section 4(a), “Disability” means, as determined by the Committee
in its discretion exercised in good faith, a physical or mental condition of the Grantee that would
entitle Grantee to payment of disability income payments under the Company’s long-term disability
insurance policy or plan for employees, as then effective, if any; or in the event that the Grantee
is not covered, for whatever reason, under the Company’s long-term disability insurance policy or
plan, “Disability” means a permanent and total disability as defined in Section 22(e)(3) of the
Internal Revenue Code of 1986, as amended (the “Code”). A determination of Disability may be made
by a physician selected or approved by the Committee and, in this respect, the Grantee must submit
to any reasonable examination(s) required by such physician upon request in order to render an
opinion regarding whether there is a Disability. This definition of Disability shall be construed
in accordance with the meaning given such term under the Code with respect to a termination of
Employment due to Disability for a “Key Employee” as defined in Code Section 409A.
(b) Termination Other than Death or Disability. If Grantee’s employment with the
Company is voluntarily or involuntarily terminated by the Company or Grantee for any reason other
than due to death or Disability, then Grantee shall immediately forfeit all Units which are not
already vested as of such date. Upon the forfeiture of any Units hereunder, the Grantee shall
cease to have any rights in connection with such Units as of the date of such forfeiture. A
transfer of employment by the Grantee, without an interruption of employment service, between or
among the Company and any parent or subsidiary of the Company, shall not be considered a
termination of employment for purposes of this Agreement.
5. Grantee’s Representations. Notwithstanding any provision hereof to the contrary, the
Grantee hereby agrees and represents that Grantee will not acquire any Shares, and that the Company
will not be obligated to issue any Shares to the Grantee hereunder, if the issuance of such Shares
constitutes a violation by the Grantee or the Company of any law or regulation of any governmental
authority. Any determination in this regard that is made by the Committee, in good faith, shall be
final and binding. The rights and obligations of the Company and the Grantee are subject to all
applicable laws and regulations.
6. Tax Withholding. To the extent that the receipt of Shares hereunder results in
compensation income to Grantee for federal, state or local income tax purposes, the Company, in its
complete discretion, is authorized to (a) withhold, at such time as determined by the Company, from
any cash or other remuneration (including withholding from delivery to Grantee a number of Shares,
based on the market value of such Shares, as of the applicable Vesting Date), or a combination
thereof, then or thereafter payable to Grantee, the sum that the Company requires to meet its tax
withholding obligations under applicable law or regulation (the “Withholding Liability”); (b)
require Grantee to pay an amount, at such time as the Company shall specify, equal to the
Withholding Liability in cash, by certified or cashier’s check payable to the Company, or in any
other form acceptable to the Company; or (c) cause a sale or sales of Shares on behalf of Grantee
pursuant to which all or a portion of the proceeds are paid to the Company to satisfy the
Withholding Liability and all remaining proceeds (if any) are delivered to Grantee, and Grantee
agrees to take all such action as may be necessary or appropriate to effect such sales. Further,
the Company’s obligation to deliver vested Shares, or any stock certificate or certificates
representing vested Shares, to Grantee shall be subject to, and conditioned upon, payment of the
Withholding Liability.
7. Miscellaneous.
(a) No Fractional Shares. All provisions of this Agreement concern whole Shares. If
the application of any provision hereunder would yield a fractional Share, such fractional Share
shall be rounded down to the next whole Share.
67
(b) Not an Employment Agreement. This Agreement is not an employment agreement, and
no provision of this Agreement shall be construed or interpreted to create any employment
relationship between Grantee and the Company for any time period. The employment of Grantee with
the Company shall be subject to termination to the same extent as if this Agreement had not been
executed.
(c) Dispute Resolution. Any dispute or controversy arising out of or relating to this
Agreement, or any breach hereof, shall be resolved by binding arbitration in accordance with (i)
the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”)
before a single arbitrator (unless otherwise mutually agreed by the parties) as selected pursuant
to the Rules and (ii) the Federal Arbitration Act. Judgment on any award rendered by the
arbitrator may be entered in any court of competent jurisdiction. The venue for any arbitration
proceeding shall be in Xxxxxx or Xxxxxxxxxx County, Texas, except if otherwise mutually agreed by
the parties. The fees of the AAA and the arbitrator shall be split equally by the parties. All
other costs and expenses, including attorneys’ fees, relating to the resolution of any such dispute
shall be borne by the party incurring such costs and expenses.
(d) Notices. Any notice, instruction, authorization, request or demand required
hereunder shall be in writing, and shall be delivered either by personal delivery, by telegram,
telex, telecopy or similar facsimile means, by certified or registered mail, return receipt
requested, or by courier or delivery service, addressed to the Company at its then current main
corporate address, and to Grantee at his address indicated on the Company’s records, or at such
other address and number as a party has previously designated by written notice given to the other
party in the manner hereinabove set forth. Notices shall be deemed given when received, if sent by
facsimile means (confirmation of such receipt by confirmed facsimile transmission being deemed
receipt of communications sent by facsimile means); and when delivered and receipted for (or upon
the date of attempted delivery where delivery is refused), if hand-delivered, sent by express
courier or delivery service, or sent by certified or registered mail, return receipt requested.
(e) Amendment, Termination and Waiver. This Agreement may be amended, modified,
terminated or superseded only by written instrument executed by or on behalf of the Company and by
Grantee. Any waiver of the terms or conditions hereof shall be made only by a written instrument
executed and delivered by the party waiving compliance. Any waiver granted by the Company shall be
effective only if executed and delivered by a duly authorized executive officer of the Company
other than Grantee. The failure of any party at any time or times to require performance of any
provisions hereof shall in no manner affect the right to enforce the same. No waiver by any party
of any term or condition herein, or the breach thereof, in one or more instances shall be deemed to
be, or construed as, a further or continuing waiver of any such condition or breach or a waiver of
any other condition or the breach of any other term or condition.
(f) Governing Law and Severability. This Agreement shall be governed by the internal
laws, and not the laws of conflict, of the State of Texas. The invalidity of any provision of this
Agreement shall not affect any other provision of this Agreement, which shall remain in full force
and effect.
(g) Successors and Assigns. This Agreement shall bind, be enforceable by, and inure
to the benefit of, the Company and its successors and assigns, and Grantee and Grantee’s permitted
assigns under the Plan in the event of death or Disability.
IN WITNESS WHEREOF, this Restricted Stock Unit Agreement is approved, granted and executed as
of the date first written above.
| XXXXX INTERNATIONAL, INC. | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| GRANTEE: | ||||
| «Full_Legal_Name» | ||||
| Signature | ||||
| Print Name | ||||
68
