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Exhibit 10.3
THE LEARNING COMPANY, INC.
Restricted Stock Agreement
Granted Under Long Term Equity Incentive Plan
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AGREEMENT made this 30th day of January, 1998, between The Learning
Company, Inc., a Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxx (the
"Participant").
For valuable consideration, receipt of which is acknowledged, the
parties hereto agree as follows:
1. PURCHASE OF SHARES.
The Company shall issue and sell to the Participant, and the
Participant shall purchase from the Company, subject to the terms and conditions
set forth in this Agreement and in the Company's Long Term Equity Incentive Plan
(the "Plan") 350,000 shares (the "Shares") of common stock, $0.01 par value, of
the Company ("Common Stock"), at a purchase price of $0.01 per share. The
aggregate purchase price for the Shares shall be paid by the Participant by
check payable to the order of the Company or such other method as may be
acceptable to the Company. Upon receipt by the Company of payment for the
Shares, the Company shall issue to the Participant one or more certificates in
the name of the Participant for that number of Shares purchased by the
Participant. The Participant agrees that the Shares shall be subject to the
Purchase Option set forth in Section 2 of this Agreement and the restrictions on
transfer set forth in Section 4 of this Agreement.
2. PURCHASE OPTION. The Company shall have the right and option
(the "Purchase Option") to purchase from the Participant, for a sum of $.01 per
share (the "Option Price"), some or all of the Unvested Shares (as defined
below) upon occurrence of any of the following events (each a "Repurchase
Event"):
(a) In the event that the Participant ceases to be employed by the
Company for any reason or no reason, with or without cause, prior to January 30,
2008, the Company may exercise the Purchase Option to purchase from the
Participant at a price per share equal to the Option Price, some or all of the
Unvested Shares.
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(b) In the event that the Company does not achieve the Performance
Objectives (as defined below), then the Company shall exercise the Purchase
Option to purchase from the Participant, at a price per share equal to the
Option Price, all of the Unvested Shares; and
(c) In the event that the Company does not receive approval at the
Stockholder Meeting (as defined below) of the LTIP Amendment (as defined below),
the Company shall exercise the Purchase Option to purchase from the Participant,
at a price per share equal to the Option Price, all of the Unvested Shares.
"Unvested Shares" means the total number of Shares multiplied by the
Applicable Percentage at the time the Purchase Option becomes exercisable by the
Company. The "Applicable Percentage" shall be 100% prior to July 30, 1998. The
Applicable Percentage shall be reduced by 5% on July 30, 1998, provided that (i)
the Performance Objectives have been achieved, and (ii) the Company has received
stockholder approval at the Stockholder Meeting of the LTIP Amendment.
Thereafter, the Applicable Percentage shall be reduced by 2.5% on each October
30, January 30, April 30 and July 30, and shall be zero on or after January 30,
2008, provided that the Applicable Percentage shall cease to be reduced if the
Participant is no longer employed by the Company.
(d) For purposes of this Agreement, employment with the Company
shall include employment with a parent or subsidiary of the Company.
(e) The Performance Objectives shall mean the objectives set by
the Compensation Committee as set forth on Exhibit A. The Stockholder Meeting
and the LTIP Amendment shall have the meanings set forth in the letter
agreement, in the form attached as Exhibit B, dated as of the date hereof,
between the Company and the Participant.
3. EXERCISE OF PURCHASE OPTION AND CLOSING.
(a) EXERCISE OF PURCHASE OPTION.
(i) The Company shall be deemed to have exercised the
Purchase Option for the full number of Unvested
Shares immediately upon occurrence of either of the
events set forth in Section 2(b) or 2(c) above. The
Company shall, within 30 days after the occurrence of
either such event, deliver to the Participant a
written notice of exercise of the Purchase Option.
(ii) The Company may exercise the Purchase Option by
delivering or mailing to the Participant (or his
estate), within 60 days after the termination of the
employment of the Participant with the
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Company, a written notice of exercise of the Purchase
Option. Such notice shall specify the number of
Shares to be purchased. If and to the extent the
Purchase Option is not so exercised by the giving of
such a notice within such 60-day period, the Purchase
Option shall automatically expire and terminate
effective upon the expiration of such 60-day period.
(b) Within 5 days after his receipt of the Company's notice of the
exercise of the Purchase Option pursuant to subsection (a) above, the
Participant (or his estate) shall tender or cause to be tendered to the Company
at its principal offices the certificate or certificates representing the Shares
which the Company has elected to purchase in accordance with the terms of this
Agreement, duly endorsed in blank or with duly endorsed stock powers attached
thereto, all in form suitable for the transfer of such Shares to the Company.
Upon its receipt of such certificate or certificates, the Company shall deliver
or mail to the Participant a check in the amount of the aggregate Option Price
therefor.
(c) After the time at which any Shares are required to be
delivered to the Company for transfer to the Company pursuant to subsection (b)
above, the Company shall not pay any dividend to the Participant on account of
such Shares or permit the Participant to exercise any of the privileges or
rights of a stockholder with respect to such Shares, but shall, in so far as
permitted by law, treat the Company as the owner of such Shares.
(d) The Option Price may be payable, at the option of the Company,
in cancellation of all or a portion of any outstanding indebtedness of the
Participant to the Company or in cash (by check) or both.
(e) The Company shall not purchase any fraction of a Share upon
exercise of the Purchase Option, and any fraction of a Share resulting from a
computation made pursuant to Section 2 of this Agreement shall be rounded to the
nearest whole Share (with any one-half Share being rounded upward).
4. RESTRICTIONS ON TRANSFER.
The Participant shall not sell, assign, transfer, pledge, hypothecate
or otherwise dispose of, by operation of law or otherwise (collectively
"transfer") any Shares, or any interest therein, that are subject to the
Purchase Option, except that the Participant may transfer such Shares to or for
the benefit of any spouse, child or grandchild, or to a trust for their benefit,
PROVIDED that such Shares shall remain subject to this Agreement (including
without limitation the restrictions on transfer set forth in this Section 4, and
the Purchase Option and such permitted transferee shall, as a condition to such
transfer, deliver to the Company a written instrument
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confirming that such transferee shall be bound by all of the terms and
conditions of this Agreement.
5. EFFECT OF PROHIBITED TRANSFER.
The Company shall not be required (a) to transfer on its books any of
the Shares which shall have been sold or transferred in violation of any of the
provisions set forth in this Agreement, or (b) to treat as owner of such Shares
or to pay dividends to any transferee to whom any such Shares shall have been so
sold or transferred.
6. ESCROW.
The Participant shall, upon the execution of this Agreement, execute
Joint Escrow Instructions in the form attached to this Agreement as Exhibit C.
The Joint Escrow Instructions shall be delivered to the General Counsel of the
Company, as escrow agent thereunder. The Participant shall deliver to such
escrow agent a stock assignment duly endorsed in blank and hereby instructs the
Company to deliver to such escrow agent, on behalf of the Participant, the
certificate(s) evidencing the Shares issued hereunder. Such materials shall be
held by such escrow agent pursuant to the terms of such Joint Escrow
Instructions.
7. RESTRICTIVE LEGEND.
All certificates representing Shares shall have affixed thereto a
legend in substantially the following form, in addition to any other legends
that may be required under federal or state securities laws:
"The shares of stock represented by this certificate are
subject to restrictions on transfer and an option to purchase
set forth in a certain Stock Restriction Agreement between the
corporation and the registered owner of these shares (or his
predecessor in interest), and such Agreement is available for
inspection without charge at the office of the Secretary of
the corporation."
8. PROVISIONS OF THE PLAN.
This Agreement is subject to the provisions of the Plan, a copy of
which is furnished to the Participant with this Agreement.
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9. CHANGE IN CONTROL.
In the event of a "Change in Control" as defined in Section 10A of the
Plan on the date hereof, and PROVIDED THAT (i) the Company has achieved the
Performance Objectives, and (ii) the LTIP Amendment has been approved at the
Stockholder Meeting, the Company's Purchase Option described in Section 2 herein
shall lapse and the Shares shall become fully vested.
10. WITHHOLDING TAXES; SECTION 83(b) ELECTION.
(a) The Participant acknowledges and agrees that the Company has
the right to deduct from payments of any kind otherwise due to the Participant
any federal, state or local taxes of any kind required by law to be withheld
with respect to the purchase of the Shares by the Participant or the lapse of
the Purchase Option.
(b) The Participant acknowledges that he has been informed of the
availability of making an election in accordance with Section 83(b) of the
Internal Revenue Code of 1986, as amended; that such election must be filed with
the Internal Revenue Service within 30 days of the transfer of shares to the
Participant; and that the Participant is solely responsible for making such
election.
11. THE PLAN.
(a) PLAN PROVISIONS APPLICABLE. This Agreement is subject to all
provisions of the Plan, a copy of which is being delivered to you with this
Agreement. The Plan is described in the Prospectus which is also being delivered
to you with this Agreement.
(b) AGREEMENT AND PLAN PROVISIONS CONTROL. The Restricted Stock
described in the Prospectus may vary substantially from this Agreement. Your
rights are as set forth in this Agreement and the Plan, which control in the
event of any inconsistency with the description in the Prospectus.
12. SEVERABILITY.
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, and each other provision of this Agreement shall be severable and
enforceable to the extent permitted by law.
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13. WAIVER.
Any provision for the benefit of the Company contained in this
Agreement may be waived, either generally or in any particular instance, by the
Board of Directors of the Company.
14. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
Company and the Participant and their respective heirs, executors,
administrators, legal representatives, successors and assigns, subject to the
restrictions on transfer set forth in Sections 4 and 5 of this Agreement.
15. NOTICE.
All notices required or permitted hereunder shall be in writing and
deemed effectively given upon personal delivery or five days after deposit in
the United States Post Office, by registered or certified mail, postage prepaid,
addressed to the other party hereto at the address shown beneath his or its
respective signature to this Agreement, or at such other address or addresses as
either party shall designate to the other in accordance with this Section 15.
16. PRONOUNS.
Whenever the context may require, any pronouns used in this Agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural, and vice versa.
17. ENTIRE AGREEMENT.
This Agreement and the Plan constitutes the entire agreement between
the parties, and supersedes all prior agreements and understandings, relating to
the subject matter of this Agreement.
18. AMENDMENT.
This Agreement may be amended or modified only by a written instrument
executed by both the Company and the Participant.
19. GOVERNING LAW.
Except as required by the Delaware General Corporation Law,
this Agreement shall be governed by and construed in accordance with the
internal laws of the Commonwealth of Massachusetts.
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20. ASSIGNMENT; BINDING EFFECT; NO TRANSFER.
Subject to the limitations set forth in this Agreement, this
Agreement shall be binding upon and inure to the benefit of the executors,
administrators, heirs, legal representatives, successors and assigns of the
parties hereto; PROVIDED, HOWEVER, that you may not assign any of your rights
under this Agreement.
21. DAMAGES.
You shall be liable to the Company for all costs and damages,
including incidental and consequential damages and attorneys' fees and expenses,
resulting from a disposition of Shares which is not in conformity with the
provisions of this Agreement.
This Agreement shall no confer upon you any right to continued
employment, nor shall it interfere in any way with the right of the Company, a
subsidiary or affiliate to terminate your employment at any time.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE LEARNING COMPANY, INC.
By: /s/ Xxxxxx Xxxxxxxx
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Title: Chairman, Compensation Committee
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Address: Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx
00000
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
Address:
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