GRACO INC. 2010 STOCK INCENTIVE PLAN
Exhibit 10.3
GRACO INC. 2010 STOCK INCENTIVE PLAN
THIS AGREEMENT, made this «DATE» day of «MONTH», «YEAR», by and between Graco Inc., a
Minnesota corporation (the “Company”) and «NAME» (“«NAME»” or the “Employee”).
WITNESSETH THAT:
WHEREAS, the Company pursuant to the Graco Inc. 2010 Stock Incentive Plan (the “Plan”) wishes
to grant this stock option to Employee;
NOW THEREFORE, in consideration of the premises and of the mutual covenants contained in this
Agreement, the parties agree as follows:
| 1. | Grant of Option | |
The Company grants to Employee, the right and option (the “Option”) to purchase all or any
part of an aggregate of «SHARES» shares of Common Stock of the Company, par value USD 1.00
per share, at the price of USD «PRICE» per share on the terms and conditions set forth in
this Agreement. The date of grant of the Option is «DATE» (the “Date of Grant”). |
||
| 2. | Duration and Exercisability |
| A. | No portion of this Option may be exercised by Employee until the first
anniversary of the Date of Grant and then only in accordance with the Vesting Schedule
set forth below. In no event shall this Option or any portion of this Option be
exercisable following the tenth anniversary of the Date of Grant. |
||
| Vesting Schedule |
| Portion of Option | ||||
| Vesting Date | Exercisable | |||
First Anniversary of Date of Grant |
25% | |||
Second Anniversary of Date of Grant |
50% | |||
Third Anniversary of Date of Grant |
75% | |||
Fourth Anniversary of Date of Grant |
100% | |||
If Employee does not purchase in any one year the full number of shares of Common
Stock of the Company to which he/she is entitled under this Option, he/she may,
subject to the terms and conditions of Section 3, purchase such shares of Common
Stock in any subsequent year during the term of this Option. This Option shall
expire as of the close of trading at the national securities exchange on which the
Common Stock is traded (“Exchange”) on the tenth anniversary of the Date of Grant or
if the Exchange is closed
|
Exhibit 10.3
on the anniversary date or the Common Stock of the Company is not trading on said
anniversary date, such earlier business day on which the Common Stock is trading on
the Exchange. |
|||
| B. | During the lifetime of Employee, the Option shall be exercisable only by
him/her and shall not be assignable or transferable by him/her otherwise than by will
or the laws of descent and distribution. |
||
| C. | Under no circumstances may the Option or any portion of the Option granted by
this Agreement be exercised after the term of the Option expires. |
| 3. | Effect of Termination of Employment |
| A. | If Employee’s employment terminates for any reason other than Employee’s gross
and willful misconduct, death, retirement (as defined in Section 3D), or disability (as
defined in Section 3D), Employee shall have the right to exercise that portion of the
Option exercisable upon the date of termination of employment at any time within the
period beginning on the day after termination of employment and ending at the close of
trading on the Exchange ninety (90) days later. |
||
| B. | If Employee’s employment terminates by reason of Employee’s gross and willful
misconduct during employment, including, but not limited to, wrongful appropriation of
Company funds, serious violations of Company policy, breach of fiduciary duty or the
conviction of a felony, the unexercised portion of the Option shall terminate as of the
time of the misconduct. If the Company determines subsequent to the termination of
Employee’s employment for whatever reason, that Employee engaged in conduct during
employment that would constitute gross and willful misconduct justifying termination,
the Option shall terminate as of the time of such misconduct. Furthermore, if the
Option is exercised in whole or in part and the Company thereafter determines that
Employee engaged in gross and willful misconduct during employment which would have
justified termination at any time prior to the date of such exercise, the Option shall
be deemed to have terminated as of the time of the misconduct and the Company may elect
to rescind the Option exercise. Gross and willful misconduct shall not include any
action or inaction by the Employee contrary to the direction of the Board with respect
to any initiative, strategy or action of the Company, which action or inaction the
Employee believes is in the best interest of the Company. |
||
| C. | If Employee shall die while employed by the Company or an affiliate and shall
not have fully exercised the Option, all shares remaining under the Option shall become
immediately exercisable. If Employee shall die within ninety (90) days after a
termination of employment which meets the criteria of Section 3A above, only those shares vested as of the date of termination shall be exercisable. The executor or
administrator of Employee’s estate, or any person(s) to whom the Option was transferred
by will or the applicable laws of distribution and descent may exercise such
exercisable shares at any time during a period beginning on the day after the date of
Employee’s death and ending at the close of trading on the Exchange on the tenth
anniversary of the Date of Grant. |
Exhibit 10.3
| D. | If Employee’s termination of employment is due to retirement or disability, all
shares remaining under the Option shall become immediately exercisable. Employee shall
be deemed to have retired if the termination of employment occurs for reasons other
than the Employee’s gross and willful misconduct, death, or disability after Employee
(i) has attained age 55 and 10 years of service with the Company or an affiliate, or
(ii) has attained age 65. Employee shall be deemed to be disabled if the termination
of employment occurs because Employee is unable to work due to an impairment which
would qualify as a disability under the Company’s long term disability program.
Employee may exercise the shares remaining unexercised at any time during a period
beginning on the day after the date of Employee’s termination of employment and ending
at the close of trading on the Exchange on the tenth anniversary of the Date of Grant.
If Employee should die during the period between the date of Employee’s retirement or
disability and the expiration of the Option, the executor(s) or administrator(s) of the
Employee’s estate, or any person(s) to whom the Option was transferred by will or the
applicable laws of distribution and descent may exercise the unexercised portion of the
Option at any time during a period beginning the day after the date of Employee’s death
and ending at the close of trading on the Exchange on the tenth anniversary of the Date
of Grant. Notwithstanding anything to the contrary contained in Section 3, if the
Employee’s employment is terminated by retirement (as defined in this Section 3D) and
Employee has not given written notice to the Chair of the Management Organization and
Compensation Committee of the Board of Directors (the “Committee”), of Employee’s
intention to retire not less than six (6) months prior to the date of his retirement,
then in such event, for purposes of this Agreement only, said termination of employment
shall be deemed to be not a retirement but a termination subject to the provisions of
Section 3A, provided, however, that in the event that the Committee determines that
said termination of employment without six (6) months prior written notice is in the
best interests of the Company, such termination shall be deemed to be a retirement and
shall be subject to this Section 3D. |
||
| E. | If the Option is exercised by the executors, administrators, legatees, or
distributees of the estate of a deceased optionee, the Company shall be under no
obligation to issue stock hereunder unless and until the Company is satisfied that the
person(s) exercising the Option is the duly appointed legal representative of the
deceased optionee’s estate or the proper legatee or distributee thereof. |
||
| F. | For purposes of this Section 3, if the last day of the relevant period is a day
upon which the Exchange is not open for trading or the Common Stock is not trading on
that day, the relevant period will expire at the close of trading on such earlier
business day on which the Exchange is open and the Common Stock is trading. |
| 4. | Manner of Exercise |
| A. | Employee or other proper party may exercise the Option only by delivering
within the term of the Option written notice to the Company at its principal office in
Minneapolis, Minnesota, stating the number of shares as to which the Option is being
exercised and, except as provided in Sections 4B(2) and 4C, accompanied by
payment-in-full of the Option price for all shares designated in the notice. |
||
| B. | The Employee may, at Employee’s election, pay the Option price as follows: |
Exhibit 10.3
| (1) | by cash or check (bank check, certified check, or personal
check) |
||
| (2) | by delivering to the Company for cancellation, shares of Common
Stock of the Company which have been held by the Employee for not less than six
(6) months with a fair market value equal to the Option price. |
For purposes of Section 4B(2), the fair market value of the Company’s Common Stock
shall be the closing price of the Common Stock on the day immediately preceding the
date of exercise on the Exchange. If there is not a quotation available for such
day, then the closing price on the next preceding day for which such a quotation
exists shall be determinative of fair market value. If the shares are not then
traded on an exchange, the fair market value shall be the average of the closing bid
and asked prices of the Common Stock as reported by the National Association of
Securities Dealers Automated Quotation System. If the Common Stock is not then
traded on NASDAQ or on an exchange, then the fair market value shall be determined
in such manner as the Company shall deem reasonable. |
|||
| C. | The Employee may, with the consent of the Company, pay the Option price by
delivering to the Company a properly executed exercise notice, together with
irrevocable instructions to a broker to promptly deliver to the Company from sale or
loan proceeds the amount required to pay the exercise price. |
| 5. | Payment of Withholding Taxes | |
| Upon exercise of any portion of this Option, Employee shall pay to the Company an amount sufficient to satisfy any federal, state, or local withholding tax requirements which arise as a result of the exercise of the Option or provide the Company with satisfactory indemnification for such payment. Employee may pay such amount by delivering to the Company for cancellation shares of Common Stock of the Company with a fair market value equal to the minimum amount of such withholding tax requirement by (i) electing to have the Company withhold shares otherwise to be delivered with a fair market value equal to the minimum statutory amount of such taxes required to be withheld by the Company, or (ii) electing to surrender to the Company previously owned shares with a fair market value equal to the amount of such minimum tax obligation. | ||
| 6. | Change of Control |
| A. | Notwithstanding Section 2A hereof, the entire Option shall become immediately
and fully exercisable upon a “Change of Control” and shall remain fully exercisable
until either exercised or expiring by its terms. A “Change of Control” means: |
| (1) | an acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the “1934 Act”)), (a “Person”), of beneficial ownership (within the
meaning of Rule 13d-3 of the 0000 Xxx) which, together with other acquisitions
by such Person, results in the aggregate beneficial ownership by such Person of
30% or more of either |
Exhibit 10.3
| (a) | the then outstanding shares of Common Stock of
the Company (the “Outstanding Company Common Stock”) or |
||
| (b) | the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally
in the election of directors (the “Outstanding Company Voting
Securities”); |
provided, however, that the following acquisitions will not result in a
Change of Control: |
| (i) | an acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, |
||
| (ii) | an acquisition by the Employee or
any group that includes the Employee, or |
||
| (iii) | an acquisition by any entity
pursuant to a transaction that complies with clauses (a), (b)
and (c) of Section 6A(3) below; or |
| (2) | Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (the “Incumbent Board”) cease for any reason to
constitute at least a majority of said Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
will be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
membership on the Board 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 by or on behalf of a Person other than the
Board; or |
||
| (3) | Consummation of a reorganization, merger or consolidation of
the Company with or into another entity or a statutory exchange of Outstanding
Company Common Stock or Outstanding Company Voting Securities or sale or other
disposition of all or substantially all of the assets of the Company (“Business
Combination”); excluding, however, such a Business Combination pursuant to
which |
| (a) | all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding Company
Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or
indirectly, a majority of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors (or comparable equity interests), as the case may be, of the
surviving or acquiring entity resulting from such Business Combination
(including, without limitation, an entity that as a result of such
transaction beneficially owns 100% of the outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities (or comparable equity securities) or all or substantially
all of the Company’s assets either
|
Exhibit 10.3
directly or indirectly) in substantially the same proportions (as
compared to the other holders of the Company’s common stock and
voting securities prior to the Business Combination) as their
respective ownership, immediately prior to such Business Combination,
of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, |
|||
| (b) | no Person (excluding (i) any employee benefit
plan (or related trust) sponsored or maintained by the Company or such
entity resulting from such Business Combination or any entity
controlled by the Company or the entity resulting from such Business
Combination, (ii) any entity beneficially owning 100% of the
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities (or comparable equity securities) or
all or substantially all of the Company’s assets either directly or
indirectly and (iii) the Employee and any group that includes the
Employee) beneficially owns, directly or indirectly, 30% or more of the
then outstanding shares of common stock (or comparable equity
interests) of the entity resulting from such Business Combination or
the combined voting power of the then outstanding voting securities (or
comparable equity interests) of such entity, and |
||
| (c) | immediately after the Business Combination, a
majority of the members of the board of directors (or comparable
governors) of the entity resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for such
Business Combination; or |
| (4) | approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company. |
| 7. | Adjustments; Fundamental Change |
| A. | If there shall be any change in the number or character of the Common Stock of
the Company through merger, consolidation, reorganization, recapitalization, dividend
in the form of stock (of whatever amount), stock split or other change in the corporate
structure of the Company, and all or any portion of the Option shall then be
unexercised and not yet expired, appropriate adjustments in the outstanding Option
shall be made by the Company, in order to prevent dilution or enlargement of Employee’s
Option rights. Such adjustments shall include, where appropriate, changes in the number
of shares of Common Stock and the price per share subject to the outstanding Option. |
||
| B. | In the event of a proposed (i) dissolution or liquidation of the Company, (ii)
a sale of substantially all of the assets of the Company, (iii) a merger or
consolidation of the Company with or into any other corporation, regardless of whether
the Company is the surviving corporation, or (iv) a statutory share exchange involving
the capital stock of the Company (each, a “Fundamental Change”), the Committee may, but
shall not be obligated to: |
| (1) | with respect to a Fundamental Change that involves a merger,
consolidation or statutory share exchange, make appropriate provision for the
protection of the
|
Exhibit 10.3
Option by the substitution of options and appropriate voting common stock of
the corporation surviving any such merger or consolidation or, if
appropriate, the “parent corporation” (as defined in Section 424(e) of the
Internal Revenue Code of 1986, as amended from time to time, and any
regulations promulgated thereunder, or any successor provision) of the
Company or such surviving corporation, in lieu of the Option and shares of
Common Stock of the Company, or |
|||
| (2) | with respect to any Fundamental Change, including, without
limitation, a merger, consolidation or statutory share exchange, declare, prior
to the occurrence of the Fundamental Change, and provide written notice to the
holder of the Option of the declaration, that the Option, whether or not then
exercisable, shall be canceled at the time of, or immediately prior to the
occurrence of, the Fundamental Change in exchange for payment to the holder of
the Option, within 20 days after the Fundamental Change, of cash (or, if the
Committee so elects in lieu of solely cash, of such form(s) of consideration,
including cash and/or property, singly or in such combination as the Committee
shall determine, that the holder of the Option would have received as a result
of the Fundamental Change if the holder of the Option had exercised the Option
immediately prior to the Fundamental Change) equal to, for each share of Common
Stock covered by the canceled Option, the amount, if any, by which the Fair
Market Value (as defined in this Section 7B) per share of Common Stock exceeds
the exercise price per share of Common Stock covered by the Option. At the
time of the declaration provided for in the immediately preceding sentence, the
Option shall immediately become exercisable in full and the holder of the
Option shall have the right, during the period preceding the time of
cancellation of the Option, to exercise the Option as to all or any part of the
shares of Common Stock covered thereby in whole or in part, as the case may be.
In the event of a declaration pursuant to this Section 7B, the Option, to the
extent that it shall not have been exercised prior to the Fundamental Change,
shall be canceled at the time of, or immediately prior to, the Fundamental
Change, as provided in the declaration. Notwithstanding the foregoing, the
holder of the Option shall not be entitled to the payment provided for in this
Section 7B if such Option shall have expired or been forfeited. For purposes
of this Section 7B only, “Fair Market Value” per share of Common Stock means
the fair market value, as determined in good faith by the Committee, of the
consideration to be received per share of Common Stock by the shareholders of
the Company upon the occurrence of the Fundamental Change, notwithstanding
anything to the contrary provided in this Agreement. |
| 8. | Miscellaneous |
| A. | This Option is issued pursuant to the Plan and is subject to its terms. The
terms of the Plan are available for inspection during business hours at the principal
offices of the Company. |
||
| B. | This Agreement shall not confer on Employee any right with respect to
continuance of employment by the Company or any of its subsidiaries, nor will it
interfere in any way with the right of the Company to terminate such employment at any
time. |
Exhibit 10.3
| C. | Neither Employee, the Employee’s legal representative, nor the executor(s) or
administrator(s) of the Employee’s estate, or any person(s) to whom the Option was
transferred by will or the applicable laws of distribution and descent shall be, or
have any of the rights or privileges of, a shareholder of the Company in respect of any
shares of Common Stock receivable upon the exercise of this Option, in whole or in
part, unless and until such shares shall have been issued upon exercise of this Option. |
||
| D. | The Company shall at all times during the term of the Option reserve and keep
available such number of shares as will be sufficient to satisfy the requirements of
this Agreement. |
||
| E. | The internal law, and not the law of conflicts of the State of Minnesota shall
govern all questions concerning the validity, construction and effect of this
Agreement, the Plan and any rules and regulations relating to the Plan or this Option. |
||
| F. | Employee hereby consents to the transfer to his employer or the Company of
information relating to his/her participation in the Plan, including the personal data
set forth in this Agreement, between them or to other related parties in the United
States or elsewhere, or to any financial institution or other third party engaged by
the Company, but solely for the purpose of administering the Plan and this Option.
Employee also consents to the storage and processing of such data by such persons for
this purpose. |
IN WITNESS WHEREOF, the Company, by the Management Organization and Compensation Committee of
the Board of Directors, and the Employee have caused this Agreement to be executed and delivered,
all as of the day and year first above written.
| GRACO INC.
Management Org and Comp Committee |
||||
| By | ||||
| «NAME» | ||||
| Its Chairman | ||||
| EMPLOYEE |
||||
| By | ||||
| «NAME» | ||||
