Exhibit 10.4
XXXXXX CDT INC.
STOCK APPRECIATION RIGHT AWARD AGREEMENT
THIS STOCK APPRECIATION RIGHT AWARD AGREEMENT (this "Agreement") is
effective February 22, 2006 (the "GRANT DATE") by and between Xxxxxx CDT Inc., a
Delaware corporation (the "COMPANY") and Xxxx Xxxxxx ("GRANTEE").
WHEREAS, the Grantee is an executive or management employee of the Company
and has been selected by the Compensation Committee (the "COMMITTEE") of the
Board of Directors of the Company (the "BOARD") to receive a grant of stock
appreciation rights corresponding to 113,600 shares (the "SHARES") of the
Company's common stock, $0.01 par value per share (the "COMMON STOCK"), subject
to certain restrictions, and to enter into a Stock Appreciation Right Award
Agreement in the form hereof;
NOW THEREFORE, the Company and the Grantee hereby agree as follows:
1. GRANT OF SARs. The Company hereby grants to the Grantee, on the Grant
Date, stock appreciation rights corresponding to 113,600 Shares (such Stock
Appreciation Rights with respect to such number of Shares being the "SARs"). The
SARs have an exercise price of $25.805 per Share (the "EXERCISE PRICE"), which
is the fair market value of a Share on the Grant Date (such fair market value
representing the average of the high and low publicly-traded price of a Share on
the Grant Date). The SARs shall vest and become exercisable ("VEST") in
accordance with Section 2 below. The Grantee shall have no direct or secured
claim in any specific assets of the Company or the Shares to be issued to
Grantee under Section 4 hereof and will have the status of a general unsecured
creditor of the Company. The SARs are granted under the Company's 2001 Long-Term
Performance Incentive Plan (the "PLAN") and shall be subject to the terms and
conditions of the Plan. Capitalized terms used in this Agreement without further
definition shall have the same meanings given to such terms in the Plan. The
award of 13,600 of the SARs ( the amount in excess of the original annual award
limit under the Plan) is conditioned on shareholders approving an increase in
the number of awards individual participants may receive under the Plan to an
annual limit of 400,000. If shareholder approval is not obtained, the portion of
the SARs in excess of the original individual limit of 100,000 awards (i.e.,
13,600 SARs) will be cancelled and terminated, notwithstanding any contrary
provision of Grantee's executive employment agreement with the Company,
effective October 31, 2005.
2. VESTING OF SARs. One-third (1/3) of the SARs shall Vest on the first
anniversary of the Grant Date, one-third (1/3) shall Vest on the second
anniversary of the Grant Date, and the remainder shall Vest on the third
anniversary of the Grant Date. Such vesting rights with respect to the SARs are
further subject to the following conditions:
(a) Employment. During the Grantee's lifetime, the SARs are exercisable
only by the Grantee, and, except as otherwise provided in clause (c)
below, only if the Grantee has remained continuously employed by the
Company from the Grant Date.
(b) Term of SARs. The SARs shall expire ten years following the Grant
Date (the period between the Grant Date and such expiration date
being the "SAR TERM"), or earlier if clause (c) of this Section 2
applies.
(c) Exceptions. Subject to the exceptions noted in subparts (i)-(iv)
below, the SARs shall be forfeited, cancelled and terminated
immediately if the Grantee is no longer employed by the Company.
(i) Retirement. If after one year from the Grant Date the Grantee
retires from employment with the Company in accordance with
any Company retirement plan then in effect, the Grantee may at
any time within the three-year period following such
retirement (but within the SAR Term) exercise all SARs,
including those SARs that had not previously vested which
shall Vest upon retirement. The Grantee's right to exercise
SARs upon retirement in such fashion is expressly conditioned
on the Grantee's furnishing to the Company a non-compete
covenant (the form of which must be reasonably acceptable to
the Company) that would prevent the Grantee from competing
against the Company during such three-year period following
retirement (or, if shorter, through the end of the SAR Term).
The non-compete covenant will contain a provision that will
require the Grantee to pay the Company damages if the Grantee
breaches such non-compete covenant. The damages shall include
any gain the Grantee may receive from the exercise of an SAR
in violation of such non-compete covenant.
(ii) Disability. If the Grantee is no longer with the Company due
to disability (in accordance with any Company disability
policy then in effect), the Grantee may at any time within one
year following the Grantee's leaving the Company (but within
the SAR Term) exercise all SARs, including those SARs that had
not previously vested which shall Vest upon the date of
disability.
(iii) Termination of Employment. If after one year from the Grant
Date the Grantee or the Company terminates the Grantee's
employment (other than when the Company terminates the
Grantee's employment for Cause, as defined below), the Grantee
may at any time within ninety days following the Grantee's
leaving the Company (but within the SAR Term) exercise the
Grantee's SARs to the extent the Grantee was entitled to
exercise such SARs prior to leaving the Company, but not
otherwise. "CAUSE" as used above shall mean the willful
failure to discharge responsibilities.
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(iv) Death. If the Grantee dies while employed by the Company (or
if the Grantee were to die during the post-employment period
covered by Section 2(c)(ii) (Disability) above), the person
entitled by will or the applicable laws of descent and
distribution may, within one year from the Grantee's death
(but within the SAR Term), exercise the Grantee's SARs,
including those SARs that had not previously vested which
shall Vest upon the date of death.
(d) Change in Control. Immediately preceding the occurrence of a Change
in Control of the Company (as defined in Section 6(e) below), the
unvested SARs shall immediately Vest in full and, to the extent not
previously exercised by the Grantee, shall be deemed thereupon
exercised in full.
3. NON-ASSIGNMENT OF RIGHTS. The Grantee may not assign or transfer any
SARs except by will or by the laws of descent and distribution or by a qualified
domestic relations order.
4. EXERCISE OF SARs.
(a) Exercise. Vested SARs may be exercised by following the
procedures the Company has in place at the time of exercise. For Vested SARs to
be exercised by a person other than the Grantee (as provided above), the Company
must have appropriate documentation evidencing the rights of the Grantee's
beneficiary(s). The Grantee shall designate the number of Shares subject to the
Vested SARs that are being exercised, and upon exercise shall be entitled to
receive that number of Shares having an aggregate fair market value equal to the
excess of the fair market value of one Share, at the time of such exercise, over
the Exercise Price, multiplied by the number of Shares subject to the SARs which
are so exercised. For purposes of this Section 4(a), fair market value shall be
determined by calculating the average of the high and low publicly-traded price
of a Share on the date of exercise.
(b) Issuance of Shares. The Company shall issue Shares to the
Grantee upon exercise of SARs pursuant to Section 4(a) above by issuing to the
Grantee a stock certificate (or register Shares of Common Stock in book-entry
form) representing a number of requisite number of Shares. No fractional shares
may be delivered, but in lieu thereof a cash or other adjustment shall be made
as determined by the Committee in its discretion.
(c) Withholding Taxes. At the time Shares of Common Stock are issued
to the Grantee, the Company shall satisfy the statutory Federal, state and local
withholding tax obligation (including the FICA and Medicare tax obligation)
required by law with respect to the distribution of Shares from one or more of
the following methods, as the Grantee elects: (i) the Company shall withhold
cash compensation then accrued and payable to Grantee of such required
withholding amount, (ii) the Grantee may tender a check or other payment of cash
to the Company of such required withholding amount,
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or (iii) by withholding from Shares issuable to the Grantee hereunder having an
aggregate fair market value equal to the amount of such required withholding.
5. LEGALITY OF INITIAL ISSUANCE. No Shares shall be issued unless and
until the Company has determined that:
(d) It and the Grantee, at Company's expense, have taken any actions
required to register the Shares under the Securities Act of 1933, as amended, or
to perfect an exemption from the registration requirements thereof;
(e) Any applicable listing requirement of any stock exchange or
other securities market on which the Common Stock is listed has been satisfied;
and
(f) Any other applicable provision of state or federal law has been
satisfied.
6. MISCELLANEOUS PROVISIONS.
(a) Rights as a Stockholder. Neither the Grantee nor the Grantee's
representative shall have any rights as a stockholder with respect to any Shares
subject to the SARs until the date that the Company is obligated to deliver
Shares to the Grantee or the Grantee's representative pursuant to Section 4
above, and then only with respect to the Shares so delivered.
(b) No Retention Rights. Nothing in this Agreement shall confer upon
the Grantee any right to continue in the employment or service of the Company
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Company or of the Grantee, which rights are hereby
expressly reserved by each, to terminate his employment or service at any time
and for any reason, with or without cause.
(c) Employment by Subsidiary, etc.. For purposes of this Agreement,
employment by a parent or subsidiary of or a successor to the Company shall be
considered employment by the Company.
(d) Anti-Dilution. In the event that any change in the outstanding
Shares of Common Stock of the Company (including an exchange of Common Stock for
stock or other securities of another corporation) occurs by reason of a Common
Stock dividend or split, recapitalization, merger, consolidation, combination,
exchange of Shares or other similar corporate changes, other than for
consideration received by the Company therefore, the number of Shares subject to
the SARs hereunder shall be appropriately adjusted by the Committee whose
determination shall be conclusive, final and binding; provided, however that
fractional Shares shall be rounded to the nearest whole share. In the event of
any other change in the Common Stock, the Committee shall in its sole discretion
determine whether such change equitably requires a change in the number or type
of Shares subject to the SARs and any adjustment made by the Committee shall be
conclusive, final and binding.
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(e) Change in Control. A "CHANGE IN CONTROL" of the Company shall be
deemed to have occurred if any of the events set forth in any one of the
following subparagraphs shall occur:
(i) The 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 "EXCHANGE ACT")) (a "PERSON") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act) of more than 50% of either (y) the then-outstanding shares of common
stock of the Company (the "OUTSTANDING COMPANY COMMON STOCK") or (z) 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 for
purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (1) any acquisition directly from the
Company, (2) any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, or (4) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (1) and (2) of subsection (iii) of this definition; or
(ii) individuals who, as of the date hereof, constitute the
Board (the "INCUMBENT BOARD") cease for any reason to constitute at least
a majority of the 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 shall be
considered as though such individual were a member of the Incumbent Board;
or
(iii) consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all of
the assets of the Company (a "BUSINESS COMBINATION"), in each case,
unless, following such Business Combination, (1) all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% 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, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation which as a result of such transaction owns the Company or all
or substantially all of the Company's assets either directly or through
one or more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, and (2) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the
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time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(iv) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(f) Incorporation of Plan. The provisions of the Plan are
incorporated by reference into these terms and conditions.
(g) Inconsistency. To the extent any terms and conditions herein
conflict with the terms and conditions of the Plan, the terms and conditions of
the Plan shall control.
(h) Notices. Any notice required by the terms of this Agreement
shall be given in writing and shall be deemed effective upon personal delivery,
upon deposit with the United States Postal Service, by registered or certified
mail, with postage and fees prepaid or upon deposit with a reputable overnight
courier. Notice shall be addressed to the Company at its principal executive
office and to the Grantee at the address that he most recently provided to the
Company.
(i) Entire Agreement; Amendments. This Agreement constitutes the
entire contract between the parties hereto with regard to the subject matter
hereof. This Agreement supersedes any other agreements, representations or
understandings (whether oral or written and whether express or implied) which
relate to the subject matter hereof. The Committee shall have authority, subject
to the express provisions of the Plan, to interpret this Agreement and the Plan,
to establish, amend and rescind any rules and regulations relating to the Plan,
to modify the terms and provisions of this Agreement, and to make all other
determinations in the judgment of the Committee necessary or desirable for the
administration of the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in this Agreement in the
manner and to the extent it shall deem necessary or desirable to carry it into
effect. All action by the Committee under the provisions of this paragraph shall
be final, conclusive and binding for all purposes.
(j) Choice of Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, as such laws
are applied to contracts entered into and performed in such State, without
giving effect to the choice of law provisions thereof.
(k) Successors.
(i) This Agreement is personal to the Grantee and, except as
otherwise provided in Section 2 above, shall not be assignable by the Grantee
otherwise than by will or the laws of descent and distribution, without the
written consent of the Company. This Agreement shall inure to the benefit of and
be enforceable by the Grantee's legal representatives.
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(ii) This Agreement shall inure to the benefit of and be
binding upon the Company and its successors. It shall not be assignable except
in connection with the sale or other disposition of all or substantially all the
assets or business of the Company.
(l) Severability. If any provision of this Agreement for any reason
should be found by any court of competent jurisdiction to be invalid, illegal or
unenforceable, in whole or in part, such declaration shall not affect the
validity, legality or enforceability of any remaining provision or portion
hereof, which remaining provision or portion hereof shall remain in full force
and effect as if this Agreement had been adopted with the invalid, illegal or
unenforceable provision or portion hereof eliminated.
(m) Headings. The headings, captions and arrangements utilized in
this Agreement shall not be construed to limit or modify the terms or meaning of
this Agreement.
(n) Counterparts. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which shall constitute but one and the same instrument.
This Agreement is executed by the Company as of the date and year first
written above.
XXXXXX CDT INC.
By:_____________________________________
Title:__________________________________
The undersigned Grantee hereby acknowledges receipt of an executed
original of this Agreement and accepts the SARs granted hereunder, and further
agrees to the terms and conditions hereinabove set forth.
________________________________________
____________________, Grantee
Date:_______________, 2006
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