Exhibit 10.1
DEFERRED SHARES AWARD AGREEMENT
This Deferred Shares Award Agreement, dated as of December 21, 2005,
is made and entered into by and between Global Signal Inc., a Delaware company
(the "Company") and Xxxxxx Xxxxxx ("Employee") pursuant to the Global Signal
Inc. Omnibus Stock Incentive Plan (the "Plan").
______________________
WHEREAS, the Company maintains the Plan for the benefit of selected
management employees, directors and Consultants of the Company or its parents
or subsidiaries; and
WHEREAS, the Company previously granted to Employee an option to
purchase shares of the Company's Common Stock, of which twenty-five percent
(25%) of the shares have a per share exercise price equal to $8.53 and the
remaining seventy-five percent (75%) of the shares have a per share exercise
price equal to $18.00 (the "Option") subject to the terms set forth in that
certain agreement between the Company and Employee, dated March 22, 2004 (the
"Option Agreement"), which Option is outstanding as of the date hereof; and
WHEREAS, pursuant to the terms of the Option Agreement, the Option is
unvested and unexcercisable with respect to 574,000 shares of Common Stock as
of the date hereof (the "Unvested Option Shares"); and
WHEREAS, the Board desires to accelerate the vesting of that portion
of the Option that relates to 184,500 Unvested Option Shares otherwise
scheduled to vest on December 31, 2006; and
WHEREAS, the Company and Employee have agreed to cancel that portion
of the Option that relates to the remaining 143,500 Unvested Option Shares
otherwise scheduled to vest on December 31, 2006, in consideration for an award
of Deferred Shares pursuant to Section 9 of the Plan under the terms and
conditions as set forth herein (the "Cancellation and Award").
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
I. OPTION ACCELERATION AND CANCELLATION
1.1. Acceleration. In consideration of the Cancelled Option (as
defined in Section 1.2 below) by Employee, as of December 31, 2005, the Board
hereby agrees to accelerate the vesting of that portion of the Option that
relates to the 184,500 Unvested Option Shares as set forth in Schedule A so
that such shares are fully vested and immediately exercisable in accordance
with the terms of the Option Agreement ("Acceleration").
1.2. Cancellation. Employee hereby agrees to cancel that portion of
the Option that relates to the 143,500 Unvested Option Shares as set forth in
Schedule A (the "Cancelled Option") as of December 31, 2005. Employee
understands and agrees that Employee is forever relinquishing the right to
exercise the Option with respect to the Cancelled Option and any rights to or
in respect of the Shares covered thereby. Employee hereby irrevocably and
unconditionally releases, waives and discharges all claims, promises, causes of
action, or similar rights of any type that Employee may have, whether known or
unknown, unforeseen, unanticipated, unsuspected or latent that Employee may now
have against any of the Released Parties (as defined herein) as of the Date of
Grant in connection with the Acceleration and the Cancellation and Award. For
purposes of this Deferred Shares Award Agreement, the "Released Parties" are
the Company and all related and affiliated entities (including corporations,
limited liability companies, partnerships, and joint ventures) and, with
respect to each of the Company and its affiliated entities, each of their
respective predecessors and successors, past, present and future employees,
officers, directors, stockholders, owners, partners, members, representatives,
assigns, attorneys, agents, insurers, employee benefit programs (and the
trustees, administrators, fiduciaries, and insurers of such programs), and any
other persons acting by, through, under, or in concert with any of the
foregoing identified Released Parties.
1.3. Full Force and Effect. Except as otherwise provided herein, the
terms of the Option Agreement shall remain in full force and effect.
II. DEFERRED SHARES
2.1. Deferred Shares Award. In consideration for the Cancelled Option
by Employee, on December 31, 2005 (the "Date of Grant"), the Company hereby
agrees to grant to Employee a Deferred Shares Award representing the right to
receive up to that number of Shares equal to 150% of the "Deferred Shares,"
which Deferred Shares is determined by the formula set forth on Schedule B (the
"Award"). The Shares subject to the Award shall vest and become payable in
accordance with the provisions of Sections 2.2 and 2.3 below. Subject to
Section 2.4, the Company shall issue a stock certificate in respect of such
Award as soon as reasonably practicable following the vesting dates.
2.2. Time Based Vesting Schedule. Fifty percent (50%) of the Shares
subject to the Award that are payable pursuant to the satisfaction of the
Performance Goals, shall vest and become payable on December 31, 2006, and
fifty percent (50%) of the Shares subject to the Award that are payable
pursuant to the satisfaction of the Performance Goals, shall vest and become
payable on December 31, 2007.
2.3. Performance Goals. The performance goals for purposes of
determining whether, and the extent to which, the Deferred Shares Award shall
be payable shall be based on the Company's annualized dividend declared in
respect of the fourth quarter of 2006, which shall be equal to the product of
four times the Company's dividend declared in respect of the fourth quarter of
2006 (the "Q4 Dividend Run Rate"). Subject to Sections 2.2 and 2.5 below, upon
determination of the Q4 Dividend Run Rate, Employee's entitlement to the number
of Shares subject to the Award shall be fixed and nonforfeitable and shall not
be conditioned upon the Company's future performance.
2.3.1. If the Company's Q4 Dividend Run Rate is less than or
equal to $2.20 per share, then 0% of the Deferred Shares shall be payable
pursuant to the Deferred Shares Award.
2.3.2. If the Company's Q4 Dividend Run Rate is at least
equal to $2.21 per share but less than $2.30 per share, then 75% of the
Deferred Shares shall be payable pursuant to the Deferred Shares Award.
2.3.3. If the Company's Q4 Dividend Run Rate is at least
equal to $2.30 per share but less than $2.41 per share, then 100% of the
Deferred Shares shall be payable pursuant to the Deferred Shares Award.
2.3.4. If the Company's Q4 Dividend Run Rate is at least
equal to $2.41 per share but less than $2.51 per share, then 125% of the
Deferred Shares shall be payable pursuant to the Deferred Shares Award.
2.3.5. If the Company's Q4 Dividend Run Rate is equal to
$2.51 per share or greater, then 150% of the Deferred Shares shall be payable
pursuant to the Deferred Shares Award.
2.4. Income Tax Matters; Tax Witholding.
2.4.1. Set forth below is a brief summary as of the Date of
Grant of certain United States federal tax consequences of the Deferred Shares
Award. THIS SUMMARY DOES NOT ADDRESS SPECIFIC STATE, LOCAL OR FOREIGN TAX
CONSEQUENCES THAT MAY BE APPLICABLE TO THE EMPLOYEE. THE EMPLOYEE UNDERSTANDS
THAT THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS
ARE SUBJECT TO CHANGE. For federal income tax purposes, Employee generally will
not have taxable income on the grant of the Deferred Shares Award. Employee
will recognize ordinary income at the time or times the Shares covered by the
Award vests in an amount equal to the Fair Market Value of such Shares on each
such date. The grant of the Deferred Shares Award will not constitute
"property" within the meaning of Section 83 of the Internal Revenue Code of
1986, as amended (the "Code"), and as such Employee will not be entitled to
file an election under Section 83(b) of the Code.
2.4.2. TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT
REGULATIONS, WE ADVISE YOU THAT, UNLESS OTHERWISE EXPRESSLY INDICATED, ANY
FEDERAL TAX ADVICE CONTAINED IN THIS DEFERRED SHARES AWARD AGREEMENT WAS NOT
INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF (I)
AVOIDING TAX-RELATED PENALTIES UNDER THE CODE OR (II) PROMOTING, MARKETING OR
RECOMMENDING TO ANOTHER PARTY ANY TAX-RELATED MATTERS ADDRESSED HEREIN.
2.4.3. BY SIGNING THIS AGREEMENT, THE EMPLOYEE REPRESENTS
THAT HE HAS REVIEWED WITH HIS OWN TAX ADVISORS THE FEDERAL, STATE, LOCAL AND
FOREIGN TAX CONSEQUENCES OF THE TRANSACTIONS CONTEMPLATED BY THIS DEFERRED
SHARES AWARD AGREEMENT AND THAT HE IS RELYING SOLELY ON SUCH ADVISORS AND NOT
ON ANY STATEMENTS OR REPRESENTATIONS OF THE COMPANY OR ANY OF ITS AGENTS.
EMPLOYEE UNDERSTANDS AND AGREES THAT HE (AND NOT THE COMPANY) SHALL BE
RESPONSIBLE FOR ANY TAX LIABILITY THAT MAY ARISE AS A RESULT OF THE
TRANSACTIONS CONTEMPLATED BY THIS DEFERRED SHARES AWARD AGREEMENT.
2.4.4. Notwithstanding anything to the contrary, the payment
of the Award hereunder shall be conditioned upon Employee making adequate
provision for federal, state or other withholding obligations, if any, which
may arise upon the vesting of the Award.
2.5. Forfeiture; Termination Without Cause. Except as
otherwise provided below, in the event of Employee's termination of employment
with the Company prior to December 31, 2007, for any reason (including by
reason of Employee's death or Disability), any then unvested portion of the
Deferred Shares Award and Employee's right to receive any then unvested Shares
pursuant to the Award shall be immediately and irrevocably forfeited. In the
event Employee becomes entitled to any Award as set forth below and the
Employee is a "specified employee" within the meaning of Section
409A(a)(2)(B)(1) of the Code, the payment of such Award shall be delayed in
accordance with the provisions of such section to the extent necessary or
appropriate to avoid adverse tax consequences under Section 409A of the Code.
2.5.1. Subject to Sections 2.5.2 and 2.5.3 below, in the
event Employee's employment with the Company is terminated by the Company
without Cause prior to the declaration by the Company's Board of Directors of
its Q4 2006 dividend (the "Q4 Determination"), Employee shall be entitled to an
Award covering the Deferred Shares in satisfaction of the Deferred Shares Award
and shall not be entitled to any other Shares hereunder. Subject to Sections
2.5.2 and 2.5.3 below, in the event Employee's employment with the Company is
terminated by the Company without Cause on or after the Q4 Determination and
prior to December 31, 2007, Employee shall be entitled to an Award covering
that number of shares determined under Section 2.3 (regardless of whether the
Award is vested or unvested pursuant to Section 2.1) less the number of Shares
already paid to Employee in satisfaction of the Deferred Shares Award and shall
not be entitled to any other Shares hereunder.
2.5.2. In the event Employee's employment with the Company is
terminated by the Company without Cause within twelve (12) months following a
Change in Control that occurs prior to the Q4 Determination, Employee shall be
entitled to an Award covering the Deferred Shares in satisfaction of the
Deferred Shares Award and shall not be entitled to any other Shares hereunder.
2.5.3. In the event Employee's employment with the Company is
terminated by the Company without Cause within twelve (12) months following a
Change in Control that occurs following the Q4 Determination, Employee shall be
entitled to an Award covering that number of shares determined under Section
2.3 (regardless of whether the Award is vested or unvested pursuant to Section
2.1) less the number of Shares already paid to Employee in satisfaction of the
Deferred Shares Award and shall not be entitled to any other Shares hereunder.
2.6. Restriction on Transfer. The Deferred Shares Award, and
the right to receive the Award, may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of or encumbered, other than by
will or the laws of descent and distribution, and no attempt to transfer the
Deferred Shares Award, and the right to receive the Award, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee with
any interest or right in or with respect to the Deferred Shares Award or the
Award.
2.7. No Voting or Dividend Rights. Nothing contained in this Deferred
Shares Award Agreement shall be construed as conferring upon Employee the right
to vote or to consent or to receive notice as a stockholder of the Company or
any other matters or any rights whatsoever as a stockholder of the Company. No
dividends or interest shall be payable or accrued in respect of the Deferred
Shares Award Agreement or the Award prior to the issuance of the Shares upon
vesting of the Award. Only those dividends with a record date that falls on or
after the applicable stock issuance date shall be payable in respect of vested
Awards.
III. MISCELLANEOUS
3.1. Modification And Waiver. This Deferred Shares Award Agreement and
any provision hereof may be changed, waived, discharged or terminated only by
an instrument in writing signed by each of the parties hereto.
3.2. Violation of Laws. The Company shall not be required to deliver
any Award until the requirements of any federal or state securities laws, rules
or regulations, federal or state tax laws, rules or regulations or other laws
or rules (including the rules of any securities exchange) as may be determined
by the Company to be applicable are satisfied.
3.3. Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon delivery to the
Employee at his address then on file with the Company.
3.4. No Right to Employment. Neither the Plan, the granting of this
Deferred Shares Award, this Deferred Shares Award Agreement nor any other
action taken pursuant to the Plan or this Deferred Shares Award Agreement shall
constitute or be evidence of any agreement or understanding, express or
implied, that the Employee has a right to continue to provide services as an
officer or employee of the Company or any Parent, Subsidiary or affiliate of
the Company for any period of time or at any specific rate of compensation.
Further, the Company may at any time dismiss the Employee, free from any
liability or any claim under the Plan or this Deferred Shares Award Agreement,
except as otherwise expressly provided herein.
3.5. Entire Agreement. This Deferred Shares Award Agreement and the
Plan contain the entire understanding and agreement of the parties concerning
the subject matter hereof, and supersede all earlier negotiations and
understandings, whether written or oral, between the parties with respect
thereto. This Deferred Shares Award Agreement is made under and subject to the
provisions of the Plan, and all of the provisions of the Plan are hereby
incorporated by reference into this Agreement. In the event of any conflict
between the provisions of this Deferred Shares Award Agreement and the
provisions of the Plan, the provisions of the Plan shall govern. By signing
this Deferred Shares Award Agreement, the Employee confirms that he has
received a copy of the Plan and has had an opportunity to review the contents
thereof.
3.6. Interpretation. Any dispute regarding the interpretation of this
Deferred Shares Award Agreement shall be submitted by Employee or the Company
to the Company's Board of Directors for review. The resolution of such a
dispute by the Company's Board of Directors shall be final and binding on the
Company and the Employee. Any capitalized words used herein that are not
otherwise defined shall have the meaning ascribed to those terms in the Plan.
3.7. Governing Law. This Deferred Shares Award Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware applicable to agreements wholly to be executed and to be
performed therein. If any one or more of the provisions of this Deferred Shares
Award Agreement shall be held to be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
3.8. Dispute Resolution. Any dispute, claim, controversy or claim
arising out of, relating to or in connection with this Deferred Shares Award
Agreement, or the breach, termination or validity thereof, shall be brought
exclusively in any Federal or State court in the State of New York, County of
New York. Both parties hereto expressly and irrevocably submit to the
jurisdiction of said courts and irrevocably waive any objection which either of
them may now or hereafter have to the laying of venue of any action, suit or
proceeding arising out of or relating to this Deferred Shares Award Agreement
brought in such courts, irrevocably waive any claim that any such action, suit
or proceeding brought in any such court has been brought in an inconvenient
forum and further irrevocably waive the right to object, with respect to such
claim, action, suit or proceeding brought in any such court, that such court
does not have jurisdiction over such party. The parties hereto hereby
irrevocably consent to the service of process by registered mail, postage
prepaid, or by personal service within or without the State of New York.
Nothing contained herein shall affect the right to serve process in any manner
permitted by law.
3.9. Binding Effect On Successors. The Company may assign any of its
rights under this Deferred Shares Award Agreement. This Deferred Shares Award
Agreement shall be binding upon and inure to the benefit of the successors and
assigns of the Company. This Deferred Shares Award Agreement shall be binding
upon the Employee and Employee's heirs, executors, administrators, legal
representatives, successors and assigns.
3.10. Headings. The headings in this Deferred Shares Award Agreement
are for convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
3.11. Counterparts. This Deferred Shares Award Agreement may be
executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this Deferred Shares Award
Agreement to be duly executed this 21st day of December, 2005.
GLOBAL SIGNAL INC.,
a Delaware company
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer and
President
EMPLOYEE
By: /s/ Xxxxxx X. Xxxxxx, XX
-------------------------------------
Name: Xxxxxx X. Xxxxxx, XX
Schedule A
Option
Status Prior
Acceleration
and
Cancellation
$8.53 $18.00 Total
Exercisable 12/31/2005 61,500 184,500 246,000
Exercisable 12/31/2006 82,000 246,000 328,000
Total 143,500 430,500 574,000
Options to Be Accelerated
$8.53 $18.00 Total
Exercisable 12/31/2006 46,125 138,375 184,500
Options to be Cancelled
$8.53 $18.00 Total
Exercisable 12/31/2006 35,875 107,625 143,500
Schedule B
For purposes of the Deferred Shares Award Agreement, Deferred Shares shall be
equal to the sum of the following:
The quotient of (A) the product of (i) the excess of (x) the FMV of the
Company's Common Stock as of the Date of Grant minus (y) $8.53 and (ii) 35,875
shares divided by (B) the FMV of the Company's Common Stock as of the Date of
Grant plus
The quotient of (A) the product of (i) the excess of (x) the FMV of the
Company's Common Stock as of the Date of Grant minus (y) $18.00 and (ii)
107,625 shares divided by (B) the FMV of the Company's Common Stock as of the
Date of Grant.
By way of example, if the Company's FMV on the Date of Grant is equal to
$43.05, the Deferred Shares would be equal to:
(($43.05-$8.53)* 35,875)/$43.05) + ($43.05-$18.00)* 107,625)/$43.05 = 28,767 +
62,625 = 91,392 shares
