PERFORMANCE SHARE AWARD AGREEMENT
Exhibit
10(xviii)
X.X.
XXXXXXXX, INC.
This Performance
Share Award Agreement (this “Agreement”) is entered into as of [date] between
X.X. Xxxxxxxx, Inc., an Illinois corporation (the “Company”) and the undersigned
Company executive (the “Executive”).
Pursuant to the
X.X. Xxxxxxxx, Inc. 2005 Incentive Plan (the “Plan”), the Company desires to
award to the Executive as hereinafter provided certain performance shares (the
“Performance Shares”), entitling the Executive to receive shares of the
Company’s common stock (“Common Stock”) based upon the Company’s attainment of
certain long-term performance goals. This award of Performance
Shares is in consideration of the Executive’s agreement to enter into an Unfair
Competition Agreement (the “Unfair Competition Agreement”) between the Company
and the Executive concurrently with this Agreement. In turn, the Executive
desires to enter into the Unfair Competition Agreement and accept the award of
Performance Shares, on the terms and conditions set forth in this Agreement, the
Plan and the Unfair Competition Agreement. Capitalized terms used but
not defined in this Agreement have the meanings specified in the
Plan.
NOW, THEREFORE, in
consideration of the mutual promises set forth below and in the Unfair
Competition Agreement, the parties hereto agree as follows:
|
1.
|
General. This
award is governed by and subject to the terms and conditions of this
Agreement, the Plan and the
Unfair Competition Agreement (the terms of which are hereby incorporated
herein by reference). In general, the Executive will be
entitled to receive a number of Performance Shares determined by the
Company’s performance against its sales growth target (as described in
Section 2 below), with the vesting of those Performance Shares being
subject to the Company’s achievement of its return on invested capital
target (as described in Section 3
below).
|
|
2.
|
Grant of Performance Shares;
[Next Fiscal Year] Sales Target. The Company hereby
awards to the Executive a total of _______ Performance Shares (the “Target
Number”), such number being subject to possible adjustment as
follows. The actual number of Performance Shares which the
Executive will receive will depend on the Company’s total net sales during
its [next fiscal year]. Such number will be calculated in
accordance with the following
table:
|
|
If,
the Company’s [Next Fiscal Year]
sales
are at:
|
Then
the number of Performance
Shares
will be:
|
|
|
Less
than
|
$_________
|
Zero
(0)
|
|
$_________
|
Fifty percent
(50%) of the Target Number
|
|
|
$_________
$_________ or
more
|
One hundred
percent (100%) of the Target
Number
Two hundred
percent (200%) of the Target
Number
|
|
|
|
Amounts
between the foregoing numbers will be interpolated as
necessary. For example, if [next fiscal year] net sales are
$_____, then the Executive would receive ______________ percent (__%) of
the Target Number of Performance
Shares.
|
|
3.
|
Vesting; ROIC
Target. The vesting of the Performance Shares will
depend upon the Company’s average return on invested capital (“ROIC”)
during the period of three fiscal years beginning with the [current]
fiscal year, i.e., the Company’s [current], [next], [2 years out] fiscal
years (the “Measuring Period”). For this purpose, ROIC means
the Company’s operating earnings divided by its net working
assets. Vesting will be determined in accordance with the
following table:
|
|
If
the Company’s average ROIC
during
the Measuring Period is:
|
Then
the following percentage of
Performance
Shares will vest:
|
|
Less than ___
percent (__%)
|
Zero
(0)
|
|
____ percent
(__%) or more
|
One hundred
percent (100%)
|
|
|
Amounts
between the foregoing numbers will not be
interpolated. In other words, the Performance Shares will
either vest at one hundred percent (100%) or they will not vest at
all. If the Performance Shares vest, then in settlement of the
Performance Shares, the Executive will receive a number of shares of
Common Stock equal to the number of Performance Shares determined under
Section 2 above, subject, however, to the withholding provisions
below. If the Performance Shares do not vest, then they will be
forfeited in full and the Executive shall have no further rights with
respect to the award hereunder.
|
|
4.
|
Receipt by the Executive of the
Plan. The Executive acknowledges receipt of the Plan
booklet which contains the entire Plan. The Executive represents and
warrants that he has read the Plan and that he agrees that all Performance
Shares awarded under it shall be subject to all of the terms and
conditions of the Plan, including but not limited to the exclusive right
of the Committee to interpret and determine the terms and provisions of
the Performance Share Award Agreements and the Plan and to make all
determinations necessary or advisable for the administration of the Plan,
all of which interpretations and determinations shall be final and
binding. Without limiting the generality of the foregoing, the
Committee shall have the discretion to adjust the terms and conditions of
awards of Performance Shares to correct for any windfalls or shortfalls in
such awards which, in the Committee’s determination, arise from factors
beyond the awardees’ control, provided, however, that the Committee’s
authority with respect to any award to a “covered employee,” as defined in
Section 162(m)(3) of the Code, shall be limited to decreasing, and not
increasing, such award.
|
|
5.
|
Tax
Deposit. If the Performance Shares shall vest, the
Executive shall deposit with the Company an amount of cash equal to the
amount determined by the Company to be withheld upon such vesting for any
withholding taxes, FICA contributions, or the like under any federal or
state statute, rule, or regulation. The Company may withhold,
and the Committee may in its discretion permit the Executive to elect
(subject to such conditions as the Committee shall require) to have the
Company withhold, a number of shares of Common Stock having a fair market
value on the date that the amount of tax to be withheld is determined
equal to the required statutory minimum withholding. The
Company shall not issue and deliver any of its Common Stock upon the
vesting and settlement of the Performance Shares until and unless the
Executive has made the deposit required herein or proper provision for
withholding has been made.
|
|
6.
|
Agreement to
Serve. Except in the case of an event causing
acceleration of vesting in accordance with the Plan, the Executive agrees
to remain in the employ of the Company or its subsidiaries for a period of
at least one (1) year from the award date of the Performance Shares,
subject to the right of the Company to terminate such
employment.
|
|
7.
|
Other Terms and Conditions Applicable to the Performance Shares. |
|
|
a. Rights of
Shareholder. The Executive shall not have any voting
rights with respect to the Performance Shares. The Executive
shall have no right to receive dividend equivalent payments with respect
to the Performance Shares.
|
|
|
b. Termination of
Employment. If the Executive’s employment terminates
during the Measuring Period for any reason other than retirement,
disability or death, then the Performance Shares will be forfeited in full
and the Executive shall have no further rights with respect to the award
hereunder.
|
|
|
c.
Retirement. If the Executive’s employment with the
Company terminates during the Measuring Period by reason of retirement,
then the Executive will be entitled to receive in settlement of the
Performance Shares a number of shares of Common Stock equal to the product
of (x) the number of Performance Shares, if any, which subsequently vest
under Section 3 above, multiplied by
(y) a fraction, the numerator of which is the number of months during the
Measuring Period that the Executive was employed by the Company and the
denominator of which is the total number of months in the Measuring
Period, i.e., 36 months. For purposes of the foregoing calculation, the
Executive will be deemed to have been employed by the Company during the
month that his employment terminates if, and only if, such termination
occurs on or after the fifteenth (15th)
calendar day of that
month.
|
|
|
d. Disability or
Death. If the Executive’s employment with the Company
terminates during the Measuring Period by reason of disability (defined
below) or death, then the Executive or the Executive’s estate, as the case
may be, will be entitled to receive in settlement of the Performance
Shares a number of shares of Common Stock calculated in the same manner as
under Subsection c immediately above, provided, however, that if such
termination of employment occurs during the first fiscal year of the
Measuring Period, then for purposes of such calculation the number of
Performance Shares referred to in clause (x) of such calculation shall be
determined as though the Company had met, but not exceeded, its sales
growth target and 100 percent of such Performance Shares had
vested. For purposes of the foregoing, the term “disability”
means the Executive’s inability to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment that can be expected to result in death or that has lasted for
a continuous period of not less than twelve (12)
months.
|
|
8.
|
Severability. The
provisions of the Agreement shall be severable, and in the event that any
provision of it is found to be unenforceable, all other provisions shall
be binding and enforceable on the parties as drafted. In the
event that any provision is found to be unenforceable, the parties consent
to the Court’s modification of that provision in order to make the
provision enforceable, subject to the limitations of the Court’s powers
under the law.
|
|
9.
|
Venue. The
Executive acknowledges that, in the event that a determination of the
enforceability of this Agreement is sought, or any other judicial
proceedings are brought pertaining to this Agreement, the Company has the
choice of venue and the preferred venue for such proceedings is Lake
County, Illinois.
|
|
10.
|
Governing
Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois, excluding any
conflicts or choice of law rules or principles
thereof.
|
IN
WITNESS WHEREOF, the Company has caused this Performance Share Award Agreement
to be executed by a duly authorized Officer of the Company and the Executive
hereby agrees to all the terms and conditions set forth above.
|
X.X.
XXXXXXXX, INC.
|
|
|
By:
|
|
|
Xxxxx X.
Xxxx
|
|
|
President and
Chief Executive Officer
|
|
|
Executive
(Signature)
|
|
|
Executive
(Print Name)
|
|
|
|
Date
|
