CHURCHILL DOWNS INCORPORATED RESTRICTED STOCK UNITS AGREEMENT 65,000 UNITS
Return to
10-Q
XXXXXXXXX
XXXXX INCORPORATED
65,000
UNITS
THIS
RESTRICTED STOCK UNITS AGREEMENT (the “Agreement”) is made as of the 18th day of
July, 2006 by and between Xxxxxx X. Xxxxx (the “Executive”), and Xxxxxxxxx Xxxxx
Incorporated (the “Company”), a Kentucky corporation with its principal place of
business at 000 Xxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
WITNESSETH:
WHEREAS,
the Company, has identified the Executive as the successor to the current
President and Chief Executive Officer who is stepping down from such office
effective August 14, 2006;
WHEREAS,
the Company has entered into an employment agreement between the Company and
the
Executive pursuant to which the Executive will become the President and Chief
Executive Officer of the Company effective August 14, 2006 (the “Employment
Agreement”);
WHEREAS,
under the terms of the Employment Agreement, and as a material inducement to
enter into the Employment Agreement, the Executive is to receive certain grants
of equity compensation as a consequence of his employment by the Company;
WHEREAS,
the Compensation Committee (the “Committee”) of the Board of Directors of the
Company at its meeting on July 12, 2006 authorized and directed the Company
to
make an award to the Executive of units entitling the Executive to receive
shares of the Company’s Common Stock (hereinafter defined) upon the expiration
of six months following the Executive’s termination of employment with the
Company under the terms and conditions set forth in this Agreement;
and
WHEREAS,
the parties desire to enter into this Agreement to set forth the terms and
conditions of such award.
NOW,
THEREFORE, in consideration of the foregoing and the mutual undertakings herein
contained, and for other good and valuable consideration, the mutuality, receipt
and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Grant
of Units.
Subject
to the further terms, conditions and restrictions contained in this Agreement,
in consideration for services to be performed by the Executive as an employee
of
the Company and its subsidiaries, as of the date of this Agreement, the Company
grants to the Executive 65,000 restricted stock units (“Restricted Stock Units”)
having the characteristics, and entitling the Executive to the benefits,
hereinafter described. Each Restricted Stock Unit represents an unfunded
contractual right of the Executive to receive from the Company one share of
the
Company’s Common Stock upon the Executive’s termination of employment with the
Company, subject to the other terms and conditions of this Agreement. As long
as
the Units remain unvested and forfeitable per Section 6 of this Agreement,
such Units shall be deemed to be, and are referred to in this Agreement as,
the
“Restricted Units”.
2. Right
to Receive Common Stock.
The
Executive shall have no rights of a shareholder with respect to the Company’s
Common Stock as a result of the Units. The Executive shall not be a shareholder
unless and until the Executive receives a certificate for shares of Common
Stock
to which the Executive becomes entitled hereunder. Upon the expiration of six
months following the Executive’s termination of employment with the Company (or
upon the Executive’s earlier death following such termination), the Executive
(or the Executive’s representative as the case may be) shall be entitled to
receive one share of Common Stock for each Unit granted hereunder which is
not a
Restricted Unit and which has not previously been forfeited pursuant to Section
5 (including a forfeiture resulting from such employment termination). At the
time the Executive receives a share of Common Stock, and for each such share
of
Common Stock received by the Executive, the Executive shall also receive (a)
a
cash payment from the Company equal to each cash dividend declared and paid
by
the Company on a single share of Common Stock from and after the date on which
the Unit which entitles the Executive to such share of Common Stock became
non-forfeitable under Section 6 hereof, plus (b) a cash payment equivalent
to
simple interest on each amount determined in clause (a) at the annual rate
of
three (3%) percent for the period elapsed from the date such dividend was paid
on such share of Common Stock to the time the payment under clause (a) is made
to the Executive.
3. Adjustments
in Restricted Units.
(a) In
the
event of any change in the outstanding Common Stock by reason of a stock
dividend or distribution (or distribution on Common Stock of any security
convertible into securities of the Company), recapitalization, merger,
consolidation, split-up, combination, subdivision, reclassification, exchange
of
shares or the like, the Committee shall make equitable adjustments in the
Restricted Units so that the shares of Common Stock represented by such Units
represent the same percentage of the Company’s equity as was the case
immediately prior to such change. Any new, additional or different securities
to
which the Executive shall be entitled in respect of Restricted Units by reason
of such adjustment shall be subject to the same terms, conditions and
restrictions as the Units so adjusted.
(b) In
the
event Company merges, consolidates or effects a share exchange with another
entity, or all or a substantial portion of Company’s assets or outstanding
capital stock are acquired (whether by merger, purchase or otherwise) by another
entity (any such entity being hereafter referred to as the “Successor”) each
share of Company Common Stock represented by a Restricted Stock Unit shall
automatically be converted into and replaced by shares of common stock, or
such
other class of securities having rights and preferences no less favorable than
Company’s Common Stock, of the Successor, and the number of shares represented
by a Restricted Stock Unit shall be correspondingly adjusted, so that Executive
shall have the right to that number of shares of common stock of the Successor
that have a value equal, as of the date of the merger, conversion or
acquisition, to the value, as of the date of the merger, conversion or
acquisition, of the shares of Company Common Stock represented by the Restricted
Stock Units.
4. Restrictions.
The
Units, and all rights with respect to such Units, may not be sold, assigned,
transferred, exchanged, pledged, hypothecated or otherwise encumbered or
disposed of and shall be subject to the risk of forfeiture contained in Section
5 of this Agreement.
5. Forfeiture
of Restricted Units.
Subject
to Section 6 below, in the event the Executive’s employment with the Company and
its subsidiaries is terminated for any reason, such event shall constitute
an
“Event of Forfeiture” and all Units which at that time are Restricted Units
shall thereupon be forfeited by the Executive to the Company without payment
of
any consideration by the Company, and neither the Executive nor any heir,
personal representative, successor or assign of the Executive shall have any
right, title or interest in or to such Restricted Units or any other property.
6. Vesting
of Units.
(a) The
Restricted Units shall become vested and non-forfeitable as
follows:
|
Vesting
Date
|
Number
of Units to Vest
|
|
September
30, 2006
|
1,625
|
|
December
31,2006
|
3,250
|
|
March
31, 2007
|
3,250
|
|
June
30, 2007
|
3,250
|
|
September
30, 2007
|
3,250
|
|
December
31, 2007
|
3,250
|
|
March
31, 2008
|
3,250
|
|
June
30, 2008
|
3,250
|
|
September
30, 2008
|
3,250
|
|
December
31, 2008
|
3,250
|
|
March
31, 2009
|
3,250
|
|
June
30, 2009
|
3,250
|
|
September
30, 2009
|
3,250
|
|
December
31, 2009
|
3,250
|
|
March
31, 2010
|
3,250
|
|
June
30, 2010
|
3,250
|
|
September
30, 2010
|
3,250
|
|
December
31, 2010
|
3,250
|
|
March
31, 2011
|
3,250
|
|
June
30, 2011
|
3,250
|
|
August
14, 2011
|
1,625
|
In
the
event: (i) the Executive’s employment is terminated by the Company other than
for Cause, death or Disability or (ii) the Executive resigns for Good Reason,
for purposes of determining the Units which have become non-forfeitable under
this Section 6, the Executive’s employment shall be considered to have continued
through the last day of the calendar quarter in which his termination occurs.
(b) In
the
event of a Change in Control during the Employment Term (as defined in the
Employment Agreement), the Executive shall receive accelerated vesting of fifty
percent (50%) of the then-unvested Restricted Units. The Restricted Units that
are subject to accelerated vesting and non-forfeiture pursuant to this Section
6(b) shall be taken pro-rata from each then-unvested tranche of the Restricted
Units, and the remaining portion of each tranche shall vest according to Section
6(a) above, subject to potential accelerated vesting pursuant to Section 6(c)
below.
(c) If,
during the 2-year period following a Change in Control during the Employment
Term: (i) Executive is terminated by the Company other than for Cause (as
defined in the Employment Agreement), death or Disability, or (ii) Executive
voluntarily resigns for Good Reason (as defined in the Employment Agreement),
all Restricted Units shall become fully vested and non-forfeitable as of the
date of such termination.
7. Withholding
Requirements.
Whenever the Executive becomes entitled to receive Common Stock with respect
to
the Units pursuant to Section 2, the Company shall have the right to (i)
withhold from sums due to the Executive; (ii) require the Executive to remit
to
the Company; or (iii) retain shares of Common Stock otherwise deliverable to
the
Executive; in an amount sufficient to satisfy any Federal, state or local
withholding tax requirements prior to making such payments or delivering any
such shares to the Executive.
8. Effect
Upon Employment.
Nothing
contained in this Agreement shall confer upon the Executive the right to
continue in the employment of the Company or its subsidiaries or affect any
right that the Company or its subsidiaries may have to terminate the employment
of the Executive.
9. Amendment.
This
Agreement may not be amended, modified or supplemented except with the consent
of the Committee and by a written instrument duly executed by the Executive
and
the Company.
10. Binding
Effect.
This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their heirs, personal representatives, successors and assigns.
Executive accepts the award of Units hereunder subject to all of the terms
and
conditions of this Agreement. Executive hereby agrees to accept as binding,
conclusive and final all reasonable decisions and interpretations of the
Committee upon any questions arising under this Agreement, including without
limitation, the interpretation of any restrictions imposed upon the
Units.
11. Notices.
Notices
shall be deemed delivered if delivered personally or if sent by registered
or
certified mail to the Company at its principal place of business, as set forth
above, and to Executive at the address that most currently appears on the
records of the Company.
12. Investment
Representation.
If the
shares of Common Stock to which the Executive becomes entitled under this
Agreement as a result of the Units are not registered under the Securities
Act
of 1933, as amended, pursuant to an effective registration statement, the
Executive, if the Committee shall reasonably deem it advisable, may be required
to represent and agree in writing (i) that any shares of Common Stock acquired
by the Executive as a result of the Units under this Agreement will not be
sold
except pursuant to an effective registration statement under the Securities
Act
of 1933, as amended, or pursuant to an exemption from registration under such
Act, and (ii) that the Executive has acquired such shares for his own account
and not with a view to the distribution thereof.
13. Compliance
with Section 16(b).
This
Agreement and the entitlement of the Executive to receive any shares of Common
Stock for the Units awarded hereunder is intended to comply with all applicable
conditions of Rule 16(b)-3 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended. All transactions involving the
Company’s executive officers are subject to such conditions, regardless of
whether the conditions are expressly set forth in this Agreement. Any provision
of this Agreement that is contrary to a condition of Rule 16b-3 shall not
apply.
14. Registration
of Shares.
The Company shall use its reasonable best efforts to file, within 90 days
following the execution of this Agreement, a registration statement with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Act of 1933, as amended (the "Act"), covering the shares to be received pursuant
to the Units, and thereafter to cause such registration statement to become
effective in accordance with the Act and the rules and regulations adopted
by
the Commission thereunder.
15. Code
Section 409A.
It is
intended that any amounts payable under this Agreement and the Company’s and
Executive’s exercise of authority or discretion hereunder shall comply with
Internal Revenue Code Section 409A (including the Treasury regulations and
other
published guidance relating thereto) so as not to subject Executive to the
payment of any interest or additional tax imposed under Code Section 409A.
To
the extent any amount payable under this Agreement would trigger the additional
tax imposed by Code Section 409A, the Agreement shall be modified to avoid
such
additional tax.
16. Compliance
With Other Laws And Regulations.
The
rights of the Executive and the obligations of Company under this Agreement
shall be subject to all applicable federal and state laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
Company shall not be required to issue or deliver certificates for shares of
Common Stock before [i] the listing of such shares on any stock exchange or
over-the-counter market, such as NASDAQ, on which the Common Stock may then
be
listed or traded, and [ii] the completion of any registration or qualification
of any governmental body which Company shall, in it sole discretion, determines
to be necessary or advisable. The Company agrees to use its best efforts to
procure any such listing, registration or qualification.
17. Severability.
The
invalidity or unenforceability of any provision of the Agreement shall not
affect the validity or enforceability of the remaining provisions of the
Agreement, and such invalid or unenforceable provision shall be stricken to
the
extent necessary to preserve the validity and enforceability of the Agreement,
with the parties agreeing in such event to make all reasonable efforts to
replace such invalid or unenforceable provision with a valid provision that
will
place the parties in approximately the same economic position as contemplated
hereunder.
18. Governing
Law; Jurisdiction.
This
Agreement shall be governed by the laws of the Commonwealth of Kentucky. The
Executive consents to the exclusive jurisdiction of the courts of the
Commonwealth of Kentucky and of any federal court located in Jefferson County,
Kentucky in connection with any action or proceeding arising out of or relating
to this Agreement, any document or instrument delivered pursuant to or in
connection with this Agreement, or any breach of this Agreement or any such
document or instrument.
19. Entire
Agreement.
This
Agreement contains the entire agreement between the parties hereto with respect
to the subject matter hereof.
20. Capitalized
Terms.
Capitalized terms not otherwise defined in this Agreement shall have the meaning
given them in the Employment Agreement.
21. Counterparts
and Signatures.
This
Agreement may be signed in counterparts, each of which shall be an original,
with the effect as if the signatures thereto and hereto were upon the same
instrument. Signatures conveyed by facsimile or PDF file shall constitute
original signatures.
(Signature
page follows.)
6
IN
WITNESS WHEREOF, the Company and the Executive have executed and delivered
this
Agreement as of the date first above written.
|
XXXXXX
X. XXXXX
|
|
|
/s/
Xxxxxx X. Xxxxx
|
|
|
XXXXXXXXX
XXXXX INCORPORATED
By:
/s/ Xxxxxx X. Xxxxx
Xxxxxx
X. Xxxxx,
Authorized
Representative
of
the Board of Directors
|
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