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EXHIBIT 10.5
MOTOR CARGO INDUSTRIES, INC.
RESTRICTED STOCK AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into this 2nd day of
October, 1997 by and between MOTOR CARGO INDUSTRIES, INC., a Utah corporation
(the "Company"), and XXXXX X. XXXXXXXX, an individual residing in the State of
Utah (the "Participant"). The Company and the Participant are later sometimes
collectively referred to as the "Parties."
R E C I T A L S:
The Participant is a valuable and trusted key employee of the Company
who has played, and will continue to play, a significant role in the financial
success of the Company. The Company wishes to create an added incentive on the
part of the Participant to advance the interests of the Company by granting to
the Participant an opportunity to acquire shares of the common stock of the
Company as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual promises
contained herein, and for other good and valuable consideration, the parties
agree as follows:
1. Purpose.
The purpose of this Agreement is to provide the Participant with an
opportunity to acquire shares of the common stock, no par value, of the Company
(the "Common Stock") as described in this Agreement, thereby providing an
incentive to the Participant to enhance the long-term value of the Company and
to remain employed by the Company.
2. Grant Date; Termination of Agreement.
The grant by the Company of shares of the Common Stock to the
Participant set forth in Section 3 shall take place on the date on or before
December 31, 1997 (the "Grant Date") on which the initial public offering of
shares of the Common Stock (the "Initial Public Offering") is consummated. If
the Initial Public Offering is not consummated prior to December 31, 1997, this
Agreement shall, as of such date, terminate in its entirety and be null and void
and of no further force or effect.
3. Grant of Right to Receive Common Stock.
The Company hereby grants to the Participant the right to receive a
total of twenty thousand (20,000 ) shares of the Common Stock (the "Granted
Shares") on the Grant Date. The Company grants the right to receive the Granted
Shares to the Participant, subject to the terms and conditions of this
Agreement, as partial consideration for the services to be rendered by the
Participant to the Company. No consideration other than the rendering of such
services (and
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continuing employment until release of the Granted Shares as provided in Section
6) shall be required in exchange for the right to receive the Granted Shares,
and such services shall be deemed to be payment in full by the Participant for
the Granted Shares.
4. Share Certificates.
Four (4) stock certificates, each representing the Participant's
ownership of twenty-five percent (25%) of the Granted Shares shall be issued in
the name of the Participant and delivered to the Company as soon as practicable
on or after the Grant Date. All of the Granted Shares represented by such
certificates shall be deemed to be issued to the Participant on and after the
Grant Date and to be outstanding for all purposes in accordance with the terms
of this Agreement. The Participant shall deliver to the Company an undated stock
power duly endorsed in blank with respect to each such certificate immediately
after the issuance thereof. The Granted Shares and the certificates representing
the Granted Shares shall be held by the Company on behalf of the Participant
until (i) the Granted Shares are forfeited as provided in Section 6 (in which
event the certificates representing any Granted Shares that have been so
forfeited shall be canceled, and the shares of Common Stock represented by such
certificates shall revert to authorized but unissued shares of the Common Stock)
or (ii) the Granted Shares are released to the Participant as provided in
Section 6 (in which event the certificates representing any of the Granted
Shares to be so released shall be transferred to the Participant as provided in
Section 7 or to his beneficiary or personal representative as provided in
Section 8) and the blank stock powers shall be destroyed.
5. Dividends and Voting Rights.
On and after the Grant Date, the Participant shall be entitled to
receive cash dividends on all the Granted Shares, if any, when paid by the
Company and shall have full voting rights with respect to the full number of the
Granted Shares, even though any of the Granted Shares with respect to which such
dividends are paid or vote exercised shall not have been released to the
Participant and shall be subject to forfeiture as provided in Section 6.
Certificates representing any securities of the Company distributed in a
transaction described in Section 13 or otherwise with respect to any of the
Granted Shares held for the Participant by the Company shall be delivered to the
Company to be held with such Granted Shares and shall thereafter become part of
the Granted Shares for all purposes of this Agreement, subject to being released
or being forfeited as provided in Section 6, as if such distributed securities
had been granted to the Participant on the Grant Date. The Participant shall
deliver to the Company stock powers duly endorsed in blank with respect to all
certificates representing any such distributed securities.
6. Release and Forfeiture of Granted Shares.
The Granted Shares held for the Participant by the Company pursuant to
Section 4 shall be released to the Participant and/or forfeited by the
Participant as set forth below:
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a. Release Before Termination of Employment. During the term of the
Participant's continuous employment with the Company, the Granted Shares
shall be released by the Company to the Participant in the following
amounts on the following dates:
Amount Date
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5,000 shares January 1, 1998
5,000 shares January 1, 1999
5,000 shares January 1, 2000
5,000 shares January 1, 2001
For purposes of this Section 6, continuous employment shall include
employment with any combination of the Company and one or more
subsidiaries, and a temporary leave of absence with the consent of the
Company shall not be deemed to be a break in continuous employment.
b. Forfeiture due to termination of employment. Except as otherwise
set forth in this Section 6, if the employment of the Participant is
terminated by the Participant, any of the Granted Shares not previously
released in accordance with this Section 6 shall be forfeited immediately
upon the effective date of the termination and the Participant shall have
no further rights with respect to such Granted Shares.
c. Termination for Cause. If the employment of the Participant is
terminated for reasons which constitute termination for cause (as later
defined), he shall forfeit all rights to any and all of the Granted Shares
that have not been released to him on or before the effective date of such
termination. For purposes of this Section 6(c), "termination for cause"
shall mean the termination of the employment of the Participant on account
of (i) gross negligence or gross dereliction of the duties that have been
assigned to the Participant by the Company, (ii) such negligence or
misconduct as shall constitute a breach of the covenants and obligations of
the Participant under this Agreement, (iii) insubordination or action by
the Participant that is detrimental to the interests of the Company (as
determined by the Board of Directors), (iv) the failure or refusal of the
Participant to comply with the provisions of this Agreement or (v) the
Participant's being convicted by any duly constituted law enforcement
agency or authority of a crime involving moral turpitude. Notwithstanding
the foregoing, disability because of illness or accident (other than the
addiction to alcohol or drugs) shall not constitute a basis for termination
for cause.
d. Involuntary Termination without Cause. If the employment of the
Participant is terminated by the Company, but not under circumstances which
constitute termination for cause or termination as the result of
disability, the following number of
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Granted Shares held by the Company pursuant to Section 4 that have not
theretofore been released to the Participant pursuant to Section 6(a) shall
be released to the Participant as soon as practicable following such
termination: (i) if such termination occurs before January 1, 1999, that
number of the Granted Shares that equals ten thousand (10,000 ) minus the
number of the Granted Shares released to the Participant before the
effective date of such termination; (ii) if such termination occurs on or
after January 1, 1999, that number of Granted Shares that equals twenty
thousand (20,000) minus the number of Granted Shares released to the
Participant before the effective date of such termination.
e. Disability. In the event that the employment of the Participant
is terminated as a result of the disability (as later defined) of the
Participant, the following number of the Granted Shares held by the Company
pursuant to Section 4 that have not theretofore been released to the
Participant pursuant to Section 6(a) shall be released to the Participant
as soon as practicable following the effective date of such termination:
(i) if such termination occurs before January 1, 1999, that number of
Granted Shares that equals ten thousand (10,000) minus the number of the
Granted Shares released to the Participant before the effective date of
such termination; (ii) if such termination occurs on or after January 1,
1999, that number of the Granted Shares that equals twenty thousand
(20,000) minus the number of Granted Shares already released to the
Participant before the date of such termination. For purposes of this
Section 6(e), "disability" shall mean the inability to work or function as
a result of illness, accident or disease, in a manner consistent with the
Participant's present employment responsibilities with the Company, such
disability to be reasonably determined by the Board of Directors.
f. Death. In the event the Participant dies on or before January 1,
2001, the following number of the Granted Shares held by the Company
pursuant to Section 4 that have not been released pursuant to Section 6(a)
shall be released to the beneficiary or beneficiaries designated by the
Participant pursuant to Section 8, or lacking such a designation to the
Participant's estate, as soon as practicable following such death: (i) if
such death occurs before January 1, 1999, that number of the Granted Shares
that equals ten thousand (10,000) minus the number of the Granted Shares
released to the Participant before the date of such death; (ii) if such
death occurs on or after January 1, 1999, that number of the Granted Shares
that equals twenty thousand (20,000) minus the number of the Granted Shares
released to the Participant before the date of such death.
g. Acceleration of Release. Notwithstanding the foregoing provisions
of this Section 6, the Board of Directors of the Company may, in its sole
and absolute discretion, accelerate the release of all or part of the
Granted Shares or may increase the number of the Granted Shares to be
released to the Participant or in the event of his death, to his
beneficiaries or estate, based on criteria satisfactory to the Board of
Directors.
7. Distribution of Certificates upon Release of the Granted Shares.
Upon the release of any of the Granted Shares in accordance with
Section 6, the
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Company shall deliver to the Participant the certificate representing such
Granted Shares (or to his Beneficiary or his estate, as the case may be, if the
release of the Granted Shares occurs on account of the Participant's death), and
the recipient shall have full and immediate rights to the shares of Common Stock
represented by such certificate (except to the extent of restrictions imposed by
law).
8. Designation of Beneficiary.
The Participant may designate a beneficiary or beneficiaries by an
instrument filed by the Participant with the Company. In the absence of such a
designation, the Participant's personal representative, in his or her capacity
as such, shall be deemed to be the beneficiary of the Participant for all
purposes of this Agreement. Any beneficiary designation may be revoked by the
Participant or superseded by the filing of a new designation at any time prior
to the Participant's death.
9. Nonassignability of Granted Shares.
The Granted Shares that have not been released as provided in Section
6 shall not be assignable or transferrable by the Participant.
10. No Right or Obligation of Continued Employment.
Nothing contained in this Agreement shall require the Company or its
subsidiaries to continue to employ the Participant, nor shall the Participant be
required to remain in the employment of the Company or its subsidiaries. The
Granted Shares shall not be affected by any change in the Participant's duties
or position as long as the Participant remains an employee of the Company or its
subsidiaries.
11. Withholding.
The Company may require the Participant or other recipient of any
distribution of the Granted Shares under this Agreement to pay to the Company
the amount of any tax or other amount required by any governmental authority to
be withheld and paid over by the Company to such authority for the account of
the person entitled to such distribution. The recipient may satisfy such
obligation in whole or in part by electing to have the Company withhold from the
distribution shares of the Common Stock. In such an event, the number of shares
of the Common Stock withheld shall have a fair market value as of the date that
the amount of tax to be withheld is determined equal to the amount of such
obligation being satisfied.
12. Retirement Plans.
In no event shall any amounts accrued or payable under this Agreement
be treated as compensation for the purpose of determining the amount of
contributions or benefits to which the Participant shall be entitled or under
any plan intended to be a qualified plan within the
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meaning of Section 401(a) of the Internal Revenue Code, or any excess plan
providing benefits that would have been payable under such a qualified plan but
for legal limitations on contributions or benefits that may be made to or
payable from any such plan.
13. Adjustments in Shares.
If there is any change in the shares of the Common Stock because of
merger, consolidation or reorganization involving the Company, or if the Board
of Directors of the Company declares a stock dividend or stock split that is
distributable in shares of the Common Stock, or if there is a change in the
capital stock structure of the Company affecting the Common Stock, the number of
the Granted Shares held by the Company pending release pursuant to Section 6 of
this Agreement shall be adjusted in proportion to the increase or decrease in
the number of the shares of the Common Stock resulting from such change, stock
dividend or stock split, or change in capital stock structure.
14. Subsidiary Defined.
For purposes of this Agreement, "Subsidiary" shall mean a corporation
(other than the Company) in an unbroken chain of corporations beginning with the
Company if each corporation other than the last corporation in the unbroken
chain owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.
15. Amendment and Termination.
This Agreement may be amended or terminated at any time by the Board
of Directors of the Company, provided that such termination or amendment shall
not, without the consent of the Participant, affect such Participant's rights
with respect to the Granted Shares granted to him prior to the effective date of
such termination or amendment.
16. Other Agreements.
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Utah, which internal laws exclude any
provision or interpretation of such laws that would call for, or permit, the
application of the laws of any other state or jurisdiction, and any dispute
arising therefrom and the remedies available shall be determined solely in
accordance with such internal laws.
This Agreement shall not be modified by any oral agreement, either
express or implied, and all amendments or modifications of this Agreement shall
be in writing and be signed by both of the Parties. The provisions of this and
the immediately preceding sentence themselves may not be amended or modified,
either orally or by conduct, either express or implied, and it is the declared
intention of the Parties that no provision of this Agreement,
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including said two sentences, shall be modifiable in any way or manner
whatsoever other than through a written document signed by both of the Parties.
The section headings in this Agreement are for the purpose of
convenience only and shall not limit or otherwise affect any of the terms of
this Agreement.
Where the context requires, the singular shall include the plural, the
plural shall include the singular, and any gender shall include all other
genders.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"COMPANY"
MOTOR CARGO INDUSTRIES, INC.,
a Utah corporation
By:
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Title:
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Attest:
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Secretary
"PARTICIPANT"
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Xxxxx X. Xxxxxxxx
Witness:
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Name:
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