PROTOCOL SYSTEMS, INC.
RESTRICTED STOCK AWARD AGREEMENT
TO: Xxxxx X. Xxxxxxxx Date of Grant: April 3, 1998
We are pleased to inform you that you have been selected by the Board
of Directors (the "Board") of Protocol Systems, Inc. (the "Company") to
receive a Restricted Stock Award (the "Award") of 20,000 shares of the
Company's $.01 par value common stock ("Shares"). This Award is subject to
the following terms and conditions.
1. VESTING: The Shares will vest and become deliverable to you according
to the following schedule:
Date On and After Which Shares Vest Number of Shares Vested
----------------------------------- ------------------------
April 3, 1998 5,000 shares
July 3, 1998 5,000 shares
October 3, 1998 5,000 shares
January 3, 1999 5,000 shares
2. WITHHOLDING TAXES: As a condition to the delivery of the Shares, you
must make such arrangements as the Company may require for the satisfaction of
any federal, state or local withholding tax obligations that may arise in
connection with issuance and delivery of the Shares.
3. TERMINATION: If your relationship with the Company ceases because your
employment with the Company terminates for any reason, including death or
disability, then, notwithstanding the vesting schedule set forth above, you
will be entitled to receive a number of Shares that is equal to the same
percentage of the Shares that would vest on the next vesting date as the
number of days you were employed during that vesting period divided by the
number of days in the vesting period.
4. TRANSFERABILITY OF AWARD: This Award and the rights and privileges
conferred hereby may not be transferred, assigned, pledged or hypothecated in
any manner (whether by operation of law or otherwise) other than by will or by
the applicable laws of descent and distribution and shall not be subject to
execution, attachment or similar process. Any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this Award or of any right or
privilege conferred hereby, contrary to the provisions hereof, or the sale or
levy or any attachment or similar process upon the rights and privileges
conferred hereby will be null and void. Notwithstanding the foregoing, to the
extent permitted by applicable law and regulation, the Company, in its sole
discretion, may permit you to transfer this Award and the rights and
privileges conferred hereby.
5. CONTINUATION OF RELATIONSHIP: Nothing in this Award will confer upon
you any right to continue in the employ or other relationship of the Company,
or to interfere in any way with the right of the Company to terminate your
employment or other relationship with the Company at any time.
6. DETERMINATION OF BOARD TO BE FINAL: All determinations referred to
herein will be made by the Board, and such determinations will be final,
binding and conclusive.
7. INVESTMENT INTENT: You represent and warrant to the Company that you
are acquiring the Shares for your own account and investment and not with a
view to, or for sale in connection with, any distribution.
8. RESTRICTED SECURITIES; LEGEND: You understand that the Shares have not
been registered under the Securities Act of 1933 in reliance upon an exemption
from registration. Such exemption depends upon, among other things, the bona
fide nature of your investment intent stated in this Agreement. You under-
stand that the Shares must be held indefinitely, unless the Shares
subsequently are registered under the Securities Act of 1933 or unless an
exemption from registration is otherwise available. You understand that the
Company is not obligated to register the Shares. You agree that the Shares
may not be offered, sold, transferred, pledged, or otherwise disposed of in
the absence of an effective registration statement under the Securities Act of
1933 and applicable state securities laws or an opinion of counsel acceptable
to the Company that such registration is not required. You understand that
the certificate(s) representing the Shares will be imprinted with
substantially the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR APPLICABLE STATE
SECURITIES LAWS. THE SHARES HAVE BEEN ACQUIRED WITHOUT A VIEW TO DISTRIBUTION
AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT
AND UNDER ANY APPLICABLE SECURITIES LAWS, OR AN OPINION OF COUNSEL FOR THE
HOLDER (CONCURRED IN BY LEGAL COUNSEL FOR THE CORPORATION) THAT SUCH REGISTRA-
TION IS NOT REQUIRED AS TO SUCH SALE OR OFFER. THE STOCK TRANSFER AGENT HAS
BEEN ORDERED TO EFFECTUATE TRANSFERS OF THIS CERTIFICATE ONLY IN ACCORDANCE
WITH THE ABOVE INSTRUCTION.
9. COMPENSATION CLAIM: You understand and agree that this Award is made
in lieu of the payment of cash compensation to you, and you agree that all of
the Shares issued and delivered to you pursuant to this Agreement will be
forfeited to the Company in the event that you make any legal claim for cash
compensation for work performed during the vesting periods set forth above.
Please execute the Agreement in the space below and return it to the
undersigned.
Very truly yours,
PROTOCOL SYSTEMS, INC.
By:
------------------------------
AGREED AND ACCEPTED:
------------------------
Xxxxx X. Xxxxxxxx
------------------------
Date
GES\3784ges.agr
