Incentive Plan Restricted Stock Award Agreement (Financial Performance Vesting) Issued to James G. Naro
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EX-10.3 4 c06389exv10w3.htm INCENTIVE PLAN RESTRICTED STOCK AWARD AGREEMENT (FINANCIAL PERFORMANCE VESTING) ISSUED TO JAMES G. NARO exv10w3
Exhibit 10.3
LodgeNet Entertainment Corporation 2003 Stock Option and
Incentive Plan Restricted Stock Award Agreement
(Financial Performance Vesting)
Incentive Plan Restricted Stock Award Agreement
(Financial Performance Vesting)
Name: James G. Naro
Date of Award: 6-26-06
Number of Shares of Restricted Stock Awarded: 7,500
Date of Award: 6-26-06
Number of Shares of Restricted Stock Awarded: 7,500
This Agreement, effective as of the Date of Award, represents an award of Restricted Stock by LodgeNet Entertainment Corporation, a Delaware corporation (the Company), to you, pursuant to the provisions of the LodgeNet Entertainment Corporation 2003 Stock Option and Incentive Plan (the Plan).
The Plan provides a description of the general terms and conditions governing the Restricted Stock awarded hereunder. The parties hereto also agree to the following additional terms and conditions governing this award of Restricted Stock:
1. Termination of Risk of Forfeiture. The shares awarded hereby are subject to a risk of forfeiture. Subject to Section 15 hereof (which provides for accelerated termination of the risk of forfeiture under the conditions set forth therein), and Section 8 hereof (which provides for accelerated termination of the risk of forfeiture in the event of death or, in certain cases, retirement or disability, and adjustment thereto), the risk of forfeiture of the Restricted Stock issued pursuant to this Award shall terminate on January 1, 2009 (the Termination Date), except as otherwise provided herein, if, a) you have been continuously employed by the Company from the Date of Award (excluding any periods during which you are on approved leaves of absence) up to and including the Termination Date and b) the Company has achieved cumulative earnings for 2006, 2007 and 2008 of at least $1.10 per share (the Performance-Based Target). The Performance-Based Target shall be determined by reference to the Companys Net income (loss) per common share (basic), as shown in the Companys audited Consolidated Statements of Operations for 2006, 2007 and 2008. Notwithstanding the Termination Date, no payment of the Award shall be made until, and shall be subject to, the determination that the Performance-Based Target is achieved. It is acknowledged that such determination cannot be made until the date on which Company releases its audited financial statements for 2008, which is expected to occur subsequent to the Termination Date. In the event the Performance-Based Target is not achieved, the shares of stock awarded hereby shall be forfeited pursuant to Section 6 hereof, notwithstanding the Termination Date. The period between the date of this Award and the Termination Date is hereinafter referred to as the Restriction Period.
2. Restricted Stock Certificates. Any Restricted Stock granted to you hereunder shall be held by the Corporate Secretary of the Company or designee until such time as the restrictions terminate or the Restricted Stock is forfeited.
3. Certificate Legend. Each stock certificate representing shares of Restricted Stock granted hereunder shall bear the following legend:
The sale or other transfer of the shares of common stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer set forth in the LodgeNet Entertainment Corporation 2003 Stock Option and Incentive Plan and a LodgeNet Entertainment Corporation 2003 Stock Option and Incentive Plan Restricted Stock Award Agreement dated June 26, 2006.
4. Removal of Restrictions. When your Restricted Stock is no longer subject to the terms of this Agreement, you will be entitled to have the legend required by Section 3 of this Agreement removed from the stock certificates representing your shares of Restricted Stock and such certificates will be distributed to you. The Company shall have no obligation to issue fractional shares; all share amounts shall be rounded to the nearest whole amount.
5. Voting Rights and Dividends. You may exercise full voting rights and shall receive any dividends and other distributions paid with respect to the shares of Restricted Stock. If any such dividends or distributions are paid in shares of common stock of the Company, those shares shall be subject to the same restrictions on transferability as the shares of Restricted Stock under this Agreement.
6. Forfeiture. Any Restricted Stock granted to you hereunder shall be forfeited, and such shares of Restricted Stock shall revert to the Company, without any obligation of the Company to pay you any consideration therefor, if, during the Restriction Period, (i) you violate the terms of this Agreement; (ii) your employment with the Company terminates prior to the Termination Date (other than under the conditions set forth in Sections 8 or 15 hereof); or (iii) the Performance-Based Target is not achieved. The Company shall initiate a forfeiture of Restricted Stock pursuant to this Section 6 by giving notice to you at any time within the thirty (30) day period following the date of forfeiture. Upon the giving of such notice, the Corporate Secretary of the Company shall promptly cancel the forfeited shares of Restricted Stock and the stock register of the Company shall be revised accordingly. You are obligated to return to the Company any certificates representing such forfeited shares, but your failure to do so shall not affect the forfeiture or cancellation of such shares. You shall have no rights as a stockholder of the Company with respect to forfeited and cancelled shares.
7. No Employment Obligation. The award of the Restricted Stock hereunder shall not impose upon the Company a separate obligation to employ you for any given period, or on any specific terms of employment.
8. Termination of Employment Due to Death, Disability or Retirement.
(a) If your employment is terminated during the Restriction Period due to death, the restrictions shall terminate with respect to all of the shares covered by this Agreement; provided, that the Performance-Based Target is achieved.
(b) If your employment is terminated during the Restriction Period is due to Disability (as defined in the Plan), the restrictions shall terminate with respect to a pro rata portion of the shares covered by this Agreement, such pro rata portion to be based on the number of days of continuous employment subsequent to the Date of Award compared to the number of business days in the three years 2006, 2007 and 2008 (the Pro Rata Portion); provided, the
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Performance-Based Target is achieved.
(c) If your employment is terminated during the Restriction Period due to retirement (which, for purposes of this Agreement shall be defined as voluntarily terminating full-time employment after reaching the age of 62), the restrictions shall terminate with respect to the Pro Rata Portion; provided, the Performance-Based Target is achieved.
9. Termination of Employment for Other Reasons. If your employment with the Company is terminated for any reason other than those reasons set forth in Sections 8 or 15 hereof, including without limitation a termination of your employment with or without Cause (as defined in Section 15 below) all shares of Restricted Stock held by you at the time of such employment termination, as to which the restrictions have not terminated, shall be forfeited by you to the Company, in accordance with the provisions of Section 6 hereof.
10. Acceleration. Notwithstanding anything to the contrary contained herein, the Compensation Committee shall always have the power, in its sole discretion, to accelerate the Termination Date of the Restricted Stock.
11. Nontransferability. Restricted Stock awarded pursuant to this Agreement that is subject to a risk of forfeiture may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated (each, a Transfer), other than by will or by the laws of descent and distribution. If any Transfer, whether voluntary or involuntary, of Restricted Stock, as to which the restrictions have not terminated, is made, or if any attachment, execution, garnishment, or lien shall be issued against or placed upon Restricted Stock, as to which the restrictions have not terminated, such Restricted Stock shall be immediately forfeited by you to the Company, and this Agreement shall be of no further effect.
12. Tax Withholding. The Company shall have the power and the right to deduct or withhold, or require you or your estate to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign, required by law or regulation to be withheld with respect to any taxable event arising as a result of this Agreement.
13. Share Withholding. With respect to withholding required upon any other taxable event arising as a result of Restricted Stock awards granted hereunder, you may elect, subject to the approval of the Compensation Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold shares having a fair market value on the date the tax is to be determined equal to the minimum statutory total tax which could be withheld on the transaction. All such elections shall be irrevocable, made in writing, signed by you, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.
14. Administration. This Agreement and your rights hereunder are subject to all the terms and conditions of the Plan, as the same may be amended from time to time, as well as to such rules and regulations as the Committee may adopt for administration of the Plan. It is expressly understood that the Committee is authorized to administer, construe, and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which shall be binding upon the Participant. Any inconsistency between this Agreement and
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the Plan shall be resolved in favor of this Agreement.
15. Acceleration of Termination Date.
a. | If, in connection with or within two (2) years following the occurrence of a Change in Control (as defined in subsection 15 (b) below), your employment with the Company terminates voluntarily for Good Reason (as defined in subsection 15 (b) below), or involuntarily for any reason other than for Cause (as defined in subsection 15 (b) below), the restrictions on all outstanding shares of Restricted Stock not previously terminated pursuant to the terms of Section 1 hereof shall, without further action, terminate as of the date of such employment termination. | ||
b. | For purposes hereof: (i) termination of employment for Cause shall mean termination of your employment by the Company or any of its subsidiaries because of: (A) your dishonesty, fraud or breach of trust or substantial misconduct in the performance of, or substantial nonperformance of, your duties, (B) any act or omission by you that is a substantial cause for a regulatory body with jurisdiction over the Company or any of its subsidiaries to request or recommend your suspension or removal or to impose sanctions upon the Company, or (C) a material breach by you of any applicable employment agreement between you and the Company or any of its subsidiaries; (ii) termination with Good Reason shall mean voluntary termination of your employment because, without your express written consent: (A) the Company or any subsidiary materially breaches any of the terms of an employment agreement, severance agreement or other compensation arrangement between the Company or any of its subsidiaries and you, (B) you are assigned duties materially inconsistent with your position, duties, and status immediately prior the Change in Control, (C) the Company or any subsidiary reduces your base salary and/or benefits under the Companys or a subsidiarys incentive, stock option, retirement, welfare, disability, health, insurance, benefit or other compensatory plan (including, without limitation, cash paid in lieu of any such benefit) in existence immediately prior to the Change in Control (without substitution of a substantially equivalent plan or benefit), such that your compensation, in the aggregate, has been materially reduced, or (D) failure by the Company to cause any successor or resulting entity to expressly assume and agree to perform the Companys obligations under this Agreement; and (iii) a Change in Control shall mean the occurrence of any of the following: (A) any person (as such term is used in Section 13 of the Securities Exchange Act of 1934 (the Exchange Act) and the rules and regulations thereunder and including any Affiliate or Associate of such person, as defined in Rule 12b-2 under said Act, and any person acting in concert with such person), directly or indirectly, acquires or otherwise becomes the beneficial owner (as such term is defined in Rule 13d-3 of the Exchange Act, except that a person or entity shall also be deemed the beneficial owner of all securities which such person or entity may have a right to acquire, whether or not such right is presently exercisable) of |
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securities representing thirty percent (30%) or more of the voting power entitled to be cast at elections for directors (Voting Power) of the Company; or (B) there occurs any merger or consolidation (in one or more transactions) of the Company, or any sale, lease or exchange (in one or more transactions) of all or any substantial part of the consolidated assets of the Company (meaning assets representing thirty percent (30%) or more of the Companys consolidated net tangible assets or generating thirty percent (30%) or more of the Companys consolidated operating cash flow, in each case as measured over the Companys preceding four full fiscal quarters) to any other person and (y) in the case of a merger or consolidation, the holders of outstanding stock of the Company entitled to vote in elections of directors immediately before such merger or consolidation (excluding for this purpose any person (including any Affiliate or Associate) that directly or indirectly owns or is entitled to vote thirty percent (30%) of more of the Voting Power of the Company) hold less than seventy percent (70%) of the Voting Power of the survivor of such merger or consolidation or its parent, or (z) in the case of any such sale, lease or exchange, the Company does not own more than fifty percent (50%) of the Voting Power of the other person; or (C) during any period subsequent hereto, a majority of the Companys directors shall not for any reason be board members who at the beginning of such period constituted a majority of the Board of Directors or persons nominated as new directors by a majority of such continuing directors. |
16. Adjustments. In the event of any stock split, stock dividend, reverse stock split, recapitalization of the Company, or issuance of shares of stock by the Company, the number of shares of Restricted Stock subject to this Award and/or the Performance-Based Target shall be appropriately adjusted by the Compensation Committee. By way of illustration only, in the event the Company split its stock on a two-for-one basis, the number of shares of Restricted Stock subject to the Award would similarly be subject to such split and the Performance-Based Target would be adjusted to take into account the increased number of shares which would go into the calculation of the Performance-Based Target, as well as the time at which the split occurred.
17. Miscellaneous.
a. All obligations of the Company under the Plan and this Agreement, with respect to the Restricted Stock, shall be binding on any successor as to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
b. To the extent not preempted by federal law, this Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to such jurisdictions conflict of laws principles.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed effective as of the Date of Award first above written.
LODGENET ENTERTAINMENT CORPORATION | ||||
By: | /s/ Gary H. Ritondaro | |||
Gary H. Ritondaro SVP/CFO | ||||
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