Exhibit 10.10
Agreement No. 0 << PRSU Agr
>>
SMITH INTERNATIONAL, INC.
PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT
THIS PERFORMANCE-BASED RESTRICTED
STOCK UNIT AGREEMENT (this “Agreement” ) is
made and entered into by and between Smith International, Inc., a
Delaware corporation (the “Company” ) and
<< Name_First >> << Name_Mi
>> << Name_Last >>, an individual and
Employee of the Company or one of its Subsidiaries (
“Grantee” ), on the ___th day of
, 20___ , (the “Grant Date” ), subject to
the terms and provisions of the Smith International, Inc., Second
Amended and Restated 1989 Long-Term Incentive Compensation Plan, as
amended from time to time (the “Plan” ). The
Plan is hereby incorporated herein in its entirety by this
reference. Capitalized terms not otherwise defined in this
Agreement shall have the meaning given to such terms in the
Plan.
WHEREAS , Grantee is an
Employee of the Company or one of its Subsidiaries, and in
connection therewith, the Company desires to grant to Grantee
performance-based restricted stock units, subject to the terms and
conditions of this Agreement and the Plan, with a view to
increasing Grantee’s interest in the Company’s success
and growth; and
WHEREAS , Grantee desires to
be the holder of such units subject to the terms and conditions of
this Agreement;
NOW, THEREFORE , in
consideration of the premises, mutual covenants and agreements
contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as
follows:
1. Grant of Target
Units. Subject to the terms and conditions of this Agreement
and the Plan, the Company hereby grants to Grantee <<
Rounded_Prsu >> (<< Rounded_PRSU
>>) Target Units (“ Target Units ”).
Subject to Section 3 hereof, each Target Unit shall
initially represent one share of the Company’s Common Stock
(“ Share ”), $1.00 par value. Each Target Unit
represents an unsecured promise of the Company to deliver Shares to
Grantee pursuant to the terms and conditions of the Plan and this
Agreement. As a holder of Target Units, Grantee has only the rights
of a general unsecured creditor of the Company.
2. Transfer Restrictions
. Grantee shall not sell, assign, transfer, exchange, pledge,
encumber, gift, devise, hypothecate or otherwise dispose of
(collectively, “Transfer” ) any Target Units
granted hereunder. Any purported Transfer of Target Units in breach
of this Agreement shall be void and ineffective, and shall not
operate to Transfer any interest or title in the purported
transferee.
3. Performance Criteria and
Stock Awards . Upon satisfaction of the Performance Criteria as
established by the Compensation and Benefits Committee of the
Company’s Board of Directors (the “ Committee
”), the Company shall determine the number of Shares payable
to Grantee as provided under this Agreement, subject to
certification by the Committee that the specified Performance
Criteria have been satisfied. The maximum number of Shares of the
Company’s Common Stock that will be awarded under this
Agreement is determined as a percentage of Grantee’s Target
Units, such percentage based on the annual performance goals
established by the Committee in accordance with the terms of the
Plan.
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4. Vesting and Payment of
Target Units .
(a) Grantee’s
interest in the Target Units granted hereunder shall vest in
accordance with the following schedule, conditioned on
Grantee’s continued employment with the Company or one of its
Subsidiaries as of each such vesting date (the “ Vesting
Date ”), except as provided in Section 5 hereof;
provided, however, that within thirty (30) days after the
Target Units granted hereunder become vested, Grantee must open a
brokerage account with a brokerage firm designated by the Company
to receive the Shares obtained pursuant to Section 4(b)
, or such units shall be forfeited and lapse without further
notice.
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Vesting Date |
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Percentage of Target Units Vested |
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, 20__
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33 1/3% |
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, 20__
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33 1/3% |
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, 20__
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33 1/3% |
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TOTAL
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100% |
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(b)
Settlement of Target Units . Subject to
Section 7 hereof, the Company shall grant to Grantee,
within two and one-half (2 1 / 2 ) months after the end of the calendar
year in which Target Units become vested pursuant to
Section 4(a) above, a number of Shares equal to the
number of such vested Target Units determined in accordance with
Sections 3 and 4 , (provided Grantee has not terminated
employment prior to the applicable Vesting Date) unless otherwise
provided under Section 5 hereof. Each vested Target
Unit shall thus be exchanged by the Company for one Share, and such
Target Unit shall be cancelled as of the effective time of such
exchange as reflected on the Company’s stock records. All
Shares delivered to or on behalf of Grantee in exchange for vested
Target Units shall be subject to any further vesting, transfer or
other restrictions as may be required by securities law or other
applicable law as determined by the Company.
(c)
Dividends, Splits and Voting Rights . If the
Company (i) declares a stock dividend or makes a distribution
on Common Stock in Shares, (ii) subdivides or reclassifies
outstanding Shares into a greater number of Shares, or
(iii) combines or reclassifies outstanding Shares into a
smaller number of Shares, then the number of Target Units granted
under this Agreement shall be proportionately increased or reduced,
as applicable, so as to prevent the enlargement or dilution of
Grantee’s rights and duties hereunder. The determination of
the Committee regarding such adjustments shall be binding. Until
such time as Shares are actually delivered to Grantee in exchange
for vested Target Units pursuant to Section 4(b)
(above), Grantee shall have no voting, dividend or other ownership
rights in such Shares.
5. Forfeiture .
(a)
Termination Due to Death or Disability . If
Grantee’s employment with the Company or one of its
Subsidiaries is terminated due to death or Disability of Grantee,
then, in either such event, all outstanding Units hereunder shall
become fully vested as of such termination date and shall be
payable to Grantee, or Grantee’s Beneficiary in the event of
Grantee’s death, in Shares within thirty (30) days after
such date; provided, however, that if Grantee’s employment
with the Company is terminated due to death or Disability of
Grantee before the date upon which the number of Shares payable to
Grantee is determined under Section 3 , then payment
for such outstanding Units that are payable hereunder shall be made
to Grantee, or Grantee’s Beneficiary in the event of
Grantee’s death, within the time provided under
Section 4(b) .
For
purposes of this Section 5(a) ,
“Disability” means, as determined by the Committee in
its discretion exercised in good faith, a physical or mental
condition of Grantee that would entitle Grantee to payment of
disability income payments under the Company’s long-term
disability insurance policy or plan for employees, as then
effective, if any; or in the event that Grantee is not covered, for
whatever reason, under the Company’s long-term disability
insurance policy or plan, “Disability” means a
permanent, and total disability as defined in Section 22(e)(3)
of the Internal Revenue Code of 1986, as amended (the “
Code ”). A determination of Disability may be made by
a physician selected or approved by the Committee and, in this
respect, Grantee must submit to any reasonable examination(s)
required by such physician upon request in order to render an
opinion regarding whether there is a Disability.
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(b)
Termination Other than Death or Disability . If
Grantee’s employment with the Company or one of its
Subsidiaries is voluntarily or involuntarily terminated by the
Company or one of its Subsidiaries or Grantee for any reason other
than due to death or Disability, then Grantee shall immediately
forfeit all Target Units which are not already vested as of such
date. Upon the forfeiture of any Target Units hereunder, Grantee
shall cease to have any rights in connection with such Target Units
as of the date of such forfeiture. A transfer of employment by
Grantee, without an interruption of employment service, between or
among the Company and any Subsidiary of the Company shall not be
considered a termination of employment for purposes of this
Agreement.
6. Grantee’s
Representations. Notwithstanding any provision hereof to the
contrary, Grantee hereby agrees and represents that Grantee will
not acquire any Shares, and that the Company will not be obligated
to issue any Shares to Grantee hereunder, if the issuance of such
Shares constitutes a violation by Grantee or the Company of any law
or regulation of any governmental authority. Any determination in
this regard that is made by the Committee, in good faith, shall be
final and binding. The rights and obligations of the Company and
Grantee are subject to all applicable laws and regulations.
7.&nbs
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