RESTRICTED STOCK AGREEMENT FOR DIRECTORS
EXHIBIT
10.2
RESTRICTED
STOCK AGREEMENT FOR
DIRECTORS
THIS
RESTRICTED
STOCK AGREEMENT FOR DIRECTORS (the “Agreement”), effective as of _______________
(the “Issuance Date”), is made by and between Schiff Nutrition International,
Inc., a Delaware corporation hereinafter referred to as the “Company,” and
___________________________, a non-employee director of the Company hereinafter
referred to as “Director”:
WHEREAS,
the
Company wishes to afford the Director the opportunity to own shares of its
$0.01
par value Class A Common Stock;
WHEREAS,
the
Company wishes to carry out the 2004
Incentive Award Plan, as amended
(the “Plan”), the
terms of which are hereby incorporated by reference and made a part of this
Agreement; and
WHEREAS,
the
Administrator of the Plan has determined that it would be to the advantage
and
best interest of the Company and its stockholders to issue the Restricted Shares
provided for herein to the Director as an inducement to enter into or remain
in
the service of the Company and as an incentive for increased efforts during
such
service, and has advised the Company thereof and instructed the undersigned
officers to issue said Restricted Shares.
NOW,
THEREFORE, in
consideration of the mutual covenants herein contained and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereby agree as follows:
ARTICLE
I.
DEFINITIONS
Whenever
the
following terms are used in this Agreement, they shall have the meaning
specified below unless the context clearly indicates to the contrary. The
masculine pronoun shall include the feminine and neuter, and the singular the
plural, where the context so indicates. Capitalized terms used but not defined
in this Agreement shall have the meaning ascribed to such terms in the
Plan.
Section
1.1. Administrator
“Administrator”
shall mean the entity that conducts the administration of the Plan (including
the issue of Restricted Shares) as provided therein.
Section
1.2. Board
“Board”
shall
mean
the Board of Directors of the Company.
Section
1.3. Code
“Code”
shall
mean
the Internal Revenue Code of 1986, as amended.
Section
1.4. Common
Stock
“Common
Stock”
shall mean the Class A Common Stock of the Company, par value $0.01 per share,
and such other securities of the Company that may be substituted for Stock
pursuant to the Plan.
Section
1.5. Company
“Company”
shall
mean Schiff Nutrition International, Inc., a Delaware corporation, or any
successor corporation.
Section
1.6. Exchange
Act
“Exchange
Act”
shall mean the Securities Exchange Act of 1934, as amended.
Section
1.7. Forfeiture
Restrictions
“Forfeiture
Restrictions” shall mean the restrictions that could result in forfeiture of the
Restricted Shares as set forth in Section 3.1, which restrictions lapse in
accordance with Section 3.2.
Section
1.8. Plan
“Plan”
shall
mean
the Schiff Nutrition International, Inc. 2004 Incentive Plan, as amended and/or
restated from time to time.
Section
1.9. Restricted
Shares
“Restricted
Shares”
shall mean the shares of Common Stock issued as Restricted Stock under this
Agreement and the Plan, so long as such shares are subject to the Restrictions.
Vested Shares shall not be considered Restricted Shares hereunder.
Section
1.10. Restrictions
“Restrictions”
shall mean, the Forfeiture Restrictions set forth in Section 3.1, the vesting
requirements set forth in Section 3.2, and the restrictions on sale or other
transfer set forth in Section 3.3.
Section
1.11. Rule
16b-3
“Rule
16b-3” shall
mean that certain Rule 16b-3 under the Exchange Act, as such Rule may be amended
from time to time.
Section
1.12. Secretary
“Secretary”
shall
mean the Secretary of the Company.
Section
1.13. Securities
Act
“Securities
Act”
shall mean the Securities Act of 1933, as amended.
2
Section
1.14. Termination
of
Directorship
“Termination
of
Directorship” shall mean Director’s “separation from service” (within the
meaning of Section 409A(a)(2)(A)(i) of the Code, as determined by the Secretary
of the Treasury) with the Company. The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions relating
to
a Termination of Directorship, including without limitation, whether a
Termination of Directorship has occurred.
Section
1.15. Vested
Shares
“Vested
Shares”
shall have the meaning given to that term in Section 3.2.
ARTICLE
II.
ISSUANCE
OF RESTRICTED SHARES
Section
2.1. Issuance
of
Restricted Shares
Effective
as of the
Issuance Date, the Company issues to the Director ___________________ (________)
Restricted Shares, subject to the Restrictions and the other terms and
conditions set forth in this Agreement and the Plan. The value of the Restricted
Shares on the Issuance Date, based on the Fair Market Value of the Common Stock
on the Issuance Date (as required by the Plan), is [$40,000]1[$50,000]2[$60,000]3.
Section
2.2. Consideration
to
Company
In
partial consideration of the issuance of the Restricted Shares by the Company,
the Director (i) agrees to render faithful and efficient services to the Company
as a member of the Board for a period of at least one year from the Issuance
Date, (ii) agrees not to disclose or use, directly or indirectly, any
proprietary or confidential information concerning the Company so long as such
information is proprietary and/or confidential, except any disclosure or use
that is for the benefit of the Company and is incidental to the Director's
service with the Company, and (iii) agrees to abide by all of the terms and
conditions of this Agreement and the Plan. Nothing in the Plan or this Agreement
shall confer upon the Director any right to continue as a director of the
Company.
Section
2.3. Rights
as a
Stockholder
Except
as otherwise provided herein, effective as of the Issuance Date, the
Director
shall have all the
rights of a stockholder of the Company with respect to the Restricted Shares,
subject to the Restrictions, including the right to vote the Restricted Shares
and to receive all dividends or other distributions paid or made with respect
to
the Restricted Shares (subject to Section 3.4).
1 Applicable
for the
Initial Non-employee Director Award granted in accordance with Section 4.3(a)
of
the Plan.
2 Applicable
for the
Annual Non-employee Director Award granted in accordance with Section 4.3(a)
of
the Plan.
3 Applicable
for the Three Year Award granted in accordance with Section 4.3(b) of the
Plan.
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ARTICLE
III.
RESTRICTIONS
ON SHARES
Section
3.1. Forfeiture
Restrictions
Upon
Director’s
Termination of Directorship, all Restricted Shares (not vested pursuant to
Section 3.2) outstanding as of such Termination of Directorship shall be
automatically forfeited and cancelled, without payment of any consideration
therefore, effective as of the date of such Termination of Directorship.
Section
3.2. Lapse
of Forfeiture
Restrictions
(a) The
Forfeiture
Restrictions and all other Restrictions shall lapse and the Restricted Shares
shall vest [and become “Vested Shares” in three equal annual installments of 1/3
of the Restricted Shares issued, with the first installment vesting on the
first
anniversary of the Issuance Date, and each of the two subsequent annual
installments vesting on the earlier of (i) the anniversary of the Issuance
Date
next following the last vesting date, or (ii) the date of the Company’s annual
meeting of stockholders following the last vesting date at which directors
are
elected that is held within 30 days of the anniversary of the preceding year’s
regular annual meeting of stockholders,]4
[in full and
become “Vested shares” on the last day of the Three Year Term ,]5 conditioned
upon the Director’s continued service as a Board member through the applicable
vesting date. The vesting of the Restricted Shares and the removal of the
Restrictions with respect to such Restricted Shares shall cease upon the
Director’s Termination of Directorship.
(b) By
resolution, the Administrator may, on such terms and conditions as it deems
appropriate, remove any or all of the Restrictions (including without
limitation, the Administrator may accelerate vesting) at any time or from time
to time.
Section
3.3. General
Transfer
Restrictions
The
Director
shall not sell,
exchange, transfer, alienate, hypothecate, pledge, encumber or assign any
Restricted Shares, or any rights with respect thereto. Unless otherwise
permitted by the Administrator in accordance with the terms of the Plan, neither
the Restricted Shares nor any interest or right therein or part thereof shall
be
liable for the debts, contracts, or engagements of the Director or his or her
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law
by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy) and any attempted disposition thereof shall
be null and void and of no effect.
4
Applicable for the
Initial Non-employee Director Award and the Annual Non-employee Director award
granted in accordance with Section 4.3(a) of the Plan.
5
Applicable for the
Three-Year Award granted in accordance with Section 4.3(b) of the
Plan.
4
Section 3.4. Assets
or
Securities Issued With Respect to the Restricted Shares; Change in
Control
(a) Any
and all cash
dividends paid on the Restricted Shares and any and all shares of Common Stock,
capital stock or other securities or other property received by or distributed
to Director with respect to, in exchange for or in substitution of the
Restricted Shares as a result of any stock dividend, stock split, reverse stock
split, recapitalization, combination, reclassification, merger, consolidation,
share exchange, reorganization or similar change in the capital structure of
the
Company shall also be subject to the Restrictions until such restrictions lapse
or are removed pursuant to this Agreement or action by the Administrator. Any
such assets or other securities received by or distributed to Director with
respect to, in exchange for or in substitution of any Restricted Shares shall
be
immediately delivered to the Company to be held in escrow pursuant to Section
3.5.
(b) Subject
to Sections 3.1, 3.5, 3.6, and 3.7, the Restricted Shares shall vest in full,
and the Restrictions shall lapse completely, upon a Change in
Control.
Section
3.5. Escrow
of
Shares
(a) The
Secretary of the Company or any other person designated by the Administrator
shall retain physical custody of any certificates representing the Restricted
Shares, or shall maintain an account for Director evidencing the issuance of
such Restricted Shares, in escrow until and to the extent (i) such Restricted
Shares have vested and all Restrictions have been removed or lapsed as to such
shares under this Agreement; or (ii) such Restricted Shares have been forfeited
and cancelled pursuant to Section 3.1. To ensure the delivery of Director’s
Restricted Shares upon forfeiture, Director hereby appoints the Secretary of
the
Company or any other designated escrow agent as Director’s attorney-in-fact to
assign and transfer unto the Company (or such designee), such Restricted Shares,
if any, pursuant to Section 3.1.
(b) The
Secretary, or other escrow agent, shall not be liable for any act he or she
may
do or omit to do with respect to holding the Restricted Shares in escrow and
while acting in good faith and in the exercise of his or her
judgment.
Section
3.6. Vested
Shares -
Release
As
and to the extent the Restricted Shares vest and
the
Restrictions lapse in accordance with Section 3.2, then the Vested Shares shall
be released from any escrow and delivered to the Director or for the benefit
of
his or her account without the legend referenced in Section 3.7, and such shares
shall be free of all Restrictions hereunder.
Section
3.7. Restrictive
Legends
and Stop Transfer Orders
(a) Any
share
certificate(s) (or electronic entry) evidencing the Restricted Shares issued
hereunder shall be endorsed with the following legend and any other legend
required by any applicable federal and state securities laws:
THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
RIGHT OF
REPURCHASE IN FAVOR OF THE COMPANY AND MAY BE TRANSFERRED ONLY IN ACCORDANCE
WITH THE TERMS OF A RESTRICTED STOCK AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(b) Director
agrees that, in order to ensure compliance with the Restrictions referred to
herein, the Company may issue appropriate “stop transfer” instructions to its
transfer agent, if any, and that, if the Company transfers its own securities,
it may make appropriate notations to the same effect in its own
records.
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(c) The
Company shall
not be required: (i) to transfer on its books any shares of Common Stock that
have been sold or otherwise transferred in violation of any of the provisions
of
this Agreement, or (ii) to treat as owner of such shares of Common Stock or
to
accord the right to vote or pay dividends to any purchaser or other transferee
to whom such shares shall have been so transferred.
ARTICLE
IV.
OTHER
PROVISIONS
Section
4.1. Administration
The
Administrator
shall have the power to interpret the Plan and this Agreement and to adopt
such
rules for the administration, interpretation and application of the Plan as
are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Administrator
in
good faith shall be final and binding upon the Director, the Company and all
other interested persons. No member of the Administrator nor the General Counsel
or Secretary of the Company shall be personally liable for any action,
determination or interpretation made in good faith with respect to the Plan,
this Agreement or the Restricted Shares.
Section
4.2. Withholding
Taxes
Director
agrees
that in the event the issuance of the Restricted Shares, the vesting of the
Restricted Shares, or the expiration or removal of Restrictions thereon results
in the Director’s realization of income which for federal, state or local income
or employment tax purposes is, in the opinion of the Company, subject to
withholding of tax at source by the Company, the Director will pay to the
Company an amount equal to such withholding tax or the Company may withhold
such
amount from the Director’s fees or from dividends deposited with the Company
with respect to the Restricted Shares. The Administrator, in its sole
discretion, may also permit the surrender to the Company of Vested Shares in
payment of the tax withholding obligation to the extent permitted by the Plan
and provided such surrender will not result in any adverse accounting
consequences to the Company.
Section
4.3. Adjustment
for
Stock Split etc.
In
the event of any stock
dividend,
stock split, reverse stock split, distribution of Company assets to stockholders
(other than normal cash dividends), recapitalization, combination,
reclassification, or similar change in the capital structure of the
Company,
the Administrator
shall make appropriate and equitable adjustments in the Restricted Shares,
consistent with the terms of the Plan. The provisions of this Agreement shall
apply, to the full extent set forth herein with respect to the Restricted
Shares, to any and all shares of capital stock or other securities which may
be
issued in respect of, in exchange for, or in substitution of the Restricted
Shares, and shall be appropriately adjusted for any stock dividends, splits,
reverse splits, combinations, recapitalizations and the like occurring after
the
date hereof.
Section
4.4. Tax
Consequences; Section 83(b) Election
Director
has
reviewed with Director’s own tax advisors the federal, state, local and foreign
tax consequences of this investment and the transactions contemplated by this
Agreement. Director is relying solely on such advisors and not on any statements
or representations of the Company or any of its agents.
6
Director
understands that Director (and not the Company) shall be responsible for
Director’s own tax liability that may arise as a result of this investment or
the transactions contemplated by this Agreement. Director understands that
Director will recognize ordinary income for federal income tax purposes under
Section 83 of the Code as
and when the
Restrictions applicable to such shares lapse. Director understands that Director
may elect to be taxed for federal income tax purposes at the time the Restricted
Shares are issued rather than as and when the Restrictions applicable to such
Restricted Shares lapse by filing an election under Section 83(b) of the
Code with the Internal Revenue Service within thirty (30) days from the date
of
issuance.
DIRECTOR
ACKNOWLEDGES THAT
IT IS DIRECTOR’S
SOLE
RESPONSIBILITY AND NOT THE COMPANY’S TO TIMELY FILE THE ELECTION UNDER
SECTION 83(b), EVEN IF DIRECTOR REQUESTS THE COMPANY OR ITS REPRESENTATIVES
TO MAKE THIS FILING ON DIRECTOR’S BEHALF.
Section
4.5. Conditions
to
Issuance of Stock Certificates or Electronic Delivery of the
Shares
The
Restricted
Shares, or any portion thereof, may be either previously authorized but unissued
shares or issued shares of Common Stock that have then been reacquired by the
Company. The Company shall not be required to issue, deliver any certificate
or
certificates or electronically deliver the Restricted Shares or any portion
thereof prior to fulfillment of all of the following conditions:
(a) The
admission of
such shares to listing on all stock exchanges on which such class of stock
is
then listed;
(b) The
completion and
continued availability of any registration or other qualification of such
shares, or an exemption for issuance of such shares, under any state or federal
law or under rulings or regulations of the Securities and Exchange Commission
or
of any other governmental or regulatory body, which the Administrator shall,
in
its absolute discretion, deem necessary or advisable;
(c) The
obtaining of
any approval or other clearance from any state or federal governmental agency
which the Administrator shall, in its absolute discretion, determine to be
necessary or advisable;
(d) The
receipt by the
Company of all amounts which, under federal, state or local (or applicable
foreign) tax laws, it is required to withhold upon the issuance of such shares;
and
(e) The
lapse of such
reasonable period of time following the date the Restrictions lapse as the
Administrator may from time to time establish for reasons of administrative
convenience.
Section
4.6. Limitations
Applicable to Section 16 Persons
Notwithstanding
any
other provision of the Plan or this Agreement, the Restricted Shares and this
Agreement shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3) that are requirements for the application of such
exemptive rule. To the extent permitted by applicable law, this Agreement shall
be deemed amended to the extent necessary to conform to such applicable
exemptive rule.
7
Section
4.7. Notices
Any
notice to be
given under the terms of this Agreement to the Company shall be addressed to
the
Company in care of its Secretary, and any notice to be given to the Director
shall be addressed to the Director at the address given beneath his signature
hereto. By a notice given pursuant to this Section 4.7 either party may
hereafter designate a different address for notices to be given. Any notice,
which is required to be given to the Director, shall, if the Director is then
deceased, be given to the Director’s personal representative if such
representative has previously informed the Company of such status and address
by
written notice under this Section 4.7. Any notice shall be deemed duly given
when delivered in person or enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal
Service.
Section
4.8. Titles
Titles
are provided
herein for convenience only and are not to serve as a basis for interpretation
or construction of this Agreement.
Section
4.9. Construction
This
Agreement
shall be administered, interpreted and enforced under the laws of the State
of
Delaware.
Section
4.10. Conformity
to
Securities Laws
Director
acknowledges that the Plan and this Agreement are intended to conform to the
extent necessary with all provisions of the Securities Act and the Exchange
Act
and any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, and state securities laws and regulations.
Notwithstanding anything herein to the contrary, the Plan and this Agreement
shall be administered, and the Restricted Shares are to be issued, only in
such
a manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, the Plan and this Agreement shall be deemed amended
to the extent necessary to conform to such laws, rules and
regulations.
Section
4.11. Amendments
This
Agreement may
not be modified or amended in any way that adversely affects the Director’s
rights hereunder, except by an instrument in writing signed by the Director
and
by a duly authorized representative of the Company.
Section
4.12. Successors
and
Assigns
The
Company may
assign any of its rights under this Agreement to single or multiple assignees,
and this Agreement shall inure to the benefit of the successors and assigns
of
the Company. Subject to the restrictions on transfer herein set forth, this
Agreement shall be binding upon Director and his or her heirs, executors,
administrators, successors and assigns.
[Signature
Page
Follows]
8
IN
WITNESS WHEREOF, this RESTRICTED STOCK AGREEMENT FOR DIRECTORS has been executed
and delivered by the parties hereto.
9